Growth and Attrition

Just a couple of days ago, I was watching a news report about a young couple in Delhi, who work as rag pickers. Their abstemious habits are a reflection of the abject poverty they live in. A recent legislation passed by the Sheila Dikshit Government has been the cause of the furrows that appear on the foreheads of this couple. This new rule is almost certain to deprive them of their meagre livelihood. The new rule proposes to privatize garbage collection and other ancillary businesses. The timing of this law apropos of the present situation is pertinent.

We are at a juncture where any debate against Privatization and Globalization is marked with such acerbity that there is hardly any hope for the marginalized sections of Indian society. There is an urgent need to abridge the growing gap between the two poles of the Indian economy and establish a mechanism for equitable creation and distribution of wealth. The main challenge is to acclimate ourselves with Globalization and Indianisation. Our greatest adversary and strength is in our numbers. Right in our backyard, Chinese Majors like Lenovo, Huawei, TCL, Haier, Cathay Pacific, Bank of China and many more have managed to eke out a name of their own relying entirely on domestic markets. It is a matter of great delight that our Global footprint is increasing day after day. But we need to explore extensively locally before flying globally.

Getting back to the evils of LPG – Liberalization, Privatization and Globalization. I’ll try to explore the effect that liberalization has had on the poor. I have attempted to separate normative practices from ground reality. Gross inconsistencies in formulation of Govt. public policies can be vividly illustrated through examples of small time business. Perhaps there are reforms that may create better conditions for earning a decent and honest livelihood without being weighed down by the fear of extortion and harassment. I strongly advocate that the poor reap the benefits of controlled Liberalization and Globalization and that the current license-quota system be done away with. I believe that muscle and money have meant that existing Govt. Policies are always favorable to the affluent, as they almost definitely find a way around restrictions, while the Man with limited means is left to suffer under the boundaries that, perhaps inadvertently, have been placed by the govt. Immunity to certain restrictions, that have been adduced unnecessary, would be greatly appreciated by the poor entrepreneur, who otherwise finds himself embroiled in legal roadblocks. Most importantly, this post is not a rehash of previously known facts as it seeks to ascribe the condition of the poor to the govt., contrary to popular opinion that it is a result of exploitation by the rich.

Very often, urbanization has been connected with development. This however, I believe, is debatable considering the fact that the magnitude of investment that has gone into rural development is negligibly small compared to that in urban India. This is clearly noticeable in the agrarian crisis plaguing the country today, even though we have the largest workforce in terms of the sheer humanity and extensive areas of arable land. Ironically, this sector employs close to 60% of the workforce, and is lying in shambles. Various instances can be cited that demonstrate how excessive bureaucratic control is not only creating dead-ends for those who wish to enter the market but is also exposing existing entrepreneurs to constant harassment. The terms “Dead capital and diverted capital” crop up, which again is a reference to the existing license-quota Raj that has made it extremely difficult to harness hidden value.

A number of attempts have been made in the past to alleviate the problems faced by poor businessmen. I strongly argue that the failure of these methods can be attributed to the fact that none of them is market based. A market based solution would address the problems of poor entrepreneurs without compromising on standard of living of the richer sections.

Apart from this, attacking the core of the problem would mean a restructuring of the think-tank that formulates these policies. Certainly, a single net cannot catch all kinds of fish. Government policies prepared are same across the board for all situations. De-centralization of the government at various stages is a suggested solution. What seems to be the major hurdle is the information collection. Clearly, there is a yawning gap between the ground reality and assumed reality. Decentralized policy formulation would certainly benefit from better information inflow and most importantly address problems unique to a particular area. I guess that although most Govt. Policies are prepared with the name of helping the poor, they are constructed to favor the babudom, whatever benefit the poor receives from the policy is purely incidental. Here, Milton Friedman’s sentiment is echoed -“One of the great mistakes is to judge policies and programs by their intention rather than their results.”

Policy framers seem to have a confirmed view that Liberalization and Globalization is the one-point solution to this problem. It is not clear to me why the existing rules cannot be changed which will better serve the interests of the poor, and how LPG could be the single substitute of all the problems the poor are facing. I hold the view that inopportune liberalization could adversely affect small time business prospects in a developing country like India. Is it not a fact that Global Giants like Walmart have eroded the livelihood of thousands of petty traders and businessmen? Globalization is not the final answer as it protects the big players and creates pressure on smaller stakeholders. Predatory trade practices by deep-pocket organizations in the name of competition will wipe out poor businessmen from the market. I am not against LPG per se, but strongly hold the view that fledging businesses, subsistence level work and entry level professions must be shielded from LPG until our Government develops better social security and economic safety nets.

As a parting comment, I believe that the Principles of Life, Liberty and Livelihood can only be realized if the Govt. also plays its role vis-à-vis the roles of the market and civil society.

Peace be with you...

crash_w!lDcHilD

Hope and Despair

4:43 AM 2nd December,07 - I couldn't really think of anything better to write about. I haven't even started my packing, and I am supposed to leave within the next 3 hours, for a month of winter vacation. With a little bit of reflection and research, this is what I came up with...

Child Labor in India is the issue I wish to focus upon. This issue concerns me because even today, a shocking 14% of Indian boys in the age group 5-14 are involved in child labor. The figure being even higher for girls. Millions of childhoods are wasted away in dull subsistence-level labor that produces minimal economic value, draining away their creativity and learning potential of future workers.

The Govt. has had Child labor laws since 1986. But that has not substantially addressed the core of the problem. Policy framers must recognise the fact that poverty is the primary cause of this problem. Statistics reveal a clear parallel between declining poverty and reduced child labor. Also, the problem is more common in areas where parents have limited access to affordable schooling. Therefore, I infer that poverty and education can never go together. This is a curse in itself because it is tricky to address both problems simultaneously. More often than not, the child’s economic contribution to the family outweighs the need to invest in his future, even in the presence of facilities like inexpensive schooling.

While the govt. intends to eliminate child labor, by banning work in hazardous establishments, factories, workshops etc, we must examine whether these laws eliminate the need for the child to work or simply move them into less desirable or even more dangerous activities. One stumbling block where most of the current policies fail is that 90% of all working children are engaged in their own rural family work, and just 0.8% are involved in factory/industry work.

My policy will address simultaneously the problems of poverty and education. I plan to employ micro credit as my principal tool, and the village would be the locus of my action. Most of the children who are involved in family businesses invariably pick up a skill or two. These skills, rather than manual work can be utilized for earning money. It would be interesting to examine, whether through microcredit, one can pull them up from the poverty trap and motivate them to study. I am fascinated by the works of Nobel Laureate Prof. Yunus in his Grameen Bank experiment at Bangladesh If it succeeds there, why not here? Considering the scale that child labor is present in our country, I have a couple of alternatives.

I would suggest yet another strategy that operates the way Amway works. Education will be promised to a child if he promises to find ways to educate two more children when he is good enough to support himself. This method, as impractical as it may seem, has worked wonderfully well for Jeroo Billimoria, founder of Childline.

In the medium term, I would like to examine how the corporates can be motivated in this area under their corporate social responsibility(CSR).Through their wide network and business acumen, we can work out how the parents of those child labor can be drafted through some innovative ways. I don’t know at the moment what this could turn out to be, but if we do some novel experiments, the problem can be addressed.

In the long term, we have to educate our people for which there is no short-cut. We can organize sensitization programs for the ordinary men and women and if we can streamline our civic engagement, perhaps enough of social capital can be built up and the child labor will be a thing of the past.

Peace be with you...

crash_w!lDcHilD