Empowering through entrepreneurship

The Government move to reserve 27 per cent of the seats in institutions of higher education such as IITs/IIMs to Other Backward Castes in addition to the 22.5 per cent already provided to Scheduled Caste/Tribe candidates has evoked sharp reactions from different sections.

It is considered as part of affirmative action and empowerment of weaker sections. The US is cited as an example to justify such a measure.

Panels for backward classes

In India, for the uplift of the socially and educationally backward classes, two Backward Classes Commissions were constituted by the President; the Kelkar panel of 1953, which submitted its report in 1955, and the Mandal commission of 1978, which gave the report in 1980. Both reports were rejected; the first by the then government (with Gobind Ballabh Pant as Home Minster under Jawaharlal Nehru), stating that Five-Year Plans are the solutions, and the second by the Indira Gandhi government, based on a memorandum given by the then Home Minister, Mr R. Venkatraman, stating that the facts provided by the Mandal Commission were faulty. No other panel was appointed for a while.

Mandal Commission

On August 7, 1990, the former Prime Minister, Mr V. P. Singh implemented the faulty Mandal report. The Mandal Commission had suggested that the population of Other Backward Castes is 52 per cent based on the 1931 Census.

If, going by the 2001 Census, we add the SC and ST populations at 24.2 per cent (16.2 per cent plus 8.2 per cent), as per the 2001 Census figures, the three groups will constitute 76.4 per cent of the population. Adding the 2001 Census figures of Muslims at 13.4 per cent and Christians at 2.3 per cent brings the total to 92.1 per cent.

With Sikhs/Buddhists/Jains constituting 3.1 per cent (1.9 per ent+ 0.8 per cent + 0.4 per cent), we come to the absurd conclusion that the forward community is only of the order of 4.8 per cent. (Of course, some SCs will be part of the Sikh/Buddhist category).

This brings into question the data used by the Mandal Commission and suggests that the affirmative action considered is neither practical nor feasible.

A better bet would be the empowerment of the weaker sections among the SC/STs and OBCs through entrepreneurship and business rather than by employment.

Reserving seats in higher educational institutions is not going to achieve the purpose taking into account the situation at the school level. Table 1 shows the tragic condition of the weaker sections at the school levels.

Drop-out rate

The drop-out rate at the elementary level (Standard I to VIII) is large among all and more so among SC/ST students.

Hence, the battle is to be fought at the primary and secondary school levels for the weaker sections to make them entrepreneurs or self-employed to provide jobs to others.

The exhaustive Economic Census 1998, conducted by the Central Statistical Organisation (CSO) covering 30.35 million enterprises engaged in different economic activities other than crop production and plantation, deals with own account enterprises and establishments run by employing at least one hired worker. It covers private profit and non-profit institutions, cooperatives and all economic activities including dharamshalas/temples.

Table 2 gives the key findings about the ownership of the enterprises. Nearly half of all enterprises are owned by SC/ST/OBCs in the rural areas and nearly 38 per cent in the urban areas. This encompasses manufacturing/construction/trade/hotel/restaurant/transport/finance and business and other services

The enterprise survey reveals that of the total of 30.25 million enterprises in the country, 24.39 million (80 per cent) are self-financing. This speaks volumes of the credit delivery systems.

What needs to be debated is the enhancement of credit systems for the enterprises, more so those owned by SC/ST and OBCs. In other words, the focus should be on making entrepreneurs of the large segments of civil society, instead of creating large number of `proletariat’ based on 19th century models.

Growth of enterprises

The Survey also points out that the overall growth rate of enterprises owned by persons belonging to the SC category has fallen significantly from 3.42 per cent in 1980-1990 to 0.4 per cent in 1990-1998. The decline is seen both in the rural and urban areas, but in the former it is in negative (-0.41 per cent). This issue needs to be debated and studied by policy planners. Has the decline been due to migration of SC segments to urban areas or inadequate credit availability?

In contrast, the growth rate of enterprises owned by persons belonging to the ST category has increased significantly, from 4.16 per cent (1980-90) to 6.64 per cent (1990-98). The increase is sharp in the urban areas, from 2.37 per cent to 12.24 per cent. The reasons for the growth also needs study by the planners for replicating those cluster efforts. There are inter-State variations in terms of industry focus among these social segments, which also require a closer study to encourage and enhance entrepreneurial activities by these social groups in different states.

Incidentally, one of the arguments given is regarding enhancing the “social status” of these segments. Social backwardness, it is pointed out, is a valid reason for caste-based reservations compared to that based on, say, the economic criteria.

In today’s context, politics, cricket and cinema/TV provide substantial social status and, hence, the demand should be in these areas compared to corporate keyboard punching. The dramatic change in the social status of the Nadar community of Tamil Nadu in the last five decades indicates the power of business and entrepreneurship. The corporate sector and the government can play a major role by encouraging weaker sections to become suppliers, vendors, dealers, distributors, outsourcing agents and so on.

Credit delivery

The Internet and cell phone present opportunities to link millions of small entrepreneurs to create scale economics. Indian civilisation over the centuries has always been innovative and creative in finding solutions to social problems. Maybe, the time has come for the government to perform the task of a kshatriya (internal and external security) and encourage large segments of society to become vaishyas through instrumentalities of credit delivery, taxation, social security and development of regional and community-based clusters.

This may go a long way in enhancing the social status of the SC/ST/OBCs rather than providing limited job opportunities in listed companies and seats in IIT/IIMs.


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