disgust

what's more disgusting than the state of government schools? school vouchers. what's more disgusting than vouchers? iits. what's more disgusting than iits? that i should also pay for air india (never mind if i haven't ever seen the inside of a plane). what's even more disgusting than that? that i also pay for the salaries of certain dons in jnu who think i belong in the middle ages.

mamata shall outdo laloo?

Malda, May 24: Expectations are running high in Malda with Mamata Banerjee taking charge of Rail Bhavan.

From newly elected Congress MP Mausam Noor to the merchant chamber of commerce — everybody has drawn up a list of demands for Mamata, especially since the Trinamul Congress chief is known to have shared a rapport with A.B.A. Ghani Khan Chowdhury.

Mausam, Ghani Khan’s niece, will demand a Rajdhani from “Mamatadi”, a pair of superfast trains between Calcutta and Siliguri via Malda, besides introduction of electric trains in the division. “I am very happy that Mamatadi has become the railway minister. The neglected Malda division will definitely get a better deal. We want a Rajdhani and a pair of superfast trains, connecting Siliguri to Calcutta via Malda. We also want electric trains,” she said. In Malda division, trains run on diesel.

in the eighties, when ghani khan chowdhury was the minister for railways, wags in the press used to remark that the name 'indian railways' was a misnomer, because all the action seemed to happen in malda and and bengal. in the nineties, jaffer sharief, ram vilas paswan, nitish kumar and laloo yadav- all tried to follow his outstanding example of never looking beyond one's own family, village, district and state while ruling the railways.

now, it looks like mamata banerjee plans to outdo all of them- flagging off new trains in her home state just a couple of weeks after assuming office, promising relief to supporters and even checking the menus on trains to see that they're bengali enough. does one have to wait for the railway budget to realize that there'd be nothing in it for people living beyond mamata's fiefdom?

the railways is just one large business among many that the central government in delhi owns- i wouldn't say manages, governs etc., because that'd indicate an objective, professional approach to managing the affairs of those businesses. the people who seek and are offered these top posts run, and are allowed to run, these businesses like shopkeepers who are given charge of their rivals' businesses, temporarily. they run down these business in the process of running them for their own special interests- the larger public interest be damned.

one reason, actually two reasons, why no national party wants the government to withdraw from these businesses and get down to the serious business of governance is that these businesses help ruling parties to 1) build and foster patronage networks across states and 2) make a lot of money.

if public sector businesses are one way of achieving those two objectives, ministries that oversee and regulate industries are another, more subtle and unobtrusive way. why do so many contenders for ministerial posts want information technology and communications, chemicals and steel, petroleum and surface transport etc?

and why does no one want women and child welfare etc? or education without higher education? if control over the health ministry didn't mean control over large government hospitals like aiims, or over countless corporate hospitals and colleges- who'd want it?

even the 'reformers' want more of the same

mihir sen in the hindu:

Yes, reforms in India correctly entail privatisation of sectors such as airports, airlines, hotels, and cars but throughout the world, public goods like health, education and environment have been provided for or protected by governments. Ever since the Great Depression of the 1930s, capitalist democracies have seen major investments by the state in the fundamental rights of its citizenry. The difference is that in the U.S., Europe, South-East and East Asia, the state has invariably delivered. In India it has failed — both in the magnitude of its effort and in its quality. Thus, the suffering of our people is not just a tale of market failure. It is also a failure of governance. Which is where reforms for the poor must focus.

the reaction of those sections of the articulate classes in india which have welcomed the return of the congress has essentially been: thanks, for saving our jobs, our banks, our lifestyles. now, please do something about higher education, terrorism and...oh, the nrega was a great idea.

health, education, environment weren't on the agenda before the elections. and health and education of the poor never were the concerns of the brahminized classes- if sen seems radically different, please read on:

Livelihoods, education and health are not polio drops to be mechanically administered to the people. They represent complex outcomes that demand participatory processes and imaginative solutions. Merely throwing money at the people through direct cash transfers is not only insulting, it does not work. What ensures translation of outlays into outcomes is the software we put into place. This includes deployment of high quality human resource and systems that ensure accountability and stakeholder participation.

now how is this different from what was being done until now? the whole rural development package until now has always aimed to combine participatory processes and imaginative solutions, hasn't it? what the author seems to advocate is a larger presence for the bureaucracy, through such measures as increased administrative allocation under NREGA and other poverty alleviation schemes and also strengthen the public sector involvement in health, nutrition, education, banking, watershed, irrigation, NREGA and the Forest Rights Act through deployment of high quality human resource and systems that ensure accountability and stakeholder participation.

i repeat, what has the government been doing until now? how's doing more of the same going to produce better results?

health, education, drinking water and sanitation are public goods, as the author himself acknowledges in the earlier part of the article- how do banking, nrega, irrigation (which in india mostly means large dams) fit in? if the government's involvement in those areas serves the purpose of improving livelihoods, why can't direct cash transfers do that? this mixing of functions- public goods, large infrastructure and poverty alleviation- has always resulted in: lower emphasis on public goods, leakages in poverty schemes and bad planning, delays and corruption in irrigation projects.

the author wants reforms, but would like to keep the bureaucracy. he might as well be saying: thanks, go on saving our jobs, our banks, our lifestyles. in fact, we would like you to improve our job opportunities, our banks, our lifestyles.

a related piece of news- unicef attacks india's record on poverty:

India has failed to use a period of high economic growth to lift tens of millions of people out of poverty, falling far short of China’s record in protecting its population from the ravages of chronic hunger, United Nations officials said on Tuesday.

Unicef, the UN’s child development agency, said India, Asia’s third largest economy, had not followed the example of other regional economies such as China, South Korea and Singapore in investing in its people during an economic boom. It said this failure spelled trouble as the global economy deteriorated, while volatile fuel and food prices had already deepened deprivation over the past two years. (italics mine).

India has failed to use a period of high economic growth to lift tens of millions of people out of poverty.

in the last five years, when the congress-led government at the centre talked about increased allocation to education and health all that resulted in was more iits and iims and greater spending on elitist higher education. in andhra pradesh, while the rajashekhar reddy government spent nearly rs.50,000 crores on large irrigation projects, without adding an extra acre to total irrigated area, hundreds of government schools in the city of hyderabad itself closed down. while the public health infrastructure in the state is breaking down with less than a 1,500 doctors working or not working in 30,000 villages, the state government has made a large donation of hundreds of crores to private hospitals in the state through a health insurance scheme that emphasizes: prevention is impractical.

the hidden nation-state: that's where all the money the unicef talks about went to- some directly, and some indirectly through leakages in the nrega and other schemes.

hierarchy prioritized

will the bank ever lend any money to these three businessmen? so that they can move out of the slum? they've been working there, for the last twenty years, honestly and hard for more hours, every day, than any one in the bank itself. for twenty long years. does the bank trust them?

i'd said indians do not qualify. not even when they're prioritized. those who have already invested 5 lakhs to 2 crores in their businesses are also prioritized, so what kind of a chance does a thelawallah stand against them?

lending to the really small guy does not make any business sense? listen to swaminathan aiyar:

This is extraordinary. Big financiers lend against collateral, a back-up if their borrower defaults. But MFIs lend with no collateral at all. Big financiers lend to the most creditworthy corporations. MFIs lend to poor women whom nobody in history considered creditworthy before. Yet, the secured loans to big corporations are bombing, while unsecured loans to poor women are being repaid in full.

How so? What lessons does micro-finance have for Wall Street?

america and most other western nations have programmes like the sba. india has the priority sector to ensure that loans go only to people who have already exhibited their easy access to self-owned resources and credit. people who would have gained access to further credit anyway, even without their needs being prioritized by the government. seen against the history of small borrowers being more trustworthy than bigger businessmen how does one understand the indian banks' reluctance to lend to them? it means those who'd historically never owned much property do not stand a chance with indian banks. that clearly means lower caste borrowers. i ask again: if all these banks were to disappear, why would any truly marginalized individual in the country miss them?

does the priority sector include the marginalized?

the priority sector is a kind of a holy cow- even if a government thinks of rephrasing a line or two in the guidelines, it'd have a war on its hands. from p.sainath to muppala lakshman rao, a vast army of rishis and munis would be up in arms and pens. why? because these weaker sections need to be protected:

2.1.1 Units engaged in the manufacture, processing or preservation of goods and whose investment in plant and machinery (original cost) excluding land and building does not exceed Rs. 5 crore.
2.1.2 Small scale units whose investment in plant and machinery (original cost) excluding land and building is up to Rs. 25 lakh, irrespective of the location of the unit, are treated as Micro Enterprises.
2.2.4 Loans granted by banks to NBFCs for on lending to SSI sector.
3.1 Loans granted to small business and service enterprises such as, Small Road and Water Transport Operators, Small Business, Professional & Self Employed Persons, etc. engaged in providing/rendering of services (which are industry or non-industry related), and whose investment in equipment (original cost and excluding land and building) does not exceed Rs. 2 crore.
3.2 (ii) Advances granted to private retail traders with credit limits not exceeding Rs. 20 lakh.
6.Educational loans should include only loans and advances granted to individuals for educational purposes up to Rs. 10 lakh for studies in India and Rs. 20 lakh for studies abroad, and not those granted to institutions.
6.1Loans up to Rs. 15 lakh, irrespective of location, for construction of houses by individuals, excluding loans granted by banks to their own employees.
1.1 Domestic scheduled commercial banks having shortfall in lending to priority sector target (40 per cent of ANBC or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher) and / or agriculture target (18 per cent of ANBC or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher) shall be allocated amounts for contribution to the Rural Infrastructure Development Fund (RIDF) established with NABARD. The concerned banks will be called upon by NABARD, on receiving demands from various State Governments, to contribute to RIDF.

among those prioritized borrowers, do you recognize anyone who makes rs. 20 or less a day? in the rbi guidelines, bunched together with those weaker sections are these weaker sections:

(a) Small and marginal farmers with land holding of 5 acres and less, and landless labourers, tenant farmers and share croppers.
(b) Artisans, village and cottage industries where individual credit limits do not exceed Rs. 50,000.
(c) Beneficiaries of Swarnjayanti Gram Swarozgar Yojana (SGSY).
(d) Scheduled Castes and Scheduled Tribes.
(e) Beneficiaries of Differential Rate of Interest (DRI) scheme.
(f) Beneficiaries under Swarna Jayanti Shahari Rozgar Yojana (SJSRY).
(g) Beneficiaries under the Scheme for Liberation and Rehabilitation of Scavangers (SLRS).
(h) Advances to Self Help Groups.
(i) Loans to distressed urban/rural poor to prepay their debt to non-institutional lenders, against appropriate collateral or group security.

who do you think gets better attention from the banks? most of the second category of borrowers do not even have bank accounts, as i pointed out in this post. only 13% of the most vocal section of the second category (small and marginal farmers) have managed to secure occasional credit from the banks (read the opening paragraph of the 'report of the working group on the competitive micro credit market in india', prepared by the development policy division of the planning commission) until now. how would you rate the chances of anyone from the other sections in the second, real, category of obtaining, say, an occasional loan of rs. 20 or so from a public sector bank?

5 million more reasons why caste survives

to the few bloggers who'd commented on my last 2-3 posts: my apologies. for various reasons, i wasn't able to respond earlier.

i'd like to respond now to one comment by kiran here. he says:

So are you trying to suggest that Banks would have been all inclusive if they remained private ? Unlikely. Even those 10% would not have been there.

by 1980, employees in nationalized banks numbered around one million. more than 9 lakhs of those were from the upper castes. you could say around 9 lakh upper caste families (more than 5 million individuals) benefitted directly from the nationalization project.

those were national resources that were deployed to nationalize and run those banks- but they employed, almost exclusively, upper caste individuals and lent money, almost exclusively, to upper caste individuals. did nationalization reduce caste inequalities? it aggravated them. upper caste individuals, long used to privileges, were rewarded with new positions of privilege just as naturally as in the past. and the lower castes paid for those privileges just as naturally as in the past. but the key difference was: if you were a landlord in the pre-modern era, feudal honour required that you make sure those who worked for you didn't starve. the new privileges carried no such price.

how many million lower caste individuals paid for the privileges of those 5 million upper caste individuals? how many of those 5 million would actually admit that caste is a problem? most of them would probably say: it had no role to play in their lives.

what would private banks have done? by 1980, they definitely wouldn't have been able to reward 5 million upper caste individuals with privileges and made several million more lower caste individuals pay for those privileges.

shove some moral outrage in this direction

i've always contended that indian banks were nationalized to provide jobs to upper caste indians. that's the real priority sector. among all public sector employers, indian banks have the poorest record of compliance with reservation norms. the dalits and adivasis constitute less than 5% of all bank employees. the obcs, of course, would be much lower than that because the banks started shedding weight when mandal was brought in. tomorrow, if all these banks were to disappear, not one single truly marginalized individual in the country will really miss them.

why should they? those banks have never lent more than 10% of their total credit advances to the farmers, and most of those farmers were from the same social strata as the bankers, naturally. and when people from those same social strata tried to move into new, non-agricultural vocations, indian banks played a pivotal role in financing this transition. most of the other recipients of priority or directed credit, like entrepreneurs running small scale industrial units etc., were also from the same social strata.

85% of indians still do not have bank accounts: get that into your heads, progressive india.

union budgets: funding caste

the indian government still largely drives the indian economy. it still decides the course and extent of wealth creation and distribution. the organized public sector is still the highest paying and the largest employer (employee strength: 18 million) in the country. and its employees still constitute the largest segment of the market for goods and services produced by the organized private sector in the country. together, those who run the organized public sector (which includes the government) and the organized private sector represent the most fortunate sections of the indian economy. who are they?

here's some probably-not-very-far-off-the-mark guesswork:

last year (2007-08), the finance minister estimated that he'd have to spend nearly 46,400 crore rupees on the salaries, allowances and travel expenses of nearly 33 lakh central government employees. this apart from the nearly 8,000 crores to be incurred on their pensions. by various estimates, not more than 25-30% of those employees are dalit, adivasi, obc and muslim. which means the central budget takes care of around 24 lakh upper caste hindu families, directly, through, say, 45,000 crores (most of the reserved classes and the minorities are in class 3 & 4 jobs so their average salaries would be low, of course). the state governments, public sector enterprises (owned by the centre and the states), nationalized banks etc., take care of (assuming a similar share, as in the central government, for the upper castes) another 115 lakh families or so. would their wage and allowances and incidental expenses bill come to another, say, 1,50,000 crores (let's assume the salaries are lower in the states and the psus)? the organized private sector chips in with its own contributions to support another 65 lakh families (of a total 9 million). would that amount to a combined wage bill of 90,000 crores (the average private sector salaries are lower than the salaries in the public sector, by some estimates)? add to these numbers, the large defence establishment of the country, whose size varies, according to some estimates, from 2-3 million. let's go for the conservative estmate, 2 million. its combined salary and pension bill runs to another 65,000 crores. let's assume, again, that the upper caste hindus make up around 70% (only) of total employees (which means 1.4 million of 2 million) in this sector of organized employment too and their wage bill amounts to, say, (only) 45,000 crores.

what does all that mean? well, looking closely, all those facts (assumed yes, but they're not far off the mark, in my view) read together with the history of independent india in the last sixty years seem to indicate that one of the main objectives of the indian state, through its policies and pursuits, is to fund the lives of: around 14 million families of upper caste hindus directly, and through them, the lives of another 6.5 million families of upper caste hindus indirectly. or, totally, around 20.5 million upper caste hindu families. last year, it gifted each of those 20.5 million families an assured, average paycheck of around rs.1,61,000 (rs.3,30,000 crores divided by 20.5 million employees). 20.5 million families mean around 106 million individuals (the average indian family size is around 5.2 individuals). or around 71% to 53% or 42% (depending on three varying estimates of their size: 150 million, 200 million and 250 million) of all upper caste individuals in the country.

after these 106 million individuals are taken care of, the rest of the budget is all about dressing up all other efforts of the government to take care of the other 44 or 94 or 144 million of upper caste hindus in the country, in widely acceptable egalitarian garb.

the public sector doesn't discriminate?

chandrabhan prasad arguing for reservations for dalits in the private sector says:

There are 58,000 dalit/tribal professionals working with public sector enterprises (PSEs) and public sector banks. According to a report by the National Commission for Scheduled Castes/Scheduled Tribes (1989), there are 21,215 dalits/tribals in managerial/professional positions so senior that they are categorised as Group A, equivalent to the IAS/IPS. Most of these officers are either engineers or IT professionals; many are employed in organisations like BHEL, SAIL, NTPC, ONGC, IOC, MTNL, VSNL, HPCL and GAIL. Has any study been conducted by these organisations to show that dalit professionals under-perform?

when he says 'public sector enterprises and public sector banks', one can see he means the central public sector enterprises and the nationalized banks. in 1990, these two kinds of organizations provided employment to around 26 lakh people. 58,000 out of 26,00,000?

don't nurse any wrong notions that both the overal strength and the dalit representation in these enterprises might have gone up since 1989. the banks which employed around a million people in 1990 have shed a lot of weight - their employees number around 8.5 lakhs now. employment in central public sector enterprises too has come down to around 16 lakhs or so. and the total number of employees in all kinds of public sector enterprises (central and states-owned enterprises, banks, departmental undertakings) has also come down from around 61 lakhs in 1990 to around 58 lakhs now. professor sukhadeo thorat had once remarked that dalit employment in public sector enterprises wouldn't be more than 5%. i don't think it is as high as 5%.

despite the findings of his much quoted (by articulate members of those castes/classes who benefitted the most from socialist india) recent study, i think the organized private sector in india is quite probably more broadminded than socialist india's public sector enterprises. i am confident the number of dalits in the organized private sector is much more than 5%.

why 93% of india hides from the government

apropos of my previous post, i'd like to post here an excerpt of a debate with a fellow blogger, over email, on , among other issues, the informal sector in india- i think it's relevant to the issue discussed in that post. actually, this excerpt consists of only one message (mine), which is my response to one portion (which is referred to in the course of my message) of an earlier message from the other debater. i've edited out names, personal references, some obvious typographical errors (in my message) and other sections which i felt were irrelevant to the issue i wish to focus on in this post (in a general sort of way): the rickshaw pullers. reworking on the message to present it as an independent, new post is an option i've considered, but i find it a demanding task right now. it's too long, among other things..so, here goes:

my message:

i'd said we've a strongly interfering government which is a weak regulator. the presence of a large (93% of our workforce) informal sector itself is the strongest piece of evidence that the indian government is a weak regulator. you seem to be unaware of a lot of aspects of what exactly constitutes the informal sector- actually that is what the informal sector is all about - the govt too is not totally aware of what happens in the informal sector. informal sector, broadly, is that section of an economy on which a government doesn't have complete information. or of whose activities the government is not informed - it may have partial information on some sections of it, less than partial information on other sections, or very little infomation on some other sections.

let me explain: informal sector, broadly, might be viewed as composed of a) the self-employed b) and those who work for others. the self-employed may a) work alone, like many doctors who have their clinics at home or the street corner mochi b) or employ others, like restaurateurs or scrap dealers. in the second category fall people like me who broadly employ less than ten people (this is a kind of universal norm). that is one way of defining the informal sector, but that doesn't completely define it. another way of looking at it is from the angle of activity rather than mere employment- some activities of some organized sector companies might go unreported. companies might not disclose all of their turnovers or put all of their employees on their payrolls (even psus do this). a large portion of the government itself seems to work in the informal sector (ask the prime minister or the chief minister of any state how many people actually work for him at any given moment and, a hundred times out of hundred, you won't get the right figure - there are so many estimates of how many govt servants work for this or that govt that you never really get the true picture. so you could say a large portion of the government too falls in the informal sector).

now let us look at your view of the informal sector and also the role weak regulation and a strongly interfering government play in informalising the majority of the work force in the country. you say:

The informal sector in India is not the same as informal sector in US. In US, even if you employ a homeless person or even if you do a business selling in ebay, you are regulated by IRS, Labor Dept., etc. You need to pay taxes and you need to play by the rules. Well, there are a few who don't follow the rules but a big chunk of them are clearly following the rules laid out. It is not an informal sector like the one in India.

the informal sector in india is almost the same as the informal sector in the u.s., a) every single participant/person in the informal sector in india pays some kind/kinds of taxes or the other- income tax, service taxes, professional taxes, property taxes, municipal taxes, vat or sales taxes, duties, user charges, cesses, levies, fees etc., you name them. and b) the burden of taxes, as compared to their incomes, is disproportionaltely higher on them, individually, than on their average counterparts in the formal/organized sector. c) and their share of access to government services, in return, is disproportionately lower than the access of their average counterparts in the formal/organized sector. and they do play by the 'rules' of a' strongly interfering govt' (in the form of babus from every govt/dept/authority you can think of- police/ income tax/excise/commercial taxes/municipalities/labour/pollution control boards/customs/weights & measures...and a thousand other kinds). you name them. in reality, they pay a much higher price, on an average, than they'd have if they'd been playing by the rules of a reasonable government- rather than the rules (if they were reasonable) of interfering govt officials.

i'd like to expand on all the statements (a), (b), (c) i've made in the preceding para - let's consider the premise (b) first, that the burden of taxes is higher on those in the informal sector than on the formal sector, first. take two families, one headed by someone who works in the formal sector and one who works in the informal sector. let's assume that the first family makes around 50,000 rupees a month and the second family makes 2000 rupees. let's assume a uniform tax burden of ten percent on all consumption by these two families (i am taking of indirect taxes like sales/excise etc., ). we can safely assume, the first family because it has a higher income, and because it's head is regularly employed it's very likely that it'd also have accessed credit from banks etc., to buy some property and invested in deposits, stocks etc. shall we assume that they use around 20,000 rupees a month towards mortgages, loans, savings etc.,? i think it is also realistic to assume that the second family has no such access to credit...and their incomes are totally spent on consumption. so, what would the total expenditure on taxable goods and services, or consumption in rupee terms, of each family be at the end of every month? rs.30,000 in the case of the first family and rs.2,000 in the case of the second family. and the taxes paid by each family on consumption? rs.3,000 and rs.200 respectively. and the burden of taxes? 6% (of total income) of the first family ( in the organized sector) and 10% (of total income) on the second family (in the informal sector).

now i come to the premise (c): you may object to some of the assumptions in the above illustration- about the incomes, consumption levels, savings rates, tax rates (a uniform rate for two different kinds of consumption?), 'unconsumed' portions of incomes etc., for instance how can i equate taxes imposed on only consumption with the 'total burden of tax' on an individual? the rich pay income tax (not everyone in the organized sector pays income tax, and not everyone in the unorganized sector avoids them), don't they? yes, the first family is most likely to be paying income tax. but, this has to be seen against the backgroud of 1) the family's share of access to public services and 2) and the various kinds of relief offered to assessees in the form of exemptions (see http://www.surfindia.com/finance/income-tax/income-tax-exemptions.html ) and deductions (medical expenses, education expenses etc.). for example, a family (like the first family i am talking about) would be entitled to exclude from its income, education expenses to the tune of 24,000 a year, spent on the educational expenses of two kids (most of you probably know about this). think about this: the government probably spends less than a tenth of that amount on the education of each child (like one from the second family) at a government school. what about other public services - like better neighbourhoods, sanitation, potable water, electricity, roads, security, schools, universities, libraries, parks, stadia, museums, galleries, hospitals and schools and many privately provisioned (subsidised by the public in one fornm or the other) services like cinemas, malls, restaurants, theme parks, hospitals and schools etc., etc.,? those who work in the organized sector, because by definition they are better organized, have better access to all of those services. they're mostly urban, and where they're not urban, ( like factories, mining companies, railway stations in rural, semi-urban locations), the government or the companies they work for build/s/built them townships, campuses, colonies which provide much better access to public services than that offered to other people in the same rural/semi-urban neighbourhood. in fact these were india's first gated communities (every large public sector company/organization/dept has at least one, sometimes two or more)...and the big private sector companies too build them. the one at jamshedpur, ---------------- can be called modern india's first gated community (with 24 hour water supply, uninterrupted electricity etc.,), if you ignore forts st.george and st.william etc., i don't think i've to list here again the deficiencies/shortages/absence of public services in areas where informal sector workers live (mostly rural and low income neighbourhoods in cities). yes, there are exceptions - but broadly, that is how the organized/informal sections of our working population live. i'll deal with statement (a) in a short while.

The informal sector we have in India is nothing but lawlessness. You can give a spin by saying market forces are in play there. If this kinda market force is question, tomorrow a Tom dude can extrapolate it and say that swords and guns are the tools of market forces and he will argue that theft, murder, etc are valid and he can make a claim that it is also a case of market forces in play where people who are strong enough and who can hold guns or knives survive. We don't want this kinda lawless market forces to determine our lives. The informal segment in India is wrong and it shouldn't exist.

interesting you should dub the informal sector 'lawless', because some of the top lawyers in the country work in the informal sector. and the sincerest social/political activists, artists, writers, film stars- the big majority of course are the 'lawless' landless labourers, artisans, manual workers like scavengers and butchers, cattle and sheep herders, screen printers and engravers, all kinds of farmers, smugglers, gun-runners, prostitutes, pimps, child traffickers, hired assassins and other anti-social elements.

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the great majority of the workers and the self-employed in the informal sector are not 'lawless' in any sense of the term, -------. a great majority of them conduct legally recognized work and businesses and they can only be described as 'law-struck', or 'persecuted' or 'law-oppressed' or 'law-starved' etc., and as i said earlier [in statement (a)], everyone of them, workers or self-employed, pays some kind of tax or the other. i'd told you i work in the informal sector - the business i run is --------------, the it department knows about my business because i have to file annual returns, so does the excise department because my suppliers/vendors charge the business service tax/vat on goods/services supplied and i am supposed to file periodical returns with those authorities (and oh yes, i pay more than my share of taxes because i don't reclaim the excess paid by me because i don't/can't file regular returns), and so on, and at any given moment any of them and a hundred other kinds of authorities can send notices or inspectors to me. so you see, none of those who work in the informal sector are truly hidden from the law. even the lowliest rickshaw puller usually has some kind of authorization/licence (renewed periodically) or the other from civic authorities. many are members of unions recognized by some govt arm. those who do not possess a licence/authorization are even more persecuted than the licence-holders. pushcart vendors, barbers, vegetable/fruit vendors- others who sell their goods/services on the street possess/or are quite willing to pay (to possess) any reasonable 'ransom' to be recognized by the government because that'd lessen the harassment from a hundred different kinds and shapes of bribe-seekers. retailers of every kind, traders... all other kinds of businesses that work behind shutters -the majority of self-employed people(who may/or may not employ others) do not keep the govt fully informed (the government does have at least partial information on each one of them through one agency or the other) about their business/work because # the rules are unimplementable # their resources are limited (i don't include the 'creamy layer' of film stars, high paid professionals, businesses and industries and the very small layer of the criminal element, who find it lucrative not to report or let the government know the full extent of their income, size, wealth or activity to the govt depts., in this category).

i'll keep the explanation of these two reasons brief - why are the rules unimplementable? last year, a friend of mine wanted to start an edible oils firm- on a small scale, with less than 20 lakhs capital, and a small factory to process and package. he learnt he had to get 63 different kinds of approvals/licences/clearances/whatever. and it's not a one time affair- he'd have to deal with all those authorities all through his working life.another person i know, started a small -sized restaurant, only a scale bigger than a chaikhana- and from the first week he slowly started to learn, as inspectors/officials of various kinds started landing up, how many depts he actually had to get permissions/clearances and so on from. the figure was 29. i could tell you a hundred other stories, but for the moment, i think those two are enough.

i won't go into the details of how much paperwork needs to be done to comply with all the rules of all the departments, how much time needs to be spent, and how much money...i won't go into that familiar complaint- what i am saying is that to expect the self-employed person (roadside vendor/craftsman, small businessman or trader etc.,), given his resources, to comply with all the rules, given the size of the rules/requirements, is plain stupid.

now, the next question- in what way are their resources limited?

* a majority of them are from underprivileged communities - they start out with inherited resource limitations. for instance, around 20% of india's people own more than 70% of all the land in the country,
* they're illiterate or inadequately educated. most of them come from communities that have traditionally been excluded from higher education or were 'convinced', by their own communities and society at large, about the
irrelevance of modern education for people in their socio-economic positions,
* they're ignorant - education by itself doesn't bring in knowledge of laws/procedures/regulations. you are also required to be exposed to a particular kind of socialization to learn about these things,
* their businesses are too small- they can't hire the services of regular book-keepers, accountants, leave alone chartered accountants, lawyers etc., to maintain books regularly or comply with regulations,
* the cold truth is they can't afford to waste the only precious resource that they've, and that is time. a day lost could make a lot of difference to their incomes.

there could be a hundred other reasons but the essential picture you get is that they start out with less (of education, training, capital, credit, social support) and they're destined to get less ( of credit, training, technology, knowledge, social support, governmental encouragement). no broad industry associations and no powerful unions lobby for their cause on a sustained basis. one u.n (agency) report i read says that the one distinguishing feature which characterizes most informal sector businesses is that they can never scale up to their full potential. that characteristic is best exemplified by the marginal and sub-marginal farmers of india (those who work on holdings of less than one acre each) who are more productive than small/medium or large farmers who receive all kinds of support from the government. informal sector workers, mostly from the underprivileged sections constitute 93% of total indian workforce and contribute around 60% of our gross domestic product - the organized sector workers, mostly from the privileged sections contribute around 40%. if that doesn't tell you about the the curbing of potential, what will?

and if you think regulation had no role to play in that, i beg to differ. if the state directed the flow of all resources towards the creation, sustenance and growth of the organized sector on the one hand, it has also used its powers to restrain and suppress the energies of the communities originally associated with all production in india. the state in india, since independence, continued to play, and much more effectively than any time earlier, the historical role it was always assigned with: protect cows and the brahminized classes (and please don't accuse me of alluding to any one community). from the rakshasas perhaps? the rhetoric of the class argument had long deluded the rakshasas in india into believing they're not rakshasas - it produced mass hallucinations and redistributed more poverty than land.

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it's an email, so please don't expect it to present a coherent argument on all counts. also, you may not totally agree with my definition of the informal sector: there are too many working groups working at the national/international level to arrive at a better definition.what i considered relevant for this post was the fact that around 93% of india's workforce works in the informal sector.

did you speak up for a rickshaw puller today?

a comment on a recent post on the indian economy blog:

The Dhirubhai Ambani’s of today don’t need a license to open extra businesses, but rickshaw pullers in Delhi cant have more than one rickshaw, auto rickshaws need to be licensed. the license raj is very much present for these people.

i've seen slight variations of that comment expressed on sundry blogs- it's offered as a pithy critique of the reforms process in india. how genuine is this love for rickshaw pullers and other members of the great unwashed among that section of india's chatterati which can only be classified as opposed-to-but-as-silly-as-the-shining- india-advocacy group? i've an answer, i think: of the 5,100 employees working in ecil, hyderabad, only 150 belong to the scheduled tribes and most of them are employed as drivers.

that's not an answer? how about this one- it's a comment i'd made around an year ago on a post at kafila:

so, why do these servants come to delhi? because there are in delhi these huge neighbourhoods with huge homes in which live people who own huge businesses which service huge numbers of salaried people and their families in their huge homes…whose income and tenure is guaranteed by the government.
so the servants come to delhi because their income and tenure is not guaranteed by the government in their villages..nor can they work at huge businesses because there are no salaried people there whose income and tenure is guaranteed by the government.
and there are no middle class people there who can point their fingers at other middle class people and gloat over their own finer sensibilities…because they don’t ill-treat their servants even though the government guarantees, in a way, their right to do so.

that isn't an answer either? try this one:

In fact the checkered history of industrial capital shows that this class has followed this ‘veil of ignorance’ principle rather selectively. For example, the textile mills owners in Bombay in the 1930s did not bother to follow the modern criterion of recruiting mill workers and even managers. Relatively more unskilled upper caste mill workers barred more skilled workers from the dalit castes from working in the weaving sections of Bombay based textile mills. The upper caste workers opposed the entry of dalits, not on grounds of merit but on the line of purity-pollution.

how about this last offering: citizens of hyderabad city had access to piped water supply 24 hours a day in 1947. well?

rss/cpm

'I would dub the CPI (M) party as being the equivalent of the RSS for the Congress. They are anti-reform and completely xenophobic. What the country needs is a secular-reform combination; the Left is secular but not pro-reform. They do not give a monkey about the poor. Their concern is limited to public sector employees. They are interested in promoting a dole culture. The problem here is that the middle class receives a lot of dole. The poor do not receive dole and so the Left is caught up in the rhetoric of redistribution. They are using the poor to protect the privileges of the middle class. Everyone knows that the whole public distribution system does not help the poor. The money is not percolating down; rather it is reinforcing a self-serving state apparatus.'

meghnad desai has lived abroad too long - the cpm is the rss. and the rss is the cpm.

sweetheart deal

mr.yechury on the centaur hotel sale: “It confirms our fears that a lot of underhand deals were struck. It is a classic sweetheart deal, where public property was sold at a low price to a person close to the ruling establishment”.

the marxists are big on notional losses. they still reel out figures on how much 'revenues' the 'people of india' have lost because of the reduction in tax rates since the good old seventies. so who should feel the sting of these notional losses? except for a few hundred people from the top 1-5% of india's castes and a miniscule number of dalits, i don't think anyone from any other community ever worked there. or were offered discounts when they visited or stayed at the place because they owned that 'public property'.

so the real 'sweetheart deal' happened when the 'public' of india, the bottom 95% communities, were not even told that investments being made in their name in this particular enterprise, long ago, would actually benefit 'people close to the ruling establishment'.

so who are stauncher hindutvavadis - the marxists or the bjp? the original 'classic sweetheart deal' mr.yechury, was/is the republic of india.

sainath's gayatri

this short quiz is not an alternative version of this quiz.

1) which do you think are more efficient- public sector banks because they employ more brahmins or private sector banks because they employ more brahmins?

2) when do you think the govt was more pro-poor- before 1990 when the poor stood long hours in front of fair price shops and got no rations or post-1990 when the poor stand in front of fps and get no rations?

3) who were more sympathetic to the lower castes - the central and most state governments before 1990 when they ignored their demands for jobs or the same govts after 1990 when they continue to ignore their demands for jobs?