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Saturday, January 26, 2013

FDI in Retail and Dalit Entrepreneurs

10 january 19, 2013 vol xlviii no 3  EPW Economic & Political Weekly
Anand Teltumbde ( is a 
writer and civil rights activist with the 
Committee for the Protection of Democratic 
Rights in Mumbai.
FDI in Retail 
and Dalit Entrepreneurs
Anand Teltumbde
Questioning the thesis that 
foreign direct investment in 
retail will have a favourable 
effect on the fl edgling class of 
dalit entrepreneurs in India 
because processes of capitalist 
modernisation automatically 
undermine the signifi cance of 
social identities like caste, creed 
and race, this article argues that 
only a minuscule section of dalits 
has benefi ted from globalisation 
while the majority, being 
"uncompetitive", has been pushed 
to suffer ontological insecurities 
and existential uncertainties.
conomic issues, barring reservation, 
do not count in the political culture 
of  dalits.  If  Mayawati's  Bahujan 
Samaj Party (BSP) Members of Parliament 
absented themselves from voting in the 
Lok Sabha and voted in the Rajya Sabha 
in favour of up to 51% foreign direct 
investment (FDI) in multi-brand retail 
with the sole purpose of supporting the 
United Progressive Alliance government, 
it was not for any intrinsic economic 
merit of the case but for keeping "communal forces" at bay. 
Dalit apathy towards economic issues 
can be traced to their contention with 
the early communists who had made a 
dogma of the Marxian metaphor of base 
and superstructure to ridicule all noneconomic struggles, including those of 
Babasaheb Ambedkar. It resulted in alienating the dalit movement not only from 
the left movements but also from economics in general. In this situation, it was 
a pleasant surprise to see an article in The 
Times of India (TOI) (5 December 2012) – 
"To Empower Dalits, Do Away with India's 
Antiquated Retail Trading System" by 
Chandrabhan Prasad and Milind Kamble, 
both evangelists of dalit capitalism – lauding the government decision to allow up to 
51% FDI in multi-brand retail, which paves 
the way for the entry of the big global 
retail chains like Wal-Mart and Texaco. 
FDI and Dalit Entrepreneurs
Prasad and Kamble try to establish that FDI
in retail will have a favourable effect "on 
the fl edgling class of dalit entrepreneurs 
in India". The main plank of their argument is that the traditional, caste-bound 
retail sector does not provide opportunities 
for dalit entrepreneurs. FDI is modern and 
caste neutral, hence favourable to dalit 
entrepreneurship. In support of the argument the authors cited two studies. The 
fi rst is a study on dalit enterprise by the 
Centre for the Advanced Study of India 
(CASI) at the University of Pennsylvania, 
which found that most of the dalit entrepreneurs surveyed were fi rst-timers who 
had started their business after 1991 when 
the pro cess of liberalisation began. It is 
construed that the neo-liberal reforms 
have been greatly benefi cial to dalits in 
general and dalit entrepreneurs in particular. CASI researchers had found "dalit 
entrepreneurs of different shades enga ged 
in manufacturing heavy duty cranes, 
constructing tunnels, building bridges and 
building machines". The second, supplementing the fi rst, concerned a search for 
dalit  adhatiyas (middlemen) in Delhi's 
Azadpur fruit and vegetable mandi by the 
members of the Dalit Indian Chamber of 
Commerce and Industry (DICCI), obviously 
fi nding none. 
Prasad and Kamble attribute the phenomenon of post-1991 dalit enterprise to the 
impetus given to outsourcing and ancillaries industries by global competition. In 
this, there was an explosion of entrepreneurship in which dalits also found their 
place. The argument is exten ded to syllogistically establish that the tools of modernity will help India progress faster and 
FDI being one such tool will surely benefi t 
dalits. Of course, the interests of the 
dalit masses and dalit entrepreneurs are 
assumed to be the same. The authors of the 
TOI piece further claim that FDI-propelled 
organised retail would provide job opportunities to thousands of food technologists, MBAs, and CAs. Moreover, manufacturers of refrigerated food vans and refrigerators would also generate more jobs. 
The dictum that processes of capitalist 
modernisation automatically undermine 
the signifi cance of social identities like 
caste, creed and race, and their role in 
affecting economic outcomes is not new. 
One could intuitively agree that social 
identities restrict market competition, impede institutional change, raise transaction 
costs and make markets non- competitive 
and that market-driven economies would 
undermine ascription-based social identities. Writing in New York Daily Tribune
(5 August 1853), Marx noted:
The railway-system will therefore become, 
in India, truly the forerunner of modern MARGIN SPEAK
Economic & Political Weekly EPW january 19, 2013 vol xlviii no 3 11
industry...Modern industry, resulting from 
the railway system, will dissolve the hereditary divisions of labour, upon which rest the 
Indian castes, those decisive impediments to 
Indian progress and Indian power.
India came to possess the fourth largest railway network in the world just 
behind US, Russia and China and a large 
industrial base with many global companies, but the caste system, instead of collapsing, is menacingly alive and kicking. 
Notwithstanding the laments of many 
who relish seeing Marx proved wrong, 
capitalism did affect the caste system and 
even benefi ted a section of dalits. Indeed, 
the making of the dalit movement can be 
traced to capitalist development in India. 
But it is also true that capitalist development strengthened the traditionally dominant castes and accentuated the power 
asymmetry between dalits and non-dalits, 
making the former more vulnerable than 
before. The increased caste atrocities, in 
both qualitative and quantitative terms, 
are testimony to this  complex dynamics.
Globalisation undoubtedly benefi ts 
people, including dalits, but only a minuscule section. The majority, being "uncompetitive", is pushed to suffer ontological 
insecurities and existential uncertainties. 
Ideologically, the votaries of globalisation 
are favourably disposed tow ards extreme 
individualism, social Darwinist competition and belief in the free market as a 
panacea for social mobility. All that the 
poor are comforted with is "trickle down" 
theory, which is theoretically untenable 
and empirically false. Over the last three 
decades, globalisation has produced an 
alarming degree of inequality, a crisis of 
well-being for the world's poor, an 
upsurge of primordial identities and the 
decimation of demo cracy. Indeed, it has 
pushed the planet to the verge of extinction. Extreme concentration of wealth in 
the hands of the few can only be celebrated 
if one deliberately chooses to ignore the 
marginalisation of the multitude. 
From a methodological viewpoint, the 
CASI study is fraught with fl aws and 
smacks of motivated propaganda. Entrepreneurship is integral to the majority 
sub-caste of dalits (for instance, Mahars, 
Chamars, Malas and Parayas). These subcastes grabbed every opportunity that 
came their way. Although they are 
preponderantly farm labourers, there are 
also weavers, masons, carpenters, tailors, 
manufacturers, peddlers, shopkeepers, 
moneylenders, contractors, etc, in their 
ranks. It is thr ough such entrepreneurship 
that a section of dalits has amassed wealth.
One could easily fi nd hugely wealthy 
dalit individuals in every part of the 
country in the decades before 1990. As a 
matter of fact, it is precisely these entrepreneurs who constituted the base for the 
Ambedkar-led dalit movement. There fore, 
to attribute dalit enterprise or its success 
to globalisation is purely motivated. If at 
all dalit youths are impelled to entrepreneurship, the reason is the non-availability 
of job opportunities due to constriction of 
public sector jobs. In 1997, employment 
in the public sector peaked at 197 lakh, 
which consistently declined thereafter and 
came down to 180 lakh in 2007, spelling 
the virtual end of reservation. While 
entrepreneurship may be associated with 
risk-taking among the higher castes, it 
spells a reverse syndrome for dalits – 
that of risk-taking for sheer survival. As 
there are no jobs, dalit youth venture 
into starting something on their own and 
become so-called entrepreneur. The Economic Censuses of 1990, 1998, and 2005 
reveal a more truthful picture than motivated ad hoc studies since a census does 
not have any hypothesis to prove or disprove. Caste-wise data related to ownership of enterprises are available for 1990, 
1998 and 2005 and have been put 
together in a 2011 Harvard Business 
School study as summarised in Table 1. 
Average employment per enterprise 
for 2005 was 2.3, indicating that a vast 
majority of fi rms was a single-person 
enterprise. The incidence of such enterprises was far higher among the SC and 
ST categories. In the context of dalits, 
enterprise ranges from a roadside cobbler 
to a millionaire member of the DICCI. As 
the data (Table 1) clearly shows, over the 
globalisation period the share of dalit 
ownership of enterprises more or less 
remained the same, refuting the claim 
that globalisation has boosted dalit entrepreneurship. Even the Harvard Business 
School study cited above obser ved that 
the dalit millionaires claimed by the 
DICCI do not represent the broad swathe 
of SC/ST entrepreneurship. 
While the growth of ancillary industries 
or outsourcing has surely been accelerated 
by globalisation, it is presumptuous to 
assume that dalit entrepreneurs will beat 
others on price competitiveness to grab 
a share of outsourced processes or products. Given the intrinsic social handicap 
they suffer from, they can only do so by 
extra-exploitation of their employees and 
intoxicating them with caste identities. 
Prasad and Kamble's arguments make a 
mess of concepts. For instance, they 
claim dalit entrepreneurs succeed in the 
modern sectors – these businessmen 
build bridges, tunnels, machines, etc. 
Actually, dalit enterprises fall in the 
traditional (brick and mortar) sector in 
which dalits have operated for ages. The 
modern sector comprises knowledgebased enterprises in which dalit entrepreneurs still do not exist. The claimed 
success of dalits in the brick and mortar 
industry may perhaps indicate non-dalits 
moving up in the value chain, leaving 
the low end for dalits. Next, modernisation is erroneously under stood as undermining the caste system. It actually represents cultural hybridisation and coexists with tradition. Capitalist modernity 
coexists with the caste system but with 
globalisation, caste consciousness has 
deepened. The simplest example of such 
hybridisation can be seen in matrimonial advertise ments by highly educated 
Indian Americans working in frontier 
industries seeking brides from their 
own sub-castes. 
If globali sation has been such a facilitator of dalit enterprise, why should the 
DICCI seek "reservation", the non-market 
dole, for itself?
Table 1: Enterprise Ownership and Employment 
Generation by Caste Category (1990-2005, in %)
 1990 1998 2005
Population share
 Non-SC/ST 75.8  75.8 75.9
 SC 16.6  16.5  16.4
 ST 7.6 7.7  7.7
Share of enterprise ownership
 Non-SC/ST 87.5  87.3  86.4
 SC 9.9  8.5  9.8
 ST 2.6  4.2  3.7
Share of employment
 Non-SC/ST 90.6  89.4  88.5
 SC 7.4  6.9  8.1
 ST 2.0  3.8  3.4
Source: Lakshmi Iyer, Tarun Khanna, Ashutosh Varshney, 
"Caste and Entrepreneurship in India", Working Paper 12-028, 
Harvard Business School, 18 October 2011. 

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