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FDI in Retail and Dalit Entrepreneurs

Anand Teltumbde

Questioning the thesis that foreign direct investment in retail will have a favourable effect on the edgling class of dalit entrepreneurs in India because processes of capitalist modernisation automatically undermine the signicance of social identities like caste, creed and race, this article argues that only a minuscule section of dalits has beneted 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 Mayawatis 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 Indias 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 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 rst is a study on dalit enterprise by the
january 19, 2013

Anand Teltumbde (tanandraj@gmail.com) is a writer and civil rights activist with the Committee for the Protection of Democratic Rights in Mumbai.

Centre for the Advanced Study of India (CASI) at the University of Pennsylvania, which found that most of the dalit entrepreneurs surveyed were rst-timers who had started their business after 1991 when the process of liberalisation began. It is construed that the neo-liberal reforms have been greatly benecial to dalits in general and dalit entrepreneurs in particular. CASI researchers had found dalit entrepreneurs of different shades engaged in manufacturing heavy duty cranes, constructing tunnels, building bridges and building machines. The second, supplementing the rst, concerned a search for dalit adhatiyas (middlemen) in Delhis Azadpur fruit and vegetable mandi by the members of the Dalit Indian Chamber of Commerce and Industry (DICCI), obviously 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 extended to syllogistically establish that the tools of modernity will help India progress faster and FDI being one such tool will surely benet 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 signicance 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
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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 beneted 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 benets 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 towards 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 worlds poor, an upsurge of primordial identities and the decimation of democracy. 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 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
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preponderantly farm labourers, there are also weavers, masons, carpenters, tailors, manufacturers, peddlers, shopkeepers, moneylenders, contractors, etc, in their ranks. It is through such entrepreneurship that a section of dalits has amassed wealth. One could easily 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. Therefore, 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 rms was a single-person
Table 1: Enterprise Ownership and Employment Generation by Caste Category (1990-2005, in %)
1990 1998 2005

Population share Non-SC/ST 75.8 SC 16.6 ST 7.6 Share of enterprise ownership Non-SC/ST 87.5 SC 9.9 ST 2.6 Share of employment Non-SC/ST 90.6 SC 7.4 ST 2.0

75.8 16.5 7.7 87.3 8.5 4.2 89.4 6.9 3.8

75.9 16.4 7.7 86.4 9.8 3.7 88.5 8.1 3.4

Source: Lakshmi Iyer, Tarun Khanna, Ashutosh Varshney, Caste and Entrepreneurship in India, Working Paper 12-028, Harvard Business School, 18 October 2011.

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 Kambles 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 understood 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 advertisements by highly educated Indian Americans working in frontier industries seeking brides from their own sub-castes. If globalisation has been such a facilitator of dalit enterprise, why should the DICCI seek reservation, the non-market dole, for itself?
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