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Entrepreneurship in the streets

Published by The Straits Times, Singapore on 2004-06-01

NEW DELHI -- Mr Harilal Kashyap is in his early thirties. He's been working at a beauty salon here for a decade, making good money - enough to buy himself a small car, rent a decent two-bedroom apartment in the suburb of Gurgaon, and provide reasonably well for his wife and two children. But "enough" is not good enough for him. Mr Kashyap is about to start his own business.

"I have the know-how; I have put away some money, so why not start a beauty parlour myself?" Mr Kashyap said, in Hindi. "Why work for someone else when the opportunity exists to go into business for myself? India has become much freer now for small entrepreneurs."

Indeed it has. The dismantling of an asphyxiating system of licenses and permits over the last decade has benefited not only large industries but small businesses as well. The man who became India's 13th Prime Minister recently, Dr Manmohan Singh, is credited with initiating the country's economic liberalisation when he was Finance Minister in an earlier administration. What's not so widely known is how everyday individuals with a bit of money, a dollop of resourcefulness and plenty of ambition are also feeling emboldened in greater numbers to become entrepreneurs.

A visitor returning to this vast country of 1.1 billion people after a gap of three years is invariably astonished by the growth in the entrepot culture among India's masses. Every street, it seems, is being transformed into a bazaar.

There are the small shops in cities, towns and villages offering mobile phones. According to the most recent governmental estimate, there are nearly 40 million owners of mobile handsets, a multi-billion-dollar retail business that's largely in the hands of small businessmen. There are shops everywhere offering videos, compact discs, music systems, clothes, cosmetics, bicycles, shoes and sandals, snacks, laptops, handicrafts, carpets, books and magazines. Even in once quiet residential neighbourhoods, entrepreneurship is visible at street corners and in nooks and crannies.

This burst of entrepreneurial energy results from the fact that local municipalities have made it easier for people to go into business for themselves; fewer permits are required in most of India's 29 states and seven federal territories. Banks are making credit available more readily to first-time entrepreneurs. And big corporations, who traditionally relied on large privately owned outlets for retail sales, are encouraging mom-and-pop stores to do business with them.

There are those who argue that while this wider, more prominent display of small-scale entrepreneurship is relatively new, Indians have always had business in their blood. Some 3,000 years ago, Vedic society traders went overseas to sell textiles. Money lending was an established profession.

"Entrepreneurship in the service of material gain is an irrepressible Indian trait," says Mr Pavan K. Varma, who heads the Jawaharlal Nehru Centre in London. "The very poor have been deprived of the opportunity to practice it - but recent experience shows that given an opportunity, they are as good as the rest...Indians have had little option but to be street-smart about making money."

Mr Varma estimates that 10 million men and women work as street vendors and hawkers in India's cities, with another 60 million peddling consumer goods in make-shift stalls. In fact, his research has shown that the organized sector of the economy - private, public and corporate - employs only 3 percent of the overall work force of 200 million people. Almost nine out of 10 people are self-employed in India, contributing to 60 percent of India's gross savings of US$275 billion annually.

The purveyors of credit and credit cards are recognizing this explosion of entrepreneurship. Banks offer all sorts of household wares to sweeten loans. One bank in Chennai even gives away scooters for borrowers who obtain loans above a certain amount. MasterCard has registered an annual growth of 105 percent in India, the highest in Asia; American Express has grown by an annual rate of 135 percent. Officials of these companies say that Indians generally tend to be disciplined about paying back the money they borrow.

One gets the impression that consumerism - in the sense that it's understood in the West and in developed societies such as Singapore - has barely begun in India. Notwithstanding the rapid growth of Indian cities, more than 70 percent of the country's population still lives in 550,000 villages and 100,000 small towns. According to the World Bank, the Indian economy - with a gross domestic product of US$600 billion -- is already the world's fourth largest in terms of purchasing power parity. Its GDP puts India among the world's ten most powerful economies. And while the urban middle class has been estimated to be about 300 million people, its purchasing power has yet to be fully tapped by producers of consumer goods. Within a decade, its middle class, already the biggest in the world, is expected to double in size.

All this is not to overlook the continuing problem of poverty and joblessness. Half of India still lives on the equivalent of US$1 a day. But the kind of hopelessness and abject despair that made for heart-wrenching pictures in Western publications, is distinctly receding.

A visitor might be forgiven if he's optimistic about poverty alleviation, sustained economic growth and more prosperity in contemporary India. The entrepreneurial energy among everyday people like Harilal Kashyap, the restlessness among ambitious youths to succeed - all these are palpable. It would be premature to celebrate, of course, but some good cheer is definitely in order.

Pranay Gupte,
Senior Writer and Global-Affairs Columnist


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