This article is written by Ramanuj Mukherjee, CEO and Co-Founder at iPleaders.
In defence of the entrepreneurs who sell pakora and make tea: What I want from this budget.
The Prime Minister said that people who are selling pakora are also earning and must be considered to be employed. Many people are making fun of this. A former finance minister even compared selling pakoras to begging. The PM is not the first person to say this though. Few years back the Chief Minister of West Bengal was also much ridiculed after asking the youth to start shops that sell “telebhaja” – the Bengali equivalent of pakora, and also for calling it an industry.
Let’s inspect this attitude of middle and upper class Indians towards small businesses and the trades of the poor. The former finance minister’s comment reeks of the arrogance of middle class Indians who consider most physical work, and even trading, beneath them and do not respect labour. They belittle initiatives by the poor and common man and small entrepreneurs who in reality keeps the wheels of economy moving.
For once, I fully agree with the Prime Minister. Those of you who know me personally or follow me on social media, you may see me usually vociferously attacking many policies of the current government. However, more than being partisan, I am a pragmatic person. I want India to flourish.
It is quite obvious that India is not going to move ahead and take the place at the global table as a leader that we are demanding till the vast majority of the citizens are lifted out of poverty. I do not think it is going to happen because the government will come up with some brilliant scheme or a shiny new policy. It will happen as the poor toil there way up, inch by inch. The government has to just get out of their way, and not make it more difficult for them to do so.
It is inconceivable that at the current rate of job growth in the formal sector, all Indians are even going to have any productive work to do in formal economy. The informal sector is most likely going to make it work for crores and crores of young Indians who have been coming of age. If it fails, the formal sector is not going to be left untouched either. We have seen that after the demonetization and GST debacle. As the rural economy started crumbling, the formal economy started shaking in its boot.
The people who make tea and pakora, sell paan-bidi on makeshift roadside shops, start a garage on the highway, start a small eating joint on his balcony, buy an auto or car to drive other people around, or come up with some other ways of making money and provide for their family, create employment for another person or two, are the people on whom I am ready to pin my hope any given day. Big companies and well funded startups will fail, but these tiny entrepreneurs will fight till the last drop of blood, because for them it is a fight for survival, and sometimes a fight to climb out of the cesspit of poverty. Still, they are the most ignored and exploited people in India. They are not exactly piss poor enough to deserve the sympathy of the educated rich people. After all, they are not committing suicide under pressure of debt! They are smarter and more well off than that. They are also not donating to political parties like big business, and they can’t lobby either as by definition they are unorganized!
This informal sector accounts for more than 80% employment in this country. The IT industry crashing may leave a few thousand middle class people in need of jobs, but this informal sector crumbling will leave the country with a broken spine. It may take decades to recover from the ensuing chaos that will follow the informal sector failing in India. I don’t even want to imagine such a doomsday.
While government gives a lot of subsidies to big companies, in form of tax breaks, free or cheap land, cheap electricity, soft loans and other provisions, the informal sector entrepreneur is left to fend for themselves despite being the most important actor in our economy. In fact, they are often at a receiving end of bad or poorly implemented government policies. Just see how badly we hit them with demonetization and GST.
When the budget was announced today, I was only looking forward to hearing if the government is doing something for these tiny entrepreneurs. They are the only people who can save our country from economic doom and gloom. Rest of us are dependent on them. If they do well, we all will. I was hoping that the government will realise that too! Especially since the Prime Minister recognized the importance of the entrepreneurs who sell tea and make pakora.
However, you will notice that there is nothing in the budget for these people. There are a lot of sops for the poor people who are struggling to keep their heads above water. There are a lot of things for big companies. There is one good thing for MSMEs, reduction in the income tax rate for companies with upto 250 crores revenue. This is sort of good, but still this is good for much bigger businesses than the tiny entrepreneurs I am talking about. It won’t make much difference to them.
Could the government not make it income tax free for the micro-entrepreneurs who earn upto 10-12 lakhs per year? Or maybe a 5% income tax? That would have gone a long way. Oh, what a difference that could make, without denting income tax collection much. Most of these people do not pay tax anyway, and find creative ways to evade the tax man. What a great incentive it would have been then, to become an entrepreneur than a salaried person! Can you think of a better way to encourage entrepreneurship or respect the people who create jobs for the rest of us?
I wonder why the tiny entrepreneurs are invisible to the government, the think tanks and the media. It is probably because the middle class in this country has an iron grip over governance thanks to their privileges. We like the people who work jobs and earn salaries, and have some sort of inherent disrespect for people who do small trade like selling pakora and vending tea.
The country must change its mind. As a country we must stop worshipping the job holders and learn to respect the small time entrepreneur. Until we learn to change this thing about ourselves, we will never achieve our full economic potential as a country.
This budget, from that perspective, was another wasted opportunity.