Friday, September 2, 2011

[ZESTCaste] Govt may mandate procurement from Dalit-run firms

Govt may mandate procurement from Dalit-run firms
Sidhartha & Subodh Ghildiyal, TNN Sep 1, 2011, 03.30am IST

NEW DELHI: The Centre is set to make it compulsory that 4% of its
annual purchases be made from the units run by dalits and tribals, in
what will be its strongest bait for classes which hold the key to
political battles at the Centre and states.

The 4% purchase quota proposal from ministry of micro, small and
medium enterprises (MSME) is part of the policy that 20% of government
procurement be done from MSMEs.

Preferential procurement has been an early poll promise of UPA and its
delivery after seven years in power is set to be seen through the
prism of Uttar Pradesh elections where Congress is vying with dalit
czarina Mayawati to recapture some political space after decades in

Activists have believed that mandatory purchases from dalit units
would boost entrepreneurship among poor classes with assured state
clientele and without the fear of competition from entrenched
businessmen. The demand gained ground in the new economy where job
quota was shown to have limitations of reach.

The quantum of business available for dalit entrepreneurs may be big.
An OECD estimate had suggested that government purchases amounted to
30% of GDP, thereby making business of Rs 94,000 crore available for
dalit units. But even by the lower estimate based on Centre's spending
pattern, Rs 25,000 crore may be available to units set up and run by
SCs and STs.

This year, the Centre budgeted to spend around Rs 12.5 lakh crore, of
which defence spending and interest payments add up to Rs 5 lakh crore
while subsidies are estimated at Rs 1.4 lakh crore. So, procurement by
MSMEs would be around Rs 1.2 lakh crore.

It is not a small figure going by Centre's first tentative steps after
years of reluctance in the face of strong lobbying over the years. A
sub-committee of the cabinet committee on dalit affairs in UPA-1 had
recommended that 30% of government purchases be made from SCs/STs. The
inspiration for purchase quota comes from Digvijay Singh regime in MP
where it formed part of state policy after Bhopal declaration.

The move, at once part of affirmative action plan, is bound to attract
attention of social justice observers. For Congress, it would be a way
to blunt the criticism among SCs/STs after failing to extend the
frontiers of job reservation to private sector as promised in UPA-1.
Its proposal for 5% quota in private enterprises which availed
government funding met with lukewarm response and has been put in deep

If enacted now, Congress could use it as a weapon to contrast its
achievement with the work done by Mayawati regime for dalits, a
segment Rahul Gandhi has been trying hard to woo from its first choice
BSP. Congress needs big ticket decisions to back its chances in April
polls in UP and is working hard on a clutch of measures including a
new land acquisition bill.

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