Saturday, April 23, 2011

[ZESTCaste] India's untouchables make millions

India's untouchables make millions
By Jason Overdorf
Created 2460-04-23 14:03

Jason Overdorf [2]April 22, 2011 07:41

Members of the lowest caste have proven themselves as entrepreneurs
and India's elite is turning to them for business advice.

NEW DELHI, India — Not long ago, some of India's most influential
economic planners sat down with a group of Dalits — India's erstwhile
untouchables — to get, of all things, some business advice.

Though brutally oppressed for thousands of years, Dalits have
benefited from education and job quotas in recent years. Some have
struck out on their own to become entrepreneurs — and successful ones
at that.

India's Planning Commission, which formulates the government's
five-year spending plans, is taking notes.

"To be honest, the Planning Commission was stunned to find out the
scope and size of our businesses," said Milind Kamble, a 43-year-old
construction business owner who heads the Dalit Indian Chamber of
Commerce and Industry.

"We told them we are also contributing to GDP also and generating
employment also."

India's Dalit castes were once forced to perform jobs that the Hindu
religion deems polluting — like sweeping floors, making shoes and
cleaning toilets.

And even though India outlawed untouchability in 1950 and established
quotas in government, higher education and public sector jobs, Dalits
still suffer from social and economic discrimination, according to a
recent book by economist Sukhadeo Thorat. Dalits are still twice as
likely to be wage laborers than Indians from other castes, for
instance, and they are still routinely denied access to tea shops,
water pumps and barber shops.

However, since the economic liberalization of 1991 — when India
dismantled the planned economy system of quotas for manufacturing — a
growing number of the Dalits have — without connections or capital —
had varying degrees of business success.

"Including mine, most of the big Dalit-owned businesses are 15 years
old," said Kamble. "With the emergence of globalization and the
disappearance of the License-Permit Raj, many opportunities appeared
and many of us jumped on them. Multinationals started rushing in, and
business expanded in a big way."

The 30 Dalit business owners who met with the Planning Commission —
which formulates the five-year plans that map out for the government
how best to spend its resources — are just the tip of the iceberg, the
Dalit chamber of commerce claims.

According to a spokesman, the Maharashtra-based organization has more
than 1,500 members. Kamble estimates that there are 10 times that
number of Dalit entrepreneurs across India. Combined, their companies
generate about $4.5 billion in revenue and employ more than 50,000
people. And apart from gaining access to education through mandatory
"reservations," they built their businesses without government help.

"The Planning Commission was stunned when they asked how many of us
used government schemes to build their businesses," said Kamble. "Only
one entrepreneur from Mumbai raised his hand and described how he'd
applied for $20,000, spent three years visiting government offices to
chase his money and finally got $15,000."

For the government advisory body, that was more inspiring than
depressing — considering the increasing clamor for the expansion of
welfare programs, escalating demands for establishing education and
job quotas for more and more groups, and calls to extend the job quota
system to the private sector as well as government jobs.

"The Dalits reframed the topic from give me the grants and
reservations ..." said Boston Consulting Group's India chairman Arun
Maira, a member of the Planning Commission since 2009. "Any time
someone starts to make suggestions from a very practical exposition of
their own situation ... that's a very interesting conversation to

Local press reports suggest that the Planning Commission is now
considering measures such as launching executive training programs for
Dalit business owners at the prestigious Indian Institutes of
Management, raising the limit on loans offered to Dalit businesses
through the main government program for encouraging industries run by
economically weaker sections of society and making Dalit entrepreneurs
eligible for special lending rates from key state banks.

But according to Surinder Jodhka, a professor at Jawaharlal Nehru
University who recently conducted a study of first-generation Dalit
entrepreneurs, the Planning Commission is trying to present a picture
that looks rosier than the reality warrants — precisely because of the
renewed calls for state intervention that threaten efforts to
liberalize the economy further through labor reforms and other

"There are of course [Dalits] who are doing very well," Jodhka said.
"But the absolute numbers in proportion to the Dalit population is
statistically insignificant. To see it as a trend or something which
is going to become a routine thing is an overstatement."

Meanwhile, the obstacles preventing most Dalits from pulling
themselves up by their own bootstraps go way beyond discrimination.

Most Dalits have almost no assets, so startup loans are nearly
impossible to get — even when the government announces a special
scheme. As new entrants, they lack the familial and social connections
on which most small-scale businesses depend — a problem that can be
exacerbated by prejudice. And in a country where trade has always been
connected to caste, many find it difficult to master the intangible
"style" of the marketplace. They simply don't fit in.

Take the case of 68-year-old Ratibhai Makwana, who heads an
Ahmedabad-based plastics conglomerate called Gujarat Pickers. With
more than $20 million in annual revenue, Makwana's company has been
growing more than 10 percent per year for the past three years. But it
wasn't easy getting started.

When his father tried to break into leather manufacturing — a natural
extension of a traditional "polluting" occupation — in 1962, banks
refused to grant him a loan. When they expanded into textiles, their
association with leather-making meant that they had to deal with
high-caste middlemen rather than sell directly to the mills. And once
they were granted a distributorship, their high-caste rivals organized
a boycott.

"This all happened because I was a Dalit," Makwana said.

Rajender Gaikwad, the 49-year-old head of GT Pest Control, tells a
similar story. Once a sprayer himself, today he employs 400 people in
four Indian states, has already opened for business in Singapore and
plans to enter Malaysia and Thailand soon. But he faced plenty of
obstacles along the way.

"I had no money. I used to take money from money lenders even on high
interest rate of sometimes 20, 25 percent," Gaikwad said. "And back
when my business was still small, a lot of the checks people used to
give me would bounce. People were not giving me my hard-earned money."

Those stories don't surprise Jawaharlal Nehru University's Jodhka.
Surveying prosperous regions in Punjab, he found that lack of access
to loans or capital forced most Dalit entrepreneurs into businesses
like running a small grocery shop or an agency for a cooking gas
distributor. Fewer than 2 percent operated more capital-intensive
enterprises such as hotels or factories.

"People need jobs. People need secure employment," said Jodhka.
"Entrepreneurship is fine ... but it's tough. Whatever has happened
over the last 70 to 80 years has been due to state policies — the new
Dalit middle class, Dalit politics, etc. If you ask them, they all
give credit to reservations."

However committed they are to self-reliance, Kamble, Makwana and
Gaikwad agree. All three of them argued that India's system of job and
education quotas must be continued for 10 to 25 years to complete the
uplift of the oppressed castes.

All three also suggested that the government could redefine the
conventional wisdom about quotas to include not just jobs and seats in
universities, but also business loans, tax breaks and advantages in
the tender process for government contracts.

"This is only the beginning," said Gaikwad. "Businessmen are coming
forward, but they need support from the government. If the government
supports entrepreneurs, then there will be lot more people like me."


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