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Reuters/Yuya Shino
Break through.

These entrepreneurs are challenging India’s cruellest social system—and winning

Devesh Kapur
By Devesh Kapur

Much has been written about the new generation of entrepreneurs, who are transforming India’s business landscape. Some of them have come up against one of the most dehumanising social hierarchies of the country—the caste structure.

Despite this crippling baggage, there are several Dalit entrepreneurs who have shaped successful businesses over the last few years. It is important to talk about their caste, because even today, one in four Indians admit to practicing untouchability

Following is an extract from Defying the Odds: The Rise of Dalit Entrepreneurs by Devesh Kapur, D. Shyam Babu and Chandra Bhan Prasad (published by Random House India) that chronicles the lives of some of these entrepreneurs. 

The stories in this book are a small slice of a thousand medium and large Dalit entrepreneurs that we have identified and surveyed in collaboration with the Dalit Indian Chamber of Commerce and Industry. It is heartening to note that their combined turnover is in the region of a billion US dollars. But they are not ‘representative’ in any formal statistical sense either of the Dalit community or even of Dalit entrepreneurs.

Finding even these thousand Dalit entrepreneurs was a major task, as there are no official records or data on their existence. Curiously, most Dalit entrepreneurs we surveyed said they were never approached by enumerators of the Economic Census, the only official instrument that supposedly gathers information on entrepreneurs in India comprehensively.

Who are these entrepreneurs? What do they do? What were their pathways to success? In which sectors are they more likely to find success? The entrepreneurs are in a wide variety of sectors, from manufacturing to construction to newly emerging services like healthcare and education. They come from across India but their presence in eastern India is decidedly weaker.

Often, their success was nurtured by one or both parents who saw the benefit of providing their child with an education.

Is Dalit entrepreneurship more likely to thrive in states with a more favourable environment for entrepreneurship (as in west and south India) or in states where Dalits are more politically empowered—as has been the case in Uttar Pradesh—but which are not economically dynamic? The answer seems more the former than the latter. A thriving economy may not benefit everyone, but a weak economy does seem to hurt everyone, as is evident by the virtual absence of large Dalit entrepreneurs in Bihar and West Bengal.

There are, regrettably, few women entrepreneurs, an illustration of the continued deep gender inequalities in Indian society, including within Dalit communities.

As one reads the stories in this book, some commonalities emerge in the routes to success for these Dalits. Often, their success was nurtured by one or both parents (and especially the mother) who saw the benefit of providing their child with an education. They ensured funds for the child’s education by taking on extra backbreaking work that provided the ready cash, sometimes choosing between their children when finances were severely strained and allowed the education of only one child. Often the siblings would also make sacrifices by taking less so that the pooled resources would be above a minimum threshold. This allowed a chosen child to access opportunities that would create a pathway to success for one member, who in time would hopefully ‘pull up’ the entire family.

A common thread among these stories is the jugaad employed by these budding entrepreneurs to find start-up funds for their new ventures. These funds are often provided by family and friends—the wife selling her jewellery, the mother relinquishing her savings, and other family members and well-wishers chipping in. Without this initial capital, it unlikely that these fledgling entrepreneurs would have made a success of their ventures.

Dalit entrepreneurs lack access to the sorts of social networks that are now recognized as critical for success in any walk of life.

While all entrepreneurs in India face obstacles because of a lack of credit from the formal banking system, potential Dalit entrepreneurs are doubly handicapped because they almost invariably lack collateral and also because of their more limited access to informal credit through community networks. The Indian government set up the National Scheduled Castes Finance & Development Corporation (NSFDC) in 1989 to help entrepreneurs by augmenting their skills, providing working capital, holding executive development programmes, and so forth. Until FY2013 it had disbursed Rs 2,504 crore (cumulative) to 8.6 lakh beneficiaries (approximately Rs 30,000 per beneficiary). Not only are these amounts trivial, there is no evidence of any outcomes. None of the entrepreneurs in our stories had bothered accessing one more official enclave outfit.

The near absence of linkages with a financial system dominated by public sector banks, supposedly enjoined to lend for ‘priority sectors’, matters even more since Dalit entrepreneurs lack access to the sorts of social networks that are now recognized as critical for success in any walk of life, especially entrepreneurship. Instead of providing access to new networks, these narrow mandate institutions have straight- jacketed Dalit entrepreneurs as supplicants of a governmental bureaucracy. Indeed the fact that the NSFDC is part of the Ministry of Social Justice and Empowerment rather than under the Ministry of Finance or Commerce or Industry reveals the mindset underlying the government’s support for Dalit entrepreneurs.

The role of reservations is muted in explaining their success. Reservations in government jobs can be helpful, albeit indirectly. Having a spouse or a relative in a government job can provide access to new networks and an income safety net that allows greater risk taking. However, only a small minority of the Dalit entrepreneurs in our stories benefited from job quotas.

Clearly education matters, but in most cases it is not the sort of elite education offered by the IITs or the IIMs but an education in a polytechnic that equips them with real world skills. The experiential school of hard knocks is their true classroom of learning.

Indeed, degrees from elite institutions may well make their recipients risk-averse, avoiding the types of occupations or sectors they believe are not ‘good enough’ for them. But for this group, having so little to begin with and the determination to make something of their lives means that they have fewer inhibitions. They are willing to try entrepreneurial opportunities in areas as wide-ranging as trading in wholesale vegetable markets, construction or recycling, where the working conditions are rarely air- conditioned offices in swank office buildings. Indeed, the same is the case with manufacturing, where the heat and dust, labour issues and inspectors, among other factors, have meant that the scions of more privileged social groups lack the stomach to rough it out, leaving these spaces as opportunities for those willing to roll up their sleeves.