Dalits gain traction; govt plans preferential purchases from SC, ST businesses

Scheduled castes, or dalits, who make up about 180 million of 1.2 billion Indians, are usually seen as a homogenous entity. 

Not anymore. The dalits are splintering. And interestingly, our public-policy processes are beginning to respond to some of the new challenges. In recent times, dalit enterprise, in all its hues, has gained traction and heft. It is revealing unique entrepreneurial skills, products and services; it is also announcing, in a way, the emergence of the dalit elite. 

It is a class thrown up by, but distinct from, the burgeoning dalit middle-class, which has been engendered over the years by reservations in education and public sector jobs. Of course, the bulk of dalits continue to battle difficult circumstances, with about 60% of such households still depending on wage labour for subsistence. 

"You can see prosperity among a fraction of dalits, but the real situation is grim," says Anand Teltumbde , civil rights activist and grandson of Babasaheb Ambedkar. Demarcations among dalits are now visible and pronounced. Quaintly, it is akin to, though not identical to, what is happening among black Americans in the US. Eugene Robinson , a Pulitzer Prize-winning writer, in a recent book, Disintegration, describes the breaking up of the black community into four parts: "the mainstream middle-class; the abandoned underclass; the transcendent elite; and black immigrants and those of mixed-race heritage". 

While trends among dalits in India go along similar lines, what is pertinent is that India is beginning to borrow from the US policy responses to this hierarchy. This is especially true with regard to support mechanisms for disadvantaged entrepreneurs. Supplier diversity - a system of enforcing purchases from disadvantaged businesses - is one such tool in the support kit. 

A few weeks ago, Uday Kumar Varma , secretary, ministry of micro, small and medium enterprises (MSMEs) met Karen G Mills and her team at the US Small Business Administration (SBA) in Washington DC. He was trying to get a fix on an American law that channelises a considerable amount of federal contracts to SMEs and disadvantaged enterprises. 

RESERVATION ROAD 

In 2010, according to SBA, US federal contracts worth $98 billion were awarded to SMEs and disadvantaged businesses; of this, $34 billion of contracts went to businesses run by African- Americans and other minorities. Mills, appointed by US President Barack Obama, is pivotal to the new economic push by the American administration, focused on job creation. As in the US, MSMEs in India are critical to employment. 

Indian MSMEs employ 59 million people across 26 million units and account for 45% of all manufacturing output, according to government data. On June 24, while announcing the US SBA's numbers, Mills said: "...when the federal government gets contracts into the hands of small businesses...they have the opportunity to grow and create jobs, and the federal government gets access to some of the most innovative and nimble entrepreneurs". 

India now wants to take this road. The ministry of MSMEs, working in tandem with the ministry of social justice and empowerment, has put together a plan for preferential purchases from MSMEs, and also from businesses owned by scheduled castes (dalits) and scheduled tribes. 

"Last month, the prime minister told a meeting of state ministers of welfare and social justice that the rollout is imminent," says Mukul Wasnik, minister for social justice, indicating that the possibility of the plan getting stuck in policy meanderings is remote. 

"The new scheme proposes 20% of all government purchases be reserved for SMEs; within this, a 20% sub-quota is proposed for units owned by scheduled castes (SCs) and scheduled tribes (STs)," says Varma. If it becomes law, the concept of supplier diversity will finally make its formal appearance in India, though in the public sector for starters. 

"It's not prudent to make it mandatory right away. We propose a threeyear, graded, gradual approach to achieving the goal," explains Varma. "We have to tread carefully, address possible supply bottlenecks and capacity constraints." 

The initiative is not just about purchases from SMEs. It is expected to foster the creation of an entire ecosystem, complete with mentoring and capacity building process, as in the US. "Progress and impact will have to be measured each year," he says.