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The marginalised have to establish their own thinktanks that equip their representatives with hard data and analysis

Caste is the real bane of India; it was and it still remains. Let’s strive to make India inclusive and collectively nurture a dream.

Updated: June 14, 2020 1:22:24 pm
rbi, dalits, MSMEs, SC/ST entrepreneurship The RBI has slashed the repo rate by 115 points since the lockdown commenced March 25.

Written by Arun S Khobragade

Any positive change is resisted, especially the one that promises to reorient the society and replace its foundations. The people who lost privileges were shocked, and the ones who gained rights could neither comprehend the development nor were they prepared to reap their benefits. This flux was exploited by the people in power and their biases started creeping in, which resulted in marginalised becoming second-class citizens.

Let’s consider two most impactful organs of the Indian State: the executive arm of the government that implements its schemes and policies and the RBI as the governing body for financial access to the marginalised.

The executive or bureaucracy has remained the biggest impediment in the development of marginalised communities: not only by its sheer apathy, but also by considering reservation policy as an encroachment on their own entitlements. Since Independence, they have ensured that all policies for SCs/STs are doomed to fail. Such schemes introduced in the last 10 years to increase the spectrum of entrepreneurship are no different. Let’s look at its shortcomings.

The 4% share in the Public Procurement Policy (2012) is actually a purchase preference policy, and not an affirmative action policy. It entails that the SC/ST vendor meets the lowest price criterion, thereby putting the new entrant on a par with the well-entrenched firm and ignoring the operational cost difference between the two. This explains the negligible response from the entrepreneurs of marginalised communities. The 2017-18 procurement data, this is, six years after implementation of the policy, states that the share of procurement from MSMEs owned by SC/ST entrepreneurs is 0.01% at Rs 442.52 crore against the total procurement of Rs 24,226.51 crore from MSMEs.

Second, the establishment of a Venture Capital Fund (2014) was envisaged to overcome the insistence of collateral by the banking system that acted as an obstacle for first-time SC/ST entrepreneurs. The bureaucracy designed the VCF as debt support against the collateral, albeit with a lower rate of interest. Ironically, it ended up creating the same obstacles it was supposed to remove.

Third, Stand Up India’s (2016) directional goal was to include SC, ST and women entrepreneurs financed by each branch of banks. After 17 months of its launch, an RTI filed by The Indian Express revealed that the banking system had provided Stand Up India loans to 5,852 SC applicants, 1,761 ST individuals and 33,321 general-category women.

As of March 2020, the ratio has remained the same, women beneficiaries are still 81% of the total sanctioned loans. It was for this reason that bureaucrats had clubbed women with SC/STs in the scheme. This is how bureaucracy foul-plays with the rights and shares of SC/STs.

Besides capital, land becomes a key criterion for SC/ST entrepreneurship as it can be mortgaged with legacy financial institutions. In 2016, on the 125th birth anniversary of Dr Ambedkar, most states came out with a policy of reserving plots in their respective industrial areas. For example, Maharashtra reserved 20 per cent, Karnataka reserved 22.5 per cent.

Soon, it became an implementation problem as the reservation was on the number of plots and not distributed according to the size of plots. As a result, the smallest plots got reserved for the SC/STs, irrespective of the entrepreneur’s size requirement. Thus, many SC entrepreneurs could not benefit from the scheme.

Fourth, the RBI as an organ of the State is another failed institution for SC/STs. The Priority Sector Lending (PSL) is the only financial inclusion policy it has adopted. However, the committees that were formed post-1991 to examine PSL, be it C Narasimhan Committee, M V Nair Committee, or N Mor Committee, sought to dilute PSL norms, resulting in scheduled commercial banks not meeting their targets and RBI turning a Nelson’s eye to this breach.

Banks have been mandated by the RBI to review PSL at the board level on a half-yearly basis to determine consolidated lending to the marginalised. However, RBI does not capture the data at a granular level. Hence, there is no reliable data to know the extent of credit access for SC/STs.

According to PSL’s common guidelines, records of receipt, sanction, rejection and disbursement should be given to the investigating agency. RBI, till date, has not released any report analysing the reason for the rejection of loans to SC/ST entrepreneurs and suggesting any remedial action for the same.

How do we overcome these design biases? Dr Ambedkar sought reservation as he wanted SC/STs to occupy the table when policies were deliberated. This can happen only if the SC/ST youth get into civil services at the age of 22-23 and not in their 30s. The age concession has to be removed for the greater good.

The only legislation that meets Dr Ambedkar’s vision of economic equality is the Scheduled Caste Sub-Component Plan (SCSP) & Tribal Sub-Plan (TSP) legislation, brought through the fifth and sixth five-year plans. The law made it mandatory to have budgetary allocations for SC/STs proportional to their population. However, the inability of elected representatives of the SC/STs to object to the non-implementation of constitutional safeguards has allowed the government to reduce and misuse allocations of SCSP/TSP.

How do we assist our elected representatives? The marginalised have to establish their own thinktanks that engage and equip elected representatives of SC/STs with hard data and analysis so that they can create an impact inside and outside the legislature.

Constitutional benefits are derived when society works for it. Caste is the real bane of India; it was and it still remains. Let’s strive to make India inclusive and collectively nurture a dream.

The writer is Managing Director, Babasaheb Ambedkar Social Innovation Council

Suraj Yengde, author of Caste Matters, curates the fortnightly ‘Dalitality’ column

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