JOIN USProtect small entrepreneurs
The pandemic and its devastation impel me to narrate these two stories, both heart-wrenching.
Dinesh, a Nepali Gorkha, was a cook in our house a few years ago. He must have been 18 then. He was a bundle of energy like a gazelle.
Dinesh had two traits that stood out. An iron will and discipline. At 5 every evening, on the dot, come rain or sunshine, he would jump into his track pants and bolt from the house for his karate classes. He would return home by 7 pm, drenched in sweat, shower in a jiffy and with a glowing smile be ready to cook the evening meal. On occasion, he would return beaten black and blue but plunge into his chores joyfully and narrate tales of his exploits during dinner— of how he was thrashed by a much bigger fighter.
Then one day, after five or six years, he came to us to say he had earned his Karate black-belt and wished to venture out on his own and set up a martial arts school. I was thrilled, though also sad that he was leaving us.
Years passed. Dinesh kept in touch. His start-up expanded to two locations. He had tiny tots, youngsters from schools and colleges, and professionals from Tatas and Toyota and others training under him. He had married a young girl from Nepal. With the great reversal of his social status and financial standing, he beamed with pride.
And last month, suddenly, he came home to see me. The light from his eyes was dim, the lustre on his face had lost its sheen, the spring in his step was absent. The pandemic had taken its toll. His martial arts school was shut. He was unschooled but had braved on by taking online classes. The number of students had shrunk. His income had plummeted. He had bank debts and private loans to discharge. Added to it, he had to pay monthly rents for the karate school and house and had now a family to care for. He had three assistants whom he had to let go. He was now staring at an uncertain future. The coronavirus had upended his business and life.
Col Vaidyanathan (Vaidy) had retired after 20 years from the Army Engineers. A common friend directed him to me. He always had this fire in the belly to become an entrepreneur. So, he decided to set up a gourmet restaurant in Bengaluru. The Colonel loved authentic rural Punjabi cuisine. He recruited two Sikh chefs from Amritsar who specialised in kulchas and brought them to Bengaluru and launched the restaurant Kulcha di Hatti in an upscale locality. The venture took off to roaring success. Then Covid happened and the March 2020 national lockdown. His restaurant ground to a halt. He held on and kept his chefs and staff on his payroll. He had trained them with Army rigour. After three months, there were relaxations. On a wing and a prayer, he re-opened the restaurant. But the virus hovered about. The business never picked up. His losses and debts mounted. His retirement savings evaporated. Unable to sustain, he shut shop. It was gut-wrenching. He retrenched his staff of fifteen. The ground beneath him suddenly collapsed. He is undaunted, picking up the pieces, and now looking at new opportunities to start over again.
Such stories are legion. The pandemic has laid waste to the unorganised sector and wreaked havoc on families.
The real engine that keeps the Indian economy running is made up of the millions of small entrepreneurs in a myriad of enterprises. The majority of jobs is generated by tiny corner groceries, Udupi hotels, bakeries and dhabas, fruit and vegetable vendors, restaurants, spas and salons, lodges and home-stays, and countless self-employed drivers, mechanics, weavers, handicrafts artisans, pavement and pushcart sellers, etc. And, of course, in addition there are lakhs of small and medium-sized producers of goods and services, the very breath of economic activity.
The hard numbers tell the story. Government (states and Centre put together) and corporate employees add up to some 50 million people. Public sector enterprises, including the Railways, and the armed forces together account for another five million jobs. That means, out of an employable 750 million of our 1.3 billion population, just about 55 million are in the organised sector. About 350 million (farmers and rural labour) are employed in agriculture activities. That leaves the rest, nearly 350 million (which includes urban labour) — nearly 50% of the employable population— engaged in various small occupations, enterprises and services.
These unknown entrepreneurs are fired more by their imagination and entrepreneurial drive than seed capital. They overcome obstacles at every step with stoic courage, and somehow survive the ‘inspector raj’ that preys on them. They create new and different markets, jobs and wealth where none existed before.
The solutions to bail them out are not easy. Authentic and reliable data of these self-employed are hard to come by. But the government must find ways to come to their aid.
The slightly larger SMEs, about whom data is available, are in dire straits. A mandatory moratorium of two years on principle and interest payments, with waiver of penalties, on bank loans to all SMEs may be one way of giving them succour. The government can advance matching amounts as loans to banks for two years to shore up their liquidity. Along with it, a moratorium on GST without penalties for two years from March 2020 can also be offered. These measures could, to an extent, help them pay salaries and avoid retrenchment of staff. The present directive by the government instructing banks to restructure loans of SMEs is not achieving the desired objectives. Banks are risk-averse, especially with the self-employed and SMEs.
Wide consultations by the prime minister with the representatives of the SME sector and with economists may throw up more innovative and prudent ways to help the invisible backbone of the economy to recoup.
If the government protects small entrepreneurs and their enterprises, they will in turn protect jobs and create new ones. PM Modi must enable them to “live to fight another day” because once slain, they can never rise to fight again.
(The writer is a farmer, soldier and entrepreneur)