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Tuesday, September 20, 2016

SMALL IS STILL BEAUTIFUL

Government and industry face a dire challenge of responding to the expectations of the citizens. Government responds through public policy and industry through products and services. In independent India our economic policies were driven with a unique model of mixed economy whereby addressing industry and society. Welfare of the people was the primary concern and an intention of following Gandhi’s principles was initially visible. Gandhi who believed in small scale industries and village oriented economic policies had strong view on self-sufficiency concept which questioned western model of economic development. Nehru was all for socialistic pattern of society hiding away his thinking on capitalism. Nehru’s contribution is acknowledged in creating the temples of modern India. Or to say it laid the foundation of India’s economic development.

Our grandparents always emphasized on the moral learnt through the story of Rabbit and the Tortoise – slow and steady, wins the race. It became part of our growing and our faith got built in such a way that until something was not sustainable, we avoid pursuing that. Starting small and slowly becoming big was the order for the industries to follow and the role of the state was to regulate, control and facilitate such entrepreneurs. 

Producing what is required by the people in the vicinity devoid of the concern of exclusive production for export guided the industry in India for more than four decades of development that we witnessed till before signing WTO and becoming a key player in the wake of globalization. The era of protectionism and license raj slowly started losing its hold. Slowly we initiated a movement from welfare thinking to materialism and capitalism which drove the values of Gandhian economics to fade off. Western models of economic development became our role models and willingly or unwillingly we got arrested in a phenomena leading towards consumerism. 

As an antidote to the belief of Bigger is Better, more than forty years back EF Schumacher responded through a book entitled ‘Small is Beautiful – a study of economics as if people mattered’. It raised some crucial issues and questioned the premise of producing more and measuring development through Gross National Product. He warned - The substance of man cannot be measured by Gross National Product.­ The very same year when this book got published, then King of Bhutan voiced out in the UN session – Gross National Happiness is more important than Gross National Product. These voices were in sheer minority and found deaf ear by the promoters of capitalism and consumers of wealth. 

What have we done and where have we reached? We have moved from sellers’ market to buyers’ market. We have graduated from protectionism to freedom to more choices. Ironically it has also resulted in consolidations rather than distribution. Concentration of wealth devoid of distributive justice has broadened the gap between rich and the poor. 

Mass production as practiced by our neighbor China has redefined the economies of scale which has influenced Make in India movement in India. Around two years of its operation, the government has started reviewing their policy. It is reported that there has been over $1 billion inflow of capital through FDI in food processing sector alone. Yet it is to be seen in the coming year how it affects employment opportunities here. 

Yes Government and Industry have to respond to the call of the customer. Survival of the fittest as propounded by Charles Darwin is rephrased as survival of the fastest and apart from economies of scale, economies of speed is also gaining prominence in state policies and in product and service designing. The question is whether these paradigms shall be able to respond to the needs of the masses. 

Small can still be viewed as beautiful if instead of focusing on big enterprises we start to patronize small and medium enterprises. It is heartening to note that the state has already put in place some policy framework to encourage entrepreneurship through Startup initiative. The results are awaited and in all possibility should be positive. If that be so, we could enjoy the fruits of small enterprises and certainly it shall help us bridge the gap between rich and the poor with more convincing statistics and arguments.

[The author is Professor at Department of Commerce, Delhi School of Economics, University of Delhi, Delhi. He can be reached at vkshro@gmail.com]
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