Friday, August 23, 2013

Street Entrepreneurs - 1

India’s most enduring heritage since independence is poverty. Poverty can't be fought by throwing doles and subsidy in the name of government schemes. It can only be done by creating suitable ecosystem for innovative and risk taking individuals. These persons need not to be engineering and management college students. A street vendor with no education is taking more risk and still pursing business is an entrepreneur. Entrepreneurship is more prevalent and still damn difficult to pursue for people working in unorganised sector. A NCEUS report estimates that in 2005 out of the 485 million persons employed in India, 86 percent or 395 million worked in the unorganised sector, generating 50.6 percent of the country's Gross Domestic Product.

Someone once told me to understand how businesses runs, interact with an entrepreneur, even if it is a pawn shop. I didn't get the point back then. Once in the college, I had read few chapters of book Grassroots entrepreneurship : entrepreneurs and micro-enterprises in rural India by Ajit Kanitkar. That became an inspiration for pursuing an interview with a street entrepreneur. I didn't record the facts like an official interview but collected it gradually in chit chat over a time of two months. What I understood of Street Vendors previously was a little value until I interacted with Mr. Binay Pradan. Our main protagonist, Mr. Binay Pradhan, is a Street Entrepreneur without any big degree and runs a Paanipuri Shop. Mr. Binay can't bear the idea of sweating tears for another person who will get profit on his hard work. He stated : "When one works for oneself, then one really puts the heart in the whole business." One of his wisdom lines remain with me - "A person must be good listener when working on the street. And, these days it has became more important to speak good & sweet rather than selling good products."
Family background - He has studied till 10th and family is located in Nayagada, Odisha. He is the eldest of 6 brothers. He was involved with farming. He also had worked in UP, Bihar and Mumbai for total of 10 years before starting his own venture. He was visiting to Harishankar temple as Bol Bam Kanwariya 11 years ago. That was the tipping point for him. He decided to start own business and migrated to Balangir. Hunch rather than market research, was the basis for opening a shop.

Business Model - Mr. Binay earn maximum upto Rs. 15,000 in a month. Cost of raw materials vary upto Rs. 200 to Rs.500 per day. While profit can fluctuate between Rs. 500 to Rs. 1000 on any given day. Also, he procure the raw material from a local trader since the inception of the business. Half the payment is given on the spot while remaining is done on credit. Payment is done as per cash flow obtained through sales. He takes day off on Sunday and rainy day. And he takes long leave for home in summer holidays.

He is married and blessed with three children. Girls are doing good in Class 6th and 9th while son is studying in class 2nd. He wants to impart best education to his children as this is only chance for next generation towards prosperity and respect. I agree with him completely. Education gives us skill to survive in economy and opening of minds. Those who dream about India becoming an economic superpower must support education and entrepreneurship around us.

Wednesday, August 7, 2013

Social capital

While we have a fair idea of social network, only few know about this is relatively new and multifaceted jargon: Social Capital. The simplest way to understand social capital is through the old adage, “it’s not what you know, but who you know”. There is variety of definitions of this word due to highly contextual nature. In words of wiki social capital is the expected collective or economic benefits derived from the preferential treatment and cooperation between individuals and groups.

I became aware of this term while studying Livelihood and Natural resource management. I recalled concept of social capital while working with producer groups. I started wondering about cohesive nature and community cooperation. Any person in society cooperate as well as compete. Still others may be in conflict. Hence, I saw there is a scope for micro to macro level analysis of social capital. Alas ! I am not an expert on this subject. There is also an absence of consensus on how to measure it due to nature and rigor of indicators. Even if we measure and evaluate, how it can contribute to nurturing of social capital.

While we can see result of good social capital means creation of civic culture and strong democracy inside society. We can see it as more utilitarian in disaster recovery and vulnerability reduction. It works as as ‘glue and grease' and can improve efficiency of society by facilitating coordinated action. So what makes social capital so useful ? As per Robert Putnam and Thomas Sander, it enable individuals to access valuable information, facilitates altruism, find partners for joint economic transactions and facilitate collective action.

As per Current Population Survey (CPS), administered by the U.S. Census Bureau, they measure social capital with these indicators:

•Voting in local elections (such as mayor or school board)
•Frequency of using the internet to express opinions about political or community issues
•Frequency of communicating with family and friends
•Trust of neighbors
•Confidence in institutions (corporations, the media and public schools)

Social capital is associated with a host of desirable outcomes:

• There is more trust and there are more blood donations in towns with lots of civic associations.
• Voter turnout is higher, and financial markets work better (Guiso, Sapienza, and Zingales 2008).

A growing literature has pointed out that social capital can also have a ‘dark side’ (Field 2003):

• The Ku Klux Klan, drug-dealers and the mafia rely on social cohesion to ensure co-operation.
• Also, important recent work shows that civic associations can lead to the entrenchment of existing leaders, undermining the quality of governance (Acemoglu, Reed, and Robinson 2013).

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This Blog is meant purely as a personal diary of a rural manager in making. It exists to record information, experiences and opinions about various issues encountered in the line of duty. Any person, institution and organization mentioned here doesn't assume any liability for its contents. This is not a deliberate attempt to defame anyone. And if you have actually read all that is written in the blog and aren't mad at me, then thanks for your time and patience !

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