June'20

Articles

Entrepreneurial Development Among Dalits: A Mixture of State Interventions and Personal Capabilities

Devendra Jarwal
Assistant Professor, Department of Commerce, Motilal Nehru College, University of Delhi, Delhi, India; and is the corresponding author. E-mail: devendra.jarwal@mln.du.ac.in

Anju Kahal
Assistant Professor, Department of Commerce, Motilal Nehru College, University of Delhi, Delhi, India. E-mail: anjukahal74@gmail.com

Equal development of every section of society is essential for the overall prosperity of any nation. But inequality exists in every society and things get worse when inequality of any group is caused by social discrimination. In India, historically 'Dalits' were subjected to social exclusion, but emerging market opportunities are opening avenues for Dalits as well to achieve equal economic status. Due to constitutional obligations, various Dalit empowerment schemes have also been introduced by the State. These State interventions have developed a negative sense against Dalits that they are surviving in business just because of State support system and they lack capabilities. Therefore, this study has been carried out with the objective to determine whether Dalits are in business just because of State interventions or whether they possess any individual attributes to perform on their own. The study uses the purposive sampling method for the collection of primary data and standard deviation based test of hypothesis. The authors conclude that Dalit entrepreneurship needs both State interventions through supportive policies and development programs. Individual entrepreneurial attributes of Dalits should also be acknowledged and their capabilities are required to be sharpened through State-supported entrepreneurial framework.

Introduction
Dalits, constitutionally known as scheduled caste people, had been subjected to social exclusion and inhumanly treated as 'untouchables'. They were forced to perform leather and sanitation works according to the status of their birth instead of skill sets. The untouchable status had been assigned due to their historic occupational inheritance, which was the outcome of the rigid division of labor prevalent in the Hindu religion (Kumar, 2014). Dalits were forced to carry low order works such as manual scavenging, drain cleaning, sweeping roads, collecting garbage, tanning, etc. (Loctefeld, 2001). Thus, all external factors suppressed the evolution of entrepreneurial capabilities amongst Dalits by just forcing them to carry out dirty works and imposing social exclusion upon them to prevent them from carrying out any other activities beyond the purview of their designated caste (Mander, 2006). After the adoption of the Constitution of India, the right to equality and right to fair chances in public employment were guaranteed to sections of the society including Dalits (Hanchinamani, 2001). Reservation in public employment is a great idea, but shrinking public sector enterprises and policymakers' thrust to create job providers instead of job seekers have posed a challenge to the Dalit members in seeking a career path in the capitalist private sector (Teltumbde, 2013).

The conspicuous uplifting process of Dalits started with the liberalization of the economy, where value and cost of a product are preferred to caste, due to which consequently a new class of entrepreneurs emerged, known as 'Dalit entrepreneurs' (Damodaran, 2008). Internal zeal was always present amongst Dalits to take entrepreneurial activities, but it was the external environment that was resisting them from entering into entrepreneurship (Michael, 2007). Under the external environment, the most notable is a positive environment created by government policies like the prohibition of discrimination, provision of finance, selfemployment schemes for Dalits, and reservation in public sector undertaking distributorship, etc. All these government schemes have benefitted Dalit entrepreneurs, but there is a negative sense that has developed amongst the general public that Dalits are not talented as they lack merit and because of government support only they are thriving (Ratnamala and Govindaraju, 2012). Thus, it would be interesting to determine the extent of the role of government schemes in the performance of the Dalit entrepreneurs. There should be a systematic study to answer these two research questions. Are Dalits thriving just because of excessive government support? Are their capabilities irrelevant in determining their performance?

The answers to the above-mentioned two questions are very much important because Dalit entrepreneurship in not only individual or family-centric, rather it affects the society and economy at large (Zoltan et al., 2015). For economic growth, the development of every section of society is imperative. There is no doubt that government programs are playing an important role in uplifting the marginalized community, but in return their successful business ventures are equally contributing to the society and economy by fulfilling consumer demands through their products and services, paying taxes, disbursing wages, procuring raw material, investing capital and generating gross domestic product to the nation (Izhar et al., 2015). Most importantly, there is a need to bust the myth that Dalits lack merit and capabilities and consequently to establish the fact that they are as capable as other human beings.

Literature Review

A huge number of existing studies on entrepreneurship have determined the various personal attributes of entrepreneurs (Fereidouni et al., 2010). Entrepreneurs generally possess attributes such as innovation, optimism, ability to take risks, ambition, target orientation, skill sets, education, social networking, family background, etc. (Tan, 2001; Taormina and Lao, 2007; and Gupta and York, 2008). An entrepreneur is a person who is ready to take the risk of establishing a new venture through his/her innovative idea to correct demand-supply mismatch and simply exploit market opportunities for profit (Schumpeter, 1949). Schumpeter emphasized upon the 'creative-destruction' attribute of an entrepreneur. Entrepreneurship is about risk-taking in introducing new products or services against a product or service which has become obsolete due to technological interventions (Drucker, 1970). Entrepreneurship is the process of establishing a new venture or rejuvenating existing business units, especially new business fields, by hunting for unexplored opportunities (Onuoha, 2007). An entrepreneur is a person who consistently discovers and conceives new products or services having identified value in response to anticipated opportunities (Bolton and Thompson, 2000). Apart from innovation and creativity, entrepreneurs do possess the organizational capability to pool resources, the ability to turn ideas into process, and readiness to accept failures (Hisrich, 1990). For the current study, the authors have considered the individual entrepreneurial capabilities, and hence the data of those Dalit entrepreneurs who did not take benefit from any direct government schemes have been separated from the total data.

The individual capabilities of an entrepreneur is also possessed by successful Dalit entrepreneurs and some success stories have also emerged in the public domain (Kapur et al., 2014). The book Defying the Odds is an acknowledgment of the unprecedented Dalit identity. It narrates the outstanding success journey of 20 Dalit entrepreneurs who by dint of some exceptional qualities like determination, aspiration, never-say-die approach, adventurism and good luck have succeeded in overcoming the economic and social barriers. It provides some illustrations where adversity turned into opportunities and unprecedented entry of Dalits into avenues that were traditionally dominated by the privileged classes. These are very few success stories, and there is still backwardness of Dalits existing in largescale due to social exclusion by the upper caste people (Das and Mehta, 2012). Thus, external environmental factors are the main barriers to Dalit entrepreneurship in India and in some parts of the Indian sub-continent. The external environment to business consists of the surrounding economic and socio-political environment (Fereidouni et al., 2010). The business environment has been defined as the analogous durability of the administrative system conducive to the ease of doing business (Klapper et al., 2007). Parameters for a conducive business environment include the process of starting a business, licensing process, workers employed, property registration process, credit facility, investor protection, taxation, free trading across borders, contract enforcement framework, and exiting a business (World-Bank, 2020). The business environment influences the degree of entrepreneurship and especially direct support programs like self-employment schemes (Chatterjee and Deb, 2017).

The business environment does influence entrepreneurs in general, but in the case of Dalit entrepreneurs, they remain insulated from taking advantage of a conducive business environment due to social discrimination-based embargo which restricted their entry (Thorat and Newman, 2007). The traditional caste-based retail markets did not offer much opportunity for Dalit entrepreneurs. It was the neo-liberalized policies adopted in the year 1991 which led open market environment and consequently the society lifted some restrictions to let Dalits enter the retail segment (Prasad and Kamle, 2012). The liberalization and privatization policies attracted foreign capital in the country and from mixed economy setup India slightly embraced capitalist approach which has been perceived as a transition from 'closed economy' to the 'open economy' (Patnaik, 2016). In the open economy, price and quality of products and services are preferred over caste and social background. Open economy eliminated the monopolies of upper caste people and the evolution of free and fair market practices started. The open economy accelerated fast growth which opened many new avenues for Dalit entrepreneurs to step in (Aiyar, 2015).

To create a favorable business environment is the responsibility of the government by providing basic facilities to the people (Van den Bosch and De Man, 1994). Efforts from the government must be two-fold, firstly, to develop various skills among the people and secondly, to create an economic environment to employ those skills of the people (Richardson, 2004). The factors affecting the economic environment have already been discussed in the previous paragraph which is being monitored under ease of doing business initiatives. The small entrepreneur-focused basic facilities include self-employment programs, soft terms based financial funding programs, skill development and training programs, awareness measures, and infrastructural facilities (Vasanthakumari, 2012). The supportive role of the government has produced promising results in the growth of entrepreneurship (Barreto, 2013). Thus, data of those Dalit entrepreneurs who did take benefit of any direct government schemes have also been collected.

The above-reviewed literature has supported the following assumptions of this study:

  • Dalits do possess entrepreneurial capabilities, but social exclusion has hindered their growth, and if free market is provided to them, they can compete with other market players fairly.
  • The external environment does play an important role in entrepreneurial growth.
  • The government is responsible for providing a favorable external environment conducive to business.
  • The government has to play a supportive role in nurturing entrepreneurship among its people.

The reviewed literature did not provide specific answers to the above-stated two research questions: whether Dalit entrepreneurs are thriving just because of excessive government support and whether the capabilities of Dalits are irrelevant to the degree of their performance. Thus, to answer both these questions, the present study has to proceed further for data collection and apply research methodology to draw conclusions to bust the myth that Dalits lack merit and capabilities. Conclusions may also help to establish the fact that they are as capable as other human beings.

Data and Methodology

For this study, Dalit entrepreneurs operating in the state of Rajasthan have been selected for interview. The interviews were conducted by providing a structured questionnaire (see Appendix) to the respondents and recording conversations with them while filling the structured questionnaire. The state of Rajasthan has been chosen because it has 17.2% of the total population consisting of scheduled caste people which is higher than the national rate and also it has registered the highest number of atrocities against scheduled caste communities between the years 2013 to 2015 (Bairwa, 2018). As per the Rajasthan State's economic census report presented in the year 2005, there were 118,068 own account establishments operated by scheduled caste persons, and in this figure of 118,068, there were 44,542 enterprises having at least one employee hired. So the population size is 44,542 entrepreneurs. Out of this population, 740 Dalit entrepreneurs were selected through the purposive random sampling method and care was taken that entrepreneurs from all the districts of Rajasthan should be represented in the survey. Out of the 740 target respondents, the authors have received responses from 640 entrepreneurs. Statistically, for the universe population of 44,542 entrepreneurs, the authors calculated at a confidence level of 95% with confidence interval as 4 and the resultant figure of sample size came out as 592 entrepreneurs. So the ideal sample size is 592 entrepreneurs, while the authors got responses of 640 entrepreneurs which means the sample size is fairly representative of the universal population of the study.

The authors have assumed both external business environment and internal capabilities of entrepreneurs having an influence upon Dalit entrepreneurs; hence, for building a conceptual model, the authors incorporated the theoretical framework of the Global Entrepreneurship Monitor (GEM) model. The model examines the achievements of large and big firms and also provides market opportunities to small and medium sector enterprises by sub-contracting their orders or by procuring intermediate products from the SME firms. The function of entrepreneurship in the enterprise creation/growth process is the main instrument propelling macroeconomic growth which is augmented by the complementary nature of both large and small-sized firms.

The top portion of Figure 1 focuses on the role of large established enterprises. Depending on national framework conditions, large firms generally integrated into international trade markets, which can promote self-expansion and maturation. The economic success of large enterprises tends to create new market opportunities for SMEs through technological spillovers, spin-offs, and an increase in domestic demand for goods and services, integration of SMEs in supplier network, and so forth. Yet, whether domestic firms can seize these opportunities depends largely on the existence of a competitive and vibrant SME sector. The lower part of the above figure highlights the second mechanism driving economic growth: the role of entrepreneurship in the creation and growth of firms. The entrepreneurial process occurs in the context of a set of framework conditions. It further depends, firstly, upon the emergence and presence of market opportunities and secondly upon the capacity, motivation, and skills of individuals to establish firms in pursuit of those opportunities. While the success of large established enterprises tends to create profit opportunities for small and new firms, these firms can also affect the success of large enterprises.

In this study, the authors also found that Dalit entrepreneurs are getting business opportunities due to vertical disintegration of manufacturing processes. The evolution of nano-technology has led to customization of products and services. Due to the vertical disintegration of manufacturing process and evolution of nano-technology, Dalits operating under SMEs are getting work through sub-contracting from largescale industries (Nagraj, 1984). Large scale industries offer standard product range and therefore SMEs are in a better position to modify these standard products according to the needs of customers through customization process (Fornasicro and Zangiacomi, 2013). Similarly, Dalits operating in the SME sector are getting customization opportunities and fulfilling the customer's demand up to their expectations. The GEM model is also helpful in testing the question whether various self-employment schemes of the government have influenced Dalit entrepreneurship output and productivity.

H0: Various self-employment schemes of the government do not influence Dalit entrepreneurship output and productivity.

H1: Various self-employment schemes of the government do influence Dalit entrepreneurship output and productivity.

To test the significance of variables of the hypothesis, the authors have employed twotailed tests of significance for the difference between two observed means.

Results and Discussion

To analyze the above-mentioned hypotheses, the authors filtered the data and out of a total of 640 respondents, identified those 604 respondents who were not successors of wellestablished business establishments and started entrepreneurial activity on their own as firstgeneration entrepreneurs. The networth incremental rate data of entrepreneurs who had taken benefit of self-employment schemes and also who had not taken benefit of such schemes are given in Table 1.



Let us take the hypothesis that there is no significant difference in the mean scores of category of entrepreneurs who had taken benefit of self-employment schemes and those entrepreneurs who had not taken any benefit of self-employment scheme.

Since the difference is less than 1.96 Standard Error at a 5% significance level, the null hypothesis is accepted. Statistically, at a 5% level of significance, if the calculated value is less than 1.96, then there is no significant difference between the two observed means (Gupta, 2005). Hence, there is no significant difference between the performance of governmentsponsored Dalit entrepreneurs and self-sourced Dalit entrepreneurs. However, in absolute terms, those who have taken benefit of various self-employment schemes of the government have registered 12.01% net worth incremental ratio which is 1.45% more than those who had not taken any such benefits. Though entrepreneurs who had taken government-sponsored benefits have registered more growth, yet there number is just one-third of entrepreneurs who had not taken any benefit. Therefore, a huge number of entrepreneurs are successful not only because of government-sponsored measures but also due to the overall liberalized environment, i.e., they are guided by market forces and due to their entrepreneurial capabilities. In the open market economy, the rule 'survival of the fittest' applies, and internal capabilities of entrepreneurial firms do play an important role in combating external forces (Behrens and Robert-Nicoud, 2014).

The average networth increment rate is derived from taking the compounded average growth of capital employed registered between the periods starting from the time of establishing business till the conclusion of immediately preceding financial year from the date of the interview. The average capital increment ratio has been 11.93% (Table 2). The capital increment ratio is an indicator of output and productivity (Baily et al., 1981). After analysis, the authors found that those 187 entrepreneurs who had availed any self-employment schemes had achieved an average capital increment ratio of 12.01%, while those 453 entrepreneurs

who did not avail any such schemes achieved average capital increment ratio of 11.90. With the mean at 11.93, the range of 190.05 figure is too wide and shows extreme values at lower and higher ends. However, the mode is at 11.25 which is very close to mean and distribution of frequency is Lepokurtic as kurtosis is more than 3 which shows that majority of the frequency distribution is around mean (Gupta, 2005). Skewness is also positive and this shows the movement of frequency towards the right tail and alternatively interpreting that very few firms have a negative growth rate, i.e., only 21 firms have a negative growth rate (Figure 2). Therefore, the mean of the networth increment rate is significant and fairly represents the sample population.

The authors specifically asked a question to the respondents about availing the benefit of any scheme or self-employment development program. The results of these questions are discussed below.

Question: Did you ever avail of any entrepreneurship development (with reference to specific entrepreneurship development programs such as business counseling provided by the Small Business Development Center) program? In response to this question, 134 respondents said they had availed the benefit of entrepreneurship development programs.

When asked to indicate any particular government schemes in the category of the entrepreneurship development program, more than 58.20% of entrepreneurs did not respond and skipped this question. This may be either because they were not aware of any such schemes or because they did not find any of them useful or attractive. Of the remaining, 41.80% of entrepreneurs responded in the affirmative, and out of these respondents, 134 respondents (20.93%) did use the entrepreneurship development programs (Table 3).

Question: Have you availed of any government scheme for your business?

In the survey, the authors found that 187 out of 640 (29.21%) Dalit entrepreneurs had availed directly or indirectly any government schemes to support their business. The majority

of them agreed that the National Scheduled Caste Finance and Development Corporation (NSFDC) is playing an effective role in this regard. The survey also revealed that 115 (17.96%) Dalit entrepreneurs availed financial assistance under Special Central Assistance to Scheduled Castes Sub Plan and a concessional loan from NSFDC. As per Economic Review Report for the financial year 2014-15 of the state of Rajasthan, 49,857 Scheduled Castes families had been assisted in the year 2013-14 against the annual target of 46.649 which was 107% of the target (Report, 2015).

In the survey, 22 (3.44%) Dalit entrepreneurs have indirectly benefitted from Self-Help Groups (SHGs) under the Rajasthan Rural Livelihood Project. Rajasthan Rural Livelihood Project pursues the game plan of building up the capacities of targeted households supplemented by technical and financial support for improving incomes, minimizing costs, cutting down risks, and reducing vulnerability. The main objective of this project is to enhance the economic opportunities and empowerment of the rural poor with a focus on women and marginalized groups in the 18 targeted districts in the State. Under the Project, 14,383 SHGs have been formed/co-opted till December 2014. Bank accounts have been opened for 12,011 SHGs and Tranche-I have been provided to 8,893 SHGs, which are further assisting marginalized groups including Scheduled Caste community members (Report, 2015).

In the survey, 38 (5.94%) Dalit entrepreneurs benefitted by the Rajasthan Scheduled Castes and Scheduled Tribes Finance and Development Corporation Limited. It is functioning for the welfare of the Scheduled Castes and Scheduled Tribes through which the State government has pledged to protect the economic and social concerns of these classes. Till December 2014, a total of 7,208 persons benefitted from the banking scheme introduced under Special Central Assistance (Report, 2015).

In the survey, 12 (1.88%) Dalit entrepreneurs have been allotted land by the Rajasthan State Industrial Development and Investment Corporation (RIICO) under the Special Scheme. This Special Scheme is aimed to encourage scheduled caste and scheduled tribe entrepreneurs to set up their industrial units and special rebate at the rate of 50% in the allotment of land/ plots is facilitated by RIICO. Corporation has been making special emphasis upon SC and ST entrepreneurs by allowing upfront concession in the rate of development charges in the land allotment in industrial areas. During the financial year 2014-15, under Scheduled Caste Sub Plan, RIICO gave a rebate of 2.88 mn in development charges (Report, 2015).

The survey also indicates that government schemes formulated to support business among Dalits are vital because they lead to the formation of perception that entrepreneurship is not only possible for people of the marginalized community but also worthwhile in improving their status. Below are some quotes from the survey:

"As per my opinion, I think that support from government and other relevant institutions create an environment conducive to entrepreneurship and thus stimulate entrepreneurship. Support also indicates that business start-up is a good thing for individuals in general and marginalized community in particular and therefore important for society. Assistance either by way of concessions, technical training including apprenticeship and access to affordable startup finance promotes the status of entrepreneurship among Dalits as an important endeavor. So support matters in the intention to start a business."

"According to my experience, I can say that the government and other sister institution's support affects the intention to start a business in many ways. Therefore, for would-be entrepreneurs, the availability of support makes them begin to think that business startup is achievable. I consistently noticed that there are Dalits who started their businesses because assistance for startups became available from our institutions mostly in the case of LPG distributorship, Petrol Pumps, and Ration Shops, etc. In other words, these Dalit individuals would not have started if support was not available."

"Even if an individual is able to identify an opportunity that he or she believes can be turned into a profitable business, and even if an individual is able to develop a business plan around such an idea, he or she will not be able to make it a reality if affordable startup capital cannot be accessed. So for me, this is a major support element that should be in place to promote entrepreneurship."

The survey indicates that a favorable policy may promote Dalit entrepreneurship to a high status in society and it also increases entrepreneurs' confidence by thinking that starting and growing a business is possible for Dalits. Low cost and dedicated finance for Dalits offered by the NSFDC have enabled and encouraged entrepreneurs who would never have considered starting a business to have a go. The survey identified several major benefits of the support mechanism. These benefits include simplified business regulation on business operations and lower business formalization costs, access to markets, access to affordable low-cost finance, counseling with training facilities and provision of accessible technology. Most of the entrepreneurs revealed that during their startup phase, they were unable to afford business registration fees and rent for the suitable location of the business, hence there is a need to reduce business registration fees, business rates, and rents for new businesses. The authors also noticed that some critical business facilitation services can only be accessed through regional centers often located at District or Tehsil (Sub-District) headquarters. This creates a barrier against nascent Dalit entrepreneurs because of travel cost implications and inability to hire agents. However, the facility of e-governance is available where they can get access through virtual mode instead of a physical visit, but still for application process, they need to visit physically due to the ineffectiveness of the system.

In the survey, the authors found that 66 (10.31%) Dalit entrepreneurs wanted to avail but were not successful in availing the facility of government schemes or any kind of organized finance. Because, while a certain level of financial support is available through these schemes, yet access is not straightforward. The procedural requirements to access debt finance are often complicated and often require services of middleman with lots of rigid paper formalities. Sometimes, they not only depend on whom one knows within the institution or government but also whether one has collateral and a viable business plan. Thus only a few people may be able to meet these conditions.

Out of the 453 respondents who were not government sponsored, 36 respondents admitted that they were lucky as they inherited their already established family business but still they feel homophily and social discrimination in the market. Out of those who had not taken any direct government-sponsored benefits, they revealed their struggle stories. 196 respondents were intrapreneur turned entrepreneurs, and saving generated from job salary was used to establish their business. They carried the same core and allied activities of their employers, and experience earned while in job helped them a lot in the form of apprentice training. The remaining 221 respondents started their journey from scratch and were 'necessity entrepreneurs' who embraced entrepreneurship due to push factors as they did not get any meaningful employment. Their struggle in establishing business helped them as 'on the job training'.

Conclusion

It can be concluded that there is no significant difference between the average networth increment rate of entrepreneurs who have taken direct benefit of any government scheme and the average networth increment rate of entrepreneurs who have not taken any direct benefit of any government scheme. Though the average rate of net-worth increment ratio of government-sponsored entrepreneurs is more than 1.45 than self-source-financed entrepreneurs, yet co-variance of self-source-financed entrepreneurs is less as compared to governmentsponsored entrepreneurs (Table 1). Therefore, the performance of self-source-financed entrepreneurs, is more consistent as compared to government-sponsored entrepreneurs. Moreover, in the sample data, the authors found that self-source-financed entrepreneurs consist of more than 70% of the total sample population, which means such entrepreneurs are much higher in number than government-sponsored entrepreneurs. Hence, government support is imperative in the success of any Dalit entrepreneur, yet the individual capabilities of Dalit entrepreneurs have an important role in running their business operations. With their capabilities, they have overcome the financial, social and economic barriers (Jodka, 2010).

Dalit entrepreneurs do not operate in isolation, they also work under a system. Targeted welfare schemes to Dalits entrepreneurs do provide benefits to them, but they are also equally influenced by the overall business environment of the nation. If given a fair chance to play, they will perform as good as other entrepreneurs of the nation. India is performing well by constantly improving its tally in the ease of doing business index (Doshi et al., 2019). The pull factors of the business environment are providing opportunities to every citizen of India and so is the case with Dalit entrepreneurs. But due to the prevailing social discrimination against Dalits in the society, they need special attention from the policymakers. Public employment avenues are also shrinking and there are not many employment opportunities in the ongoing economic scenario and most of the Dalits still live below the poverty line. Therefore, because of these push factors, Dalits have to start their own business to survive and they require a government support system, not only financial support but the most important discrimination-free positive environment where their capabilities get fair recognition. The authors conclude that Dalit entrepreneurship needs both State interventions through supportive policies and development programs and indeed it is sustaining because of both the features i.e., State interventions and personal capabilities. Individual entrepreneurial attributes of Dalits should be acknowledged and their capabilities sharpened through Statesupported entrepreneurial framework.

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Reference # 26J-2020-09-03-01