Dalit Entrepreneurs: Exploring What It Means to Run a Business as a Dalit

Success stories of Dalit millionaires have become popular in mainstream media. For instance, Kalpana Saroj and Milind Kamble were awarded Padma Shri for their success in entrepreneurship despite backgrounds of poverty and marginalisation. The idea of using entrepreneurship as a means for social and economic empowerment for Dalits has gained traction, with a Dalit Chamber of Commerce and Industry being formed as well.     
                 
Despite these moves forward, Scheduled Castes owned just 9.8% of all enterprises in 2005, far below their 16% share in the total population. The political and social inclusion of Dalits in these areas appears to have yet to be translated into the area of entrepreneurship. The high and middle castes have been over-represented in the area, with middle castes being 39.3% and high castes 31.2% of the total population while owning 47.5% and 36.5% of total enterprises, respectively (MSME Dataset, 2009). It must be noted that many of the enterprises studied were single-person enterprises that studied 'self-employed' individuals. This has raised eyebrows on whether the definition of entrepreneurship has been understood in a relatively crude manner, that is, if the 'enterprises' counted in the survey are survivalist in nature. Such a situation would further increase the under-representation of Scheduled Castes in entrepreneurship.

Enterprises owned by members of SCs and STs tend to be smaller, less likely to employ labour from outside the family, and more likely to belong to the informal or unorganised sector (Iyer et al., 2013). From 1990 to 2005, there has been little change in caste in entrepreneurship, with the growth in employment of SCs being minimal as well (Iyer, L., Khanna, T., & Varshney, A , 2013 ). The stagnant issue of the under-representation of SCs in entrepreneurship warrants attention.

The Dalit Indian Chamber of Commerce and Industry (DICCI) promotes entrepreneurship as a means of empowering Dalits economically. This shows that Dalits can find a relatively equitable starting ground in entrepreneurship rather than other fields. We examine the playing field for Dalit entrepreneurs by looking at reasons for under-representation.

Potential reasons for the pertinence of under-representation, like literacy rate, discrimination, difficulty in accessing credit, lack of business knowledge, etc., are discussed below.
As per Census 2011, the literacy rates of SCs were 66.1%, below the national percentage of 72.99%. However, studies show that literacy rate and ownership of enterprises have no considerable correlation. This study does not look at the role of higher-level education in the success of entrepreneurship. A survey by the Reserve Bank of India points out that 88% of start-up owners have at least a bachelor's degree, pointing to a possible relationship. If higher education has a role to play in entrepreneurial intention and competence, SCs have lower GERs (Gross Enrolment Ratios) than the national average in higher education (Indian Express, 2019)

This under-representation is higher in urban areas as compared to rural areas. Since rural areas witness more social discrimination based on caste, it is assumed that social discrimination does not have a pertinent role either. However, while social discrimination might not manifest in its crude form, issues in accessing informal credit or support unequally affect Dalits.

Situation Of Dalits with Regards to Various Aspects of Entrepreneurship

Various aspects of entrepreneurship have been discussed below in the context of Dalit entrepreneurship to help readers understand what it means to be a Dalit entrepreneur.
First, entrepreneurship requires capital. Venture Capital programs started by the National SC/ST hub show a positive bias towards SC and ST entrepreneurial initiatives. Apart from venture capital, a level of personal investment is also typically seen among entrepreneurs. If personal wealth has a role in the start and success of entrepreneurial activities, we find that SCs receive the short end of the stick. The share of assets owned by SCs was 7.6%, much lower than their percentage in the population. The lack of assets also makes it more difficult to provide collateral, which is required while applying for formal credit, making Dalits more vulnerable to informal credit.

Second, running any business requires the purchase of raw materials and supplies. A study in North-West India finds that caste plays no significant role in this domain. Only 5% of all respondents reported any difficulties in getting supplies because of their being Dalit. 'As long as you can pay, no one cares who you are'. This was so when the suppliers, in almost all cases, were non-Dalits.
Third, access to credit. It is believed that access to credit can explain differences in entrepreneurship, wealth and income (Goraya, S.S, 2013).

Formal sources of credit include banks, cooperative societies, and government initiatives. Studies show that enterprises receiving government support in the form of subsidies, etc., are more likely to seek formal credit. This shows a positive bias towards SC entrepreneurs. Several schemes, such as the Venture Capital Fund for Scheduled Castes, Special Credit Linked Scheme, special marketing assistance scheme, etc., have been started in favour of SC entrepreneurs.

However, informal credit sources remain popular in India. Around 80% of MSMEs still need to receive credit from formal sources. The nature of MSMEs suggests that businesses must be taking loans from somewhere, likely from colleagues or friends.

Informal credit, however, is less readily available to SCs. A Pune-based entrepreneur explained that it was common practice among kiln owners to help each other out when short of bricks or money. However, he needed help to procure such credit from his peers. Similar cases of caste-based difficulties in obtaining informal credit have been heard.

Entrepreneurship also involves extensive bureaucratic procedures for obtaining licenses and other permissions. The same study shows instances of officials of the 'Deshashta Brahmin' or 'Bhonsle' caste immediately helping businessmen of their own caste and delaying support to Dalits. Social connections among higher-level businessmen and suppliers, largely of higher castes, also disadvantage Dalit entrepreneurs.

The Way Forward

The main obstacle to the success of Dalit entrepreneurs identified is access to proper credit. First, it is important to discuss what makes entrepreneurs heavily dependent on informal credit sources. A survey of MSMEs found that most business owners are unaware of the programmes and credit schemes available to them, creating a false sense of dependency on informal credit. Further, there have been concerns regarding whether the schemes have been regularly taken up. The way forward involves creating proper awareness as regards affirmative action schemes available to SC entrepreneurs.
 
References

Goraya,S.S. (2013) How does caste affect entrepreneurship? Journal of Monetary Economics https://www.sciencedirect.com/science/article/pii/S0304393223000144
IYER, L., KHANNA, T., & VARSHNEY, A. (2013). Caste and Entrepreneurship in India. Economic and Political Weekly, 48(6), 52–60. http://www.jstor.org/stable/23391395
DESHPANDE, A., & SHARMA, S. (2013). Entrepreneurship or Survival? Caste and Gender of Small Business in India. Economic and Political Weekly, 48(28), 38–49. http://www.jstor.org/stable/23527445
JODKHA, S.S. (2010) Self-employed scheduled castes in the north west https://www.researchgate.net/profile/Surinder-S-Jodhka/publication/294182082_Dalits_in_business_Self-employed_scheduled_castes_in_north-west_India/links/573ee50108ae9ace8413332c/Dalits-in-business-Self-employed-scheduled-castes-in-north-west-India.pdf )
PRAKASH, A. (2015). Dalits Enter the Indian Markets as Owners of Capital: Adverse Inclusion, Social Networks, and Civil Society. Asian Survey, 55(5), 1044–1069. https://www.jstor.org/stable/26364323
Kadam, A., Singh, P., & Chatterjee, J. (2023). Does the owner’s caste affect access to credit for enterprises in India’s unorganized sector? Applied Economics Letters, 1–6. https://doi.org/10.1080/13504851.2023.2186346
IFCI Venture Capital Fund | SC ST Hub. (n.d.). https://www.scsthub.in/content/ifci-venture-capital-fund
Nipfp. (n.d.). NIPFP | web page. https://www.nipfp.org.in/publications/working-papers/1923/
DICCI : Dalit Indian Chamber of Commerce & Industry. (n.d.). https://dicci.in/
Livemint. (2015, January 22). The politics of Dalit venture funds | Mint. Mint. https://www.livemint.com/Opinion/9TFDqZvQg9alOZkQvCPVwI/The-politics-of-Dalit-venture-funds.html
 
Author’s Bio 

Anjali Paruvu is a research intern at CDPP. She is a grade 12 Humanities student at P. Obul Reddy Public School, Hyderabad. She is a part of her school's student council and regularly takes part in Model United Nations. She maintains her own blog 'Anecdotes and Realizations' regularly.