Small is literally big. And on the ground, it is fighting a grim battle for survival. But for its new found proponents, small is a big time opportunity. The talk here is about the small business segment that is currently facing unprecedented turbulence.
For politicians, though, this turbulence has come as a grand opportunity. Small business may be languishing on the ground but suddenly it has become the most potent constituency (read vote bank).
They say every crisis brings with it an opportunity. And politicians of all hues would rush to steal any such “breakthrough”. So when demonetisation and GST dealt a double blow to the already fledgling small business community, the opposition in Congress suddenly “felt” the pain of the small business community. It accused the government of unleashing license raj on the small traders in name of GST, debilitating their ability to stage a recovery.
Worried about the charge sticking, a nervous Modi government just announced a new set of measures to smoothen the rough GST blow for the MSME sector. The damage, though, has already been done.
Rahul Gandhi, who for a change made a smart impression at UC Berkley early September, used this ammunition of small businesses to fire at Prime Minister Narendra Modi.
Since then, Gandhi has lost no opportunity to position himself as the champion of the small business community. Wherever he goes and speaks now, a small business pain story weaves its way into the narrative.
Rhetoric apart, there is a catch here: Small business has traditionally been a BJP vote bank. The segment has shied from ever voting for the Congress. Now, the Congress has launched a campaign to take control of this potent vote bank.
A look back shows how the opportunity arose in the first place for the Congress.
With the BJP in power, Modi was expected to be a big votary of business, small and big. In the initial days, the euphoria over Digital India, Make in India and Start-up India somehow gave small business an impression that it was being forced to play second fiddle to big business.
This was exploited politically by the opposition with Gandhi coining the now famous “Suit Boot Ki Sarkaar”.
As the Prime Minister traded his suits for the now famous Modi jacket, he sought to reinvent himself as the messiah of the poor and the downtrodden.
The course correction led to the advent of demonetisation. This was a severe short term blow to the micro, small and medium business. Six months later, GST happened and the MSME sector gasped for breath. That said, GST is a historic and bold reform which will integrate the economy, but only in the medium and long term.
Gandhi seized the low-hanging fruit and now he believes he is the voice of the trader community.
The UPA government’s own track record in uplifting the mood of small business was pretty modest, made worse by plethora of scams caused by distribution of patronage to big business.
The then Prime Minister Manmohan Singh set up a MSME Task Force in his office chaired by his Principal Secretary TKA Nair. An exhaustive report was submitted with little or no follow up for execution.
The ruling dispensation is now desperate to take back control of what it believes is a community that has been a committed vote bank. Over the past week, top economic ministers brainstormed to mitigate the falling business sentiment more so for the small business.
The truth is that small business community actually got the wrong end of the stick from the Modi government early on.
First, the MSME ministry was entrusted to a veteran politician in Kalraj Mishra, who always lived on the edge with age being a disadvantage. His rather modest knowledge of the sector made it worse, though he made an effort to connect the dots.
As he was given two junior ministers to try and retain focus, the Prime Minister himself aggressively pushed for Startup India, a more attractive proposition from within the small business space.
Policy imperatives apart (demonetisation and GST), the MSME sector witnessed another setback with the latest Cabinet reshuffle witnessing the ministry losing out on one of its junior ministers and Mishra being eased out having crossed the age of 75.
The incumbent minster with independent charge, Giriraj Singh, isn’t a political lightweight but is certainly as raw about matters of the economy as his predecessor.
The sector needs a patient hearing and a mentor alike in the government and the opposition who understands the pain points. It has yet the biggest potential to put the Indian economy, especially manufacturing back on track.
Alas, what it is receiving instead is a lot of sympathy rather than empathy. The obvious overflowing attention isn’t to redeem the pain but to use the beleaguered community of 5.3 crore MSMEs in India for vote bank politics.
Thereby hangs a sordid tale of our politics of economics.