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The Rs 300-Billion Club

By Chandrabhan Prasad

06 December, 2004
The Pioneer

The Dalits - Scheduled Castes and Scheduled Tribes - are the first beneficiaries of job reservations in Government. This is something we all know. Bizarre as it may seem, India's private sector is the second largest beneficiary of reservations to Dalits. Let's examine how.

The reservations have helped about 3.5 million (35 lakh) Dalits to get Government jobs (Central/State Governments/PSUs etc). This is my estimate, based on the Fourth Report of the National Commission for SC/STs (1997-98). Unfortunately, no central agency, including Planning Commission, Union Ministry of Social Justice and Empowerment, Census Commissioner of India or National Sample Survey, have any published report showing the number/percentages/position of Dalits employees/officers at the all India level, including State Governments.

About 3.3 million (33 lakh) Dalits have got into trade/commerce/manufacturing (often small in terms of size and turnover), of which, about half of this (1.65 million or 16.5 lakh) may have been caused by reservations (Dalit employees/officers often finance their unemployed children to set up businesses).

That means, about five million (50 lakh) Dalits have used reservations to join India's middle/lower middle class rank. In other words, reservations have produced five million Dalits, or 25 million Dalit persons (assuming that a household in India comprises five persons) as consumers, who otherwise, through the natural process of development, may never have been able to enter the market places. But, how does it help the private sector?

Reservation has given Dalits jobs in cities and towns. Understandably, they now follow the lifestyle as well as the cultural behaviour of urban India. Assuming that most urban inhabitants with a secured monthly income use toothbrushes, it follows that the Dalit employees /officers/ small business persons too are following the trend. Also assuming that most users buy at least two toothbrushes each year, then the 25 million (2.5 crore) Dalits must be buying 50 million (5 crore) toothbrushes contributing Rs 500 million (Rs 50 crore) annually to the Rs 3,000 million toothbrush industry. Assuming that a Dalit household spends Rs 10 on tooth paste/powder (Rs 120 a year), then the five million Dalit households are contributing Rs 600 million annually to the Rs 9,500 million tooth paste/powder industry annually.

According to an estimate, about 61 million households in India use pressure cookers. One can then assume that Dalit households have an estimated 5 million pressure cookers. And if the price of each pressure cooker averages Rs 300, then the five million Dalit households would have contributed about Rs 1,500 million to the pressure cooker industry. If India's middle/lower middle class households buy at least two pencils a month, then the 5 million Dalit household are buying about 120 million (12 crore) pencils a year. If a pencil costs Re 1, then Dalits are contributing about Rs. 120 million annually to the pencil industry.

India's FMCG Fast Moving Consumer Goods industry soap/hair oil/shampoos/other cosmetics is estimated to be worth Rs 6,000 million. If the urban middle/lower middle classes are the main consumer base, then the 5 million Dalit households too must be buying these items. If Dalit households buy an average of two soaps (a bath, and a wash soap each month, then, the 5 million Dalit households must be buying 120 million soaps every year. If a soap costs an average of Rs 5, then Dalits are contributing about Rs 600 million annually to the soap industry.

If one assumes Government employees/ officers earn an average Rs 10,000 a month and spend half of that in the market, then the reservation produced Dalits contribute about Rs 25 billion a month, or Rs 300 billion annually to India's private sector. An amount that is more than the combined annual net income of Reliance, the TATAs, the Birlas and the Dalmias.

The Dalits have used reservations, a doctrine scripted by Dr Ambedkar, to their advantage. Thanks to reservation, there is a Dalit middle class which is a discerning customer of goods and services. Whatever they earn from the State, they spend on India's private sector. So, purely from a business angle, shouldn't the private sector come forward to confront the Rs 300 billion question an embrace reservations for Dalits!











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