India’s new Entrepreneurs

India’s new Entrepreneurs
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First Published: Wed, May 16 2007. 12 13 AM IST
Updated: Wed, May 16 2007. 12 13 AM IST
Nearly five centuries ago, Agra was the commercial nerve centre of a flourishing Mughal empire. Thanks to the monuments that were built by the kings and emperors, including the Taj Mahal, this Uttar Pradesh city was just little more than a tourist stopover.
But, almost unnoticed, Agra has come to illustrate another economic revolution. It has, despite its dilapidated state and creaking civic infrastructure, become a hub of new opportunities in the service sector. Such has been the impact of these opportunities that, by the end of 2004 until when data is available, more than six of 10 people here, are now self-employed, up from just five years earlier.
Agra is only symptomatic of a new breed of second-rung Indian cities, beyond the metros of Delhi, Mumbai, Chennai, Bangalore and Kolkata, that have begun to savour benefits of India’s 8%-plus economic growth of the last four years.
A comprehensive government survey, conducted every five years, puts Agra right behind Varanasi as the city with the most self-employed, followed by Bhopal, Indore and Patna. A few years back, Agra was not in this picture with Varanasi, Patna, Pune, Lucknow and Kolkata among the top five cities in terms of self-employed males.
As a result, apart from the 40% of population that depends largely on agriculture, and some who still rely on the traditional leather and footwear business and iron foundries, most people in Agra now work in new professions as “self-employed” persons.
According to the National Sample Survey Organization, in 1999-2000, 431 of every 1,000 employed males were self-employed in the city. This has climbed to 603 per 1,000 in 2004-05. Nationally, the number of self-employed persons has also grown, but from 368 to 395 per 1,000, nowhere close to the trend in Agra and a host of similar cities.
New whizz-kids
Chalk it up to people such as 21-year-old Yatendra Singh. When he graduated from the local university in 2005, he never imagined that in little under three years he would be co-owner of two Internet cafés. “The Internet had started taking off in Agra. I would have survived otherwise, but maybe not run an independent business,” he says.
The Internet boom came a little later to Agra than Delhi or Mumbai, but is now within arm’s distance of Singh’s small basement set-up on the Bodhla-Sawan road, as you enter Agra from Sikandra. It marks the spot where Mughal emperor Akbar lies buried. The area around has been developed afresh to meet demand for housing. “At least eight cyber cafés, big or small, have sprung up since 2004 in this area,” Singh points out. So have dyers and dry cleaners, public telephone call providers, real-estate brokers, and courier-delivery shops, all cheek-by-jowl around busy old streets, crammed with scooters and cycle rickshaws.
Part of the reason why Agra has moved to self-employment seems to be its improved connectivity with neighbouring states and Delhi. A new expressway to link it with Noida, near Delhi, is in the works, while the city government is firming its pitch for a metro rail system. It also has the distinction of being one of the only five cities in a very large state, other than Varanasi, Meerut, Lucknow and Kanpur. All these attributes seem to make Agra the ideal hub for services, despite its low industrial activity. Singh’s older brother Krapal, for instance, is now juggling time between Agra and Noida, a five-hour drive away, setting up their family’s second 15-seat cyber café in Electronics City.
Growing needs
Meanwhile, the UP government projects the population of Agra city will grow 3.84% every year, to touch 2.04 million in 10 years and 2.7 million by 2031.
This, for the state administration, can only mean that the cyber cafés, couriers, call booths, hotels, education centres and real-estate dealers will keep snowballing.
“We are growing very fast and the city is changing. The only way to accommodate these changes is to find new ways of employment, by bringing in investment and modernizing the city,” says Ashok Kumar, commissioner, Agra.
As commissioner, Kumar is the top administrator of Agra, responsible for its planned development and monitoring government schemes. “A sizable chunk of self-employment now comes from professions that either did not exist a decade back or were minuscule,” he says.
The rise in self-employment is evident across the country, though analysts differ in what that means. Arvind Virmani, principal economic adviser with the Planning Commission, the top planning agency for the country, says the move towards self-employment suggests one part of the eventual transition of labour from unskilled jobs in agriculture to skilled jobs in manufacturing.
Self-employment is the usual route for labour as it moves up the value chain from agriculture to industry, Virmani wrote in a 2006 working paper on employment and equitable growth for the Commission. “Whether the final shift to higher-skill jobs in manufacturing actually happens in India depends on other factors – such as skill development and labour laws being more rational, to encourage employment by industry,” he says.
But Arjun Sengupta, a member of Parliament and former member-secretary, Planning Commission, sees in the trend towards self-employment the declining fortunes in farms made worse by laggard industrial activity.
“This needs attention—we must encourage industrial activity and boost agriculture productivity to stimulate higher-paying jobs which have decent conditions,” he says.
Opportunities galore
Analysts say that the rise in self-employment shows a shift in the way the Indian economy now functions. “The rise in self-employment goes to show that people are finding work outside traditional sectors,” said Duncan Campbell, director, policy integration department with the International Labour Organization.
New opportunities have meant that many have been able to affect a career shift that they would not have foreseen.
Take Rajendar Yadav, at 25, he’s already a veteran of the city’s traditional industry: footwear. In 2002-03, when footwear-related exports from the city touched $350 million (Rs1,435 crore), Yadav decided to leave his decent-paying job as production in-charge at Superhouse, a footwear exporter.
By 2005, he had settled into a new role as freelance “indenting” agent for shoe and accessory makers within Agra and in Delhi, Noida and Chennai. A newly minted entrepreneur, he now purchases machinery that makes leather footwear and deals in sundry items such as decorative beads, for five regular clients.
“What is the point if I have to keep working for others while every business sector booms in the city?” Yadav said at his office, a sparsely furnished room on the roof of his two-storey house in Awas Vikas, a new colony being developed by the Agra Development Authority since 1999. Most of his work seems to be conducted over his mobile phone.
Yadav is representative of the shifting employment pattern that is unveiling across cities in India. The Survey data reflects this trend in 29 Class I cities, with population of more than one million, including Howrah in the east to Kalyan-Dombivili in the west and Hyderabad in the south to Ludhiana in the north.
The cyber-café owner and the indenting agent for leather components constitute the top end of the self-employed: they are also employers. The single-largest share of self-employed in the country, however, are what are called home-based workers, who work for themselves, or produce for a contractor/sub-contractor, who is himself part of a long value chain. There are, according to survey figures for 1999-2000, some 29 million families dependent on such industrial outwork. While many of them are women, Agra today has the second-largest proportion of self-employed males in India, after Varanasi, where 757 of 1,000 employed males were self-employed in 2004-05.
Turning point
For Agra, the turning point came when a slew of industries had to be shut down on fears that pollution from these units was damaging the marble exterior of the Taj Mahal. Following a Supreme Court order over a decade ago, the foundry and leather businesses here went through a series of ups and downs.
While some 750 foundries could move to Foundry Nagar after a shift to compressed natural gas, a less polluting fuel, to survive; others engaged in leather tanning, for instance, quite simply shut down.
Former workers of these industries are among those who have moved over time to self-employment. Agra’s foundries are perhaps the best example of this shift. Started 400 years ago by Mughal emperor Akbar to supply weapons and other metalwork to his kingdom, Agra’s foundries became the biggest arms suppliers to the nearby princely states as well.
When closures came, a stunning five lakh workers ended up without jobs, some for the rest of their lives. Parts of the city are still dotted with foundries with their shutters down or locked up.
“For those five lakh workers, self-employment is a necessity than a sign of growth in the local economy,” said Raj Babbar, the member of Parliament from Agra. “We must ensure that traditional skills such as zari embroidery, carpet weaving and marble inlay do not die out. These are the only way to create new growth. Otherwise, I fear, this city will decline without its big industries or crafts.”
However, trades such as zari embroidery and carpet weaving rely heavily upon homeworkers—who essentially produce at home to work orders provided by contractors.
“Most such work is carried out at very low piece rates (not daily wages), and comes with no social protection whatsoever,” says Santosh Mehrotra, a senior consultant with the Planning Commission and author of a recently published book, Asian Informal Workers. He says it is also important to make the distinction between self-employed workers and self-employed employers very clear, since fortunes tend to vary between the two kinds.
“In urban areas, the self-employed employers are less likely to be poor and also likely to be less poor or live below the poverty line,” says Mehrotra. “This is because they are usually involved in activities where production is directly for sale, such as in crafts or manufacturing.”
Agra has some 10,500 small industries, which employ more than 50,000 workers. Some 7,200 units are in the tiny industry segment and employ more people. “There has been a burst in self-employment after the polluting industries were shut down because of services and trading jobs,” said Sanjay Gupta, who headed the Confederation of Indian Industry in western UP till 2006.
New roles
Sonu Sharma, who was a general handyman with the Agra Development Authority, now runs a public call office (PCO) booth in New Market, a crowded business district of Agra, from a tiny shop he owns next to a busy temple.
“My income has gone up to Rs3,000-4,000 a month now. I used to make half this amount earlier,” said Sharma, whose PCO shop has two phones. Billing machine included, Sharma paid Rs5,000 to start the venture.
“We started running PCOs in western UP in December 2005 and already have 30,000 PCOs there. Agra is the biggest and fastest-growing market in UP, along with Meerut and we have more than 3,000 there,” says a Bharti Airtel Ltd official. Meanwhile, stiff competition between phone companies is replicating what happened in Delhi or Mumbai with a variety of mobile products and services jostling for customers.
Pankaj Timori has been selling mobile phones since 2005 from his tiny corner shop in the local Heeng Ki Mandi. The area, claim locals, is Asia’s biggest market for raw material for footwear, if just 50% transactions conducted off-the-books are considered.
Timori has hit upon a unique way to beat his family business’ biggest woe: selling paints. Their original family trade required a lot more space to display and store the wares. “There wasn’t enough room in our small shop and no room to expand. Considering that, selling phones is proving more profitable,” he said.
It isn’t just stores or retail offerings. Agra has also begun to breed services entrepreneurs such as Kapil Jain, an engineer by training, who set up his event management and wedding-planning business in 2002. His bread-and-butter work comes from non-resident Indians (NRIs) or foreigners who want to marry in the city of the Taj Mahal.
“Agra is not ready for wedding planners or event managers yet, but foreigners do want to marry here because the Taj Mahal provides them an ultimate setting,” Jain said.
He generally gets two-four NRI weddings a season, but with a tour and travel and event management businesses thrown in, he more than takes care of the bills.
Jain’s small office, from the roof of which the Taj Mahal can be spotted at a distance, is as modern as any in Delhi. He has 10 employees including two women. Some 789 of every 1,000 employed women in Agra, up from 462 in 1999-2000, are self-employed, more than anywhere else in the country, except for Varanasi and Jaipur. Overall, in Class I cities, the proportion of women who depend on self-employment has gone up from 352 per 1,000 employed in 1999-2000 to 382 in 2004-05.
Women such as Pragya Mittal, a 25-year-old post-graduate in History from Agra College who decided to become a tourist guide, one of the 130 guides approved by the government to operate in the city. While Pragya still dreams of joining the Indian Administrative Services, she isn’t keen to go to the usual fall-back option, teaching.
“This is an independent and well-paying profession and I would rather stick with it than study more or work elsewhere,” she says. For good reason. More than 20,000 people visit the Taj every month giving a steady flow of business to the guides though there are hundreds of other local residents who also try to piggyback as unapproved guides.
There is a downside to the lack of big industry and large scale job creation ventures as well. Agra is dotted with a large number of tuition centres. Sanjay Rawat, who runs an academy to coach some 100 youngsters on how to make it through a range of competitive entrance tests.
“I can’t be sure, but at least 80% of the students who make it through a test will not return to Agra,” says Rawat. “There is a premium on education in Agra because the opportunities are largely outside.”
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First Published: Wed, May 16 2007. 12 13 AM IST
More Topics: Corporate News | Sector Spotlight |
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