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TECH TALK: As India Develops: Market Access (Part 2)

March 17th, 2004 · No Comments

Atanu Dey puts the challenge of developing rural India in perspective:

Rural India, like the rest of India, is extremely large. Around 700 million people in 600,000 villages call rural India their home. Agriculture is their main occupation. Foodgrains and cereals add up to about two-thirds of India s agriculture output. For India as a whole, agriculture is the most important sector accounting for about a third of the nations GDP and two-thirds of all employment. Though the share of agriculture in national income has declined as India develops, it still provides the main source of wage goods for the manufacturing and services sectors of India. Agriculture makes up about 18 percent of India s exports.

Rural India is also extremely poor. Of India s over one billion population, about 35 percent live below the poverty line. Fully three quarters of all poor Indians live in rural India. In other words, about 270 million rural Indians or 40 percent of the rural population are poor even by Indian standards. The defining characteristic of rural India is therefore both income-and non-income poverty. The challenge facing those concerned with Indias development therefore simply stated is: how to raise rural Indias income. One prerequisite is to increase agricultural productivity, of course. But that would necessarily imply that less labour will be required for agriculture. The labour released from agriculture will have to find alternative sources of income. Manufacturing and services are the obvious sectors which will absorb the additional labour. Given that India is a large economy of over a billion people, the growth of manufacturing and services is natural. However, there are structural impediments to their rapid growth such as poor infrastructure and inadequate financial resources. In the long run, infrastructure improvements must happen. But it will take many years, if not decades, to happen.

Given the constraints, it is important to explore s ort-term and medium-term alternative sources of income for the rural population. Gandhi, the father of Indias independence, once observed that the solution to Indias poverty lay not in mass production but rather in production by the masses. It is in that spirit that we considered the problem of mass poverty. What, we asked, were the masses of rural India most suited to producing outside the traditional agricultural sector? The answer was evident: hand crafted labour-intensive goods which can be produced without requiring massive investments in infrastructure.

Even a cursory examination of the non-agricultural production of rural India leaves one breathless at the scope and the variety of goods produced by artisans. Traditional handicrafts span a range that is nearly impossible to describe without employing superlatives. Tens of thousands of handmade goods in a variety of media are traditionally found across the vast landscape of India. Vast numbers of goods made from a wide range of wood, leather, iron, brass, copper, silver, granite, marble, soft-stones, semi-precious stones, fabrics of various kinds, glass, and so on are traditionally made in rural India. Each region of India has something unique in terms of styling and workmanship. The traditions run deep since the crafts are handed down from generations to generations across the centuries.

It is therefore easy to argue that at least in part, the answer to the problem of rural poverty has to be found in the production of handmade goods by the masses of rural India. Urban India has been so far the major market for these. However, the potential exists for expanding the markets beyond urban India. Globalization and the revolutions in ICT have presented an opportunity for enlarging the market for rural handcrafted goods and thus provide income opportunities to rural artisans like never before.

Indian handicrafts are not entirely unknown outside rural India. There are many institutions, both public and private, that channel handicrafts from rural India to the rest of the world. For example, various Indian state governments have outlets for handicrafts from their states. Most of these are found in major metropolitan cities in India. Some firms export Indian handicrafts also. Exports of handicrafts (including hand-knotted carpets) from India are of the order of $1.5 billion per year. In absolute terms, that is an impressive figure but relative to the size of the rural population, it is clearly far below the potential. One can easily argue that handicrafts should fetch about $50 per capita per year if properly marketed. That means, rural Indias handicraft exports could aggregate around $35 billion. That scale would have been difficult, if not impossible, to achieve a few years ago. Fortunately, it is no longer outside the realm of the possible because of a confluence of a number of factors such as globalization, the Internet and the world wide web and the glut in mass-produced manufactured goods.

The solution proposed by Atanu is ABC: A Mediated Marketplace.

Tomorrow: Market Access (continued)

TECH TALK As India Develops+T

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