With two out of the seven phases of polling for the
2019 Lok Sabha elections over, Prime Minister Narendra Modi, who is BJP’s star campaigner, has made an emphatic pitch to woo the trader community. While the timing might be a little suspect, what is certain is that the principal opposition under Rahul Gandhi has sustained an audacious bid to wrest control of the ever mushrooming micro and small business constituency.
The truth is that Congress has been on the top of the SME (small and medium-sized enterprises) narrative for quite some time now and in the election season, it has not let go off any opportunity to label the ruling alliance as a pro-big business.
A traditional BJP vote bank, the micro and small business (fronted by the trader community) faced an unprecedented crisis in the wake of demonetisation and Goods and Service Tax (GST) during the last two years.
The Congress narrative, however, has not always worked. During Gujarat state assembly election, analysts had predicted a sweep for Congress in Surat and adjoining belt (business geography dominated by diamond trade). The actual result proved otherwise.
That was Gujarat, a constituency traditionally beholden to Modi and BJP. Yet, at the pan India level, expecting a repeat in terms of the small business vote bank cannot be taken for granted even by diehard BJP supporters.
MSME Election Narrative
This is primarily because the MSME (micro, small and medium enterprises) sector has not yet fully recovered from the demonetisation and GST assault. Ideologically, the formidable community may not argue against the merits of business transparency (GST) and stated charge against black money (demonetisation), but there is little to address their balance sheet Anemia.
The shrewd politician that he is, Modi is keen to bring the trader block back in BJP fold. It is just that time might be running out. Addressing them at a well-attended Talkotra Stadium rally in the national capital, Modi hailed the trader community as the backbone of the economy. Prime Minister added that that the government stood in support of the country’s traders and would create bodies to address all their problems.
Keen to counter Rahul Gandhi's often repeated accusation, Modi claimed, “The number of registered businessmen has doubled since GST and the states’ revenue has increased by 1.5 times.”
Aware of the Congress push to be seen as championing the cause of small business, BJP took a deep dive into history. “After Independence, under the Congress, it has been spread that all that has been wrong with the country is because of the traders,” he said.
“But the people who spread this, they benefited from high inflation, and then blamed the traders and businessmen for it. The truth is that the common trader is hit double due to inflation. One is when he makes his home budget and second, because people’s money is spent on essentials, and so businesses saw fewer sales.” When inflation is controlled, then there is more money in the pocket, then business in the markets grows quickly,” he added.
While previous governments used to boast about the laws they introduced, this government had vowed to reduce the number of laws and ended 1,500 laws in the last five years, he added.
Modi Talkotra Trader Pitch
Never known to be short on oratory skill (bordering on strategic political communication), Modi is conscious of the fact that one single line —
Suit Boot Ki Sarkar — ad nauseam has taken deep roots in the country. That one-line punch, has now so to say, come to define (rightly or wrongly) the politics of Rahul Gandhi.
Therefore, the Modi Talkotra pitch has a valid context. But the ground challenge for Modi and Rahul is formidable - both - in terms of managing the narrative as also in terms of finding the right solution for putting the engine (SME vertical) of the economy back on track.
The track record of both UPA (United Progressive Alliance) and NDA (National Democratic Alliance) in terms of a new policy framework to address the vexed SME challenge has been rather dismal. It is important to analyse what is on offer for the beleaguered sector in the just laid out manifestos of Congress and BJP respectively.
BJP says for promoting entrepreneurship among youth, the government (if elected to power) will invest Rs 20,000 crore in the startup sector. The party says it would get 50,000 startups established by 2024. Others manifesto promises include:
Manifesto War Over Trader Sops The Technology Centres, other skilling centres of MSMEs and NSICs (national small industries corporation) incubation centres alone would provide focused and high-level skilling to more than 6 lakh people per year. About 10 percent material to be sourced for government procurement will be done from MSMEs having at least 50 percent women employees in their workforce. Under a new 'Entrepreneurial Northeast' scheme, provide financial support to MSMEs and for employment generation in northeastern states. Work towards creating a single-window compliance and dispute resolution mechanism for MSMEs.
For traders, BJP will establish National Traders’ Welfare Board and create a National Policy for Retail Trade for the growth of retail businesses. To be fair to him, the NDA government has launched a retail framework which global majors see as protectionist and protective of the small business segment.
On the lines of the Kissan credit card, BJP promises to also create a scheme to give merchant credit card to registered merchants.
The Congress manifesto too is high on promise. It argues that as MSMEs account for 90 percent of all employment outside agriculture, its definition based on the capital employed is biased against labour.
The Congress manifesto offers solution of linking the definition of MSME to employment. A business employing 10 persons or less will be 'micro;' between 11 and 100 will be 'small;' and between 101 and 500 will be 'medium.' It is not yet clear how change of definition will make the business plan healthy.
The party has pledged to create an Enterprise Support Agency to help entrepreneurs, including startups, with an all-round business support. It also promises a regulatory forbearance for MSMEs which means they will be exempt from all applicable laws and regulations (except the Minimum Wages Act and tax laws) for a period of three years from April 1, 2019, or in case of new businesses, the date of commencement of business. This, party claims, means freedom from 'Inspector Raj' until they stabilise.
Promise Versus Delivery
Have not we heard that before? And setting up a new agency in itself isn’t a great idea for it creates another opportunity for bureaucracy to prevail.
The Congress manifesto says the party will encourage the establishment of state-level and regional-level institutions, including small banks, to provide bank credit to MSMEs. Credit is a recurring challenge and the idea is too much in the long shot.
Having said that all these manifesto promises look nice on paper but the big question that begs an answer is that if respective governments' indeed cared for the welfare of the sector comprising 5.3 crore MSME business entities, why didn't they execute even 50 percent of what they promise today when they were in power?
Manifestos are after all a statement of intent that even politicians at times tend to forget conveniently.
How does one help the trader community and trade at large to make a virtue of respective manifestos? By exercising the power vested in their much coveted vote. Go out and vote in large numbers to make a difference.
Rakesh Khar is senior editor, Special Projects, Network 18. He writes at the intersection of politics and economy.