Letters

Letters to the Editor — June 27, 2020

China issue

It is no exaggeration that India’s relationship with China has turned topsy-turvy after the violent clashes our soldiers had with the Chinese soldiers. And it is difficult to predict how long it may take to repair this damage.

The present government has not spared a single occasion to criticise Jawaharlal Nehru’s government for creating the twin problems of Kashmir and China. Now the very same government has been caught in quicksand, if I may say so using evidence of a matter-of-fact situation rather than levelling an accusation. Our leader had visited China a few times as India’s Prime Minister, in addition to his earlier visits as a Chief Minister. The Chinese leader too was invited to India. Should not the Prime Minister have taken up with him this most important border dispute that has been simmering for decades? Therefore, the country as a whole is very anxious to get a proper answer from the Prime Minister. The people of India would not be satisfied with mere rhetoric of “saving every inch of our territory” (Editorial page, “The myopia of 20/20 hindsight”).

B.M. Baliga,

Bengaluru

The state of Ayurevda

The central premise behind recognising Ayurveda as a medical system in its own right is that the Ayurvedic classics, when approached scientifically, can serve as repertoire of researchable, if not employable, medical information. Bypassing these classics and haphazardly recommending random formulations, as Ramdev’s Patanjali Ayurved Limited seems to have done, would be a defeat of this central premise. The Ministry of AYUSH has done the right thing by restraining the company from publicising its “proprietary pill” as a cure for COVID-19. But what is worrying is that the Ministry appears oblivious to its more fundamental role. Its mandate is to scientifically reform, popularise and regulate the practice of Ayurveda. Sadly, the Ministry’s track record in scientifically reforming Ayurveda is dismal. Outdated medical facts and theories continue to be taught in Ayurvedic colleges with a veneer of philosophical sophistication. Unless this serious problem is tackled, the field would not acquire the competence to deal with contemporary health challenges. A fluid and unsettled science can only be expected to remain vulnerable for misuse as a lucrative commercial proposition. Such a state of affairs is an injustice to the great legacy of Ayurveda.

Dr. G. L. Krishna,

Bengaluru

Some thoughts on International SME Day

I write this as Senior Fellow and Director, Institute of Small Enterprises and Development, Cochin. The world celebrates June 27 as ‘International SME Day’. Small and Medium Enterprises (SMEs), which remained much outside the realm of major development debates for long, have taken central place through the Agenda 2030 and the Sustainable Development Goal No.8 (Decent work and Economic Growth), by the UN General Assembly. In the year 2020, the UN agenda is “ supporting small businesses through the Covid-19 crisis”.

According to the data provided by the International Council for Small Business (ICSB), MSMEs make up over 90% of all firms and account, on average, for 70% of total employment and 50% of GDP. According to the Ministry of MSME, Government of India, they contribute significantly to the manufacturing output, employment and exports of the country. It is estimated that, “in terms of value, the sector accounts for about 45% of the manufacturing output and 40% of the total exports of the country”.

Meanwhile the global community places so much importance on the SME role, especially for their involvement in the neighbourhoods, and in the local economy. However, it is ironical that, globally, in an year when humanity remains largely closeted over the threat of a pandemic, and restricts its movements to neighbourhoods only, the bulk of these enterprises are struggling for survival; a sizeable segment has already disappeared from the scene , under the “ two-curves problem”, associated with the pandemic. The world, even under the zenith of its technological achievements, failed to understand their creativity and drive, and to engage them effectively. Instead , many governments do consider them as a liability to the so-called “knowledge economy”. In a knowledge economy, a significant component of value may thus consist of assets that are intangible, such as the value of its workers’ knowledge or intellectual property.

While the pivotal role of SMEs in the economy is generally accepted today, this role was brought into the limelight of political platforms and economic discourses through India’s ‘Freedom Movement’. The political articulation of Mahatma Gandhi was brought into the stream of economic discourses, by scholars such as J.C. Kumarappa, and later, at the international level, by E.F. Schumacher. The hubs of global capitalism, under the hegemony of Britain and the U.S., could realise its relevance only in the early 1970s. Today, while the global North celebrates the SME role in their economies, India required a pandemic like COVID-19 , to look back to the foundations of its legacy, and of the importance of “ boot-strap development”, as propagated by the Father of the Nation.

As already noted, there are much tautologies on the SME role in the economy. To cite the joke of a senior bureaucrat, “the graphs brought out by some official SME promotion agencies always take an upward trend”. But, the fact remains that from time to time, in the practice of SME development, there used to be more analogies than analysis. Where lies the catch?

The SME role in the economy is simple. Households and firms are the basic decision-making units in any economy. Firms produce; households consume the firm’s output. There needs to be a balance between the two. If and when the balance is lost, either through a malfunctioning of the system, or by a policy intervention, the economy falls into trouble. In a pandemic situation, when there is no production, consumption also gets squeezed, as consumer expectations are down. Since consumption is limited, which means insufficient aggregate demand, there is no incentive for the firms to produce. That is what we see today.

But, how is the balance lost? When the resource and output flows are affected, it happens. Manufactured products and services are the two forms of output. They have a mutual relationship that is organic in nature. The essential purpose of services is to transact manufactured products. But, since the 1990s, there has been an enhanced trend toward a blurred system, wherein, both the output of these forms remains highly integrated — a phenomenon called ‘servitisation’, a new addition to the semantics of business literature.

‘Development’ is a much orchestrated catch-word in the modern world. Development Economics has shaped tools and techniques to analyse and explain it. There could be add-on variables, but the fundamentals are, growth in GDP, and a reasonably progressive distribution. GDP includes, the ‘hard output’ that satisfy the basic human needs. You feel hungry? A ‘thali’ that costs ₹70 will do. You can also have a lunch that costs ₹1,000. Apart from the rice and vegetables that it is composed of, the rest are all the cost of “services”, and overheads.

Here comes the role of public policy. If the policy maker is keen on serving a ₹1,000 meal to every citizen of the country, well and good; but he cannot. Hence, he will have to be selective. Policy decisions, beyond being a solution to the basic economic problem, demand complex tools and techniques. Here comes the relevance of the knowledge economy. Knowledge helps to solve the basic economic problem in a better way; but knowledge itself is not an output that satisfies the consumer.

Technology is a third force and a bonding factor in modern business. while, undoubtedly, it has contributed to the enhancement of productivity, it also created the “big illusion” of the 21st century. Today, “start-up” is the global catch word. Once appearing as a facilitator, technology has taken centre stage, with its own illusion.

To what extent has technology helped to solve the problems of millions of people reeling under COVID-19? How has technology helped oil value chains so that at least after the lock- down period, the country is back on the wheels. Why is it that the tiny entrepreneurs who provide income and employment opportunities for millions, are starving? Providing answers to these questions is the challenge and responsibility of all who glorify the latest paradigm of Industry 4.0. If one “can’t see the woods for the trees”, a pandemic may help them to see what it is. Finding that SMEs face “some problems” under this pandemic is putting the cart before the horse. In fact, MSMEs form the largest anti-cyclical tool under a recessionary situation, as latest research indicates. But, unfortunately, even the best of Keynesians have failed to understand this reality. Are we still living in the 1930s, seeing an umbrella of Industry 4.0. in the dream?

P.M. Mathew,

Kochi

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Printable version | Jul 12, 2020 8:12:12 AM | https://www.thehindu.com/opinion/letters/letters-to-the-editor-june-27-2020/article31927604.ece

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