Modi Government Has Near ‘Zero Effect’ in Meeting Procurement Quota From Dalit, Adivasi Enterprises

While government departments and CPSEs are supposed to procure 4% of their goods and services from SC/ST suppliers, the NDA government, in four years of its rule, has struggled to breach the .5% mark.

Prime Minister Narendra Modi at the launch of the national SC-ST hub in Ludhiana in 2016. Credit: PTI

Prime Minister Narendra Modi at the launch of the national SC-ST hub in Ludhiana in 2016. Credit: PTI

New Delhi: The Narendra Modi government has struggled over the last four years to improve the Centre’s track record of procuring goods and services from Dalit and Adivasi entrepreneurs.

According to sources, government departments and central public sector undertakings (PSUs) have procured just 0.37% of their requirement of  goods and services from Scheduled caste (SC) and Scheduled tribe (ST) suppliers as at the end of March 2017, against the stipulated annual quota of 4%.

Moreover, the Modi government alone cannot claim credit for the low levels of procurement as the figure is cumulative and includes vendors added during the previous Congress-led United Progressive Alliance regime which had launched the scheme in 2012. Despite its claim of a significant pick-up in implementation of the scheme, the Bharatiya Janata party-led National Democratic Alliance government has strangely not published segregated data on beneficiaries added by it.

Significantly, the 4% sub-quota for SC and ST vendors was carved out by the NDA government in October 2016 out of the 20% quota approved by the Manmohan Singh-headed Congress regime in 2012 from micro, small and medium enterprises (MSMEs). To make it easier for government agencies and PSUs to comply with the new public procurement guidelines, the UPA government had given them three years’ time and until then, the scheme was kept voluntary.

As per an estimate by the Organisation for Economic Cooperation and Development (OECD), government purchases account for 30% of GDP. Going by this estimate, the new public procurement policy meant huge business opportunities for Dalit and Adivasi entrepreneurs.

The idea was to leverage affirmative policies to promote entrepreneurship among these underprivileged communities. However, potential benefits have not flowed to SC and ST vendors due to the shoddy implementation of the scheme.

SC-ST hub

In October 2016, the Modi government launched a national SC-ST hub under the MSME ministry as a subsidiary of the National Small Industries Corporation (NSIC) to provide support to Dalit, Adivasi entrepreneurs. With an initial allocation of Rs 490 crore, the hub was mandated to work towards strengthening market access, monitoring, capacity building, leveraging financial support schemes and sharing industry’s best practices.

The rationale for the hub was laid out in a July 2016 office memorandum from the ministry. The memorandum  – a copy of which is with The Wire – notes grimly that “less than 0.5% of total procurement of goods and services of CPSES is made from enterprises owned by sC/ST” and that the hub would help improve this.

However, over the 15 months, the hub has failed to live up to expectations as majority of Dalit and Adivasi entrepreneurs continue to struggle to tap opportunities thrown up by the new public procurement guidelines for them.

A key reason, point out analysts, is that the hub has not put in place any mechanism to handhold SC, ST vendors, leaving them to figure out things on their own. Not only that, it is also indulging in activities that critics say are unlikely to yield any substantive benefits to SC and ST entrepreneurs.

For example, Shubha Parmar, founding director, Centre for the Study of Caste and Capitalism (CSCC), has questioned the utility of holding regional conclaves for SC and ST entrepreneurs.

Parmar said the hub had initially outlined in its action plan that it would undertake activities such as developing a business facilitation system to assist procurement, handholding and mentoring to equip entrepreneurs to become a part of the supply chain of the government departments and PSUs.

“But the hub is now carrying out activities like holding regional conclaves (20-odd already held and more in the pipeline) without clearly defining what concrete outcome these would deliver for the Dalit entrepreneurs. We would like to know whether these would give any tangible outcomes, apart from creating buzz,” she asked.

“The need of the hour is to look for answers and bring about course correction in hub’s actions right now,” Parmar told The Wire. CSCC is a think-tank-cum-policy advocacy group working to promote entrepreneurship among Dalit and Adivasi communities

When contacted by The Wire, KK Sharma, who is in charge of the SC-ST hub at NSIC, declined to comment on its performance.

There is also perception among SC and ST vendors that the NSIC is using the hub’s funds to publicise its own schemes and programmes. “NSIC has 64 offices of its own across the country, which it could have used to spread awareness among SC, ST entrepreneurs. “But still it is spending hub’s scarce resources for holding awareness conclaves in different states,” one entrepreneur who has been involved with the hub’s activities, told The Wire.

The NSIC is also opening 20 business facilitation centres for Dalit, Adivasi entrepreneurs. Each centre will need funding of nearly Rs 60 lakh a month to run, according to people with direct knowledge of the matter.

But sources in the MSME ministry said NSIC has been asked to have dedicated offices and manpower for the hub as it is a separate entity.

The Modi government, which is credited for carving out sub-quota out of the overall MSME quota, is due to complete its tenure in a year but has not yet revealed how many SC,ST entrepreneurs have benefited from the scheme under it. Unless that happens, a credible review of the scheme’s implementation cannot be carried out, say industry observers.

Modi keeps saying he is committed to empowering Dalits and making their lives better. While launching the SC-ST hub in Ludhiana in October 2016, Modi said his head “hangs in shame” over incidents of atrocities against Dalits that take place even after 70 years of independence and called for more focused efforts to correct social anomalies.

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