In search of our entrepreneur

Prof E. Bijoykumar Singh *

A Manipuri entrepreneur preparing a handloom item at a stall during "Ecocrafts Exhibition" at NEDFi Haat, Guwahati
Pix - Shyam

If I am asked to identify a leverage to alleviate the problem of poverty, backwardness and alienation in Manipur, I will point to rural development. Much of the poverty, backwardness and alienation in this region are characteristics of this problem and a common problem in any state is the inability to utilise the resources optimally. The resources available in the state are not properly utilised and the resources from outside are also not properly absorbed.

What the renowned administrator Nari Rustomji said of Arunachal is valid for this state. The plan money was not used properly and despite huge investment over time in this region it failed to take off. The vibrancy of pre independence era was no longer there. This has literally reduced the regional growth experience into a black box and development a gamble with an increasingly bigger bet. The widening gap between rich and poor states is a major threat to national security and economic integration.

Manipur being largely rural if rural development is taken care of, the plethora of centrifugal forces currently haunting us will gradually disappear. Decades of planning and crores of rupees have not changed the core of rural areas prompting us to look for alternative routes to rural development. It is in this backdrop that the role of entrepreneurship began to be discussed seriously. Entrepreneurship is increasingly realised as a strategic development intervention for accelerating rural development. Without it other factors will be wasted.

Rural India is inseparable from agriculture. Rural Manipur also is no exception. The predominance of agriculture in rural income and employment justifies the focus on agricultural development as a key to rural development. Though non agricultural pursuits will become more prominent as the economy grows, currently the focus has to be on agriculture. Huge potential exists for increasing productivity and efficiency but also for capitalizing on the opportunities offered by the new trade regime.. Thinking that we can and planning how to do are traits of entrepreneurship. However rural population in general cannot be expected to come up immediately to pursue the strategies. Important inputs into an entrepreneurial process are capital, management, technology, buildings, communications and transportation infrastructures, distribution channels and skilled labour. Rural areas lack most of these inputs.

The issue therefore is how to increase the supply of entrepreneurs in rural Manipur. The solutions are associated with one's understanding of what entrepreneurship is. It ranges from 'there is nothing that one can do to 'there are different ways of doing it'. If this is innate, it cannot be used as a leverage. Being innate implies that one cannot nurture it. On the other hand it is the belief in our ability to nurture it that prompts policy makers come up with programmes for entrepreneurial development. However given the quality of knowledge on the determinants of entrepreneurship we are not in an enviable position.

One has to take certain proactive measures to produce more entrepreneurs. We need to understand and then tweak the determinants to produce the desirable outcomes. We have to create a business environment that encourages the initiatives of rural entrepreneurs and to enhance the human and institutional capacities required to foster entrepreneurial dynamism and enhance productivity. Business opportunities arise from markets and entrepreneurial capabilities.

Micro and small scale enterprise are appropriate for rural people- large number of non-farm employment and small capital and little sophisticated managerial and technical skills .Some cultures or social groups are more conducive to entrepreneurial behaviour than others. Inheritance of entrepreneurial tradition, family position, social status, educational background and the level of education are important factors. It can be stimulated through a set of supporting institutions and through deliberate innovative actions which stimulate changes and fully support capable individuals or groups .

In contrast, another view to which I subscribe is that the problem is not shortage of entrepreneurship but rather its misallocation. Entrepreneurship is always there and to blossom it requires appropriate incentives in terms of institutional rules. It is the set of rules and not the supply of entrepreneurs or the nature of their objectives that dictate the ultimate effect on the economy via the allocation of entrepreneurial resources. What is required is the adjustment of rules of the game to induce a more felicitous allocation of entrepreneurial resources. Economic policy is the art of the feasible.

Practicability and the ease with which a measure can be implemented are important in identifying policy variables. The supply of entrepreneurship is there and it has to be allocated optimally. The rules of the game that specify the relative payoffs to different entrepreneurial activities play a key role in determining whether entrepreneurship will be allocated to productive or unproductive directions and that this can significantly affect the vigour of the economy's productivity growth. One need not wait slow cultural changes to redirect the flow of entrepreneurial activity towards more productive goals.

It can be done by rule changes which can be implemented faster. The activities that promise the greatest monetary returns lead to a reallocation of entrepreneurs from one sector of the economy to another and that reallocation can take forms which give the appearance of the vanishing or emergence of entrepreneurs as a group.

There are numerous examples of entrepreneurs anywhere any time. Some are productive and some are non productive. Kangla Foods of Nambol, Manipur is an example of productive entrepreneurship. The politicians with rural backgrounds are also entrepreneurs par excellence even though they are non productive from the social angle. The reason why we have many non productive entrepreneurs in rural areas is the incentive system. It takes years to replicate a kangla but what a politician needs is only a few years to amass wealth equivalent of several kanglas.

The crooks also operate under the belief that they will not be caught every time they rob the public exchequer. Besides they control the executives also. Manipur has the reputation of having the highest per capita insurgent group in India. The risks these young men take and the dreams they are fighting for should qualify them as entrepreneur par excellence. They have every trait of an entrepreneur in the broadest sense. When such traits are abundantly found, shortage of entrepreneurs cannot be an issue. That their activities are not productive endorses our view.

The incentive structure encourages wealth from any source. The point is any portfolio of measures to nurture entrepreneurship can be sabotaged leading to more and more exclusive development .if the payoff system remains as it used to be , misallocation will persist. Entrepreneurship has not disappeared, it has been misallocated. This may explain the poor visibility of outcomes of our efforts. Let us see how a misconceived incentive system can lead to non productive entrepreneurship.

In ancient Romeas long as it did not involve participation in industry or commerce, there was nothing degrading about the wealth acquisition process. Persons of honourable status in ancient Rome had three primary and acceptable sources of income: landholding (not infrequently as absentee landlords), "usury" and what may be described as "political" payoff." This discouraged industry and commerce .

In medieval China, an official entered upon his duties only after spending long years in study passing many examinations; he then incurred debts to get himself appointed in proper places and then proceeded to extract the amount he had spent on preparing himself for his career from the public he administered-and extracted both principal and interest. The unfortunate part of the tale is that Manipur has such problems even in the 21st century. Only a few of our industrialists are millionaires.

The presence of crorepati MLAs from remote highly backward areas supports the view that it is there. Those officials who had bought their jobs and offices are bent on recouping their 'investment'. Now and then a few idealists are lured by money and this sends a very confusing message to the people. Thus reallocating entrepreneurship from unproductive activities to productive ones should be given higher priority than programmes for developing entrepreneurship. Such prioritisation may have been unnecessary where entrepreneurship is more widely diffused and numerous stakeholders can handle any sabotage attempt.

As our challenges multiply, nurturing of entrepreneurs is as important as its reallocation. However nurturing entrepreneurship by training them and then abandoning them to the mercy of rent seeking entrepreneurs will accentuate the problem of misallocation. Thus any hand holding exercise should minimise the interface between would be entrepreneurs and rent seeking officer entrepreneurship.