By Jamal Mecklai
It’s great that the government is finally coming up with a sound focus on employment, which everyone recognises as one of the primary economic issues facing India. It is planning a five-year Rs 9,000-crore package for the handicraft sector, which particularly delighted me since I had just drafted a version of this article in which I pointed out that the most significant impact of investment on jobs would be in handloom.
Using data from the ministry of textiles, an investment of Rs 1,000 crore in the handloom sector would generate between 400,000 and 500,000 jobs — well above the job creation impact of the PLI scheme. Significantly, around 30-40% of these jobs would go to weavers and allied artisans, 70% of whom have historically been rural women; the balance would help support the broader ecosystem, including raw material supply chains, logistics, design, marketplaces, etc.
Another crucial value is that since these jobs would best be undertaken in small towns and villages, it would reduce the huge waves of vulnerable migration which creates problems in our urban and semi-urban areas. Banglanatak.com, an NGO that I work with and which has been working for over 20 years helping rural artisans develop and market their work, has found that one of the major benefits is that when people have meaningful employment they are happy to stay back in their villages and rural homes. Indeed, they have found that the average age of inhabitants of the villages they work with has actually fallen sharply over the years, from around 50 or 55 to between 28 and 35 years.
The founder told me this amazing story of a kantha artist who made around Rs 1,000 a month before she was recognised and promoted. She now makes around Rs 5-10 lakh a month! With her new-found wealth, she has bought and donated land in her village to build an artisan’s centre. While this is a truly remarkable story, there are hundreds of others which are equally inspiring.
The investment should not be viewed simply as expenditure on handicraft production. It should be understood as investment in a wider ecosystem of livelihoods, cultural heritage, women and youth, entrepreneurship, local enterprise, community institutions, and rural development. The ultimate objective should be to create villages where the craft remains alive, artists earn with dignity, young people see a future in the local economy, women have greater economic agency, visitors can experience living heritage, and the community itself becomes the custodian and driver of development. The government can provide the enabling investment and institutional support; the community should progressively own and drive the process.
The development process should be viewed as a progression: Identification, followed by mapping, skill development, design, exposure, market understanding, market access, infrastructure, entrepreneurship, community institution, cultural tourism, and self-sustaining craft village.
Clearly, different villages will move at different speeds, and government support should respond to their stage of development. According to Banglanatak, Rs 9,000 crore could be meaningfully deployed in generating around 15 lakh jobs over five years, by which time the jobs would become self-sustaining. The programme could and should be topped up in year 3.
Over and above this sector, the government needs to increase its focus on non-handicraft MSMEs, which are also strong generator of jobs and exports. An investment of Rs 1,000 crore in the textile sector would create between 15,000 and 30,000 direct jobs; in leather, the number is similar (10,000-25,000 jobs per Rs 1,000 crore of investment). If we consider indirect jobs, these industries would provide a 7-8 multiplier on the jobs created by the PLI schemes (for the same investment). Yet the investment in the MSME sector is a modest Rs 48,000 crore, just about 25% of the allocations to the larger projects.
Another facility that the government should provide to MSMEs is easier access to capital. Substantial amounts of capital could be unlocked by simply eliminating taxes for investors in debt funds that provide revenue-based financing (a facility largely used by MSMEs). The cost of the exchequer would be a piddling Rs 500 crore a year, no more than a rounding error in the bigger scheme of things.
The good news is that none of these ideas is new — it’s great that the government finally seems to be listening and these critical pathways for some of our poorest citizens can finally be opened.
The writer is CEO, Mecklai Financial.
Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.