The Hindu Business Line : For a pole position

Ever since the Special Economic Zone gripped the public imagination as a panacea for lethargic policy and an indifferent infrastructure, the concept of the industrial hub has never had a moment’s rest. Just about every sector perceiving itself the victim of backwardness looks to New Delhi for a corner of its own to plant its growth seeds and reap the harvest. Now comes the turn of the unorganised sector. The National Commission for Enterprises in the Unorganised Sector (NCEUS) that submitted its report to the Prime Minster recently has even coined a new term for the hub — Growth Poles (GPs). The panel suggests that 25 such GPs be set up during the 11th Plan, one each in a corresponding number of states with economic incentives similar to those for the SEZs.

Economic incentives of the kind that the SEZs symbolise are perverse not the least because they are discriminatory and, therefore, define exclusivity in an economy moving towards seamless markets. But in the case of the unorganised sector, the same incentives in a GP may offer the kind of leg-up to enterprises with the potential to become modern firms. An outstanding feature of the US economy has been its almost infinite capacity to enable enterprise to take root in a backyard as it were, and blossom into a modern corporation. The unorganised sector in India has had no such enabling environment so far but the GP can provide it by concentrating the facilities for more efficient use by a cluster of enterprises. That is perhaps the best way to bring the kind of dynamism in the sector that has so far remained backward both from the owner and employee’s perspective. Various studies have shown productivity levels in the unorganised sector to be far from optimal, with rural-based enterprises worse off than urban ones. Even in manufacturing enterprises in rural areas that account for a large share of employment, labour productivity is declining. From labour’s point of view, the conditions in the unorganised sector leave much to be desired; the NCEUS has called for social security and better working conditions. The GP can provide the right ambience to implement best workplace practices, and also become the laboratory for entrepreneurs and start-ups. While the climate for entry-level firms is changing for the better, it is not yet conducive for the kind of enterprise-creation that an economy on the roll should foster. Organising the unorganised sector into spatial clusters with time-bound incentives can change all that for the better.