Affirmative entrepreneurship

The launch of a SEBI-registered venture capital fund (VCF) to exclusively finance Dalit-owned businesses is recognition of the emergence of an entrepreneurial class in this historically discriminated community that is now eyeing opportunities for further growth. The last couple of decades have seen quite a few Dalits setting up successful businesses in diverse fields — from construction, transport and hospitals to manufacture of leather goods, cranes, forgings and industrial helmets. Most of these are small and medium enterprises that have graduated beyond the stage where their funding needs can be met through term loans from the National Scheduled Castes Finance and Development Corporation and the like. It is this gap that is sought to be bridged through the newly launched fund, which plans to raise Rs 500 crore for investments in Dalit-promoted ventures whose capital requirements may typically be in the range of a few crores.

The idea of a dedicated VCF for Dalit entrepreneurs is worthwhile for two reasons. The first is that it promotes the cause of liberal, ‘inclusive capitalism’. While business in India is no longer the preserve of a few ‘vaishya’ or traditional mercantile castes, the fact remains that this widening in the social base of capitalists has not really extended to communities in the lowest rungs – including those once regarded as ‘untouchables’. Currently, there is just one listed company whose promoter happens to be a Dalit. The 1,000-odd members of the Dalit Indian Chamber of Commerce & Industry, which has initiated and lobbied for the new fund, are mainly first-generation entrepreneurs with modest turnovers and burning ambitions. They deserve encouragement, if only for the symbolic value that the diversity of its capitalists has in sounding the death knell for the country’s centuries-old caste system.

That links up with the second reason for having a Dalit-focused VCF. The basic principle of affirmation action, as opposed to blanket quotas, is that a conscious attempt is made to identify, reach out and improve the capabilities of particular sections of society – something that no government or corporate would bother to do in the normal course. A venture fund targeted at Dalits can extend the same approach, to identifying potential entrepreneurs from the community and investing in their projects. What is necessary, however, is that the fund is professionally managed and the projects being financed are fundamentally sound. It would also help if such funding is backed up by marketing support. A big chunk of Dalit entrepreneurs today are beneficiaries of outsourcing in the post-reform era, with their products forming part of the supply chains of major corporates. With the likes of the Tatas and Godrejs even making ‘supplier diversity’ a part of their vendor development programmes, a Dalit VCF is an idea whose time has come.

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