Pandemic, Informal economy and Khau Galli.

Formal sector issues

Just today it was published that output from eight formal sectors of the economy who make the bulk of the Indian economy were down on a month to month basis . This means all those apologists for the Government who said that it was ok that the Govt. didn’t give the 20 lakh crore package which was announced. In fact, a businessman from my own city, a certain Prafull Sarda had asked via RTI what happened to the 20 lakh crore package which was announced? The answers were in all media as well as newspapers but on the inside pages. You can see one of the article sharing the details here. No wonder Vivek Kaul also shared his take on the way things will hopefully go for the next quarter which seems to be a tad optimistic from where we are atm.

Eight Sectors declining in Indian Economy month-on-month CNBC TV 18

The Informal economy

The informal economy has been strangulated by the current party in power since it came into power. And this has resulted many small businesses which informal are and were part of culture of cities and towns. I share an article from 2018 which only shows how good and on the mark it has aged in the last two years. The damage is all to real to ignore as I would share more of an anecdotes and experiences because sadly there never has been any interest shown especially by GOI to seek any stats. about informal economy. Although CMIE has done some good work in that even though they majorly look at formal, usually blue-collar work where again there is not good data. Sharing an anecdote and a learning from these small businesses which probably an MBA guy wouldn’t know and in all honesty wouldn’t even care.

Khau galli

Few years back, circa 2014 and on wards, when the present Govt. came into power, it did come with lot of promises. One of which was that lot of informal businesses would be encouraged to grow their businesses and in time hopefully, they become part of the formal economy. Or at least that was the story that all of us were told. Due to that they did lot of promises and also named quite a few places where street food was in abundance. Such lanes were named ‘Khau galli’ for those who are from North India, it was be easily known and understood. This was just saying that here are some places where you could get a variety of food without paying obscene prices as you would have to vis-a-vis a restaurant. Slowly, they raised the rates of inputs (food grains), gas cylinder etc. which we know of as food inflation and via ‘GST’ made sure that the restaurants were able to absorb some of the increased inputs (input credit) while still being more than competitive to the street food person/s. The restaurant F&B model is pretty well known so not going there at all. It is however, important to point out that they didn’t make any new ‘khau gallis’ or such, most or all the places existed for years and even decades before that. They also didn’t take any extra effort either in marketing the khau gallis or get them with chefs or marketing folks so that the traditional can marry to the anew. They just named them, that was the only ‘gain’ to be seen on the ground.

In its heyday, the khau galli near my home used to have anywhere between 20-30 Thelas or food carts. Most of the food carts would be of wood and having very limited steel. Such food carts would cost anywhere around INR 15-20k instead of the food cart you see here. The only reason I shared that link is to show how a somewhat typical thela or food cart looks in India. Of course YouTube or any other media platform would show many. On top of it, you need and needed permission from the municipality a license for the same which would be auctioned. Now that license could well run from thousands into lakhs depending on various factors or you gave something to the Municipal worker when he did his rounds/beat much like a constable every day or week. Apart from those, you also have raw material expenditure which could easily run into few thousands depending upon what sort of food you are vending. You also would typically have 2-3 workers so a typical Thela would feed not only its customers but also 2-3 families who are the laborer families as well as surrounding businesses.

As I used to be loyal and usually go to few whom I found to be either tasty or somehow they were good for me. In either case, a relationship was formed. As I have been never fond of crowds, I usually used to in their off-beat hours either when they are close to packing up of when I know they usually have a lull. That way I knew I would get complete attention of the vendor/s. Many a times I used to see money change hands between the vendors themselves and used to see both camaraderie as well as competition between them. This is years ago, once while sharing a chai (tea) with one of the street vendors I casually asked I have often seen you guys exchanging money with each other and most of the time quite a bit of the money is also given to the guy who didn’t make that much sales or any sales at all.

The vendor replied sharing practical symbiotic knowledge. All of us are bound by a single thing called poverty. All of us are struggle. Do you know why so many people come here, because they know that there would be a variety of food to be had. Now if we stopped helping each other, the number of people who would make the effort would be also less, we know we are not the only game in town. Also whatever we give, sooner or later it gets adjusted. Also if one of us has good days, he knows hardship days are not far. Why, simply because people change tastes or want variety. So irrespective of good or bad the skills of the vendor is, she or he is bound to make some sales. The vendor either shares the food with us or whatever. Somehow these things just work out. And that doesn’t mean we don’t have our fights, we do have our fights, but we also understand this. Now you see this and you understand that these guys have and had a community. Even if they changed places due to one reason or the other, they kept themselves connected. Unlike many of us, who even find a hard time keeping up with friends let alone relatives.

Now cut to 2020, and where there used to be 20-30 thelas near my home, there are only 4-5. Of course, multiple reasons, but one of the biggest was of course demonetization. That was a huge shock to which many of thela walas succumbed. Their entire savings and capital were turned to dust. Many of their customers will turn up with either a INR 500 or INR 2000/- Re note where at the most a dish costed INR 100/- most times half or even 1/3rd of that amount. How and from where the thela walas could get that kind of cash. These are people who only if they earn, they and their family will have bread at night. Most of the loose change was tied up at middle to higher tier restaurants where they were giving between INR 20/- 30/- for every INR 100/- change of rupees and coins. Quite a few bankers made money by that as well as other means where the thela walas just could not compete. These guys also didn’t have any black money even though they were and are part of the black/informal economy. Sadly, till date no economist or even sociologist as far as I know has attempted or done any work from what I know on this industry. If you want to formalize such businesses then at the very least understand their problems and devise solutions. And I suspect, what is and has happened near my house has also happened everywhere else, at least within the geographical confines of the Indian state. Whether it was the 2016 demonetization or the pandemic, the results and effects have been similar the same all over. Some states did do well and still do, the suffering still continues.

With the hope that the new year brings cheer to you as well some more ideas to remain in business by the thela walas, I bid you adieu and see you in new year 🙂