#01: Unshackling India
This past week I was reading Harish Damodaran’s “Break to Breakthrough”, a biography of Hatsun group and its founder Chandramogan.
To the uninitiated, Hatsun Group, also known as Hatsun Agro Private Limited is the largest private dairy enterprise in India. Started in 1970 as an ice-cream factory, Hatsun grew leaps and bounds, especially after it forayed into the milk in late 1990s.
While the economic liberalisation has its fair share to play in the success of Hatsun, it is not its sole determinant. As we read more, we find that while economic liberalisation occurred in 1991, other laws were bought in which again created artificial barriers. Barriers bought in to protect the milk cooperatives, from “Big Business”.
But if we pause and look back, milk cooperatives themselves were the “Big Business” bogeyman. Farmers were at their mercy, as they would pay on their terms and since they were effectively an monopsony, farmers had little choice.
Along came Hatsun, which tried and succeeded in enriching farmers and what stood in their way not technology, capital or ambition but the laws and regulations meant to “protect” farmers.
When the backdoor regulations (MMPO - Milk and Milk Products Order) were finally scrapped Indian Dairy Sector exploded catapulting India to the top of dairy producing nations.
My concern here is not a specific sector, but the general trend in India where rather than putting a guardrails to safeguard citizens and economy, we put a cage around our people and our enterprises.
There is a concept called “Residuary Powers” in constitutional law, wherein any subject or powers not explicitly mentioned is vested with one of the entities. Thus, in India, any subject that is not mentioned in the concurrent or state list by default becomes the domain of Union Government.
This mentality has also crept into the governance and citizen-state relations in India. Rather than set people free and intervene only when some undesirable outcome occurs, Indian state restricts citizens lives and only allows a few things and others that escape its purview.
This has created a perpetual need for state capture, either by corporates through corruption or by social groups through political mobilisation. No wonder, average Indian has for decades felt that India is a corrupt and decisive country where people don’t cast their vote but vote their caste.
Indians don’t help each other out because we are disincentivised to do so. There was and still is a reluctance in India to help a victim of road accident because the state then harasses you by involving you in the proceedings. You’d rather let the person die, than help them and let the system kill you by its slow grinding process.
If you help someone out, the state (and to a certain extent the society) doesn’t thank you, but suspects you. They are unable to understand why anyone would help others. Hatsun group was able to boost profitability by not not just streamlining things in their factory, but also investing in research that improved farmers productivity as well as transparency.
They did not do it entirely out of altruism, but out of pure business logic. Helping farmers meant earning their loyalty and more importantly reducing costs, as it made more sense for hatsun to invest in 4000 farmers be more productive and produce greater milk than having 70000 unproductive farmers who produced less milk on their own.
Indians will help each other out when it makes sense to do so. The first step in that is unshackling India, letting us help each other out, make our lives better. To borrow from one of my favourite pieces of rap:
“People aren’t chessmen you can move on a board, at your whim - their dreams and desires ignored, . . . . Give us a chance, so we can discover, the most valuable ways to serve one another.”
Till then…. Jai Hind
Book Notes: Broke to Breakthrough - Book Notes
Youtube: Fight of the Century: Keynes vs. Hayek - Economics Rap Battle Round Two
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