Small is Beautiful

Rajesh Jain of raises 2 very important (and relevent) questions with regard to Rural India and SMEs (i.e. Small-Medium Enterprises) :

1. Why are SMEs small?
2. Why is rural India poor?

Rajesh’s analysis throws up some pertinent facts :

They are both very large markets and suffer from coordination failure ; There are huge information inefficiencies that exist in both, and significant gaps where Technology can help meet the needs.

In addition, I think part of the problem lies in our not being able to use *indigenous* technologies to the extent possible.

Very often, we make the mistake of trying to import a technology from a foreign land without adapting it suitably to local conditions. And then we blame extraneous factors when the implementation fails.

E.F. Schumacher advocates an alternative in his book – Small is Beautiful – where he profiles a number of “technologies”, developed locally, in response to local needs, that result in sustainable development and economic growth.

Closer home, I am told, a small unit in IIT(Bombay) is also trying to develop some home-grown solutions to home-grown industrial problems. So is the HoneyBee network of Professor Gupta in IIM(A).

There is another facet to this problem that has often bothered me : There is no dearth of Business Management graduates in this country, with business schools mushrooming in every nook and corner. Yet, a very small percentage of them end up becoming entrepreneurs or take up employment with SMEs.

I don’t know if the blame lies with an education system that is designed to produce “workers” not thinkers / leaders, or with our society for bringing up each generation with the belief that a “secure job” is the only way to a secure future, and that business is only for a fortunate few who have wealth in their family that they can afford to squander.

SMEs (and Rural India) would benefit tremendously with the influx of new ideas and learnings from these management graduates, if only they allowed themselves to contribute. And the students, in turn, would also get a chance to put their education to good use, instead of joining the corporate ladder on the 80th rung, hoping and wishing to make it to the top before they reach the ripe old age of 60 ! The way I see it, it would be a win-win situation. And the economy would benefit too.

Here’s hoping that we will see more such initiatives in the days to come…