- Does transparency necessitate the direct engagement of citizens with the government at all levels ?
- Is access to the millions of documents processed daily at government offices via the Right to Information sufficient to assure a transparent governance system?
- Does transparency only help when the issue is significant not routine, when large amounts of money are laundered versus petty sums of money exchanged as bribe?
- Do we conflate transparency with fairness? Also, is transparency a necessary precondition to a fair and just governance system? Aren't many of our petty corruption practices common knowledge? What is the difference between common knowledge and transparency?
- What kinds of action by citizens, courts of justice or other government bodies need to follow that first step of creating transparent governance? Naming and shaming? Bringing the accused to court? Publicizing these acts in media?
From what I have seen within my own work context in India - local government, small enterprises in a small town, urban slums - people here have common knowledge regarding regulatory and government agencies. They know who the bribe-accepting officials are, and they know to whom they have to give commissions and how much. The public seems relatively aware of how governance as usual works, and especially those who do business - even at the very small business scale - seem to understand and shrug off the fact that this is just how it is.
Above: A "corner store" kiosk at one of the city's most prominent slums (in the central part of the city). Ironically, the Odisha State Employment Mission office is situated at a five minute walk from this slum, just down this same street.
In the case of small enterprises, there are seemingly a hundred regulations that entrepreneurs must navigate. Given (1) the severe financial and resource constraints under which micro and small entrepreneurs in India operate and (2) the lack of training, education, or creation of cultural norms that help entrepreneurs understand why these licenses may be important, it's hardly surprising that they bypass, ignore or buy off these regulatory permits.
We ourselves are now initiating the process of acquiring a health & safety / food license for our small snack food enterprise that we started a few months ago. This is in addition to the registration with the District Industries Centres (DIC), which requires detailed information on capital costs, land acquisition, details of production and so on. Now, that DIC registration is a precondition to filling out even more paperwork that is required for various government subsidy schemes. Paperwork exists and is hated in every country; India is not an exception to this.
The problem at least in this region of India is not the regulatory requirements. The problem here is that these don't lead anywhere, except to even more paperwork. The problem is that this mass of regulations often becomes yet another tool for explicit harassment by regulatory officials. The problem is that the cost of interacting with government - time costs, and repeated petty bribes - is too high for micro or even small businesses to frequently bear.
When government discourages small entrepreneurs from using government opportunities
Consider as an example my visit to the DIC office. My program manager and I went to speak with one of the senior officials who would be part of the government chain handling our application for a subsidy for our MBC food processing unit. Our snack food range, scale, and scope of mechanised operations is expected to grow over the next couple of years but would be classified as a micro/small enterprise for now; it is eligible for a subsidy under the National Food Processing Mission. The conversation was short and useful. But it ended as follows:
The official asked me how much the total cost of my operations would be. I replied that it would be about INR 30 lakhs. [According to the National Food Processing Mission guidelines, the subsidy can be a maximum of 25% of total project cost which in our case comes to INR 7.5 lakhs (not a small amount for us or other startups)]. In response, the official himself confirmed what I already perceived - the cost of engaging with the government to push and pursue our application file would be so high that it simply wasn't worth the paltry sum of 7 1/2 lakhs.
Not that we were ineligible, not that we were unworthy, not that we wouldn't get the subsidy at the end of the day (or six months, or year) but that it would simply be too much work for so small an amount.
So out of either kindness, malice, apathy, or the desire to prevent the pile of application files on his desk from growing higher, the government official in the Industries sector asked us to not pursue the subsidy application unless we were able to invest about INR 1.5-2 crore in our unit (according to guidelines the subsidy can be a maximum of 50 lakhs, which at 25% of total project cost, comes to a 2 crore project).
There are many things wrong with the above story, but what bothers me most is the fact that after all these little roadblocks that entrepreneurs at least in this state of Orissa have to face over and over and over again, that these same government officials would say, "Oriyas are not entrepreneurial".
Coming back to our food license... The following is the list of forms to fill.
Regulatory Checklist for Food License
- In the case of an enterprise with assets below 12 lakhs, Form A (applies to us in the case of our small food enterprise)
- ID Proof for Proprietor and Personal Details
- Trade License
- Medical Certificate of Employees
- Water Testing Report
- Food Certificate Management Plan
- Annual Turnover details
- Residential Proof
More cumbersome, More costly
One of the problems with the thoroughness of the above checklist is that we need to run around a very large number of government offices trying to get the paperwork done. Because of course there is NO centralized office to process all these forms, NO streamlined channel specifically for this class of permits, NO simple online form filling....
- Each form has to be filled in a separate office. Each verification done by a separate set of officials. Many of these offices are in obscure back alleys and not in the same part of the city.
- What this means is extensive interaction with each sub-department, sub-office, sub-officer.
- Which means that if the process gets blocked, we know exactly where it is blocked - the water test, the medical test, the food test, the budget. Our application won't be mysteriously rejected and returned to us for a full revision. We will be able to follow our application across offices and clerks..... a more transparent regulatory chain.
- But does this improve transparency of governance in the ideal meaning of the term? If it does, does this make things better and fairer for us if not easier? I'm not entirely sure.
Anyway, forget facilitation of this cumbersome process, just getting information about these requirements and their corresponding forms from our peculiarly uninformed government officials has taken us a week of running around. I still don't understand - perhaps a cultural gap - how a government clerk working in an office for fifteen years could not know which forms we have to fill. Am I missing something? An unspoken demand for a bribe?
- We are a project with a small but dedicated full time staff, so we have the luxury of having one very capable staff member work full time at just this running around. But what of micro or small businesses that can neither afford such manpower, nor have any locally well-connected person in their network who can do this for them?
Now, we are "well connected" so dropping the names of senior officials or well known figures in the city who are working on this project with us often buys us some respite from harassment by government clerks. But then again, we aren't even counting the time cost of our staff member - all those hours spent by him in going and chatting with half a dozen people about the requirements, who are the right officials to contact, whom to befriend, and whose palm to grease so that we somehow navigate this regulatory maze in no longer than a month or two.
How can a small entrepreneur have a "lean startup" in a context where a basic license is complicated, takes so much time, and requires hiring someone who understands how local government agencies work or just in which alley these government agencies are located?
One of the requirements for a food license is to test the quality of the water used for food preparation. I assumed this would mean that an official actually visits the site of production and takes a sample of the water to test.
I was wrong.
Our staff member visited the government laboratory that is supposed to do the water testing, and was asked to bring back a couple of vials of water from the site. Our staff member returned to our office and asked me for vials. I looked at him in amazement because I didn't quite understand the logic here. So if I used contaminated water for food production, but filled a couple of bottles with water from an uncontaminated household tap, I'd pass the test?
This to me is a joke and an emblem of the rotting institutions here. This above regulation on paper does what it is supposed to; in practice it achieves nothing. It wastes my time and does nothing to protect my product's consumers. So why this farce? And who oversees it?
But there are more problems with this than just its utter meaninglessness.
Enabling Access to Clean Water Before Enforcing the Use of Clean Water
(1) Even were the regulation to be tightly enforced, having access to clean water at all is impossible for most low-income, micro-scale entrepreneurs in the city because of poor urban planning and development.
Street vendors or small food kiosk owners typically live in slums. They don't have uncontaminated drinking water themselves, how would they access the same for their food production purposes? Getting a manipulated license is cheaper than getting access to clean water, then paying a fee to certify. So of course no one's going to do it. Why would they?
Food is a low-cost, low-skill, high return business option and hence a typical point of access into the [informal] economy for micro entrepreneurs. The food sector provides wonderful business options to the base-of-the-pyramid entrepreneur population and they shouldn't be denied these opportunities because of regulation that they couldn't adhere to even if they chose to.
Give micro entrepreneurs (including street food vendors) who live in slums or low cost public housing, [free] access to clean water at home. Clean water is a basic right.
Access to clean water will automatically make it more likely that clean water will be used for food production. Why? Because most food production at the micro business scale is done at home since this is the cheapest option. This will not always be true, but as Step # 1, it is fair and efficient.
Educate Consumers and Vendors on the Need for Food Regulation
(2) In addition to making it possible for food micro businesses to actually follow regulation, efforts are also required to educate both vendors and consumers on the need for and value of these regulations. Else consumers will not demand food that has been produced according to a certain set of criteria (or quality standards), and acquiring the permit will continue to be an unnecessary cost for the entrepreneur.
You have eaten street food? In India? Then you know that the volume of sales that can be achieved by food made and sold in unsanitary conditions by the side of the street is tremendous, and more importantly, completely unaffected by licensing or guarantee of hygiene. So in a context where there is no attempt to build consumer demand for food that is clean in addition to fast, cheap, and tasty, a vendor feels no pressure to be licensed.
Educate consumers on consumer rights, particularly on how their food choices affect their health. Explain to entrepreneurs how the masses of people they are feeding each day puts a lot of public health responsibility on their shoulders. Let there be a general understanding that regulation of food safety and hygiene is a public good - something that benefits all people - and not an unnecessary burden.
While this will likely not help create the culture of regulation enforcement among government officials, it may at least start creating a culture of regulation adherence among the entrepreneurs.