By Benjamin Lyngdoh
An economic process is a system that converts raw materials into finished goods/services which are then consumed by the consumers. For example, potatoes as raw materials are processed into chips/chops which are then offered to the consumers for consumption. The exchange of money in the value chain (from raw potatoes to consumers) drives development. Any economic process is driven by humans. They are more important than machines, equipments, etc. This is the reason why no development can happen without a productive human resource. The failure to factor this results in a handicap. The Meghalaya economic scenario explains the handicap as despite being rich in resources/raw materials, progress has been slow (state GDP growth rate of 4% over 2016-17 to 2020-21 at constant prices [source: MOSPI, 2022]). Clearly, something is wrong with its economic processes.
The first element of economic process is resource management. Meghalaya has been trying to address the problem of unemployment for some time now. But, simply just asking the youth to become entrepreneurs and start a small business has little meaning. Plus the continued practice of motivating the youth to initiate repetitive/imitative businesses which are already present in the market space has little value. For example, if there are already five grocery shops in a locality it would be uneconomical for someone to start a sixth. The solution lies in resource management. It would be beneficial if at every localised level (village/block area) a continuous assessment is done on the resources/raw materials available. This would then become a base for the initiation of economic activities at an individual/community level. If the resources are assessed and managed appropriately the problem of unemployment would not be so bad. Take the southern stretches of Meghalaya which are rich in broomsticks. These have largely been sold in bulk to middlemen for onward processing. If the broomsticks can be properly managed at the village level it can lead to the establishment of many broomstick processing units providing employment to many at the village level. This would also generate income for the local businesses.
The main challenge of unemployment is that the majority of the business start-ups are drone or imitative in nature. Drone means that businesses being initiated are old-school with no innovation at all (Betel-nut shops, etc). Imitative means entrepreneurs just imitate whatever the others are already doing (Grocery shops, etc). This brings capacity building into play which is the second element of economic process. It refers to making the people capable of productive employment. It is important to draw a line between motivation and capacity building. While the former focuses on mentally preparing oneself, the latter is oriented towards skilling and empowerment. The problem is that the majority of business development programs are purely motivational only. Motivation has no meaning without skills and technical know-how. Now, capacity building requires a dedicated focus on innovation which is of two types – newness and process. Even globally, newness innovation is few as it is difficult to come out with a completely new product/service frequently. Most of the innovations are ‘process’ as seen in the form of better packaging, better service offering, better product design, etc. Capacity building has to focus on the creation of better processes and new combinations else all start-ups would just be drone/imitative.
The third element of economic process is production of goods and services. Here, labour has to be available and capital is equally important. Meghalaya has an abundance of labour which can be trained into productive skills areas. The problem lies in capital formation and its subsequent investment. The situation is such that those who have capital do not know where to invest and those who have brilliant innovative ideas do not have the financial resources. If production has to be seamless then there is a need to bridge the gap between money and talent. What is required is a medium/platform where the two parties can meet and negotiate. Many are aware of the reality show Shark Tank in which budding entrepreneurs with bright ideas pitches their business proposals in front of wealthy investors. If impressed and convinced the investor then invests their wealth in the business idea. It is a win-win situation for both. But then again, production cannot take place in the absence of sound infrastructure. For example, in the absence of proper roads, electricity, etc the broomsticks from south Meghalaya would continue to be sold through middlemen with no opportunity for the local villagers to process them into finished products.
Goods production has to be supported by efficient distribution which is the fourth element. This is where logistics and marketing comes into effect. An excellent product X has no value if it cannot be distributed to other parts of India and beyond. The lack of effective distribution networks hampers entrepreneurial spirit. Meghalaya as a market is too small. Again it is about the availability of sound infrastructure. Airports, railways, roadways and waterways are critical for distribution of goods and services. Distribution has to be handled with care. For example, the distribution of tourism is akin to overselling. This happens when a destination is over-marketed while on the backdrop of poor logistics and service quality. The majority of the tourism services are located in Guwahati and Shillong. This has little value when it comes to empowerment of the rural youth. On the other hand, there is a case of underselling. The varieties of local chips now available are fit to challenge the likes of Lays, Uncle Chips, etc. However, they lack proper packaging and information on the product; short shelf-life and many do not have FSSAI (Food Safety and Standards Authority of India) certification. These are red flags that need attention.
Consumption is the final element. It goes without saying that for businesses to thrive and grow the goods produced and services offered would have to be consumed. In the fitness of things there lies the need for the consumption of locally produced/offered goods and services. Unless the products of local businesses are bought by people the local economy will never grow. It is the starting point of development and the growth of more local entrepreneurs. This is not a case of emotional purchase, rather a sustained practice of buying local products. Emotions come and go. What is needed is an understanding of how the local economy works. Much work is needed in this aspect. The state government would do well to really immerse in the needs of the local businesses and initiate a drive to boost consumption of local products. Making the consumers realize the importance of supporting local entrepreneurs should be one of the focus areas in 2024. For instance, now that the festive season is over the households may evaluate in money terms that ‘of all the goods/services consumed in the last three weeks how much was spent on local products’. This analysis might just change our future consumption behaviour.
In the end, what are needed are policies and strategies that factor all the elements of economic processes. It would be holistic and more productive. (Email – [email protected])