| Just weeks ago, the media had started counting the number of times the phrase "inclusive growth" figures on the prime minister's official website, after he publicly made a case for including the economically weaker sections of society in the ongoing unprecedented economic growth story. |
| Sivaji, a philanthropic multi-millionaire NRI who comes back to India to provide worldclass educational and medical facilities for the poor, faces stiff resistance from vested interests, and is rendered bankrupt. |
| He then gets even with the system by blackmailing and extracting black money from the hoarders, takes it abroad through the havala route, only to launder all of it back into India, and directs the funds to his intended charitable objects. |
| Sivaji conveys in simple terms to the masses the evils of the parallel economy and explains how the rich become richer and the poor become poorer. The money he has extorted and laundered go on to fund jobs, education, vocations and social infrastructure for the common man. The economically weaker sections get access to banking and smart cards. Sivaji advocates private government, and India eventually becomes part of the G-10 nations. |
| Back to reality. The prime minister's plaintive talk of inclusive growth faces a tremendous set of legal and regulatory obstacles in implementation. Take a walk around the Gateway of India in Mumbai and you will notice the sheer throb of enterprise and capitalism. |
| You will find hawkers busy peddling goods ranging from balloons and toys to food, to Chinese-made FM radios and touristy souvenirs. You will find self-styled tourist guides offering to tell stories of the history of the Gateway of India. Some of these businessmen are as young as the founder of Microsoft was when he dropped out of school to start his business. |
| If you get chatting with some, you will find that these poor people earn a top line income of as much as Rs. 500 to Rs. 2,000 a day. That represents too much cash for storage in tattered pockets or beneath jute sacks. Not only do these poor capitalists not get any institutional support in the form of capital, they do not even get to keep their earnings safely in a bank. |
| To open bank accounts to enable safe-keeping of their earnings, one would need to meet the KYC (know-your-client) requirements prescribed by the Reserve Bank of India (RBI). It is indeed ironical and unfair on the part of the regulatory system to ask such people for a driving licence or a utility bill (electricity or phone), or a passport to open a bank account. Likewise, they would be unable to open a mutual fund account for any systematic investment plan. In fact, the Securities and Exchange Board of India (Sebi) referred to slumdwellers and chawl-residents as "men of straw" while dealing with the IPO scam. |
| This column has no intention to deprecate the laudatory objectives of KYC requirements. It only seeks to make a case for re-writing the KYC policy to help men of straw become part of the inclusive growth that the prime minister dreams of. Ask anyone working in the micro-credit space and he will tell you that KYC is indeed the single biggest impediment to such inclusive growth. Talk of micro-credit to a drawing-room economist and you will most likely hear cynical sniggers of how it is too silly an issue to be bothered with. |
| The result is that many of these poor people end up losing their cash savings to robbers and thugs on the street. Others choose to pre-empt getting robbed by spending on living for the moment. It is quite common for earnings to be immediately spent on instant-happiness providers like fancy wristwatches, sunglasses, garish clothes and other useless colourful stuff, most of which too can get stolen or extorted on the street. |
| As for access to credit delivery, the only access our poor capitalists have is to the usurious money-lenders, whose terms of lending are neither comprehensible to the common man nor properly regulated. |
| Various state governments are busy harassing RBI-registered non-banking finance companies with showcause notices under the state-led money lender regulatory laws, but have done little to make the terms of credit clear and transparent for clients of these money lenders. |
| (The author is a partner of JSA, Advocates & Solicitors. The views expressed herein are his own.) |
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