“The hafta (bribe) I pay to this municipal officer is cheaper, compared to shop rent, in a city like Mumbai!” says Riyaz, a street vendor selling cosmetics and lipsticks on an overly crowded street in Bandra. He appears relaxed while telling me the story of how he pays the hatfa (bribe) to a municipal officer once every 15 days. This made me curious; I further inquired how much in bribe he pays. “Between Rs 500 and Rs 700, depending upon his mood; otherwise, during festive seasons like Diwali, Christmas, or Holi, I am compelled to pay Rs. 1200 without any scope of negotiation,” utters Riyaz, in a sense of protection, with a smile.
I find a lot of vendors like him here, and I am sure that despite the richest municipality organisation, i.e., BMC (with a budget reaching Rs 53,000 crores), in Mumbai, the location of the informal economy on the streets is larger than the regulated one, and we’re OK with that as long as cheating is not caught! These bazaars, in urban spaces, do not only cater to the needs and demands of middle and low-income consumers but also represent and proffer the social and economic occupations and opportunities for many street vendors.
These street vendors, often coming from the lower strata of the caste society, do not inherently possess the privileges to run their trade in the licenced shops or stores. And the question of enterprising in the mall is certainly beyond the imagination. “My grandfather started his part-time business selling jeans and shirts in the 1980s. My father did not take much interest in continuing with it,” confesses Ram Yadav, a street vendor from Colaba, who sells imitated jeans that are ‘Made in China’ between Rs 100 and Rs 700. “The best thing about my business here is that even the elite class buys from me without regretting their choices,” Ram laughs off.
Vendors like Ram Yadav and Riyaz are not new and will never get old. A tête-à-tête with them reminisced about the stories of my research work in Nathu La Pass, Sikkim state, in May 2018. India’s border trade with China can be traced back to the golden days (Silk Route), but in 1962, when these two super-Asia giants went to war, the border trade between the states of Sikkim, Uttarakhand, and Arunachal Pradesh with China collapsed. In 2005–06, after decades of negotiations and talks, the trade revived, but only to learn that the traders on the Indian side were unhappy with the statist nature of the Indian government.
As per the border trade pact with China, since 2006, we have been entitled to export 20 items and import 14 items as listed. The trade list was rejuvenated in 2012; the export items that locals from these regional states shot up to 36 and the import items to 20. Yet, the traders were unhappy, as stated in my thesis, “A Study On Informal Economy Between India And China With Reference To Border Trading And Informal Exchanges Via North East India Region”.
The traders confessed that they resort to informal exchanges with the Chinese traders because the government is too slow and Fabian, by nature, to acknowledge the entrepreneurial spirit of the traders from both sides. Amid heavily secured trade points, even the capital limit (earnings) is regulated, due to which Indian traders are anticipated to not earn more than Rs. 2,00,000, and this affects their incentives formally.
Coming back to the saga in Mumbai, Omkar Pandharkame, heading the Department of Entrepreneurship Studies at Atlas SkillTech University, informs me that he is launching a ‘Street Entrepreneurship’ course for the students of management and marketing. This is a positive as well as a practical approach since it is important and cognitive for the students to develop a perspective on their lived experiences when they do projects and assignments with street vendors.
Going beyond the rote learning in the classrooms, which management colleges often suffer from, the idea behind this initiative is to enhance start-ups, selling skills, competitiveness, and collective initiatives, thereby uplifting the experiential gap between the street vendors and the management students, especially for the advancement of interpersonal relations, research studies, and the infusion of skill-based technology for the street vendors.
In 2014, India ranked 142nd on the Ease of Doing Business Index. Whereas, since 2020, she has globally ranked 63rd. Amid brouhaha about India’s GDP growth story, nations like Kazakhstan (25), China (31) and Rwanda (38) are doing pretty well. The features of ‘Ease of Doing Business’ highlight the nature of fairness and openness, regulations, taxes, red tape-ism, corruption, and any other vital aspects of welcoming entrepreneurship.
As per a report in the Asia Studies Journal (2019), the cases of harassment and trauma that street vendors experience are not actually solved by the state governments of India. It states, “To curb such illegal practices of harassment and grant vendors their right to livelihood, the Parliament of India enacted the Street Vendors Act in 2014. After seventy years of judicial and regulatory clashes, the act finally legitimised the rights of street vendors and mandated that states create rules, schemes (government programs), and local governance structures.
The act attempts to decentralise governance and balance the interests of different stakeholders through the structure of Town Vending Committees. This committee includes representation from local authorities, residents, non-profits, and market and vendor associations. Five years after the Street Vendors Act was passed by the Parliament of India, vendors’ fight for their access to public space continues with little respite. We are yet to see whether the new democratic and vendor-led governance, when implemented, will lead to new ways of thinking about a place for vendors in Indian cities.”
Centre for Civil Society, a think tank representing the ideas of liberalism and the free market, based in Mumbai and Delhi, where the authors are researchers, systematically tracked the implementation of the Act through analysing court judgements, Right to Information filings, and field studies in two large urban centers.
The judgements passed by various high courts (the equivalent of State Supreme Courts in the US) reflect the judiciary’s failure to establish necessary checks on municipal authorities and instead penalize the very street vendors the act seeks to protect. Where the act prioritises the concept of inclusion in vendor governance, municipal officials continue to exclude vendors — from streets, from meetings, and from decisions. Local administrators, for instance, often ignore vendors’ contribution to economic activity and see it solely as a question of space management — how many vendors should sit where and what the size of their vending carts should be.
Per the International Labor Organization’s definition of informal sector statistics, independent street vendors, taxi drivers, and home-based workers are all considered to be enterprises. About 50 percent of India’s gross national product is accounted for by this informal economy.
Sociologist Sharit Bhowmik, known for his expertise on the informal economy, estimates that about 2.5 percent of India’s urban population is engaged in street vending. Per the last census, street vending as a primary occupation had grown to engage approximately 1.61 million people in 2012. Calculations under the Street Vendors Act and the preceding National Policy exceed these estimates by at least 50 percent.
Studies find that in Delhi, one of the largest urban metropolitan areas in India, there are close to 3 million street vendors, but official (and outdated) lists only recognise half of these. Whether in official data or on the streets, vendors are ignored and hold weak bargaining power against more privileged sectors of society.
Vendors are considered “antisocial, anti-developmental, dirty, unaesthetic, and unhygienic,” despite being integral to the urban economy. They are frequently targeted, harassed, and evicted by government officials and police. The power imbalance between impoverished, and often migrant street entrepreneurs, and local authorities has created alarming channels for corruption and bribery.
A study on street vendors found that they pay between 10 and 20 percent of their earnings in bribes. In Mumbai, for example, the collection of penalties, redemption charges, or license fees at Mumbai Municipal Corporation is approximately IND ₹120 million (US $1.5 million). While the collection of ‘hafta’ (informal payments from vendors), amounts to a staggering IND ₹1200 million (US $17 million) annually. Manushi, a civil society organization, found that IND ₹500 million (US $7 million) is collected monthly as bribes or protection money from street vendors and rickshaw pullers operating in Delhi alone.
When I was doing my studies in International Political Economy in 2011, I came across this underrated economic angle, “dead capital theory,” by Hernando de Soto Polar, an economist from Peru. Sadly, it is not taught in the spaces of IIMs and IITs either. This theory, in my academic experience, can bridge the knowledge and pragmatic gap between entrepreneurship students and street vendors.
Hernando de Soto Polar argues that those living in poverty should be provided titles to the land, homes, and businesses they live in, recognised as dead capital without being legally registered, which would bring vitality to the assets and grant poor individuals the opportunity to build wealth and generate income. He still believes that instability surrounding property rights was a leading reason for conflict internationally.
Despite having the lengthiest constitution in the world, India shies away from including street vendors in Article 19 (1) (g) which empowers citizens to practice their occupation. In 2003, for instance, the High Court of Bombay banned cooking on the streets and vending within 150 meters of train stations. In 2004, the Supreme Court of India suggested that the permissions for hawking must consider factors like the narrowness of the road, the free flow of traffic or movement of pedestrians, areas like hospitals, and places of worship.
Municipal laws regulate the use of pavements, while the police regulate the use of roads. These laws reflect strong biases against street vending. For instance, the Calcutta Municipal Corporation Act states that “it has been decided to declare any such encroachment by the hawkers, stall holders . . . as a cognizable and non-bailable offense”. Section 34 of the Bihar Police Act states that the police can punish anyone for two actions: slaughtering animals in public and displaying goods for sale. Such bizarre restrictions on street commerce abound across India.
Since the era of Indira Gandhi’s socialism, the ‘right to property’ is not a fundamental human right and this has simply caused a crescendo in the statist tendencies of the governance. Therefore, street vendors are facing a lot of social, economic, and legal challenges in their enterprises.
As analyzed by Hernando de Soto Polar, the dead capital owned by poor or middle-class people in emerging economies cannot be realized due to poor policies, ineffective procedures, or bureaucracy. If these assets in the informal sector were recognised and brought into the mainstream market economy, they could possibly become the key to fostering development.
[This blog was first published on the YKA website]
