governance, political economy, institutional development and economic regulation

Is India a land of Banias or Rajas, Babus and bonded labourers (the latter collectively termed “Rabudom”)? The anglo-west is clearly a land of banias (service with a smile, anything to improve the bottom line, everyone tries to work) as is China and East Asia.  South Asia (including India) and Africa are still caught in the transition from Rabudom to “Baniagiri”. In essence the difference between the two is in the nature of capital accumulation.

Rabudom relies on an “extractive” model of depleting what already exists, like all of West Asia and much of Africa. Under Rabudom, ownership of physical resources is the key to wealth; land, real estate, mines, oil, forests, rivers, lakes, spectrum and in a unliberalised business environment, licenses to set up businesses (i call these legislated rents). Not surprising therefore that this model of wealth accumulation runs foul of the workers; the ordinary citizens who can see the use of law and muscle power to corner natural resources and “the legal right to do business” and hence resist the process. Baniagiri on the other hand is based on a more sustainable “value for money” and “going business” approach. Baniagiri considers both the input (resources) and the output(customer satisfaction) value propositions over the long term. In doing so, it focuses on the “use” of money to maximise profit. Rajadon seldom focuses on “how” money is used because more wealth is always there for the asking by just digging it out of the ground…..a parallel in agriculture is “jhoom” slash and burn cultivation where the underlying assumption is availability of sufficient land.

Baniagiri also requires the constant scanning for business entry points of “high value” accretion with low levels of competititon (like a bridge across a river or a port). These areas are too complex for Rabudom. Rabudom also fears to enter business areas which require the “transformation” of natural resources into value, like using bauxite to make Aluminum or using coal, rivers or solar radiation to generate power. These are natural preserves of Baniagiri. Baniagiri would also enter the natural resources game, if an entry point is available and the value proposition is good, but the key difference is, it does not rely solely on this method of vaue creation, unlike Rabudom.  We in India are still at the “little Raja” stage. It is illustrative that the concept of “seniority (a typical Rabudom concept) exists even amongst artists and actors.

Ofcourse given our population, there are millions of Indian farmers who are deep into Baniagiri and innovation; professionals who are international quality and traditional business communities who embody the essence of Baniagiri. Unfortunately, there are still too few of these to have a critical mass to induce significant change. It is only when the majority of our citizens start becoming Banias that we will reject waste; debunk false pride in social status and acquire the vision to deliver. This can only come from someone who has lived the talk. Maggie Thatcher brought the UK back to being what they had begun as, ” an island of shop keepers” and is still hated by many for doing so.  Who will deliver India?

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Comments on: "Indian Rabudom and Baniagiri" (2)

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  2. […] OpinonIndia governance, political economy, institutional development and economic regulation Skip to content ← Indian Rabudom and Baniagiri […]

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