Entrepreneurship in Services and Socially Disadvantaged

Dehejia, Rajeev; Panagariya, Arvind

While substantial literature now exists on poverty and inequality by social groups in India, almost nothing has been known on how the latter have fared as entrepreneurs. Out paper provides a first comprehensive look at entrepreneurship among the socially disadvantaged groups in terms of the shares in the value added, workers employed and the number of enterprises owned in the partnership and proprietary enterprises in services sector. Consistent with the evidence on poverty, wage and education outcomes, the Scheduled Castes (SC) and Scheduled Tribes (ST) are behind other social groups in entrepreneurship but their presence is far from negligible. The SC account for approximately the same proportion of enterprises and worker employment as their share in the total population. Their share in the gross value added is, however, only half. The presence of ST is considerably below their share in the total population. But the share of other backward castes (OBC) in the gross value added is approximately equal to their share in the population. All groups have shared in growth though not to equal extent. In terms of gross value added, the ST enterprises have grown the fastest followed by the OBC, SC and the forward castes. The SC and ST entrepreneurs are concentrated disproportionately in smaller and lower productivity enterprises. The forward castes have been experiencing a decline in their share so that the greatest competition the SC and St enterprises face is from the OBC.

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Academic Units
Program on Indian Economic Policies
School of International and Public Affairs, Columbia University
Program on Indian Economic Policies Working Papers, 2011-7
Published Here
May 2, 2012