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Strengthening Urban India's Informal Economy: the Case of Street Vending

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Strengthening Urban India's Informal Economy: the Case of Street Vending JULY 2018 ISSUE NO. 249 Strengthening Urban India's Informal Economy: The Case of Street Vending RAMANATH JHA ABSTRACT Street vending was illegal in urban India for almost six decades until the passage of the Street Vendors Act in 2014. Despite the law having legalised the activity, however, the default policy in most cities across India is to clamp down on street hawkers. Yet street vending remains a viable source of employment for many. As the pace of urbanisation increases across India, it is only likely that a greater number of street traders will contest for space. This brief examines the spatial and legislative dimensions of street vending. It recommends that street vending be made into a planned activity, purposefully written into a city's urban plans. INTRODUCTION e 1961 Bollywood movie Tel Malish Boot which seems to have only intensied in the Polish,1 in a classic song Ek Ana Boot Polish, Do recent decades. In Mumbai, for example, under Ana Tel Malish, summed up the hardships faced pressure from residents in the locality of by the street vendor in trying to eke out a living. Bandra, the authorities decided to clear the Hill In the song, the vendor charged an 'ana'2 for Road of street vendors3 in March this year. polishing shoes and two for a hair massage at his Around 45 licensed stall owners operating from footpath shop in Mumbai. He was proud that he the road will be relocated to the Pali municipal neither stole nor begged but worked hard to market; another 200 will be put out of business.4 earn a living. Yet, the world would not allow him Despite street vending being one of the to live in peace. oldest forms of retail in the country, the urban Millions of street vendors in a fast- laws of independent India still neglect the urbanising India continue to face this struggle, a c t i v i t y a n d i t s p r a c t i t i o n e r s . C i t y Observer Research Foundation (ORF) is a public policy think-tank that aims to influence formulation of policies for building a strong and prosperous India. ORF pursues these goals by providing informed and productive inputs, in-depth research, and stimulating discussions. The Foundation is supported in its mission by a cross-section of India’s leading public figures, academics, and business leaders. To know more about ORF scan this code ISBN: 978-81-938214-8-0 © 2018 Observer Research Foundation. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from ORF. Strengthening Urban India's Informal Economy: The Case of Street Vending administrators continue to regard hawking as by Parliament in 2014, legalised the activity.5 illegal. ere are sections of the public who feel e Act aims to protect the livelihood of street that hawkers encroach on spaces meant for civic vendors and provide them with a conducive use, and others simply consider them as environment for carrying out their business. It eyesores. Even those who may be buying goods covers all varieties of vending and denes the from vendors, would like for them to be more mobile vendor, stationary vendor and street obscure. vendor. e Act mentions vending in a street, Clearing streets, footpaths and transport lane, sidewalk, footpath, pavement, public park terminals of vendors and hawkers, and or any public place or private area. It stipulates conscating their goods, is a daily municipal that cities will establish Town Vending activity. For their part, the street vendors Committees (TVC) with members drawn from continue to claim their space in the cities to earn all stakeholders including hawkers their living. In a cat-and-mouse game, local themselvesat least once in ve years, and ocials ignore hawkers when convenient and carry out a survey. A minimum vending age of tighten the rules on them when exigencies have 14 has been prescribed. Street vendors must demanded preventive action. is has served a give an undertaking to the TVC that they will dual purpose: some underhand money goes to carry on the business of street vending either the administration for turning a blind eye, and personally or through any of their family the street vendors get to conduct their business members and that they have no other means of too. With time, hawkers found able allies and livelihood and will not transfer the certicate of protectors among local councillors who objected vending or place allocated to them to any other to their eviction and instead promoted their person. In the case of death or permanent proliferation. Hawkers returned the favour by disability, it allows the transfer of certicate to turning into loyal voters and political workers. A the spouse or a dependent child. In cases where complex calculus emerged: hawking was bad vendors have complaints about being treated under the law, but the law did not nd any unfairly, a grievance redressal mechanism has takers. While hawkers dared it and breached it, been put in place.6 buyers ignored it and abetted its breach. Local e Act not only provides protection to politicians benetted as it helped perpetuate street vendors but also imposes regulations on their career, and administrators ignored the them. In this context, it is relevant to dene the implementation of the law, tempering private term holding capacity of a zone. e term prot with local exigency. Consequently, street denes the maximum number of street vendors hawking continued to 'thrive' illegally in every who can be accommodated in any vending zone. Indian city. If the number of vendors in a zone exceeds the holding capacity, the TVC will carry out a draw of THE STREET VENDORS (PROTECTION OF lots. ose who do not nd a place are LIVELIHOOD AND REGULATION OF accommodated in an adjoining zone. e STREET VENDING) ACT, 2014 regulations allow vendors to carry out business in their designated place, but no vendor can step e Street Vendors (Protection of Livelihood into an area earmarked as a no-vending zone. and Regulation of Street Vending) Act, passed A maximum of 2.5 percent of a city's population 2 ORF ISSUE BRIEF No. 249 • JULY 2018 Strengthening Urban India's Informal Economy: The Case of Street Vending could be accommodated in the vending zones, a way of doing things characterised by (a) ease depending on the holding capacity. of entry; (b) reliance on indigenous resources; With spots being allocated based on the (c) family ownership; (d) small scale operations; drawing of lots, the surplus number of vendors (e) labour intensive and adaptive technology can lose business, and those who encroach into skills acquired outside of the formal sector; (f) the no-vending zone are evicted. e Act does unregulated and competitive markets.8 not take into consideration the total number of ere is growing evidence to suggest that the current vendors and the potential increase in capacity of India's formal sector to generate their numbers in the future. employment has declined. On the other hand, In defence of the Act, it has laid down the the informal economy has multiplied and today rules fairly, seeking to balance the overall comprises between 50 to 80 percent of newly interests of city mobility with the welfare of created jobs.9 Part of this expansion is also on street hawkers. However, those entrusted with account of the informal sector providing a vital planning cities and implementing the law need link to the supply chain in the formal sector. e to proactively plan in the spirit of the Act. One outcome is that the informal sector in many would assume that if a person who has been urban centres is assuming proportions larger unable to nd employment takes recourse to than the formal sector. Consequently, the poor vending, the government will proactively nd turn to the informal economy to earn their them space. However, the ground reality is quite livelihoods. the opposite: the administration discourages e informal sector has a range of attractive such people from occupying pedestrian space or points. ere are few barriers to entry as the disrupting trac. e administration has often initial capital as well as the requirement for skills raised questions on the feasibility of the spatial is minimal. While a few do receive vocational dimensions of street hawking, instead of training, most entrepreneurs learn through proactively resolving the situation. informal apprenticeships. Flexibility in In the current situation, eviction of street participation provides another attraction. It hawkers continues to be the default response in allows members to conveniently mix household big cities. e primary problem that must be responsibilities with earning opportunities and addressed is that there is an excess number of exibility in work hours. Some may enter this hawkers given the available space. e question sector voluntarily because of protable that needs to be answered is if it is possible for opportunities. e small scale of the enterprises the administration to reverse this situation. puts them in advantageous positions to oer tailored services that large enterprises may not THE INFORMAL SECTOR provide. is brief examines how the urban informal A city's economic landscape comprises both the sector can be used as a potent force to alleviate formal and informal sectors. e term 'informal urban poverty and become the fulcrum of an sector' gained currency after the concept was improved urban economy. If the government pressed into international usage in 1972 by the prioritises bringing the informal sector into the International Labour Organisation (ILO) in its mainstream, it should be able to not only Kenya Mission Report.7 It dened informality as generate more employment opportunities and ORF ISSUE BRIEF No.
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