When we venture out in the cities, we see a whole series of activities around us - a little girl selling flowers, an old man selling books, or a woman carrying freshly caught fish on her head. They are all street vendors, part of the huge parallel economy that has an impact on everyone’s lives.
India is one of the fastest-growing economies in the world, but the benefits have eluded many of its citizens. We don’t usually recognise street vendors as a formal industry, and usually, refer to them as an informal one. We usually take this small business for granted. But they contribute crores of rupees to the city and state economy.
Who are street vendors?
A street vendor is a very broad term. It refers to anybody selling goods on the street without a proper shop. Studies suggest that there are between six to ten million of them in India, and they comprise nearly 14% of the informal urban economy of the country. But only a few of them have licenses for selling.
There is a big debate on what role street vendors should play in the economy of India. Street vending has always been a way for poor people to make a living, like selling items like vegetables, fruit, or clothing and shoes. This entire infrastructure and framework which runs our lives daily is also a formal business.
This article will describe the crucial role played by the street vendors in the economy and what the government can do to integrate them.
1. Cheap price
Though there are big malls and supermarkets in all the major cities, most people still prefer to buy from street vendors. This is because, street vending is an ecosystem in itself, providing food and other items at affordable prices. Street vendors purchase goods at wholesale prices and make them available at the doorsteps of the middle and lower-middle classes. This helps to save time for these buyers that would have otherwise been lost, going to the market.
They are a boon to those who buy life’s necessities at affordable prices and in small quantities. For those of us who cannot afford to go to supermarkets, these vendors embody food security.
2. One vendor, many mouths to feed
Most street vendors are the sole earning members for their households, responsible for bringing food to the table and paying the school fees for their kids. A good source of income will save them and their family.
3. Interconnected with the formal economy
Street vendors have strong linkages with the formal economy, and many of them buy goods from the formal sector to resell. Many of their customers work in the formal sector. Those who buy and sell fresh food are an essential part of the urban supply chain. The street vending economy has a turnover of around Rs 80 crore a day.
4. Street vending-a good business model
We do a great injustice by calling street vendors marginalised because, in every business metric that you can think of, they exceed tier 1 companies. Let us take an example of a bookstore on a footpath. You can measure the per square footage revenue and return of investment of a street vendor’s stall. The investment in a street business exceeds by several times the return of investment for the malls.
Let us take another example, of a girl selling flowers. The flower that she is selling for Rs 10, had been bought for, say, Rs 7. So, she is earning a 30 per cent profit. This margin is much higher than most organised businesses.
Moreover, she has the flexibility of giving you discounts on the spot-something that salespeople at MNCs cannot do.
5. Helps in even distribution of wealth
The distribution of wealth in the informal sector is far more than in the formal sector. This happens due to the cutting down of operations costs. Suppose you eat a plate of idly from a vendor on a footpath, and he charges you twenty-five rupees. Of this, he would keep only six to seven rupees for himself; the rest will go to the people in the supply chain, like, the people who grind the dough, or those who wash the utensils.
If you eat this same plate of idly at a five-star hotel, it will cost you around five hundred rupees. The bulk of that money would be kept by the establishment, and a very minuscule percentage of that reaches the ecosystem.
6. Has lots of flexibility
The street businesses operate with a great deal of fluidity. Millions of street vendors can change their entire inventory, supply chain, target segmentation, pitch, and method of selling, every month. This translates to an overhaul, 12 times in a year. In contrast to this, large businesses would take anywhere between five to seven years to implement an organisational transformation.
7. Create jobs
Due to the pandemic, many people have lost their jobs. Hawking on the streets can be an opportunity for them to earn a livelihood. Though it will not make them rich, it will sustain them and provide cheap goods and services to other people.
Street vendors create jobs for others in the supply chain farmers and drivers. They represent around 4% of the total urban workforce.
8. Helps us to stay at home
Amid the lockdown, mobile street vendors are considered essential workers, and an important part of the food supply chain. For many locked-in residents, they are the only source of fresh fruits and vegetables. Those who sell prepared food, offer takeaways due to social distancing norms.
The role of the government
Street vendors face daily challenges to their economic livelihood. The biggest problem that they face in congested cities like Delhi or Mumbai is the lack of space. Governments can dramatically improve the street vendor’s livelihoods, by improving infrastructure and providing sufficient space for vending. It can fully legalise street vending, and remove the need for licenses.
1. Use public spaces more efficiently
The Powers that be can think of an integration strategy like efficiently managing public spaces or proper mapping. Any urban intervention that involves spatial changes depends on maps. To properly account for street vendors the government can go for community-led enumerations that will collect data for a complete census.
Hawkers should not be allowed to sell near local businesses, since that will harm the latter. Facilitating mixed-use planning that allocates open public space to vendors can boost local economies, and encourage residents to shop. Inclusive and thoughtful urban design can play a key role in building connections between the citizens and the street vendors. Features like shady trees, low compound walls, and a wide footpath would benefit both the residents and the vendors.
2. Give monetary benefits
Recently the Government has launched a Rs 5000 crore special credit facility for street vendors hit by the Covid-19 lockdown. They can take a loan of Rs 10,000 for capital to revive their small business. However, instead of credit, the government can also give a one-time direct cash grant as livelihood support, to restart the economy.
3. Keep control of quality
The government should build a mechanism to authenticate or guarantee the quality of products sold on the streets. This would curb the menace of counterfeit products. For those selling cooked food, the health and hygiene department must conduct periodic checks and implement safety norms.
Street vendors are an important cog in the wheel of an urban economy. They are the ‘Unorganised India Inc” that creates millions of jobs for the unemployed youth. Street vendors play a major role in reducing the cost of living in urban cities, and we must all support them.
Also read:
1) The impact of Covid-19 on Small Businesses. How bad this has been?
2) How small businesses are coping during Covid-19?
3) Best COVID-19 Lessons For Small Business Sectors of India
4) How To Manage Investment During Covid-19 Pandemic?
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FAQs
Q. How can sidewalks be used to facilitate street vending?
Ans. The government can designate specific areas of the sidewalk as vending zones, and for other facilities like trees or signage. These multi-utility zones should give the customers proper access.
Q. Which cities have the most street vendors?
Ans. Metropolitan cities like Mumbai, Delhi, and Kolkata have got the highest concentration of street vendors.
Q. How can the government map the location of street vendors?
Ans. This can only be done if the government registers and gives licenses to all vendors. It should also keep a tab on any new street vendor setting up a stall.
Q. Are there any business opportunities for entrepreneurs in this sector?
Ans. Yes, you can create an app connecting, for instance, those who sell vegetables in an area. Buyers can place orders on this app, and get them delivered within a few hours.
As a passionate advocate for urban economics and informal sectors, my extensive experience and in-depth knowledge allow me to shed light on the intricate dynamics of street vendors in India. Having delved into the complexities of this subject, I can attest to the profound impact these unsung heroes have on the nation's economy.
Street Vendors: Catalysts of the Informal Urban Economy
Street vendors form a pivotal component of India's economic landscape, contributing significantly to the parallel economy that often goes unnoticed. With an estimated six to ten million vendors, comprising approximately 14% of the informal urban economy, their role extends far beyond what meets the eye. While many operate without formal licenses, their economic contributions cannot be understated.
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Cheap Price and Economic Accessibility: Street vending serves as an independent ecosystem, providing affordable goods to the middle and lower-middle classes. Despite the presence of malls and supermarkets, people prefer the accessibility and affordability offered by street vendors. These vendors source goods at wholesale prices, making them available to a wide demographic at their doorstep, thereby saving time and catering to the necessities of those who cannot afford larger retail establishments.
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Breadwinners for Families: A significant proportion of street vendors are the sole earners for their households, shouldering the responsibility of putting food on the table and covering essential expenses such as school fees. A stable and adequate income for street vendors directly impacts the well-being of their families.
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Integration with the Formal Economy: Contrary to the perception of street vending as an entirely informal sector, these vendors are intricately connected to the formal economy. Many procure goods from formal sectors for resale, and their customers often work in established industries. The street vending economy boasts an impressive turnover of around Rs 80 crore per day.
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Robust Business Model and Flexibility: Despite being labeled as marginalized, street vendors often outperform tier 1 companies in various business metrics. The per square footage revenue and return on investment for street vendors' stalls surpass those of malls. The flexibility of their business models, offering discounts on the spot and adapting rapidly to changing circ*mstances, sets them apart from large corporations.
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Wealth Distribution and Inclusive Growth: Street vendors play a pivotal role in wealth distribution within the informal sector, ensuring that a significant portion of the money spent reaches various stakeholders in the supply chain. This stands in contrast to the formal sector, where a considerable share remains within the establishment.
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Flexibility and Job Creation: The agility of street businesses is noteworthy, allowing them to overhaul their inventory, supply chain, and selling methods multiple times a year. This adaptability contrasts sharply with the lengthy transformation timelines of large corporations. Street vendors also play a crucial role in job creation, representing approximately 4% of the total urban workforce.
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Government's Role: Street vendors face challenges related to space in congested cities, and the government can play a pivotal role in improving their livelihoods. Efficient use of public spaces, monetary benefits, and quality control mechanisms are essential components of a supportive government strategy.
Recommendations for Government Action:
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Efficient Use of Public Spaces: Governments should implement integration strategies that efficiently manage public spaces, considering community-led enumerations to collect comprehensive data. Mixed-use planning that allocates open public space to vendors can stimulate local economies.
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Monetary Support: The recently launched special credit facility is a step in the right direction, but the government could also consider one-time direct cash grants as livelihood support to aid the revival of small businesses.
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Quality Control: Establishing mechanisms to authenticate and guarantee the quality of products sold by street vendors is crucial. Regular checks by health and hygiene departments can help maintain standards, especially for those selling cooked food.
In conclusion, street vendors are not merely informal players in the urban economy but integral contributors who deserve recognition and support. Embracing inclusive urban design and implementing thoughtful government policies can elevate the status of street vendors and further enrich the diverse economic tapestry of India.
