Wednesday, January 02, 2013

A Tale of Two Cigies

It was the best of times. It was the worst of times.

An average citizen over 40 years of age in 1970, and an average citizen in 2012 had some things to say that were the same : "Quality of public life has gone down. Corruption is rife. There are deteriorating values amongst today's youth." The 1970 citizen experienced a quality of life better than his / her parents did with more options in life, the same holds true for 2012.  Of course, if you happen to be poor and disempowered, you were miserable and exploited in 1970 and you are miserable and exploited right now. Things aren't worse. This bit was to justify the first line. Now for the story (non-fiction).

I'd just shifted to this big city. A short walk in either direction from where I lived were cigarette sellers. In direction A, was a team of two - brothers. Direction B was a team of two - dad and son. That's where I bought cigarettes regularly. Every day.

Team A were around 25 years old. Their stable of products included tea (freshly made), cigarettes, paan sachets and an assorted of packaged eats - biscuits, sweets, menthols. Team A came into work around 8 am and packed up at 8 pm.

Team B was largely run by the son. Aged about 15. A very similar stable of products. Except he also made fresh paan. This shop opened at 8 am and packed up at midnight.

Cut to 2012.

Team A now stocks the initial range plus soft drinks - Coke, Pepsi etc,  makes snacks (samosas, pakodas). It also has a delivery crew that delivers hot tea in kettles to offices in the neighbourhood. Overall, there are now six people working there full time. One of the brothers isn't there. He fell off the roof at his house, fixing the TV satellite dish a few years ago. His brother told me.

Team A works the same hours (12 hours) around the week. Their set-up on the street corner needs to be packed up every evening (takes about 1 hour). They store in the compound of a  company owned guest house 20 yards away. Its an informal arrangement that's lasted nearly two decades.

Team B has also expanded to soft drinks. Except he's got a fridge, the kind visible after Pepsi and Coke came to India. He stocks a variety of stuff including chocolate. On occasion, I've spotted beer bottles. He doesn't sell them - he stores them for some of the blokes who also work around there. He has an oven to heat and serve snacks - he doesn't make them there. They're all on the street. He also has a telephone booth for public calls and now employs two guys who do shifts. The electricity connection isn't legal. The phone connection is an extension from a legal phone booth - they're located rightoutside a major telephone exchange. The kid,  now grown up, lives in a proper two bedroom house and rides scooter to work. He has a car, that he uses on holiday time (when does he manage that?) for his family. I've seen the scooter, he looks well fed (ok, fat) and as long as I've known, he's worked really hard.

Team A and B are illegal operations. They have to pay off civic officials and cops. The electricity is technically stolen, but they have to pay off some guys to use it. They would happily pay official prices. Since they are illegal, they can't obtain those connections. All their transactions are cash. In the absence, thus, of a financial track record, banks cannot even contemplate personal loans for business. Plus the business isn't legal. Technically, they don't pay taxes - but the bribes they pay out translates to higher than the highest official tax rate.

Both businesses are located near bus stops. Their clientele is largely bus commuters. Some of their products pull in the private car users also, of course. The tea and eatables are all cheap.

There are several points to contemplate on this. The following won't meet global standards (read EU, US etc) on many things:
working hours, days off etc
  1. labour standards and work conditions (there's no toilet or drinking water, for example)
  2. wages
  3. food health clearance - no one knows how much pesticide is their in their products, or disease carrying ingredients. Miraculously, no one seems to have been adversely affected as their customers keep coming back - over two decades.
  4. they're selling cigarettes (ouch!)
  5. they employ teenage kids - early teenage - some of them

Additionally from a national rules standpoint:
  • They are squatters on public space and illegal (criminal)
  • they don't pay taxes (officially) and steal electricity 
  • their employment generation gets tagged under "informal sector" (about 90% of national employment) and "services" (55% of GDP). However, they rarely influence any public policy on anything. Many are happy about the structural change, i e, growth in the services sector, signalling our emergence as a happening economy. And they'll point to software services, retail etc.
  • they don't get bank or formal sector credit. They borrow from family or money-lenders.

Business growth and contribution to national economy? Well, we've discussed the employment generation.  The highest margin products they sell are the ones they make - tea, snacks. Margins on all manufactured products are on trade margins on retail prices - they don't have a choice. 

A big step up for both has been the emergence of the soft drinks refrigerator and distribution of ice-blocks. Both these have happened in scale through the late 90s. Why? Because of Pepsi and Coke (those awful guys). About 70-80% of their sales happens in the summer months (about 2 months) and their distribution efforts to maximise sales have created this flexible-infrastructure. Ice-blocks are delivered to street vendors to enable chilling for sales. The fridge now holds about 50% of stuff not sold by them.

Conventional jingoistic logic that dominate national politics and media everywhere, would have told them to sell tea and snacks and keep the other guys out - (the cola client won't drink tea - margins on tea around 100% or more, margins on cola - 8%). They didn't. Instead, they've exploited this to widen their business.  Notably, they stock bottled water that is chilled - a boon on both counts in hot climate cities. They must be anti-national.

What does the future hold for them? There's hardly anyone on their side in the govt, international fora that dictate policy. The ones batting for them on their feet are customers - a vast number from lower income groups (by city standards). I haven't seen any deteriorating values from these guys. They're still as polite and hardworking. As savvy. 

I visited them on my last trip there. They recognized me and asked me why I was missing. They don't know my name and I don't know their names. Its the way of big city life. 

It is the best of times. It is the worst of times.


  1. This is one of your most poignant posts. Keep writing, Pras.

  2. Thanks! You're saying I have feelings...yaaaay! (seriously, this is what drives me at work). Guys like them. Real life heroes.