BENGALURU: Dalit business owners in the country experience a significant income gap of around 16%, when compared to those from other structurally disadvantaged backgrounds such as OBCs, Adivasis and Muslims, due to certain stigmas attached to their caste, revealed a study conducted by the Indian Institute of Management - Bangalore (IIM-B). The study arrived at this analysis, despite controlling and matching for correlated factors such as education, land ownership, urban setting and social environment in its regression, which are often unaccounted for in caste-based research.
The research paper, ‘It’s not Who You Know, but Who You Are: Explaining Income Gaps of Stigmatized-Caste Business Owners in India’, was published in the PLOS One journal by IIM-B Professor Prateek Raj; and co-authored by Prof Hari Bapuji, University of Melbourne; and Prof Thomas Roulet, University of Cambridge. It offers vital insights into the systemic barriers faced by Dalit business owners. It further provides a road-map for creating a more equitable economic landscape in India.
“Dalit business owners will likely receive lower returns for their social capital due to frequent rejections, micro-aggressions, and the burden of managing their stigmatised identity, which hinders their ability to secure valuable business opportunities,” highlighted the paper. Another interesting finding is that not just at the initial level, but as businesses grow with a high level of social capital, the gap keeps widening for Dalit business owners. Such individuals face unique stigma-related disadvantages that cannot be equated with other forms of identity-based challenges, such as gender, race, or ethnicity, explained Prof Raj, the first author of the study.
Speaking to TNIE about the long-term impacts of income gaps in a growing economy such as India, Prof Raj said they would often lead to inefficient allocation of resources. “Income inequality due to identity-related factors leads to misallocation of resources. Someone talented in business, may not be able to perform to their fullest potential due to their caste. Caste stigma, like racism in the US and European countries, make economies inefficient,” he explained.
Studies highlight that there are over 300 million Dalits in India alone, who can be helped with the right policy interventions from the government. “Skill development is certainly something that policymakers should prioritise, as human capital is associated with higher income for Dalit business owners just like others. Additionally, we need to consider how networking events, which tend to be so important in business, can be designed to be more inclusive so that they include, engage and benefit Dalit business owners as well,” suggested the IIM-B professor.