Why small businessmen in Gujarat are quitting industry and turning to financial speculation

M Rajshekhar reports in Scroll:

He says there are two major trends are playing out in Gujarat’s economy. One of closing industries and other of rising financial speculation..

On one hand, small industrial units are shutting down. This is not a recent development. Micro, small and medium units in the state started getting into trouble about five years ago, well before the central government demonetised high-value currency notes in November and introduced the Goods and Services Tax in July. As Scroll.in reported from Surat, several factors were at work – rising imports from China, the entry of bigger players with greater economies of scale, and government policies such as import duties that favoured bigger companies over smaller ones.

On the other hand, financial investments have boomed in Gujarat. Two years ago, a sharebroking firm in Rajkot, Marwadi Shares, was adding about 1,000 new customers every month. That is now up to 6,000 new customers a month, said Ketan Marwadi, its managing director.

Data for the last five years shows the state’s people are investing more in fixed deposits, mutual funds and small savings accounts.

Businessmen in the state say the two trends are related – an industrial slowdown is leading to a rise in financial investments.

Gujarat has always been seen as a haven for financial speculation due to historic ties to trade and finance. On its own financial speculation has its own role to play and some people will always be there in the speculation business. But if we see more real sector people quitting due to lack of opportunities and joining speculation it is worrisome..

I don’t necessarily see this as questioning government and its policy. It is largely a “Sapien problem” as narrated by Yuval Harari. Eventually all these several so called revolutions where humans have cornered all these resources from other beings, will come to haunt humans themselves….

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