India Uncut

The Times of India reports:

In a remote village in Tamil Nadu, little Nirmala (12), rolls her nimble fingers over a sheaf of tobacco leaves, pins them adroitly into a tumti yale and seals the edges. She has to do this about 2,000 times a day, like she has been doing for over two years now. Even while she is sleeping, she smells the pungent tobacco, the memory bringing forth a psychological cough.

And why does Nirmala do this? The report continues:

In Tamil Nadu’s Vellore district, every household has two or three Nirmalas, pledged as collateral. It’s a vicious cycle of poverty, labour — mostly child labour — and families on the brink of self-destruction.

Every household has a story: the family takes a loan, then unable to repay it on time pledges a child as a labourer. The child is bonded to the menial work for life — for most often the family is not able to pay back and get the child released.

Slavery, essentially. In this case the loan sharks take slaves as "collateral," while in other cases they keep squeezing their victims dry, often driving them to suicide, with crazy rates of interest. The problem here is not the loan sharks themselves, but the conditions that allow them to exist. When there clearly is demand for capital, why are these loan sharks the only people satisfying the demand? Why isn't our rural landscape flush with micro-financers, rural bankers, and so on? Also, an unrelated point: where are the manufacturing units that you'd expect to spring up to utilise the cheap labour available?

The answers to these questions lies in obstacles that the government places in the way of private enterprise in this country, and a part of the solution lies in removing those obstacles. Nirmala's parents need more options. And so does Nirmala.

(I'm co-writing an article with a friend in which I'll elaborate on these themes. Watch this space, and suchlike.)

Cross-posted on The Indian Economy Blog.