As Mumbaikars revel the Ganpati festival, many businesses rush around the fete. One such business that blooms is the flower business and Dadar remains the go-to place for all of us. Vivid colours, fresh fragrance and the typical mandi hustle defines Dadar phool galli. The day begins at 4 am for every flower seller. Flowers are brought from different places like Sangli, Satara, Ajmer and Bengaluru. As one vendor replaces the other throughout the day, the market is never out of stock. It is the best example of perfect competition where firms (in this case vendors) can enter and exit the market freely and no single buyer or seller determines the market price. Competition, economies of scale and network effects truly benefit sellers and buyers. The multi-decades old market is situated in one of the best locations in Mumbai that every business craves for: Dadar station. It caters demand from residential, corporate and religious entities as the area abodes the best of them. 80% of the revenue being made within the first four hours, cash only mode of payment, daily operating cycle, zero inventory costs and almost no marketing efforts are features of this business model.
Those alien to this market would feel that it’s the best business to be in. But nothing in the world is so utopian. It is one of the largest informal markets in the country. The market is placed between a flyover and a railway bridge. It encroaches and burdens the area giving rise to congestion and filth. It makes life worse for Mumbaikars thus producing a negative externality. When an external party suffers from a transaction, negative externality is generated. Bombay High Court in a judicial statement pronounced, “The railway station premises are often congested as commuters continuously exit and enter the station. Also, there is huge traffic congestion just outside the stations, thus, the petitioners (hawkers) cannot be allowed to conduct business in the premises.” Though we may be pleased to hear this judgement, let us think about those hawkers once. Around 150 hawkers will have to fetch another place for hawking (frankly speaking, will lose their jobs). It will be a nightmare for every hawker. Usual arguments against such statement is – “What’s harm in doing the business at some other place?” or “Why can’t they do some other job? Above paragraph addresses the alternative location and alternative job arguments to some extent. Let us elaborate those two issues below.
Trust is an important factor in any financial, social or political transaction. In this case, we trust the quality of the flowers in Dadar market. Also it is worth noting that it is the unified trust in the market rather than a particular vendor. Thus, individual vendors lose their identities up to some extent and entire market becomes a single entity. Unless relocated entirely (which seems implausible due to no legal recognition of hawkers and lack of space in Mumbai), each vendor will have to sell separately at different locations. Benefits from competition, economies of scale and network effects are lost affecting the vendors more than the buyers. With respect to the alternate job argument, let us consider an example of layoffs. During restructuring, businesses often lay off their workforce with compensation and sometimes with a notice period. They ensure that employee’s livelihood is not disturbed. Also, employees can afford to stay unemployed for couple of months thanks to their saving and gratuity funds. However, hawkers don’t enjoy these privileges. Laws are made for formal sector only. Hawkers live on daily incomes and their skills are limited to their businesses only. Lack of legal recognition is the biggest risk and threat to their businesses while upskilling and rehabilitation are herculean tasks entailing state’s intervention and investment. Judiciary, thus becomes their only hope in such rigmarole.
Even though pains of commuters are prioritised, more empathy is needed towards hawkers. An economic solution to any negative externality is to increase the price for accommodating the social costs. In this case, it could be levying fee on hawkers or imposing certain conditions and restrictions on them. Alternatively, entire market can be relocated. In these solutions, their existence is validated and livelihoods secured. Banning them from one location might burden other parts of Mumbai creating more informal spaces, slums, unemployment and crimes. The blog does not want to challenge the decision but wants to bring a point that judiciary or we may have potentially missed or have been missing. It is thus, important to notice the rising informality in Indian cities (Ghani, 2008), inspire confidence in them and finally bring them in the formal channel.
– Swapnil Karkare
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Image Link: https://pixabay.com/en/flower-color-plant-ornament-nature-3218958/
The image is mere representation and not the real Dadar flower market.
