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> Your average auto rickshaw or e-rickshaw driver can make around $150-200/mo tax free and eligible for subsidies, making it more competitive than working at a

> Your average auto rickshaw or e-rickshaw driver can make around $150-200/mo tax free and eligible for subsidies, making it more competitive than working at a factory ($250-300/mo but 5% income tax and not eligible for subsidies). It’s before my morning coffee, so I’m likely missing something. How is the factory worker earning less? Are subsidies huge?

alephnerd 3y ago
> Are subsidies huge Yep. If you earn less that $3k a year, 1. You pay no income tax 2. You get heavily subsidized groceries (what would cost $30/mo becomes $10/mo) 3. You can buy a heavily subsidized apartment (PMAY-U) 4. Depending on the state, you can get free electricity, water, etc. 5. If you are in a semi-rural area, you can get psudeo-UBI via the MGNREGA program With all of this, you can end up netting an additional $700-1.2k a year tax free. Fundamentally, China and Vietnam were able to succeed at pushing people into factory work because these kinds of subsidies didn't exist, forcing people to choose between working at a factory or starve. Also, factories in China and Vietnam would build dormitories, but in India that falls foul of labor laws. This is why most migrant workers in India are from the state of Bihar - the government in this state has been incompetent at running welfare programs, so rural poverty has not been alleviated.
- jtrip 3y ago
  >Fundamentally, China and Vietnam were able to succeed at pushing people into factory work because these kinds of subsidies didn't exist, forcing people to choose between working at a factory or starve. Also, factories in China and Vietnam would build dormitories, but in India that falls foul of labor laws. That's dubious thinking. The hurdles to establishment of a manufacturing base are not labor shortages. The biggest issue in India is the ease of doing business[0] and the bureaucratic red tape. India ranks 136 in 190 countries in starting new businesses, among many other accolades. [0] https://archive.doingbusiness.org/en/rankings https://archive.doingbusiness.org/en/rankings [1] https://news.ycombinator.com/item?id=24106545 https://news.ycombinator.com/item?id=24106545
  - Karrot_Kream 3y ago
    No, it's not that simple. Some of the regulatory capture that exists in India is layered on by existing companies like Tata and Maruti. These companies and existing relationships make it difficult for new entrants but wouldn't make it hard for existing firms to build and staff factories as they have been doing.
    - alephnerd 3y ago
      EV Car Laws are a classic example of this. The only major EV Car manufacturer in India is Tata Motors. They lobbied the Indian government to set EV Car GST at 5% instead of 50% like it is for other cars. When Toyota India (and it's partners Maruti Suzuki and Hyundai India) started considering manufacturing Hybrids [0], Tata went on a lobbying blitz to prevent Plug-in Hybrids from getting similar tax treatment as EVs [1]. The Indian government ended up siding with Toyota [2] Oh, btw. This entire story only happened in the past 3 months. [0] - https://www.reuters.com/business/autos-transportation/toyota-lobbies-india-cut-hybrid-car-taxes-much-21-letter-2023-10-23/ https://www.reuters.com/business/autos-transportation/toyota... [1] - https://www.reuters.com/business/autos-transportation/tata-motors-urges-india-keep-hybrid-tax-toyota-seeks-cut-sources-2024-01-17/ https://www.reuters.com/business/autos-transportation/tata-m... [2] - https://auto.hindustantimes.com/auto/cars/nitin-gadkari-bats-for-hybrid-car-tax-sops-proposal-sent-to-finance-ministry-41711965444650.html https://auto.hindustantimes.com/auto/cars/nitin-gadkari-bats...
      - Karrot_Kream 3y ago
        Yes I'm aware sadly. Have a friend of a friend involved in the 3 wheeler EV business in India. Not going to drop names because it's a small world.
        alephnerd 3y ago
        Oof. Best of luck to them. I'm curious how they differentiate themselves from the Jugaad three-wheeler manufacturers. That seems to be where a lot of the demand and growth has been from what I've seen.
- selimthegrim 3y ago
  I mean, is the stuff they get in utility stores of acceptable quality? Pakistan got rid of them at federal level (like PDS) in the 80s after the Americans or IMF complained I think but there was a lot of hoarding and backroom dealing going on. I think certain provinces still have them.
  - alephnerd 3y ago
    > stuff they get in utility stores of acceptable quality Depends on which scheme/welfare program you're using. The ones managed by the Federal/Central Government have better QAing and because of Aadhar it's much harder to do shenanigans and steal en masse. The brands provided are also available at your local Indian grocery store [0]. State Level schemes tend to be of varying quality. Some states (eg. Himachal, Punjab, Tamil Nadu, Kerala) are able to maintain a high quality, but other states (eg. Bihar, West Bengal, Madhya Pradesh) are unable to properly execute. The Pakistani PDS collapsed because the hoarding and backroom dealing you mentioned. It fundamentally wasn't a bad program, it just lacked the institutional infrastructure needed to prevent corruption and lossage. The same thing happened in India until Digital Public Infrastructure (DPI) like Aadhar was rolled out. With Aadhar, UPI, etc, it's easier to detect anomalous disbursements and thus root out corruption, as you have an audit trail. Federal Schemes in India all require Aadhar/Biometric Validation. State Level Schemes don't require biometric validation, and as such can (and have) been abused. [0] - https://www.nafedbazaar.com/ https://www.nafedbazaar.com/
- mavelikara 3y ago
  I think this paints an overly rosy picture of welfare programs. It reads like what a rich person would imagine how poor people think. Taxes in India are computed in "slabs" of different rates. I believe everyone in India are allowed to exclude $3.5K from their annual income for computing their tax obligation. Of course, those making less that $3.5K do not pay any taxes. But those making over $3.5K do not pay any taxes for the first $3.5K of their annual income. So, there is no incentive to earn less as OP seems to suggest.
  - alephnerd 3y ago
    > overly rosy picture of welfare programs I agree (I couldn't edit it by the time the limit ended)! The bigger issue is factory work is unappealing because working 10-12 hours a day under the table earning $250-300/mo doesn't make sense for most people. Rural and lower class life does suck (heck my dad grew up in a jhuggi), but earning money for yourself is better than being at the mercy of a factory owner who can and often holds back your salary and doesn't provide housing. That's a major differentiator between Chinese and Indian style factories - Chinese factories provide dormitories but Indian ones can't due to some regulatory issues. Furthermore, most well paying factories aren't established in smaller towns or non-tier 1 metros, and the kind of demographic who would be open to working at a factory doesn't want to leave their hometown to take a massive risk living as a migrant worker in Chennai or Noida. And that's why you see the boom in e-rickshaws in Tier 3/4 metros and small towns - it's an easy way to start your own business that's paying somewhat decently, and in most states welfare disbursement is "good enough" (as in better than 5 years ago). That said, this is a localized maxima, and major reforms are needed, because this kind of an unorganized industry is going to eventually crash due to oversaturation.

alephnerd 3y ago

> Are subsidies huge Yep. If you earn less that $3k a year, 1. You pay no income tax 2. You get heavily subsidized groceries (what would cost $30/mo becomes $10/mo) 3. You can buy a heavily subsidized apartment (PMAY-U) 4. Depending on the state, you can get free electricity, water, etc. 5. If you are in a semi-rural area, you can get psudeo-UBI via the MGNREGA program With all of this, you can end up netting an additional $700-1.2k a year tax free. Fundamentally, China and Vietnam were able to succeed at pushing people into factory work because these kinds of subsidies didn't exist, forcing people to choose between working at a factory or starve. Also, factories in China and Vietnam would build dormitories, but in India that falls foul of labor laws. This is why most migrant workers in India are from the state of Bihar - the government in this state has been incompetent at running welfare programs, so rural poverty has not been alleviated.

jtrip 3y ago
>Fundamentally, China and Vietnam were able to succeed at pushing people into factory work because these kinds of subsidies didn't exist, forcing people to choose between working at a factory or starve. Also, factories in China and Vietnam would build dormitories, but in India that falls foul of labor laws. That's dubious thinking. The hurdles to establishment of a manufacturing base are not labor shortages. The biggest issue in India is the ease of doing business[0] and the bureaucratic red tape. India ranks 136 in 190 countries in starting new businesses, among many other accolades. [0] https://archive.doingbusiness.org/en/rankings https://archive.doingbusiness.org/en/rankings [1] https://news.ycombinator.com/item?id=24106545 https://news.ycombinator.com/item?id=24106545
- Karrot_Kream 3y ago
  No, it's not that simple. Some of the regulatory capture that exists in India is layered on by existing companies like Tata and Maruti. These companies and existing relationships make it difficult for new entrants but wouldn't make it hard for existing firms to build and staff factories as they have been doing.
  - alephnerd 3y ago
    EV Car Laws are a classic example of this. The only major EV Car manufacturer in India is Tata Motors. They lobbied the Indian government to set EV Car GST at 5% instead of 50% like it is for other cars. When Toyota India (and it's partners Maruti Suzuki and Hyundai India) started considering manufacturing Hybrids [0], Tata went on a lobbying blitz to prevent Plug-in Hybrids from getting similar tax treatment as EVs [1]. The Indian government ended up siding with Toyota [2] Oh, btw. This entire story only happened in the past 3 months. [0] - https://www.reuters.com/business/autos-transportation/toyota-lobbies-india-cut-hybrid-car-taxes-much-21-letter-2023-10-23/ https://www.reuters.com/business/autos-transportation/toyota... [1] - https://www.reuters.com/business/autos-transportation/tata-motors-urges-india-keep-hybrid-tax-toyota-seeks-cut-sources-2024-01-17/ https://www.reuters.com/business/autos-transportation/tata-m... [2] - https://auto.hindustantimes.com/auto/cars/nitin-gadkari-bats-for-hybrid-car-tax-sops-proposal-sent-to-finance-ministry-41711965444650.html https://auto.hindustantimes.com/auto/cars/nitin-gadkari-bats...
    - Karrot_Kream 3y ago
      Yes I'm aware sadly. Have a friend of a friend involved in the 3 wheeler EV business in India. Not going to drop names because it's a small world.
      - alephnerd 3y ago
        Oof. Best of luck to them. I'm curious how they differentiate themselves from the Jugaad three-wheeler manufacturers. That seems to be where a lot of the demand and growth has been from what I've seen.
selimthegrim 3y ago
I mean, is the stuff they get in utility stores of acceptable quality? Pakistan got rid of them at federal level (like PDS) in the 80s after the Americans or IMF complained I think but there was a lot of hoarding and backroom dealing going on. I think certain provinces still have them.
- alephnerd 3y ago
  > stuff they get in utility stores of acceptable quality Depends on which scheme/welfare program you're using. The ones managed by the Federal/Central Government have better QAing and because of Aadhar it's much harder to do shenanigans and steal en masse. The brands provided are also available at your local Indian grocery store [0]. State Level schemes tend to be of varying quality. Some states (eg. Himachal, Punjab, Tamil Nadu, Kerala) are able to maintain a high quality, but other states (eg. Bihar, West Bengal, Madhya Pradesh) are unable to properly execute. The Pakistani PDS collapsed because the hoarding and backroom dealing you mentioned. It fundamentally wasn't a bad program, it just lacked the institutional infrastructure needed to prevent corruption and lossage. The same thing happened in India until Digital Public Infrastructure (DPI) like Aadhar was rolled out. With Aadhar, UPI, etc, it's easier to detect anomalous disbursements and thus root out corruption, as you have an audit trail. Federal Schemes in India all require Aadhar/Biometric Validation. State Level Schemes don't require biometric validation, and as such can (and have) been abused. [0] - https://www.nafedbazaar.com/ https://www.nafedbazaar.com/
mavelikara 3y ago
I think this paints an overly rosy picture of welfare programs. It reads like what a rich person would imagine how poor people think. Taxes in India are computed in "slabs" of different rates. I believe everyone in India are allowed to exclude $3.5K from their annual income for computing their tax obligation. Of course, those making less that $3.5K do not pay any taxes. But those making over $3.5K do not pay any taxes for the first $3.5K of their annual income. So, there is no incentive to earn less as OP seems to suggest.
- alephnerd 3y ago
  > overly rosy picture of welfare programs I agree (I couldn't edit it by the time the limit ended)! The bigger issue is factory work is unappealing because working 10-12 hours a day under the table earning $250-300/mo doesn't make sense for most people. Rural and lower class life does suck (heck my dad grew up in a jhuggi), but earning money for yourself is better than being at the mercy of a factory owner who can and often holds back your salary and doesn't provide housing. That's a major differentiator between Chinese and Indian style factories - Chinese factories provide dormitories but Indian ones can't due to some regulatory issues. Furthermore, most well paying factories aren't established in smaller towns or non-tier 1 metros, and the kind of demographic who would be open to working at a factory doesn't want to leave their hometown to take a massive risk living as a migrant worker in Chennai or Noida. And that's why you see the boom in e-rickshaws in Tier 3/4 metros and small towns - it's an easy way to start your own business that's paying somewhat decently, and in most states welfare disbursement is "good enough" (as in better than 5 years ago). That said, this is a localized maxima, and major reforms are needed, because this kind of an unorganized industry is going to eventually crash due to oversaturation.