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Monday, June 5, 2023

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We have landed in the second wave of covid-19 pandemic with growing animosity towards the state of the economy. Apart from all the other issues Bharat has been struggling with, rising unemployment has been one with more intensity. The macro numbers suggest that economic activity has been trammelled on account of lockdown conditions throughout the country.

Some employees have taken a haircut on their packages while others have lost jobs entirely or are not able to find one. According to CMIE data, 7.35 million jobs were lost in April, being the third straight month after minor losses in February and March leading unemployment rate to soar to 8% from 6.5% in March. The ratio of failure to provide employment opportunities by the job market is greater than the labour force looking for one.

Government policies have been scathed rather obliquely, while the virus has spiralled out of control. For obvious reasons, the implementation of the government’s plan to reboot the manufacturing sector has not yet grounded. Manufacturing, mining and services that need to be consumed, which normally form 35% to 40% of the Gross Value Added, are distressed under these circumstances.   .

While reading a New York bestseller, an epiphany just struck when I came across direct selling and wondered how Bharat could better its economic state in this time of crisis.  Direct Selling, which adopts network marketing as its marketing strategy, is a unique form of self-employment. This industry has shown more popularity in major economies. Network marketing, as the name suggests, involves promoting, marketing and selling a product using the power of networks.

Undoubtedly, these economies are enjoying a larger per capita income since they earn passive incomes apart from their regular nine to five. As per World Federation of Direct Selling Associations annual report [1], direct selling is valued at $180.5 bn covering around 120 million direct sellers. 78% of the revenue is generated by major developed and developing economies ranking from United States being the largest and followed by China, Korea, Japan, France, Germany, Brazil, Malaysia, Taiwan and Mexico.

Wellness and beauty comprised about 64% of global revenue followed by other product categories such as consumer durables, clothing and accessories, food and beverages, home improvement, utilities, financial services and other products.

In Bharat, Indian Direct Selling Association (ISDA) regulates this industry. At present, there are 457 direct selling companies registered with ministry of consumer affairs. As per a report by FICCI Ease of doing business [2], Bharat’s direct selling industry is expected to turn into Rs. 64500 crore industry by 2025 employing as many as 180 crore individuals, 60% being women. These numbers might even climb higher with respect to covid -19 situation.

In 2019, Bharat reported revenue of $2.47bn (~Rs. 17000 crores) and ranked 15th from 19th since last global ranking. The industry trended with 6 million individuals in 2019 and this number is adding up on account of the pandemic. In H1 of FY2021, (from April to September), the industry registered a growth of 4.7% YoY reporting gross sales of 7500 crores and 5 million new individuals were added.

For FY2022, the industry is expected to grow at a CAGR of 4.8% to reach Rs. 15,930 crores. The contribution of beauty, wellness and nutraceuticals including immunity-boosting products have grown from 33% to 46% on account of the pandemic.

There is immense potential for this business to grow in Bharat in the wake of covid-19 pandemic as it features low start-up cost, remote working and flexible timings fostering women entrepreneurship, all of which is adept for fruition, looking at the current pandemic situation.

Also, this industry has virtually very low capital investment as simple electronic devices such as mobiles or laptops can be used to conduct this business. It is a people –driven business, which also develops community building, ethical business practices and creating value in the long term. The industry faced certain challenges with regards to regulating dubious organisations, Ponzi schemes and unauthorised selling on e-commerce websites.

Nevertheless, the Indian Direct Selling Association has been administering these issues in order to propel this industry forward. To increase the awareness amongst upcoming additions in labour force participation, the government has also included multi-level-marketing as a vocation in state universities thereby creating awareness about this employment opportunity.

This industry gives individuals the opportunity to develop as an entrepreneur and start their own ventures thereby compounding employment along with compounding incomes.  It also advocates for vocal for local thereby generating further manufacturing capabilities on smaller scales. Apart from reviving the consumption engine, it also generates revenue to the ex-chequer.

In 2019, this industry contributed Rs. 2600 crores to GST collections. To sum it up, this form of self – employment of direct selling can quench Bharat’s thirst of employing ever- increasing labour force largely since there is no limiting factor when it comes to number of employable persons, thereby boosting economic growth.


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Samiksha Punamiya
Samiksha Punamiya
An ardent researcher, deeply inclined toward understanding economics and policy making. Rich in experience of writing on economic research on various platforms. I am a CA by qualification having about five years of experience in financial services space.


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