The Hindu Editorial Analysis 18th January, 2021

The Hindu Editorial Analysis 18th January, 2021

Rise of shadow entrepreneurship
Relation with syllabus : GS-3-Economy-Growth
Context : Pandemic and changes seen in various sectors and related issues

What is Shadow Entrepreneurship?

   •   Shadow entrepreneurs are individuals who manage a business that sells legitimate goods and
       services but they do not register their businesses.

   •   It means that they do not pay tax as their business activities are performed outside the reach of
       govt. authorities.

   •   India has the 2nd highest number of shadow entrepreneurs in the world.

Examples :

   •   Educational sector: providing certificates to students against money
   •   Finance: providing easy loans to app users or customers
   •   Betting Economy: Online games
   •   Healthcare: e-pharmacies or Tele-medicines

Covid-19 and shadow entrepreneurship related challenges :

   •   The pandemic led to a supply-demand shock in the market because of nationwide lockdown.

   •   At the same time, online market witnessed a huge surge.

   •   Shadow entrepreneurs also utilised this opportunity .

   •   For example, in the online education field, we could notice many e-learning platforms , websites ,
       youtube channels . But, there was no regulatory authority to impasse this mushroom growth. Not
       every platform can provide quality education.

•   Owing to lockdown , many people lost their jobs , saw salary cuts etc. So, liquidity crunch was
       there and instant loans became popular. But, it was also related with cross-border and national
       security related concerns (shady loans being provided by Chinese instant loan providers online)

   •   In the telemedicine sector too , harassment over phone by customer care workers became a new
       trend.

   •   Clearly, while such shadow entrepreneurialism may spike short-run welfare effects with
       technology mediated access, they could create perverse welfare consequences in the long run.

The way forward:

   •   In the world of private coaching houses in Indian education, strong monitoring of quality would
       be essential. This needs to be complemented with non-compliance being punishable with a jail
       term, clamping down on services and related strict consequences. Those shadow firms that
       comply are more than welcome to join the dominant mode of service delivery with non-shadow
       firms.

   •   There also needs to be an associated harmonisation of activities between competition authorities
       of governments (in India’s case the Ministry of Corporate Affairs in regulating shadow
       entrepreneurship and government departments in healthcare, education or finance).

Update debate
Relation with syllabus : GS-4-Business ethics, privacy
Context: Recent update policy of Whatsapp , Ethical and privacy issues
Recent happenings :

   •   Whatsapp has decided to delay the update of its privacy policy owing to a backlash from its users.

   •   Problems for the Facebook-owned app started earlier this month when it announced an update
       to its terms of service and privacy policy, according to which users would no longer be able to
       opt out of sharing data with Facebook.

   •   February 8 was kept as the deadline for the new terms to be accepted.

   •   This triggered a mass exodus from WhatsApp, the likes of which it has never encountered, not
       even in the aftermath of the Cambridge Analytica scandal, which did bring a lot of bad press to its
       parent, or when the messaging app’s co-founders called it quits a few years ago.

   •   The WhatsApp policy update has clearly spooked many users, who, concerned about their privacy
       getting compromised, have shifted to alternative platforms such as Signal and Telegram.

   •   In recent weeks, according to media reports, messaging app Signal has topped the app store charts
       in India and many other countries. Interestingly, WhatsApp uses the same end-to-end
       encryption protocol as Signal.

Responses of Whatsapp post mass exodus:

   •   It has tried to allay fears about privacy being compromised because of the updates.

   •   It has put out numerous messages and taken out advertisements to convey that the changes are
       “related to optional business features on WhatsApp, and provides further transparency about how
       we collect and use data”.

•   Millions of business interactions take place every day on WhatsApp, and the new privacy
       updates are supposedly to make these easier while also enabling personalised ads on Facebook.

Are our data really secured ?

   •   Although Article 21 says that Right to privacy is a fundamental right but India still does not have a
       concrete Data Protection law.

   •   In Europe , stringent General Data Protection Regulation( GDPR) prevents such sharing between
       apps. Users there are in control of their data much more than anywhere else in the world.

Way forward:

   •   India could do with such a law.

   •   All it has is a draft version of a law, and it has been so for a few years now.

   •   Privacy of a billion citizens is too important a thing to be left just to the practices of a
       commercial enterprise. It will be reassuring if it is guaranteed by a strong law.