Arunchalam's example is also a classic case of how Indian government has destroyed India's entrepreneurial zeal. When Arun introduced his cheap sanitary pad making machine, Indian government woke up and see an opportunity to gain votes of poor and goodwill of large companies.
Indian government came up with a scheme where poor women will get a "fixed" quota per month of sanitary pads paid for by tax payers.
--- Ministry of Health and Family Welfare (MHFW) is set to embark upon an ambitious programme, reports The Hindu on 21st February 2010, to reach about 200 million women with 100 sanitary pads per person per annum with a budget of some INR 20 billion in next 3 to 6 months.
-- [Source: One of the email threads I was exchanging on this matter with a friend in government]
This is another Indian government scam where big companies like Johnson and Johnson etc. will provide these pads at taxpayers cost to the poor women while politicians will take their cut. Going by past experience even the pads wont reach the women.
Those who might be aware of India's economic history, it is full of such scams. Indian government often ran government sponsored health campaigns claiming things like
- "Wash your hands with soap after and before having food and going to toilet else it will will cause diseases."
- "Use iodized salt in food else your children will be born retarded".
- "Use toothbrush and toothpaste"
The reality is, even in rural areas the level of hygiene is way better. People used handmade soaps and herbal alternatives for soap. (Even I used them in my childhood). During my childhood oral hygiene involved brushing teeth with 5 different types of leaves, gargling with hot water mixed with a mixture of 15 different kind of powders which were comprised of different kind of tree skins, herbs and roots. My father still knows the formula and I used it successfully when I developed a gum related infection.
And you know what? Indians used plenty of sea salt in their food. We ate salted fish, Salted Pickles and what not.
Today it so happens that all these small scale industries are already dead. Not because they failed to innovate or compete on price. (In reality some companies like Vico succeeded with these traditional products) They failed because government actively tried to kill them in the name of public welfare.
Today I am buying a Colegate toothpaste which claims to contain "sea salt". The TV ad of this toothpaste shows a grandpa showing his grandson that his teeth are stronger at 80 purely because he used sea salt to brush his teeth in past. There are other companies out there which are selling toothpastes claiming to contain the exact same herbs that we used in past (Miswaak, Babool etc.)
When I visit Target and Wallmart I often see shelves full of crudely packaged soaps titled "Handmade Soap" selling at 3x the price of normal soap.
I feel sad for Arunachalam and many other people I know who are mad just like him because rest of us Indian citizens have failed to make a political choice which would have heralded these men as heroes.
Unsolicited Advice to Americans: I see American government taking same direction as that of Indian government in past and present. Pushing private interests of few in the name of poor. Buying votes by redistribution of wealth while wrecking incentives to be innovative. I might be wrong. But there is no cost to being cautious.