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June '02


The Auroville economy is not healthy

- by Carel


A white paper on Auroville's economy was presented in April. Its main finding is that the development of the commercial sector is a cause for concern and that Auroville's current economic structure cannot be sustained


It started during a workshop on Alternative Economic Systems in 1998. The Economy Group asked Prof. Henk Thomas, Professor Emeritus of the Institute of Social Studies, The Hague, The Netherlands and Chairman of Stichting de Zaaier, if he could make recommendations for the future development of the Auroville economy. "I answered that this was absolutely impossible without a database and a solid research effort about where Auroville stands and how it got there," says Henk. "The future cannot be sketched unless one understands past trends and the current situation. And that landed me in an exercise that was more far-reaching than I imagined," he adds a bit ruefully. "For I accepted the challenge and decided to take up a study of the key issues of the economic history of Auroville from its beginning in 1968 till the present, 34 years in all."

The exercise, in its initial stages, involved data collection. Together with Aurovilians Guy and Stuart this work started in March 1998. Stuart spent the next two years completing it, for there was a vast amount of material available: the Auroville Archives, the archives of the office of the Secretary, Auroville Foundation, the archives of the Sri Aurobindo Society in Pondicherry, the archives of the Centre for Scientific Research and those of Aurelec contained much data. The material collected now comprises a database of over 4000 pages, together with more than 2000 balance sheets and profits and loss accounts. Nevertheless, the data is not complete. "We rescued some files, half eaten by rats and insects, from a forgotten cupboard in the Karnataka pavilion, but we were too late to rescue files from another place that had been cleaned out just 3 weeks earlier. But we got far more than we had expected. There is probably no communitarian movement from the nineteenth century onwards which has such a rich documentation of its past," says Henk.

The researchers realized that the material collected is so extensive that scientists from many different disciplines can benefit from it. It led, in 1999, to the creation of the Auroville Social Research Centre (SRC), which now houses the database. As a spin-off from the economic research study, the SRC initiated the Socio-Economic Survey of Auroville Employees 2000, a survey of the people who work for Auroville, as a way to learn about the specific dynamic between Auroville and the villages that surround it. [see AVToday #152, September 2001] The results of this study will be part of the Economic and Social History of Auroville 1968-2000, to be published in spring 2003, while during the coming months a Paper with the main findings is scheduled for publication.
The material found was not only vast, but also complex. Other Aurovilians with different qualifications and Manuel Thomas, a chartered accountant from Chennai, joined the research team. In March 2002, Manuel, Guy and Stuart made a presentation of the work done so far to the Auroville Funds and Assets Management Committee (FAMC). As the final report might take at least another half year to appear, the FAMC asked them to publish a 'White Paper' about the strengths and weaknesses of the commercial sector of Auroville, together with recommendations. This White Paper was presented to the members of the Economy Group and FAMC on April 23rd, and to the executives of commercial units a day later.

Its main conclusion is that Auroville's commercial sector as a whole is far from healthy, notwithstanding the high level of profit contribution to Auroville. To evaluate the impact of these contributions on the Auroville economy, the researchers introduced the term 'carrying capacity', which indicates what the yearly contribution of all commercial units together is per capita Aurovilian. It appears that this 'carrying capacity' has gone down from Rs 8,900/Aurovilian/year in 1993 to Rs 6,900/Aurovilian/year in 1999, taking into account inflation and the population increase. The Paper concludes that Auroville's current situation is loaded with risks and uncertainties which threaten the survival of Auroville, even in the short run.

On this basis, says the Paper, it won't do to experiment with 'no money exchange' concepts other than in a distributive sense, such as takes place in the "circle system". A new economic course has to be charted out that is both feasible, realistic as well as 'Aurovilian' in orientation and a recommendation is made to study models that have proven feasible elsewhere in the world.

The Paper also contains a number of recommendations on how to improve the commercial sector. Foremost is the need to change the prevailing negative attitude towards 'business' in Auroville. Then there is a necessity to design new structures and institutions to promote commerce; to provide access to capital; to limit product liability claims; to prevent the loss of one unit affecting the others; to enter into joint ventures; and to stimulate outsiders to participate in Auroville's development through injecting venture capital. The Paper also recommends that institutions like the Governing Board of the Auroville Foundation, the FAMC, and the Auroville Board of Commerce take an active role in promoting Auroville business.

The Paper, in its final pages, expresses concern that the falling 'carrying capacity' will make it more difficult to sustain adequate maintenance levels for those who are maintained directly by Auroville. "Solidarity is a corner stone of an economy with 'Aurovilian' characteristics. Translated in the economic sphere, solidarity implies transparency of inequalities in private property and private incomes and a legitimization of patterns that have existed in Auroville from the earlier years onwards. One could even imagine adjustments if different goals are set. Reflection on this theme is necessary. For if this basic principle of solidarity is not addressed, only those people who have sufficient income/cash flow levels will be able to stay in the Auroville of the future."

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