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India Uninc. - Prof. R. Vaidyanathan. A tour de force on real India's economy.

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INDIA UNINC – FOREWORD

I have known Prof. R. Vaidyanathan for nearly fifteen years. He did an exhaustive study on the Non-Banking Finance Sector a decade ago which was in a sense an eye-opener for many of us in the industry. The study established that the Non-Banking Financial Sector involving large companies and small moneylenders plays a very important role in the economy of India. The Non-Banking Finance Sector plays an important role in meeting the credit requirements of the small businesses in timely fashion at appropriate risk adjusted rates. He also showed us that a larger portion of credit requirements of sectors like trade, transport, hotels etc. are met by the Non-Banking Finance Sector.
While most of our discussions used to revolve around Non-Banking Finance Companies or NBFCs, Prof. Vaidyanathan enlarged the scope of his study by introducing the role of UIBs or Unincorporated (Uninc.) bodies like money lenders, chits etc. to consider Non-Banking Finance Sector or the NBFS as a whole.
Prof. Vaidyanathan has been associated with a number of regulatory bodies and also sits on the boards of many large corporates as independent Director. But he has retained his abiding interest in small and medium businesses and their financing.
Prof. Vaidyanathan is a prolific writer in business journals and magazines. He has consistently highlighted the role of non-corporate India as well as the non-banking finance sector of our Economy. He has also dwelt on the salient differences between the Indian Economy and that of US in terms of structure, employment, institutions, instruments and regulations. He argues that Indian paradigms need Indian answers and not ‘solutions’ copied blindly from western text books.
In this seminal work, he brings out the salient aspects of the Unincorporated or Non-Corporate India primarily consisting of Partnership and Proprietorship firms, what is termed as the P&P sector.
He estimates their share in National Income — more than 40 percent — in savings/capital formation and employment. He explains that they occupy a significant part of the service sector and also have greater real growth rates. In a sense, they have been the engines of our economic growth in the last two decades. He argues that they occupy a fairly large space in our economy but get lesser attention due to our focus on the corporate sector. From that point of view he calls for re-focusing our reform process to facilitate the growth of these small and medium enterprises. India Uninc. is the victim of corruption and bribery by government agencies and lack of timely availability of credit at reasonable interest rates.
In that context, there is a need to reform regulatory and governance mechanisms at the state level. He also highlights the role of caste as social capital in some clusters of economic activity in India. It provides a refreshing perspective on the role of caste in capital formation, risk taking, facing failures and credit transactions with trust. He brings out the importance of a separate developmental and regulatory agency for Non-Banking financing entities which would go a long way in facilitating orderly and faster growth of the Unincorporated sector.
He brings out the issues of Charity and giving as practised by these small businesses from times immemorial and how without a CSR regulatory framework they have been performing acts of charity as part of their ethos.
An important point about his writing is that he backs up his claims with statistics and a generous dose of wit! I am confident that this book will be in a sense a ‘tilting point’ in discussions pertaining to our economy and reform process. Hence it is critical that policy planners, bankers, government officials, corporate denizens and academics go through this book to understand the economic issues of real India and its strengths and weaknesses.
I wish Prof R. Vaidyanathan all the best in this endeavour.
Mr. R. Thiagarajan, Founder, Shriram Group, Chennai http://prof-vaidyanathan.com/2013/12/25/india-uninc-foreword/

INDIA UNINC – ENDORSEMENTS

While the nation’s newspapers, journals, business magazines, TV channels and the internet continue to churn out reams, airtime and gigabytes of information about India’s business houses—India Inc.—in this one-of-its kind book, Prof. R. Vaidyanathan delves deep into India Uninc. and presents a persuasive case for why the latter is really what is at the heart of our economy, and why any growth story about India is incomplete if that real engine of our growth is ignored.
The author argues that the real India story, over generations, lies with the many proprietorship and partnership firms, small manufacturing units, kirana stores, single entrepreneurs and household enterprises. That they are being finally given their due, in this important study, is the result of many years of cutting-edge research, which lays bare the lopsided viewpoints of policy-makers and ‘experts’, and urges a broader vision of the country’s economy. The small entrepreneur says Prof. Vaidyanathan, should prevail over crony capitalism.
Scholarly yet accessible, and offering a wealth of information on an uncharted territory, India Uninc. is a must-read for anybody who aspires to understand the Indian economy —as well as India itself.
1)      This book provides a much needed analysis of India’s vast non-corporate sector. Prof. Vaidyanathan offers an excellent overview of previous debates, and writes with clarity and insight on the trends and reforms that have touched this sector, how people within it cope, and what more needs to be done.  
 –Nandan Nilekani, Chairman, UIDAI
 2)      Although, the Non-Corporate sector occupies a large space in our Economy, it receives little attention. This book brings out the travails of this sector in terms of poor credit availability and dealing with corrupt government agencies. It provides a new perspective to experts who are otherwise focussed on capital markets and those with access to organised banking.
–Sucheta Dalal, Editor, Money Life magazine
 3)      At a time when Finance Ministers seem to think that attracting foreign investment is the only required reform, Prof. Vaidyanathan’s book is a breath of fresh air. He is absolutely right in saying that the non-coporate sector in India is among the most dynamic, yet least known and most neglected of sectors. It urgently needs faster clearances, less red tape and more credit.
Swaminathan S. Anklesaria Aiyar, Consulting Editor, The Times of India
4)      The beam of a searchlight on a sector we hardly look at—a sector that, Professor Vaidyanathan teaches us, has been and can be one of the most powerful sources of growth in our country.
–Arun Shourie, Former Minister, Government of India
5)       The Non-corporate sector high share in national  income, in savings, GDCF, in manufacturing /in  service sector/in taxation, in credit off take etc. makes it an engine of our economic growth and hence regrettably not adequately focused… Therefore, Professor Vaidyanathan has done yeoman service to the intellectual community by providing a recipe for rectifying the situation and this is timely.
–Dr. Subramaniam Swamy, Former Commerce Minister, Government of India
6)      Non-Corporate India makes up around 45% of our GDP and provides employment for the majority of our population. Sadly they are not part of any policy, left to fend for themselves and most often at the receiving end of the inspector raj and State tyranny!  For the first time Prof Vaidyanathan has explained their existence in a lucid manner pointing out the need for good policy to enable their growth and contribution to employment.
–T.V.Mohandas Pai,  Chairman, Aarin Capital Partners
 7)      This book is from the other India perspective — or the real India, the unknown India and the India that sustains the Indian economy and providing employment and livelihood to ten times the employment that organised private sector provides.
S. Gurumurthy, Senior Journalist
 8)      I would choose India’s next tryst with destiny is about the non-corporate sector. This book wonderfully synthesizes the puzzle
–Manish Sabharwal, Chairman, Teamlease Services
9)      R. Vaidyanathan has established with surgical precision that the most dynamic elements in our society are small entrepreneurs who remain unsung heroes.
–Jaithirth (Jerry) Rao
10)     Too often, private enterprise is equated with the corporate sector.  Numbers will show this isn’t true and much of industry and service sector growth since 1991 has been driven by the MSME sector….  India’s growth story is about unincorporated India….  Professor Vaidyanathan should be complimented for bringing this sector and its three kinds of problems, entry, functioning and exit, into the discourse.
–Bibek Debroy, Economist
http://prof-vaidyanathan.com/2013/12/25/india-uninc-endorsements/

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