Book Reviews
India UnInc: Crushed by the State but can't be brushed aside! –Book Review

According to Prof Vaidyanathan, soon we would have to strengthen and facilitate our small business that contributes a huge 45% to the Indian economy and this would help in better employment and society

R Vaidyanathan, the professor of Finance at Indian Institute of Management, Bangalore (IIM-B), in one-of-its-kind and in-depth well researched study, delves into India Unincorporated by presenting a persuasive case on this sector’s single largest contribution of 45%. This contribution comes from national income, savings, investments and taxes that are ignored even though it exceeds three times the corporate sector’s contribution of a mere 15%. The official guestimates of its contributions in manufacturing and services sector are inaccurate, flawed and outdated, making the India Story incomplete when this real engine of growth story is thus wrongly disregarded.


“The growth of the economy in the nineties should be attributed to the partnership and proprietorship (P&P) firms in service activities and not due to the reforms carried out by the government or the miniscule contribution of the corporate sector... ironically this remarkable contribution of the P&P sector has not been documented and appreciated.” The wealth of information presented is adequately backed by facts and figures of P&P firms or “the unincorporated economy” that comprises small entrepreneurs in India’s growth and development of over the years…governments control and regulate an economic activity that it does not understand it and tax it if it is growing fast...this gargantuan appetite of the government goes against the grain of our civilization ethos and negates the entrepreneurship of the non-corporate sector designated mini, small and medium enterprises. Its contribution to national savings hasn’t received the recognition because the aberration is due to it being wrongly labeled “household sector, though many of them notch turnovers running into hundreds of crores… Nirma was once a group of partnership firms…. Incremental capacity created is based on its ingenuity like many passengers travelling by bus are outside the bus (by hanging on to the widows or door rails taxis in Bihar, UP and Bengal carry a couple of passengers more and a barber needs two more hands to shave an extra person rather than four more chairs… The concept of capacity is cosmic and unlimited unlike western notions of limited capacity and possibility of increasing output only by increasing capital.”


The best part of this book is Prof Vaidyanathan’s masterly analysis that discusses at length the “FDI in Retail Trade - Fact and Fiction”. The learned Professor dispassionately analyzes that “Retail trade (in India) is currently dominated by P&P firms… the retail revolution that is applauded by planners, encouraged the government and eagerly talked by experts… but not many seem to be worrying about the millions of retail traders, who will get marginalized. There is not much debate [let alone informed debate] among academics and other policy-makers about the far reaching implications that the entry of global retailers has on our economy, where the level playing field argument is meaningful and significant too. Next only to agriculture’s 17.5%, wholesale and retail trade contributes 16.6% and manufacture 14% of the GDP, their growth rates have been 3.6%, 9.2% and 8.4% respectively in the national DP of 8.3%... Livelihood of 30 million, including children and others, is involved in retail trade; 120 million will be directly impacted by the so-called retail revolution, when real estate sharks will corner prime land to construct large malls by evicting retailers.


Many householders will then create small retail shops inside their homes with the help of surplus self-employed in-house labour with mini refrigerators to store just-in-time stock of cola and bundles of toilet paper rather than a major retail revolution with the razzle-dazzle of shopping in comfortable surroundings, computer generated unreadable printouts as a panacea for all problems. The arguments that the new outlets will remain open for longer hours unlike those in the West where they close early and on Sundays falls flat as the local next door mom-n-pop kirana shops manned by the efficient owner knowing and his family the customers’ tastes, requirements, price considerations offers free home deliveries and also extends credit. He opens at 7am and closes at 10pm every day for 365 days, but labeled ‘unorganized’ by our experts and the national income data to diminish his contribution. The customers don’t need to blow up fuel to drive miles away to go to the malls. The footfalls in these shops cannot be measured using western models [since there is no place to keep anybody’s foot inside his shop!] and so he is derided and abused. It is like clubbing housewives with prostitutes in our Census data to showing them that they are involved in ‘unproductive’ activities. This is indeed a great tongue-in-the mouth apt simile. He considers these economic constraints imposed by the west to be terminological terrorism mouthed ad-nauseam by economists and policy planners without understanding their implications, they want to open it up to global sharks in the name of liberalization and kill the fast growing, productive, efficient and effective retail trade.


In this trade, the weak are marginalized due to the denial of adequate lines of institutionalized credit at reasonable rates. The other is the difficulties faced by them in opening Core Banking Solutions bank accounts – KYC [Lord Megnad Desai terms it “KILL Your Customer”!] requirement on insistence of proof of residence more particularly the migrants with no fixed residences. The just-retired governor of the Reserve Bank of India (RBI) was unable to open a bank account at Hyderabad because he couldn’t provide proof of residence in that city! While large corporates obtain large lines of credit with highly suspect credit appraisals, at prime lending rate (PLR) or base rates, soft loans and exotic facilities, a poor flower vending girl cannot open a No-frills account. This too at times she may be borrowing from a usurious money lender at 180%, or getting Rs45,000 up front for a loan amount of Rs50,000. More than 70% of the retail working capital requirements come from such non-bank sources.


The phenomenal bribes extorted by police, municipal babus and their minions are ‘organized dacoity’ as much high as Rs20 on a daily income of Rs200. That is 10% of gross income.


The arguments that the multi-national companies (MNCs) bring in ‘funds, efficiency and cost effective solutions is totally mirage, and failed models, they only access funds in our domestic financial institutions by brandishing their parent company’s ‘letters of comfort’, which fetch them funds even below prime rates because they are ‘global’. Enron promised to bring in Rs10,000 crore, but our institutions now hold more than Rs6,000 crore of worthless paper now turned into non-performing assets (NPAs). Enron CEO Rebecca Mark claimed that they’ve “spent millions to educate Indians a part of the project.” The so-called ‘technology and knowledge base’ sought to be brought with them is “just “to dumb down India” as was done by Wal-Mart in the US. The French have their Loi Royer Regulations to protect ‘Centres of French towns and villages and living of small shopkeepers’ and Germany with similar legislative constraints on outlets exceeding 1200sq.m. Other Asian countries, like Korea and Japan have the well-developed regulations and local competition to protect community based local establishments by excluding overseas companies in any ‘distributional aspects in petroleum products, rice, tobacco, salt, alcoholic beverages, fresh foods, milk and fertilizers.


Indian laws are being amended a thousand times to facilitate the grand entry of global malls and hypermarkets, some to permit the retail giants to procure directly from farmers at the agricultural market yards and not to trade in commodities, the transparency doubtful. Indian brands like Reliance have encountered opposition in states like UP. In India, with mounting pressure presently 100% FDI is permitted in single brand and up to 50% in multi-brand. Wal-mart faces US Congressional investigations into allegations of bribery and corruption in India. Today it is a hot election issue with the principal opposition parties Bharatiya Janata Party (BJP) and Aam Admi Party (AAP) stoutly opposing the entry.


Prof Vaidyanathan sums up the chapter by saying – “The sooner we strengthen and facilitate our small business, the better for employment and society.”


This must-read-by-all has a lot to say on a variety of tropical matters like Taxation and Bribery, Social Security for the Self-Employed and the role of gold, role of the stock markets, Caste and musings on other matters like the NGO sector, Art of giving – Warren Buffet to be told, Sports and Bollywood as UnInc that I commend the readers to pick up from the book itself.


India UnInc

Author R Vaidyanathan

Publisher: Westland Books 2014

372 pages

Price: Rs395





Snehal P Dani

3 years ago

Listening to Prof. R. Vaidyanathan is delight beyond imagination. His clarity of thoughts and innovative ideas are path breaking.The way he conveys in simple narration complex economic and social issues makes him eligible to be the Policy Advisor to The Government of India at hightest level of PMO or Finance Secretary.

Reliance Life terminates AB Capital, lodges criminal complaints after Moneylife expose

After Moneylife exposed fraudulent mis-selling of insurance policies by AB Capital, a corporate agent of Reliance Life, the regulator and the insurer has taken some corrective action. Reliance Life admits to receiving 2,141 complaints till August 2013, and has terminated AB Capital, launched criminal proceedings and so far got arrested five salesmen. But we keep receiving complaints

One of the biggest examples of systematic, fraudulent mis-selling of insurance policies, that has only led to a regulatory rap on the knuckles is that of AB Capital, a corporate agent of Reliance Life insurance, which has sold insurance policies to thousands of persons across the country on the fake assurance that they will get an interest free (or very low interest) loan that is equal to 10 times the premium paid.

Moneylife began to take up these cases in the early part of 2013 and wrote to the Insurance Regulatory Development Authority (IRDA) for the first time in July 2013. We have received complaints from all over India from people who did an internet search to figure out how to redress grievances.  Some of these had even borrowed money to pay the premium in order to obtain the interest free loan. While some of those, who were duped, are not financial savvy, many included software engineers from leading companies. Clearly the fraudsters had a sophisticated technique of convincing people.

Thanks to the regulator’s pressure, 95% of the complaints forwarded by Moneylife Foundation to Reliance Life have received refunds. However, the flood of complaints shows no sign of stopping. We were convinced that complaints which came to us are just a drop in the ocean. Queries to IRDA, about this rampant cheating in July 2013 and January 2014 elicited no response, forcing us to file a Right to Information (RTI) application at the end of January.

Following a first appeal, we received a detailed response with some stunning revelations.

First, while IRDA did not respond to us, it had been pushing Reliance Life to redress grievances. Secondly, Reliance Life told IRDA that until 22 August 2013 it had received 2,141 complaints against its corporate agent AB Capital. These are a vast multiple of those who approached Moneylife Foundation and had their complaints redressed. It is not clear whether all 2,141 cases have been redressed by Reliance Life.

Thirdly, Reliance Life told IRDA, “AB Capital has already terminated those employees, who indulged in mis-selling and has also lodged criminal complaints (NC) against such employees. Five salesmen have been arrested so far. Considering, the large number of complaints received against the corporate agent, the company terminated the agreement with AB Capital on 8th July.” Moneylife Foundation started taking AB Capital complaints to Reliance Life in June 2013.

Fourthly, Reliance Life has told IRDA that there are no more complaints pending about AB Capital. However, this is clearly incorrect, since Moneylife Foundation continues to receive fresh complaints even today. So far, Reliance Life has paid over Rs22 lakh to 31 people duped by AB Capital based on complaints sent by Moneylife Foundation. The amounts range from Rs30,000 to Rs2 lakh each.

In fact, while IRDA has not obtained all the details of the total extent of mis-selling by Reliance Life’s agent, or the correct data on redress, it has also not initiated any action against the company. On the contrary, Reliance Life seems to be comfortable enough to demand greater proof from victims of mis-selling. In a few recent cases, it only redressed complaints from those who had taken the precaution of making voice recordings of the telecallers and were able to provide proof.

This is clearly an issue on which the insurance regulator also needs to be held accountable for dragging its feet over the massive fraudulent actions by insurance agents.  So far IRDA has done nothing beyond sending letters and asking for data and information. Were the regulator been more pro-active or the Finance ministry and the Ministry of Consumer Affairs more diligent in their supervision, we would have seen some attempt to make companies more accountable for fraud and mis-selling by their agents.  

But this is clearly another long battle along with better financial literacy among those who buy insurance.

You may also want to read…

Reliance Life refunds Rs60,000 in a suspicious transaction: Another Moneylife success

Is Reliance Life’s corporate agent AB Capital involved in fraudulent “interest-free loan” offers? Will Reliance or the regulators initiate action?

Reliance Life’s drive against fraud callers – Will it take action against its corporate agent AB Capital?

Reliance Life’s corporate agent AB Capital offers to help victims of fraudulent “interest-free loan”

Is Reliance offering 10-year interest-free loan for buying insurance?




2 years ago

I was also misguided and cheated by Reliance life insurance agent( Ab Insurance brokers private Limited company). Details are below: I had an ICICI prudential policy 6 years back and surrendered it 3 years back with the amount lesser than I have paid might be due to market conditions. They used to call me 2-3 times daily for 3-4 months continously saying that ICICI prudential have invested the amount in Reliance shares, eventhough your policy is surrendered that invested amount has been gradually increased and to recieve that unpaid principal amount I need to have one new reliance policy through which they can create a link and provide the cheque. And they use to tell the same thing for 3-4 months. Aftr which I have borrowed 30,000Rs for 2 rupees interest money from my friend and invested in August 2014. I waited for a month and as I didnot get any cheque, i have started calling them, but they keep on going to tell that it is in processing and will be done in 5 days. Then i went to reliance office and registered a compliant on September 20th,2014, they told they will process the complaint and do the needful.but didnot get any reply. I visited 5-6 times reliance branch which is 55-60 kms from home along with my kids on staturdays, after so much arguing now they are saying that the policy cannot be cancelled and refunded as 15 days of free lookup already completed. after receiving the bond i have called the concerned people and they told me that i will be getting the cheque. It became a sever headache for me and raising to family disputes and problems. I request some one to help me and tell how can i get money back. Thanks

Anurag P

2 years ago

My name is Anurag and RIL Broker has cheated me by offering Interest-Free Loan. How can I lodge a complaint against them.


3 years ago

Can someone provide contact details with Moneylife for this case?


3 years ago

The fact remains that even now i get phones claiming to remove my agent code if i purchase a fresh policy, usually from a delhi number and who has surprisingly details of all my policies. The companies selling the policies is not bothered to explain the policy details to clients be it Reliance, Birla Sun Life or ING Vysya. New Policies are sold on the promise of higher bonus etc on a old policy of some other company


3 years ago

May be there is one more scam, ready to bust. I know one such victim. Only the corp. agent was different in his case.


3 years ago

Hi, I also know a victim but by some other corporate agent. Can moneylife help him his money back? If yes, what may be the next step? Whom should he contact?

shadi katyal

3 years ago

I have one simple question that why we are prone to such game playing and where are if any business ethics???
Why do wish to shoot ourselves with such con jobs.
It is difficult to believe that Reliance was unaware or AB Capital did not train salesmen.
Reliance is not hot waters for Gas and other business practices
and yet why the management has failed to check such practices???
Does this not show lack of any respect for any Laws and CONSUMERS

uttamkumar dubey

3 years ago

This looks to b a hoodwink from reliance to persuade investors to invest on n reliability has sm gap.

Medical Astrology

A software that will tell you what kind of ailment you will have, based on your DNA! Is it scientific?

“Every man’s life lies within the present; for the past is spent and done with, and the future is uncertain.” — Marcus Aurelius

A few days ago, The Hindu reported on a medical horoscope available in a new software that is expected to be installed soon in all major hospitals. One has only to answer some questions and the software will predict your medical future accurately. This is not new. “Doctors have been predicting the unpredictable future of their patients all the time” felt WJ Firth, professor of physics at Strathclyde University in Glasgow, in the British Medical Journal in 1991.

Following similar advice, Angelina Jolie had her beautiful breasts removed, a couple of months ago, to avoid any future chance of her getting breast cancer based on her genetic data. Ultimately, science claims to have triumphed over nature in unravelling the secrets of the future against the natural law.

Why does nature intend to keep your future a secret? That is the only way a human being can be happy on this planet. Ignorance is bliss here. Imagine, for a minute, that the software declares that you will get cancer in the near future. Your life, from that time onwards, will be totally different and, for all you know, you might die of sheer fear of cancer.

When it comes to our poor village astrologer predicting people’s future, based on their horoscope, the rationalist ‘scientific’ community demonises him, in no uncertain terms. But we prefer a predictive software because it represents technological sophistication. The software is supposed to predict the future based on your genetic make-up, like the one Angelina Jolie experienced.

Curiously, not all the DNA in your chromosomes come from your evolutionary ancestors. Your DNA includes the genes from at least eight retroviruses and many other germ genes. At some point in human history, these genes were incorporated into human DNA. These perform important functions; yet, they are entirely alien to our genetic ancestry. There are more than 10 times the germ genes in your metagenome so that there is more bacterial life inside you than ‘human life’!

The software astrology is based on our genetic make-up as we are taught to believe that genes determine what each of us is like, physically; but genes are only a tiny part of our DNA! A large portion (97%) of our genes was thought to be junk, until now. We now realise that the process that goes on outside the genes—epigenetics—has a major role to play in our evolution and development. Otherwise, how can just 23,000 genes represent all that happens to us? The so-called junk (epigenetics) is as important as, if not more than, the known human genes.

The picture of the world we ‘see’ is also artificial. Our brains don’t produce an image the way a video camera works. Instead, the brain constructs a model of the world from the information provided by modules that measure light and shade, edges, curvature and so on. This also compensates for the rapid jerky movement of our eyes, the saccades. We have more than just five senses.

With all these new data accumulating from the new wisdom of quantum mechanics, the old idea of predicting the future from our genetic make-up, as they did in the case of Angelina Jolie, looks childish, to say the least. What worries me is that the new software astrology might do far more damage than poor village astrologers that rationalists cry hoarse about. I might now repeat my usual warning to the apparently healthy in society. Do not go to the hospital when you are healthy. You might get a wrong prediction of your future, thanks to the new software toy. Do see your doctor for any deviation in your health without fail and be an intelligent partner in your treatment process.

“In times of change, learners inherit the Earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists.”— Eric Hoffer

Professor Dr BM Hegde, a Padma Bhushan awardee in 2010, is an MD, PhD, FRCP (London, Edinburgh, Glasgow & Dublin), FACC and FAMS.



Mahesh S Bhatt

2 years ago

There are Cosmic & Karmicvibrations we experience due to 9 Planets.

Sun,Moon & Earth's relative positioning brings about tidal energies in oceans which cover 71% of earth's area.

Humans also 70% fluid content in body hence scientifically prone to waves in emotions/creations etc.

Astrology is Science of Karmic influences on human soul which is energy which cannot be created nor destroyed but transformed.

Medical Astrology is small portion of the same.

Mahesh [email protected]


Suresh Ramasubramanian

In Reply to Mahesh S Bhatt 2 years ago

That is not "scientific" in that you won't find an iota of proof for that combination of assertions.


In Reply to Suresh Ramasubramanian 2 years ago

There are those who wish to pose as "rational" and "intelligent" with the clumsy use of the word "scientific". The rationale and intelligence within science is derived out of its ability to justify an argument, to merely oppose by stating something as unscientific is both petty and ignorant.

There are some amongst us here who hide an argument of nothing with the use of the word "scientific".


In Reply to Suresh Ramasubramanian 2 years ago

Mars is known as "Bhoomi Putra'(Son of earth). Latest pictures taken from the planet Mars suggest similarities between Earth and Mars.

How could our Rishis/Munis of days of yore find out that Mars has similarities with that of earth? Is it not amazing ?

Suresh Ramasubramanian

In Reply to MOHAN 2 years ago

Which latest pictures, and what specific "similarities", and quote just what which rishi or muni said about it.

I suppose such purveyors of superstition will have enthusiastic followers but I hardly expected to find articles of this poor quality in moneylife.


3 years ago

This article is very realistic and practical advice to people. Moneylife has indeed done a service by including this one.

As far as holding medical science in esteem or demonising astrology is concerned , both are wrong. For Medical science has gone no more than giving marginal relief and certainly offers no cure from most diseases or disorders , least of them being simple infections. Whereas astrology handles predictive part better in the interest of caution alone. Dr Hegde makes an interesting comparison that Preventive Health is only as effective a caution as astrology is. Don't follow either and live happily till such time it becomes unavoidable to see a Doctor.

What Dr Hegde has not mentioned is that people in the west find traditional medicine to be doing a lot more than allopathic medicine which emphasises on surgery as a solution to many ills. Yoga and ayurveda is a high end service today. Both certainly helps you enjoy life. That alone is the message.


Suresh Ramasubramanian

In Reply to krishna 3 years ago

There are superstitious people in the west too who believe in not vaccinating their kids (another thing dr Hegde advocated in a previous article), among other things.

Consult an astrologer to match horoscopes and fix dates for weddings, etc but if you trust them wih your life by asking them for medical decisions,well it is your life.

This article is completely unscientific,

Suresh Ramasubramanian

3 years ago

This is in bad taste, equating a case like Jolie's, where her mother died of breast cancer at an early age and where she too was, like her mother, genetically predisposed to it, with unscientific mumbo jumbo like astrology.

Moneylife is not doing its readers any kind of service by printing such articles. If such articles take their place alongside others that purport to offer financial literacy, I can only infer that the stock tips and market trends in other articles are also produced by consulting a jyotishi, checking for good omens at the time an IPO comes out etc.



In Reply to Suresh Ramasubramanian 3 years ago

Many years ago one day-trader went to an astrologer and asked whether it was good for him to do share trading. The old astrologer replied “Very good". Then he asked him whether he should go for "short or long". The old man who didn’t even heard of stock exchanges or share trading told him "you do whatever you want". Next day he went short and a few days later we learnt that the day-trader disappeared without a trace!!

Suresh Ramasubramanian

In Reply to MOHAN 3 years ago

Ho ho, I thought I was just cracking a joke but it looks like some people actually believe in it.

Rediff Money has this page for example ..


In Reply to Suresh Ramasubramanian 3 years ago

Whether Julie's grand mother also died of cancer ?. These are stupid assumptions made and now we see the results.

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