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“Small business & household savings are India’s growth engine”
Prof R Vaidyanathan, the most popular professor among all IIMs, regaled the Moneylife Foundation members with a brilliantly erudite and hilariously funny presentation

India Unincorporated (non-corporate sector )—which comprises partnership, proprietorship and household enterprises, your neighbourhood flower-seller or the kirana store, contribute nearly 45% of India’s gross domestic product (GDP) but remain off the radar of policymakers. On the other hand, the organised corporate sector contributes just 15% of GDP but occupies the maximum mindshare. These and other findings from Prof R Vaidyanathan’s path-breaking book, India Uninc., were the theme of his hugely popular talk at Moneylife Foundation on 25th April.  
 
Prof Vaidyanathan, rated one of the most popular teachers among all IIMs, brought alive a host of complex economic issues by punctuating his talk with innumerable asides which had the audience in splits. But there was nothing humorous about the topic: India Uninc: crushed by the State but can’t be brushed aside!
 
The burden of his talk was that official statistics about the contribution of manufacturing and services sector are inaccurate, flawed and outdated, making the India story incomplete. 
 
Blind adoption of foreign methodology and definitions has led to the government ignoring the real engine of growth which is the unincorporated sector. Consequently, this sector survives, despite lack of access to formal funding, extortion and harassment from multiple government agencies as well as the police and without access to any form of social security. Yet, they toil and put away retirement funds, giving India’s economy the security of a high savings rate. 
 
He started with explaining the economic scenario of the world and the reasons for the crisis in the West being the increase in single-parent homes, which cast a burden on the exchequer, deterioration in savings tradition, and a demanding, rights-based society. 
He  argued that there is a shift in the economic axis towards emerging markets, like India and China. Thus, it’s time for these economies to utilise this opportunity while focusing on their core strengths.  
 
Prof Vaidyanathan began his talk by walking his audience through a quick roundup of the global economic and demographic situation, to explain how India’s economy fits into this scenario. In this context, he explained a number of issues that have agitated policy-makers such as foreign direct investment (FDI) in retail. 
 
Prof Vaidyanathan believes that large-format retail stores that exist abroad cannot survive in India, because it essentially transfer of bulk inventories (packs of beer, litre bottles of soft drinks and consumables) from malls to homes. 
 
This is impossible in India, where large families and tiny apartments force people to buy and store only what is required. Prohibitive real estate is also a major factor. According to him, FDI is retail in a non-issue, except that there must be parity in borrowing rates. Our local kiranas, a major constituent of India Uninc, pay a very high interest rate, while global retailers will borrow and below prime rates even from domestic institutions by brandishing ‘letters of comfort’ from their parent organisations, he said. 
 
Prof Vaidyanathan also explained that it is the incredible savings rate of Indian households that is another engine that drives the Indian economy by supplying the capital businesses need. Again, in this context, the role played by foreign capital, that is, foreign portfolio investment, is highly overrated. 
 
Much of the Indian household savings goes into buying gold. While economists denounce the Indian habit of buying gold, it only reflects the prudence of Indian women. In the absence of State provided old-age security, they know that they would have to to create their own security. And gold serves this purpose admirably. He said that India ought to put up statues of the anonymous ‘Indian Woman’ whose natural thrift and savings habits have contributed hugely to the growth of the Indian economy. 
 
On education, he says, “I often argue with banks that they should provide such loans to parents seeking admission for their kids in under KG or KG classes rather than IIM or IIT. What is the point in providing loans for the second and third floors when there is no money to build a foundation? ” His talk touched a large number of issues that affect most ordinary Indians and was heard with rapt attention.

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An Undocumented Wonder : Book Review
The inside story of the Indian general elections by the former CEC

The Indian election is a gigantic exercise that is often called the ‘greatest show on earth’. As Gopalkrishna Gandhi sums up in his foreword to this book: “India is valued the world over for a great many things, but for three over others: The Taj Mahal, Mahatma Gandhi and India’s electoral democracy. The credit for the last of the three fames goes to the people of India... The people are the propulsive force, the driving energy of India’s electoral democracy... But the vehicle’s engine… is the Election Commission of India. And behind the vehicle’s steering wheel is the Chief Election Commissioner of India.” 
 
Dr SY Quraishi, he says, has not only given us a “vivid portrayal of what makes India’s elections work and prevail over many obstacles that confront it,” but  also “confidence and pride.”
 
“The book is my modest attempt to unravel the myth and mystery behind the great election machine, the men and women who run the world’s largest democracy and the citizens who participate in it with great gusto,” says Dr Quraishi. 
 
As promised, the pages are replete with anecdotes, case studies and analyses. The book is divided into 13 chapters. The most interesting reads are: Engaging Youth: Converting Subjects into Citizens, Secure Elections Safer Democracy, Voter Education towards Peoples’ Participation and Money Power in Elections.
 
Dr Quraishi, in the chapter on ‘Use of Technology in the Indian Elections’ outlines the Election Commission’s efforts at providing better services that include online enrolment in electoral rolls, complaint registration and public grievance management, call centres for public grievances, online information sharing and electoral roll search. And, yet, tens of thousands of people have been unable to vote in Maharashtra and elsewhere. 
 
 Dr Quraishi also dwells at length on his own innovations, including the creation of voters’ education and election expenditure monitoring divisions, India International Institute of Democracy and election management and distribution of voter slips and their impact. 
 
The most illuminative for me was an extract of the election rules and processes in early medieval India (sourced from www.conserveheritage.org). The stringent pre-qualification and disqualification norms of an earlier era, such as knowledge of business, honest income, a pure mind, accountability and many others probably need to be included in the Representation of Peoples Act once again. 
 
The book ends with the author’s reflections on ‘a few unresolved issues that affect Indian polity’ such as elections as the source of major corruption, the rise of the rich in politics, participation without representation, etc. 
 
Overall, this book is a must-read for all Indians to understand, from a man who has conducted this greatest show, what it means to participate in the election process. They will then see that being part of democratic India is not just a right or a duty but a privilege; and, hopefully, we will see even larger numbers of people coming out to vote in the future.

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