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Save, encourage 'un-organised' sector for India's future, says Prof Vaidyanathan

Speaking at an interactive session organised by Moneylife Foundation in Mumbai, Prof R Vaidyanathan said women savers and the so-called 'unorganised sector' are keeping India on the growth track and not the large corporate sector or foreign investments

Indian women are responsible for the country's growth with their humoungous ability to save money at all times. Similarly, contrary to views expressed by experts, India's growth is primarily driven by partnership and proprietorship firms and not the corporate sector. And we need to respect these women savers and the so-called 'unorganised sector' for keeping us on the growth track, says R Vaidyanathan, the professor of Finance at Indian Institute of Management, Bangalore (IIM-B).


He was speaking at an interactive session organised by Moneylife Foundation in Mumbai. Prof Vaidyanathan, who has coined the term 'India Uninc' for the largest component of the Indian economy comprising small entrepreneurs, households, said, the arguments that the multi-national companies (MNCs) bring in ‘funds, efficiency and cost effective solutions are totally a mirage and lead to failed models.


"They (MNCs) access funds at a low cost from overseas and even from our domestic financial institutions by brandishing their parent company’s ‘letters of comfort’, which fetch them funds even below prime rates. 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. To exapand her business she may be borrowing from a usurious money lender at 50%, 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," he said.


Non-corporate sector –consisting of partnership, proprietorship and household enterprises constitute nearly 50% of Indian GDP while contribution of corporate sector or companies is just 15% of the GDP. The share of foreign direct investment (FDI) and foreign financial institutional investors (FFII) in Indian investment is not more than 7%. This means, 93% of the investment in India comes from domestic savings, out of which household saving contribute almost 80%.


These savings mainly come from the household sector; the role of institutional capital is limited. Explaining the reasons for such a large household saving, Prof Vaidyanathan said, "There are four basic reasons why Indian households, especially women save money. First is for the old age. Then, there are costs involved with education, healthcare as most of these people have to spend money from their own pocket. Indian 'sanskar' also plays a vital role in savings. This includes handing over wealth to next generation."


"Day by day education is becoming more expensive. In fact, you need more money to secure admission in under KG or junior KG than higher education. Not to mention the 'special terms and conditions', like mother should be graduate or post-graduate and the family must be speaking English at home etc., implied upon needy parents," he said.


Poking fun at education practices and loans, the Professor said, "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. I mean, what is the point to provide loan for second and third floors when there is no money to build a foundation!"


According to Prof Vaidyanathan, another most important but hidden reason for household saving is corruption or bribery. "The phenomenal bribes extorted by police, municipal babus and their minions are nothing but ‘organized dacoity’ and there is no escape from this, for businesspeople. In fact, small vendors and shopowners have to pay as much high as Rs20 on a daily income of Rs200 as bribe or hafta. That is 10% of gross income of these people."


World economy and India

Earlier, speaking about the world economy, Prof Vaidyanathan said, based on the purchasing power parity, the share of emerging and developing economies is increasing, while the same for developed countries, like the G7 economies is falling.

According to The World Economy: A millennial Perspective—Angus Maddison OECD Development Centre Studies --2007, till 1820, China and India contributed more than 50% to the world GDP. However, after that, the share of both these contries started to fall while contribution from Western Europe, USSR, US, Latin America to world GDP increased till 1998.


But all these developed economies are burdened with huge debts due to non-saving culture. While India's overall debt percentage of GDP is 122%, the same for Britain jand Japan is over 500%. The US (289%), Germany (287%), South Korea (315%), France (349%), Spain (366%), Italy (310%), Brazil (494%) are the other countries from 'developed world' that have huge debt to GDP ratio.


One of the major reasons for such kind of huge debt is the high household debt percentage of GDP in countries like Britain, Canada, US, South Korea and Spain.

According to Prof Vaidyanathan, another issue before these developed world is dwindling birth rate. Almost all these countries have a population that is growing in age or retiring from active earning. At the same time, there is no replacement or same numbers are not being replaced by new work force. This is leading to migration and then there are other issues emerging related with this.


Quoting The Economist, he said, during 2010, 40.8% of all births in the US were to unmarried mothers. What was illegitimate has become new normal. In UK, there are more households with TV sets than fathers. This means, sovereignty of family is disappearing and is being replaced by single parent, mostly women, family.


Another issue in these developed countries is rising unemploment. "Spain’s jobless rate for people ages 16 to 24 is approaching 50%. Greece’s is 48%, and Portugal’s and Italy’s, 30%. In Britain, the rate is 22.3%, the highest since such data began being collected in 1992. The comparable rate for Americans is 18%. and most of the unemployed youth do not have skills. Such scenario definitely create social problems, the Professor said.


Importance of India UnInc

According to Prof Vaidyanathan, 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, but ironically this remarkable contribution of the P&P sector has not been documented and appreciated.


He said, unfortunately, the governments control and regulate an economic activity of these P&P firms or the unincorporated economy that it does not understand and tax it, if it is growing fast. This gargantuan appetite of the government goes against the grain of our civilisation 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. The concept of capacity is cosmic and unlimited unlike western notions of limited capacity and possibility of increasing output only by increasing capital, Prof Vaidyanathan added.


FDI in retail trade- facts and fiction

Dissecting the myths and reality about FDI in retail trade, the Professor said, the trade is 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 marginalised. 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," he said.


Wholesale and retail trade contributes 16.6% to India's GDP, which is next only to agriculture's 17.5%. Livelihood of 30 million, including children and others, is involved in retail trade. About 120 million will be directly impacted by the so-called retail revolution (read FDI in retail), when real estate sharks will corner prime land to construct large malls by evicting retailers, Prof Vaidyanathan cautioned.


He said, "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 show them that they are involved in ‘unproductive’ activities."


He said, 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, where transparency is 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 parties like Bharatiya Janata Party (BJP) and Aam Admi Party (AAP) stoutly opposing the entry of retails giants in India.


Prof Vaidyanathan said he considers these economic constraints imposed by the West to be terminological terrorism mouthed ad-nauseam by economists and policy planners without understanding its implications, they want to open it up to global sharks in the name of liberalisation and kill the fast growing, productive, efficient and effective retail trade. “The sooner we strengthen our small business, the better for employment and society,” Prof Vaidyanathan concluded.




3 years ago

excellent observations.need of the hour to have an economic thinking based on observed and actual facts rather than western academic theories promoted cut ,copy and paste proposals as ground realities only will help strengthen economy and I am glad people like vaidy sir are around to make policy makers think originally. Kudos to your continuous work sir. I attended your lecture on GOLD at P.S.High school chennai and my perception of gold changed before that whenever my asked for gold I used to say in Tamil. Enakku Neeye Thangam why another artificial thangam

Amol Shah

3 years ago

Fantastic analysis, if only our government can act on it consciously with a perfect strategy in place. Really missed the session.

Amol Shah


Nagesh Kini

In Reply to Amol Shah 3 years ago

Amol bhai,
Indeed you miss this great talk.
Not and the houseful with the interesting Q&A that followed.
Suggest you read the book!

Has Unicon Securities shut shop?

Unicon Securities' online trading platform is not working. The broker is not honouring payout requests from its investor customers. Even its customer services and offices are unreachable. Is Unicon Securities about to shut its business?

Is Unicon Securities Ltd, broking division of Unicon Group, is on the verge of shutting its shop? It appears that the broker is neither responding to investors’ queries nor paying out money. One of the readers of Moneylife wrote to us saying, “Recently, Unicon Securities has turned contactless. It neither picks up the phone nor answers the email. Its online money withdrawal facility has been closed and only payment is being accepted. I filed a complaint with SEBI but it just forwarded the complaint to NSE.”

“If Unicon Securities turn bankrupt, then how our margin money will be refunded and when it shall be done? Hope demat shares remain safe despite the POA signed. If brokers shall act like this how retail investor shall dare to invest in the capital market? Is opening 3-in-1 accounts with banks is the only safe solution left with investors?” he asked.

As of 31 March 2014, there are 315 compaints registered by customers against Unicon Securities during FY2013-2014 on National Stock Exchange (NSE), out of which 52% are still not resolved.

Many investors are feeling cheated and complained about Unicon Securities on and social networking sites like Twitter.

An investor wrote on consumercomplaints, “I have a trading account with Unicon Securities. From January end 2014, I was experiencing problems with trading which later got resolved but in past three weeks, it has been a dead silence in terms of trading as well as in contacting a single person, either the phones are not working, or they don't get picked. I also have Rs18,000 towards advance brokerage in the account. I am so fed up of evrything, I want my fund and brokerage back. Kindly take up my complain and help me to transfer my shares, my funds, and my brokerage amount.”

Another investor wrote, “I have a Demat account with Unicon Securities, For a few days, I'm unable to make any transaction from my account. I have been repeatedly calling their toll free number but nobody is responding. Also, all branch address and contact numbers provided on their website are out of service or non-existent. I have my money stuck in this account. Kindly help me to recover my money.”

There are similar complaints from other investors who are not able to trade or even withdraw their invested with Unicon Securities. One senior citizen (Age-72) wrote, “Recently, I am facing very bad experience with their (Unicon Securities) service. I applied for the payout amount of Rs1.88 lakh, twenty days ago via proper channel. Surprsingly, it is kept unhonoured and more over there are no human beings to pickup the telephone. I sent many mails to their help desk. That also seems to have been thrown into the dustbin without any reply. I need my money urgently! Kindly help me out.”

The investors, who have their trading accout with Unicon Securities are worried about their investments as they are not able to trade and withdraw money from thier account. The non-existence of its customer services and offices raises a question about what went wrong with Unicon Securities and when will the regulators step in?





2 years ago

I have an demat account in uncion securities. I tried many times to contact them but not get response . I have total 2600 shares of worth 1 LAC. There is my humble request to regulator to please take this matter on serious note so that we get our hard earn money back.



In Reply to anupam 2 years ago

you can put up the matter with nse by raising a complaint against unicon.


2 years ago

we have 10 demat accounts of our family members in uncion securities.We try many times to contact them but not get response .Even we submit the complaint in consumer forum but still not get any response .There is my humble request to regulator to please take this matter on serious note so that we get our hard earn money back.

Vikas Khandelwal

3 years ago

My father has an account at Unicon-Agra franchise and he has shares worth Rs. 60000 blocked from Feb onwards, nobody gives satisfactory reply. We have lodged a complaint with SEBI and afterwards some Aditya Mehta of NSE did called my father on 1st Aug that your cheque will come within a month, till not he has not recd anything. Now even NSE is not giving any reply.
Can anyone suggest?


3 years ago

unicon securities is more in the business. i had a trading account since last three years. they are not refunding my Leger balance ( 3 lacs) even after complaints against these cheaters. Jagmohan


3 years ago

I am having less than 1 lac in Unicon trading account from last 8 months, they are not replying to any mail & not responding on phone. I am very much worried to know how to recover my hard money....


3 years ago

MOB :- 09831162339
Email ID :- [email protected]

All my savings are invested in share market through UNICON since 2009. From Aug 2013 onward their behavior has changed they did not allow me to buy shares without credit in ledger in spite of huge amount of shares are lying in their custody.Sold shares on 12.02.2014 but sold amount is not transferred to my Bank.Sent Email to SEBI SCORES but no result .


dushant ahuja

In Reply to SUBRATA BANERJEE 3 years ago

Their operations are closed since Jan'14. Get to know whether your securities were in pool account or demat account. Shares lying in demat are fully secured. Immediately file complaint to NSE (written complaint).


In Reply to dushant ahuja 3 years ago

From:-SUBRATA BANERJEE:-Thanks Mr. Ahuja,1/4th of my shares are at DMAT & 3/4th are at pool/margin a/c. I sent a email to SEBI SCORES also I went to SEBI KOLKATA & I handed over a letter mentioning everything to them. They forwarded my mail to NSE & BSE.They gave me letters & I met them both.NSE had done nothing still BSE had tried something but no use .Then what is your advice?


3 years ago

those who are in delhi noida office take the staff of unicon with u .and go to sebi office dont move from sebi office untill our problem solve call me deepak jain 9884180750 chennai

Ajay Sharma

3 years ago

yes deepak,We all are having trouble with unicon so lets join hands together to get hard earned money back...
I have spoken someone there on friday and he asked me to meet on monday .. i will update here the discussion...



In Reply to Ajay Sharma 3 years ago

Hi , did you meet the folks from unicon on monday, please let me know, I also have my money stuck with them .

Plz give me your number so that we can talk.

mine is 07303006818

Ajay Sharma

In Reply to deep 3 years ago

I went there but found nobody in office except few account guys. They said we cannot do anything untill SEBI allow CDSL in unicon account.If that is done then unicon would be able to transfer shares to account. But i feel we all should come together to file a joint complaint against them and take up the case seriously. You can connect me at 09540333033


3 years ago

we all request i sebi and bse to arrest unicon director and sell his property wife jewellery and household articles and settled poor people public claim . i will wait for another one month otherwise i will go and meet mr. narendra modi and finance minister but sure i will go to media and i will never leave my money. 9884180750 deepak


3 years ago



3 years ago



3 years ago



3 years ago

They have given me a PDC aswell of july 20th but its seems it gone bounce too and i am first time investor in stocks...If i cant trust my broker with my cash than i will never invest in stock market ever...Its sebi who should take strict action and arrest the promoter of the company just like it happened to sahara...

Missing voters: Pune Police refuses to register Phadke’s complaint as FIR

Despite incriminating evidence procured through Section 4 of the RTI Act, proving fraudulent deletion of Sharad Phadke’s name from voters’ list in Pune, the police got a counter statement from Election Commission office while refusing to registering an FIR

Sharad Phadke and I,  who through inspection of files under Section 4 of the RTI Act, procured documents after spending two long days at the Tehsildar office in his Kasba constituency, revealing the fraudulent procedure adopted to delete his name from the voters’ list, decided to file a FIR for tampering with the voters’ list and illegally deleting his name.
We showed the documents to leading lawyer Aseem Sarode and noted RTI activist Vijay Kumbhar. Sarode stated that, “this case is a pointed one, directly showing the falsification of documents which is a criminal act and merits a FIR. It is a sample case of a possible mass fraud that led to deletion of thousands of names.’’ Kumbhar too mentioned that under the Representation of People’s Act, mischievous and fraudulent deletion of name from the voters’ list amounts to criminal offence and has rigorous punishment. In this case, the Collector, Election Officer and Block Officer are all directly responsible for this criminal act.

After three long hours of waiting, Senior Police Inspector Mr Sawant of the Vishrambag Wada Police Station, called us in and said that he will look into the matter as he had got a written statement from Vaishali Visal, the election office staffer, saying that she has followed the required procedure for deletion of Mr Phadke’s name. I snapped back saying, “how can you ask for a counter statement, with lodging Mr Phadke’s FIR?’’ He said. “just leave your complaint with me and we will do the needful after consulting with the senior. Such a complaint has to be addressed by the Election Commission and not by the police.”
So, how come, Mr Kirit Somayya’s police complaint regarding the same issue was filed at the Mulund Police Station under Section 120 B (for conspiracy?) just a while ago?’ To that Sawant asked us to go outside so that he could speak to his seniors.
After a few minutes, the havaldar came and asked Phadke to put a signature on his complaint, which we had drafted and brought a printout of it. Phadke insisted that he would like to lodge a FIR. So, again we went to Sawant’s office who mentioned that it would be lodged after further consultation with his seniors and he would ensure that the FIR copy is delivered to Mr Phadke’s house. As per law, the police is given 48 hours to lodge a FIR. Sarode has adviced that Phadke sends the complaint by registered post to Mr Sawant with a note saying that despite having come personally, FIR was not lodged. In the meanwhile we insisted that he gives us an acknowledgement on the copy of the complaint, which they did.
After that, I went to the Kothrud Election office where I had asked for details of three voters whose names were selectively deleted. Here too, the documents prove that no procedure was followed. More on this, tomorrow.

Details of Mr Phadke’s documents and procedure of deletion of names from the voters’ list can be read here: Pune voter list file inspection shows deletion is done fraudulently!


I used Twitter as a communication to give a minute-to-minute happening of our visit to the two police stations – first to Narayanpeth Police Chowkey and Vishrambagwada Police Station. Here they are:

My tweets (please read them from below for proper order):

In  this country for ordinary citizens at all? Politician @KiritSomaiya 's FIR lodged immediately but Phadke's kept waiting.

Filing FIR of Kothrud documents tomorrow. Until then please pray that I get back my favourite Samsung tablet mobile. So distressing!

I went to Kothrud election office,got documents of 3 citizens. Here too no procedure followed-207of 267 names deleted from 1 polling station

Taking full advantage of 48 hrs stipulated time to lodge FIR, the police registered our police complaint but have to convert it into FIR

Noted lawyer Aseem Sarode has asked Phadke to send the police complaint by Regd post also.

Oh my God - after all that running, I've gone and lost my mobile. It's got left in the rickshaw. Efforts on to trace it

Just now Police Inspector Sawant has accepted Phadke's complaint. Police has 48 hrs time to do the FIR so he will send a copy later.

Now Police Inspector is again calling his seniors. Kya darte hei ye log
Outrageous. how can Pol Insp take statement of election office without taking Phadke's FIR? Shocking. We will wait

P I Sawant says he cannot take FIR and he has already got statement from EO.dat procedure was adopted. i again read out @Dev_Fadnavis tweet

We should all salute Sharad Phadke, a senior citizen who is more enthusiastic then me to file the complaint. He is my hero of the day

Honestly, why can't police take down FIR and then start internal consultations?

Thanks @Dev_Fadnavis forr tweet on @KiritSomaiya police complaint.I quickly showed it to police. waiting since 2.5 hrs at Visrambag pol stn

Election Commissions says sorry and takes responsibility for mass deletions.Not enough. Please announce fresh date before LS election process over

Now PSI Patil has been sent by his senior offucer to find out something before he takes down complaintThey in real fix as we try to fix them

Police at Narayan Peth police chowky say they need to consult seniors. Now we have been asked tk come to vishrambag pol st. Waiting

a SC judgment says if anything so abnormal has taken place CEC shld set aside normal procedures to ensure fair election.

(Vinita Deshmukh is consulting editor of Moneylife, an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation series on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte” with Vinita Kamte and is the author of “The Mighty Fall”.)



PG Bhat

3 years ago

It is not easy to fight the system.

I admire the good work you all are doing.

Sharad Phadke

3 years ago

Police have given me "Samaj Patra"
[समजपत्र] that they have sent my complaint to Dy. Election Commissioner for Kasba Constituency for his advise.
On getting the report we will take the next action.
This is very simple a thief has been consulted to check if he has done a theft.
I will post a letter under section 154[3] to Dy. Commissioner for FIR but from this it appears the chances are very thin.
I have no energy to go in WP in High Court as this is a very long process and I have no knowledge if I will leave to see justice. [I am 73]


Abhijit Gosavi

In Reply to Sharad Phadke 3 years ago

Salute you, sir, for the courage and drive you have shown --- especially at your age! Many people your age (my parents are that age) have trouble walking, which makes this all the more admirable! And you are going to live for many more years!

Adheer Pai

3 years ago

In Pune, the EC removed around 4.2 lakh voters and provided only 21 calendar days for correction and rectification of the voter rolls after they published the final rolls.

Assuming even half of the 4.2 lakh voters came back to the EC for rectification / adding their deleted names, the EC would have to process and rectify at least 12,000 entries per day.

It is physically impossible to handle this kind of workload for EC. Any sane person knows this is.

Were they even equipped to handle this workload ?

What is the maximum workload that the EC can process in day - this can perhaps be known through an RTI.

This is a prima facie case of incompetence, negligence, improper planning and perhaps conspiracy.

Adheer Pai

3 years ago

Keep up the good work.

If a statistical analysis of the deleted voters list is done a sinister pattern will emerge - that will favor a particular political party.

I have seen instances where government officials were expected to do the voter list update work, but this task was subtly outsourced private contractors.

In the 24th April (Mumbai edition) of Times Of India (page 4), it was mentioned that if a voters name was deleted (as per the ASD list) but existed in the 2009/2012 rolls, then that citizen can vote by filing a self declaration form.
However, this was not allowed by the presiding officers, and no information regarding the same was posted outside the polling stations.

Vinita Deshmukh

3 years ago

Dear Mr Chanchalani, BJP is playing hide and seek - wondering whether BJP will win in Pune by a thin margin. In that case why make a noise? Then it will start making a noise if it loses Pune seat. Where is the genuine interest of voters' fundamental right to vote that has been brutally snatched away?


3 years ago

Sharad Phadke and Vinita Deshmukh should thank their stars for not able to register an FIR. Knowing the tardy Justice delivery system in India they may after 15 years from now will be asked to depose as prosecution witness and even after a dozen of visits to court their deposition will not be over.

Shashank Tikekar

3 years ago

It seems that Sonia's strategy to plant her cronies in constitutional institution bearing fruits for her


3 years ago

Voter list toh jhaaki hai, EVM ka fixing baaki hai . . .

J P Shah

3 years ago

Keep on keeping on. Hats off to Shri Phadke and moneylife.

Dinesh Chanchalani

3 years ago

You are the only one who is doing *something* about this in Pune. Where is the pathetic local BJP leadership of Pune? Cowards!

Abhijit Gosavi

3 years ago

Clearly, they are trying to hush this up; salute you for your courage and drive, Vinita-tai!

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