In the past I have recommended a few
books I considered a good read. Beginning now I will sometimes write about good books
that I come across that have concerns of India at heart. India UnInc is one
such book.
Santa Claus is a much celebrated figure.
He is the one who is dressed up and is seen all around during Christmas. But in
his hometown somewhere in the North Pole, it’s the little ‘Elves’ who keep the
wheels turning at his gift-factory. They’re the ones who also maintain his sled
and reindeer. The story of elves is not going to be told as often. The story of
Indian economy is somewhat similar. I believe there are two economies; one is
the political economy and the other is the “real” economy. The political-economy pays a lot of attention to the
corporate sector but the real economy comprises both the corporate and the
unorganised sector as also the “unincorporated”
sector. This is the story that “India
UnInc” looks at in the just-released book by Prof R. Vaidyanathan (RV). The
book looks at the whole UnInc industry with facts
and figures and a narrative that is enjoyable to read.
There are organised and unorganised
sectors in our economy which are recognised. Both sectors are usually
registered under some Central or State legislations and maintain regular books
of accounts and file returns. The UnInc constitutes all the other “small people”, partnerships or
proprietors (P&P as RV calls it). This sector can include your corner-pan-shop,
barbers, carpenters, plumbers, rickshaw-pullers and even CAs, architects,
lawyers and so on. These are non-agricultural and non-governmental in nature.
To give you an idea of how this sector keeps the wheels of Indian economy
turning let me quote from the book:
The Unincorporated sector in
India contributes about 45% of the national income, which, by far, surpasses
the corporate sector’s contribution of about 15% and yet its contribution
remains unacknowledged. Also, it is important to note that the estimates of
this sector in manufacturing and services need to be more accurate.
RV hilariously tells us how national
planners and economy-analysers sometimes use POTA in their studies or analysis
of this sector and economy in general. No, this is not that POTA, this POTA is
data “Pulled out of Thin Air”. He
states: “We observe that the non-corporate service
activities, which, in turn, constitutes nearly two thirds of our economy. These
are also the fastest growing activities. So justifiably, it is the
non-corporate sector that should be termed ‘the engine of our economic growth’
and the Indian economy be called the partnership and proprietorship economy
(P&P economy)”.
Thus RV deals with some myths about our
economy that have always surrounded us and led us to believe that the corporate
sector is the great backbone of the Indian economy. The truth, as with all
myths, is quite different. This is not in any way to dismiss the corporate
sector or its deserved place, but to indicate that they get more attention than
due. Known for his wit and research RV also makes some stunning points with a
good sense of humour: “There is a witty saying in the
Army, that to move up in the ranks what needs to be done is “Salute all things
moving and paint all things standing”. In the same vein, governments attempt to
control and regulate an economic activity if it does not understand it and tax
it if it is growing fast”.
RV also
touches upon education concerns of these small people and also how they
contribute to many causes; both social and religious for their own community.
That they also make a great contribution to savings while managing their own
expenses. He writes: “What is really important is that
the educational expenses are, in a perverse way, inversely related to the level
of education, like KG being more expensive than post-graduation”… Banks do not
provide loans for school education but provide for IIM/IIT education”.
This is an absurdity in our system. Narendra Modi in his last speech at a BJP
meet outlined primary education in his vision statement. RV explains it as giving loans for constructing the second
and third floor of a building but not the foundation. I would go further
and suggest primary education should be free for all children no matter private
or public schools. This freebie or burden is one that we should gladly bear.
Public and
media discussions largely centre around macro-economics. This is a reason why
you’ll find “eminent economists” like Sagarika Ghose quizzing Modi on US
business interests or fiscal deficits. Our lives are related to
micro-economics. Even on the issue of reservation in private sector, RV
logically explains why SCs/STs would be better served by developing their
skills to be entrepreneurs. Indians are gifted at enterprise. This is where
govts should be investing energy instead of more and more doles and
reservation.
I have met
RV a few times and he is a keen observer of the economy and political policies.
Apart from being a popular teacher at IIM Bangalore he conveys his messages
with a lot of facts and figures and analogies. His articles feature in many
newspapers and he often appears on TV as a panellist. We tend to discuss
economics in casual conversations with issues that directly affect our everyday
lives. This book takes it further for the country and will inevitably become a
tool and resource for anyone seeking a deeper understanding and learning of
Indian economics of the small people. You can get it as paperback or a Kindle
version.
PS: Please vote on the India’s worst journalists poll -2014 (Right margin
of this page).
