BOOKS INDIANS SHOULD READ- 10 (Chapter 4 – part 1) (Post No.8476)

WRITTEN BY R. NANJAPPA                        

Post No. 8476

Date uploaded in London – – – 9 August 2020   

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Pictures are taken from various sources for spreading knowledge; this is a non- commercial blog. Thanks for your great pictures.

For readers convenience we are giving serial nos.                            BOOKS INDIANS SHOULD READ- 10 (Chapter 4 – part 1)                                               R. Nanjappa


The state of the Indian economy is very much in the news- for whatever reason. The Modi sarkar has been  assailed for the mismanagement or poor performance of the economy by its own partymen, who are knowledgeable. 

However, this preoccupation with economic matters is not new. After all, Britain was running the affairs in India only for its own economic benefit- at the expense of India’s welfare. Even such a liberal politician like Dadabhai Naoroji wrote about our poverty and ‘unBritish rule’! India’s economic welfare was a major concern with Gandhiji, who prescribed his own solution and devised and demonstrated  certain practical steps. Nehru started the planning era, discarding all Gandhian ideals, and since then,  India has been focusing on the Economy strongly. It ended in disaster in the early 90s, and then we began LPG regime ( Liberalization, Privatization, Globalization) in the name of reforms under pressure from IMF/World Bank. But it seems to have run into a quicksand- that is where the Modi govt. finds itself. The ship has lost steam, the compass does not seem to work. Modi Government has already raided the  Reserve Bank of India twice for funds. There is now the added burden of post- Covid 19 recovery. Are we preparing well to meet the challenges? What is the ‘Economy’?

But what is it we mean when we talk of the “economy”? Most people hear of GDP, employment, poverty, stock market, Public Sector, Private Sector, organized and unorganized sectors, Big industry, banks, transport and communication and, not to forget, IT! We have the govt and RBI dishing out figures (which no one follows ) and reports (which  no one reads) and other agencies ‘monitoring’ the economy for their own purposes, and from their own angles. And we have the newspapers and the cacophony in the electronic media. Few even among the so called educated circles  really understand these things. But to know the jargon or catch phrase is enough!

We always speak of Development, Growth, Progress. There is not one among us who is not a votary of development- whatever it may mean! The focus on the mainstream media is on the Organised sector, big industry and its magnates, automobiles, IT, certain numbers and indices, etc. Yet what is their precise part and function in the economy?
Take a walk in the busy areas of our markets in cities like Bangalore or Chennai.  We find literally hundreds of petty shops lined across crowded streets and on pavements, doing brisk business.  This is a set up flourishing day in, day out, parallel to the big shops and glitzy big stores/malls.

Street market in Gandhi bazaar, Bangalore. More than 100 years old. Picture from: entrappedspaces.tumblr.
Or recall the scenes from our smaller towns.

Street market in the temple town Chidambaram, Tamil Nadu.
This can be multiplied a million times across India. Where do they  figure in our economy? Finance Minister or RBI governor cannot tell you. The bloated bureaucratic bunch cannot tell you. The big economic pundits or Harvard educated dons  won’t tell you. They all focus on the govt and the corporate sector. For the politicians people matter as but voters; for the so called economists, they are but consumers or mere numbers. Other things do not matter.

But that is exactly what Prof. R.Vaidyanathan tells us in his book: INDIA UNINC.

Published by Westland Limited, 2014.

Shown here for purely educational purpose.
What is India Uninc?

Official sources talk in terms of “Organized” and “unorganised” sectors. This is utter nonsense since every activity follows some order and organization. The correct terminology should be ‘Incorporated and Unincorporated’ or ‘formal and informal’ sectors. The so called organised sector includes all companies registered under the Companies Act, and all units registered under the Factories Act. Everything else falls under the unorganised sector- ie it is the unincorporated sector. It consists of individuals, proprietorships, family enterprises and partnerships.The unincorporated sector is  much larger than the so called organised sector. It comprises the non-agricultural and non-govt sectors. India Uninc. is in short the non-corporate sector.It is the most dominant part of our economy.

Some big, basic facts: The unincorporated sector in India contributes about 45% of the national income, which  far surpasses the corporate sector’s contribution of  around 15% and yet its contribution remains unacknowledged.  The non-corporate sector dominates service activities which in turn constitutes two thirds of our e conomy. Sectoral composition of national savings: (%to GDP) Household (which includes unincorporated sector )                                                    72% Private corporate sector                          24% Government                                              4 % The noncorporate sector of the economy has the largest share in our national income, manufacturing activities, services, savings , investment, direct and indirect taxes,the credit market, employment, forex earnings, etc. Yet this sector has never been the focus of our government so far.

The govt has now become a dissaver and its role is now to feed its employees with salary, wages, perks and pensions. The vast army of govt employees of around 20 million is taken care of by the remaining 380 million of the workforce. The private corporate sector depends on the govt to facilitate the appropriation of the savings of the household sector through banking and financial sector intermediation. Service activities dominated by the non-corporate sector have grown much faster than agriculture or manufacturing.    Prof.R.Vaidyanathan.
Photo: Free Press Journal. Thanks.

Prof. Vaidyanathan’s book is full of statistics- as he supports his arguments on the basis of established statistics ( he does not talk in the air); and where statistics are plain bunkum or not available, he does not hesitate to say so. For instance, the Uninc. sector is a mighty saver, but its precise contribution is not known as this statistics is not available! ***
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