Mint | Social capital can help close a wide MSME gap

In his inaugural address to the first Industrial Conference in Pune in 1890, Mahadev Govind Ranade noted that “the industry of the country is parched up for want of Capital" because after land revenue, a considerable portion of gross savings was used to hoard bullion. The lack of institutional arrangements for industrial finance meant that capital was locked up in unproductive assets and not available to India’s entrepreneurs. A century later, the German economic historian Dietmar Rothermund came to a similar conclusion. Lacking financial institutions, Indian surpluses in the second half of the 19th century went into gold and land. Meiji Japan, in contrast, was able to “gather small savings and to channel them into the mainstream of the national economy," enabling the country’s industrialization. Read the full article here.