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Why Does Dhunda Exist?

As a small business owner in India, there are usually plenty of challenges that one must deal with. One such challenge, that is immediately recognizable for most that do or have run a small business, is the problem of delayed payments from debtors. In its report, the RBI appointed ‘Expert Committee on Micro, Small and Medium Enterprises’ led by Mr. U K Sinha, described the problem of delayed payments as ‘perennial’.

In addition, the report states that one of the primary reasons for this problem to exist is the ‘limited bargaining power’ of MSMEs. In other words, amounts payable to small businesses generally figure somewhere near the bottom in the list of debtors’ priorities, and there’s not much that creditors can do about it, given that even in extreme cases, litigation is rarely feasible due to the infamous backlog Indian courts have on their plate.

The below chart, borrowed from the same report, shows that the 'average debtor days' for MSMEs has consistently been over 90 days -

The inter connected nature of modern supply chains means that this is a problem which directly or indirectly affects more or less every business in the ecosystem. A delays the payment due to B, whose lack of recourse means the best available solution is to simply delay payments payable to its own creditors, who in turn will do the same. The lack of recourse gives rise to a lack of accountability, and there is no way to identify and punish businesses which consistently and regularly delay payments which are due to their creditors. Once you realize the dynamics at play here, you can start to see how the problem becomes pervasive, self-sustaining and indeed, crippling.

It is not all doom and gloom for small businesses in India, though. Despite facing myriad challenges of various types, these businesses still employ around 30% of India’s workforce, contributing 45% to India’s manufacturing output and 49% to its exports. As is obvious from these figures, the MSME sector is vital to India’s economy. When you consider that a large portion of these businesses don’t even have proper access to credit, it’s amazing how much latent potential exists, if only we can solve some of the problems that hold these businesses back from realizing their true potential.

Dhunda is an attempt to do just that. We are trying to leverage technology to solve a problem that has been plaguing Indian businesses for years, in order to make it possible for these businesses to spend more of their resources on productive outcomes. If we are successful, the Indian business landscape will look vastly different from anything we’ve seen before. All sustainable businesses will have rapid and flexible access to credit, accountability will be embedded across all supply chains, and it’ll be possible to quickly identify and isolate bad actors so they can’t suck energy from good, honest businesses looking to create value for you and I.

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