India is rated as the world’s fastest-growing major economy despite a spate of difficulties and its business landscape is throwing up surprises, both positive and negative.

A rare positive surprise arrived last week when it was revealed that some of the best-run companies for shareholder value in the world were actually family-run entities. This came after fierce debate on crony capitalism where family-run groups were often linked to unfairly or opaquely influencing public policy and the allocation of state resources.

But the latest revelations show that many of India’s family-run groups had a good side often not spoken about when the banter goes back to the days of socialist controls that ended with a reform program starting in 1991.

According to a report by Credit Suisse last week, India had 111 family-owned companies among 1,015 with a market value of $250 million, putting it in third place behind China (159) and the US (121).

Notably, these family-owned companies outperformed their peers in other regions, an analyst for the financial services firm said He linked this to the “long-term outlook of family-owned businesses relying less on external funding and investing more in research and development.”

These companies generated annual returns averaging 13.9% since 2006, compared with non-family-owned companies that returned 6% per annum, the report said.

In a separate study this month, global consulting firm Bain & Company said seven Indian conglomerates that stretch across diverse industries and services delivered returns of 22% to 32% to their shareholders over the past 15 years, more than their single-business counterparts in Asia.

The report noted that between 2007 and 2016, average shareholder return dropped to 11% across Asia, less than the 12% shown by pure-play single business entities. The seven Indian conglomerates outshone the rest.

The report named the Bajaj, Lalbhai, Murugappa, Emami, Godrej and Torrent groups among the conglomerates and said diversified entities no longer held any special advantage for shareholders the way the used to.

In India’s coffee-table talk, especially among executives looking for lucrative employment, family-run groups used to be referred to as Lala companies in a mocking reference to traditional business family heads called Lalas in Hindi.

In 1969, then prime minister Indira Gandhi’s administration enacted a special anti-monopoly law aimed at family-run enterprises to measure their market clout and keep their dominance in check. But its implementation coincided with the so-called License-Permit Raj (Rule) where well-connected family barons were getting state permission from the same administration for everything from cheaper imports to permission to set up huge steel or petrochemical plants.

Industrial groups like the Ambanis, Ruias and of late the Adanis of Gujarat have been targeted by opposition groups or social activists for unfair dealings and influence peddling, although these groups deny these charges.

Things seemed to change in 1991 with the abolition of a licensing regime for most industries, but family-run businesses gave rise to talk of crony capitalism again as the focus shifted to the procurement of things such as industrial land and spectrum for telecom firms. And mammoth loans from state-run banks.

India has been aggressively discussing bank fraud and bad loans this year amid a growing pile of non-performing assets (NPAs) – or bank loans that have either gone into default or the companies have failed to make interest payments.

Most of the defaults pertain to state-controlled banks amid serious talk that officials in New Delhi’s corridors of power peddled influence to get loans approved for favored groups, few of which were family-run.

Family-run companies were prominent among a list of defaulters in a newspaper research study. Data at the end of September 2017 showed the top five defaulters alone owed between them nearly 160 billion rupees, which at the prevalent exchange rate amounted to US$2.5 billion.

Last year, a list of 12 companies with the highest loan defaults totaling a quarter of the bad-loan pile showed most of them to be controlled by families. With NPAs then estimated at 9.5 trillion rupees, these unpaid loans added up to more than US$35 billion as the companies headed for bankruptcy proceedings.

The defaulters’ list included companies controlled by the Ruias and other groups such as Jaypee and Videocon that have been cited for proximity to political parties. These two groups between them were in one estimate linked to Rs 1 trillion (US$15 billion) in unpaid loans.

The Jaypee group was recently dazzling the country by building India’s first Formula One track before it was discovered that its own corporate tires were significantly punctured.

It turns out that both effective money management and proximity to policy-makers have played a role in the dominance of family-run business groups in India.

Some have been accused of political fixing as well. It’s a tale that reflects the good, the bad and the ugly side of India’s family-run businesses.