Professional Documents
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Sealing The Victory of The Corporate Sector 2
Sealing The Victory of The Corporate Sector 2
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COMMENTARY
2005. It was predicted that the introduction of product patents would revert Indias
patent regime to its colonial incarnation,
and with a vengeance (Chaudhuri 2005a,
2005b). It would stymie the initiatives of
the Indian companies to find new processes for old chemical entities, and the
multinational corporations would try
to protect old products by creating a
chakrabyuha of minor patents to guard
their monopoly.
It has been clearly established that the
WTO, and especially, the TRIPs (TradeRelated Aspects of Intellectual Property
Rights) provisions embodied in it, came
into being as a result of a long-drawn-out
campaign and conspiracy by some of the
top multinational companies led by Pfizer,
the largest drugs and pharmaceuticals
corporation in the world (Drahos and
Braithwaite 2003). By 2012, it was easy to
predict that the situation of the Indian drugs
and pharmaceuticals industry would revert
to domination by multinational companies,
as was true before 1972, but with some differences (Chaudhuri 2012; Gopakumar
2012). A summary sketch of the developments was given in Gopakumar (2012: 4):
First, unlike in the earlier period, the MNCs
are aggressively pursuing growth in the generic segments. Second, they will enjoy monopoly power in the patented drugs market.
Third, they have the financial capacity to
take over more Indian companies.
Foreign Takeover
Between 2006 and 2010, the following
companies were taken over by foreign
multinationals: Orchid Chemicals, Shantha
Biotech, Ranbaxy, Dabur Pharma and
Matrix Laboratories. I am sure more
sales and tie-ups allowing the upper hand
to foreign companies in management of
sales, manufacture and revenues must
have taken place since then.
The KKR deal is highly significant, not
just because it is an acquisition by a private
equity fund, but also because KKR was one
of the pioneers in leveraged buyout (LBO)
of firms and was responsible for the LBO
of RJR Nabisco, which remains the largest
LBO in history in real terms (Burrough
and Helyar 1990). KKR, along with other
LBO experts, has also played a major role
in creating huge private healthcare
conglomerates in the US (Bagchi 2007),
which have successfully blocked most of
Economic & Political Weekly
EPW
vol xlIX no 24
COMMENTARY
the key findings of its December 2013 report (RBI 2013, Overview) were:
A rising trend in risk weighted assets
(RWA) to total assets along with declining trend in coefficient of variation (CV)
indicates that the rise in proportion of
risky assets in the total assets of scheduled commercial banks (SCBs) is becoming more broad-based.
The GNPA s (gross non-performing
assets) ratio of SCBs as well as their restructured standard advances ratio have
increased. Therefore, the total stressed
advances ratio rose significantly to
10.2% of total advances as at end September 2013 from 9.2% of March 2013.
The medium and large industries contributed more towards stressed advances
than micro and small industries.
Industries recorded the highest share in
restructured standard advances and with
relatively high GNPA s contributed the
highest share of stressed advances in the
banks loans portfolio followed by services.
Five sectors, namely, infrastructure,
iron and steel, textiles, aviation and mining together contribute 24% of total advances of SCBs, and account for around
53% of their total stressed advances.
The report gave a veiled warning about
the continued prevalence of the mentality
of too-big-to-fail among banks and stressed
the macroeconomic factors and the contagion effects of weaknesses of enterprises
within groups or across groups. Completely
ignoring the fact that the distressed assets
of the banks were caused primarily by two
main factors, namely, the slowdown of the
Indian economy, and the borrowing spree
of corporate groups, the Nayak Committee
condemned the PSBs for lacking the required sense of purpose, and recommended
the privatisation of the PSBs.
At one stroke, the PSBs worth trillions
of rupees, which had been built up with
public money over the last 45 years, will
be, if the Government of India and RBI act
on the recommendations, handed over to
the private corporate sector. This ignores
the misgovernance of banks in private
hands, not only before the nationalisation
of the Imperial Bank of India and subsequently at 14 other major private banks
but also the poor performance of private
banks since the formal initiation of the
neo-liberal order in 1991. To take a glaring
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