Friday, January 22, 2021: Sensex Almost Doubles From Its March Lows To VAULT PAST 50,000

MUMBAI, NEW DELHI, BENGALURU, KOLKATA, CHENNAI, AHMEDABAD, HYDERABAD, CHANDIGARH*, PUNE* VOL. 4 NO.
19
50,184.01 (High)
SENSEX ALMOST 49,624.76
(Close, 21 Jan 2021)
DOUBLES FROM ITS
MARCH LOWS TO
VAULT PAST 50,000 uP1
999.26
2 Jan 1991
FRIDAY, JANUARY 22, 2021

LIVEMINT.COM
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SENSEX NIFTY DOLLAR EURO GOLD OIL

49,624.76 14,590.35 ₹72.99 ₹88.43 ₹49,513 $55.87
167.36 54.35 ₹0.03 ₹0.17 ₹427 $0.21
mint primer
QUICK EDIT
Should you be Dizzying
buying stocks heights
now? Depends In the 2017 annual report of
Berkshire Hathaway Inc., chair-
man Warren Buffett wrote:
BY HARSHA JETHMALANI “The light can at any time go
from green to red without paus-
The BSE Sensex rose above the 50,000 mark on Thursday, before
dropping in the last hour of trading. The milestone has prompted two ing at yellow.” His caution may
extreme views—the markets have risen too high; and, the factors have been in a specific context,
driving markets up will stay. Mint explores what it means for investors but it’s especially relevant now,
with the current stock market
Buying high exuberance looking distinctly
A strategy of buying in the Sensex when it hits big milestones and holding irrational. On Thursday, the
it hasn't led to bad outcomes on past occassions. BSE Sensex blazed past the
Returns since Sensex closed above the respective milestones (in %) 50,000 mark, before ending
Sensex milestone just a shade lower. It has gone
10,000 20,000 30,000 40,000 up by a crisis-defying 90%-plus
45.2 Annual returns till date 1-year return post milestone
since its March low.
Yet, even those tempted to go
14.7 15.2 14.7 short on equities had better be
11.4 7.2 careful. As Keynes had put it,
markets can remain irrational
longer than one can stay sol-
-15.3 vent. So long as central banks
keep cheap money flowing glo-
-52.5 bally, and enough of it goes into
Source: BSE, Bloomberg, Mint Research stocks, it doesn’t really matter
whether share prices make
+ What is driving the How are the returns sense from a perspective of
1 current momentum?
With Joe Biden taking charge as
2 when buying at peaks?
Investing in the market when its
future earnings. The Sensex
ascent could easily go on. As
the 46th US President, more hit record highs can be a good asset inflation doesn’t worry
liquidity in the form of stimulus is strategy to earn decent returns, policymakers much, it’s for
expected to find its way into the analysts from JPMorgan had investors to watch out for signs
equity markets. Investors are pointed out in a study. As it turns of a reversal ahead. Monetary
increasingly betting on higher out, the strategy of buying in the policy normalization in the
spending by the US government to Sensex when it hit earlier
West, for example, could set off
boost its economy. The mass milestones, and holding the
vaccination programmes across position, has generated decent convulsions. But under covid-
countries will also contribute to returns of nearly 15% in some battered conditions, that’s dis-
the optimism around global cases; the worst case being an cussed only in hushed tones. It
economic recovery. Another factor annual return of 7.2% for those would pay to listen closely.
that has played a key role in this who bought the index when it hit
rally is a regime of ultra-low the 20,000 mark in December
interest rates globally. Emerging 2007. But one-year returns have
markets have been enjoying more fluctuated, as the chart alongside
investor interest than developed
markets in recent months, owing
shows. Those considering
purchases at current levels, clearly,
MINT METRIC
to the weakness in the dollar. need to have a long-term view. by Bibek Debroy
In Quebec, the curfew dragnet

3 What are the risks of
investing at such times?
A section of market experts is concerned
Was relaxed for walking a pet.
about India’s high valuations. The MSCI
A lady said “Capeesh?”
India index is trading at one-year forward And walked her husband on a leash,
PE multiple of 30 times. Since this is a
liquidity-driven rally, lower-than-expected
Was she fined? You bet.
stimuli or reversal in the accommodative
stance of central banks, can be a damper. A
faster-than-expected increase in inflation
could also come as a negative surprise. QUOTE OF THE DAY
What are the pitfalls of Are earnings keeping
I am honoured to announce
4 such a market rally? 5 pace with the market? that the US will remain a
As is typical during any liquidity- While the index is scaling new member of the World Health
driven rally, many retail investors highs, and valuations are pricey, a
are enticed towards mid-caps, key question is whether corporate Organization. The role of the
small-caps and penny stocks. A key earnings are catching up. After all, US, its role, global role is very,
characteristic of these stocks is valuations are a function of results
that they may give high returns in and, unless there are meaningful very crucial.
a short time-span, but also carry upgrades of earnings estimates,
very high risk. When the market equity returns will stagnate. While
trend reverses, these stocks are at there are initial signs of a good
risk of seeing steep falls, and often recovery from the pandemic, some
investors find it difficult to exit analysts worry that this is driven ANTHONY FAUCI
these positions. As chart shows, by pent-up demand, and depletion US INFECTIOUS DISEASE
betting on a diversified large-cap in household savings. They say CHIEF
portfolio may generate returns in a there is a need for more Centre
long-run, but buying small-caps in support to boost demand for the
this frenzy is a recipe for trouble. recovery to sustain.
m MINT SHORT
London’s poshest homes are sitting empty

ISTOCKPHOTO
Bloomberg The number of luxury pads up for rent
feedback@livemint.com in central London has surged by 75%
from a year earlier. For owners of the
L
ondon’s luxury housing market is multi-million pound homes, it could be
enduring a lonely lockdown. a long winter. Restrictions that resumed
Homes in the most expensive areas or tightened in the latest lockdown
of the capital are sitting empty for more which started this month are likely to
than two months before finding tenants, keep a ceiling on rents for some time yet.
the longest waiting period since the last The number of luxury pads up for rent As tenancies expired last year and the
financial crisis, as per property data has surged by 75% from a year earlier. pandemic kept new residents away, a
company LonRes. flood of vacant homes came onto the
And that’s despite rents recently mered swanky hotspots such as Mayfair market. Landlords have also struggled to
plummeting at the fastest annual pace in and Knightsbridge, forcing landlords to fill short-term rental properties popular
a decade. An exodus of office workers slash their rents or see their properties with tourists as well as those aimed at
and dearth of global visitors has ham- stay unoccupied. international students and visitors.
X
T
U RA L E
O
Y SV
N E W m
Mint Lite
Stories, opinions, news and views that matter, from around the world.
EU LEADERS shift focus to the new coronavirus variants whose spread risks outpacing the hope that vaccines will put a
quickish end to the pandemic in Europe, reports AFP. The chiefs will hold a summit—by video-link to protect themselves
from infection—“to raise political awareness on the seriousness of the situation with the new variants,” an EU official said.
Virus mutations that emerged in Britain, South Africa and Brazil have alarmed EU authorities because of their increased
infectivity, prompting bans or restrictions on travellers from those countries. For more updates, here’s Mint Lite
US rejoins WHO on Biden’s order

THE US rejoined the World Health Organisation (WHO) in one
of the first official orders of the Joe Biden presidency, reversing
a key foreign policy decision his predecessor Donald Trump
took last year after accusing the UN health agency of
incompetence and bowing to Chinese pressure over the
coronavirus pandemic. In April last year, as the coronavirus
pandemic was spreading across the globe, Trump cut off US
funding to the WHO, saying it was “virtually controlled by
China.” He then went further, triggering the process to pull the
US completely out of the organisation. The withdrawal was due
to go into effect in July this year, but Biden’s order will cancel it,
reports the PTI. Biden also announced America’s return to the
international Paris Agreement to fight climate change. Biden
has promised to put the US on a track to net-zero emissions by
2050.
Eyes on Turkey as Ankara FM visits

THE EUROPEAN Union will press Turkey to make good on
recent gestures from President Recep Tayyip Erdogan to calm
tensions, as Ankara’s foreign minister visits Brussels, reports
AFP. Mevlut Cavusoglu will meet EU foreign policy chief Josep
Borrell and then council president Charles Michel on Friday in
a push to mend ties between the 27-nation bloc and its hulking
south-eastern neighbour. Tensions between Brussels and
Ankara reached new levels last year after Turkey repeatedly
sent a ship to search for gas deposits in disputed waters,
angering the EU and its member states Greece and Cyprus. But,
in the weeks after Turkey withdrew the vessel, Oruc Reis, in
November and Brussels announced plans to expand sanctions
last month, both sides have softened their rhetoric. In an
important move, Turkey and Greece agreed to hold exploratory
talks on their maritime dispute in Istanbul on 25 January.
Covid’s impact on housing

COVID HAS impacted not just property prices, but
+ also apartment sizes. Average apartment size in
residential projects launched last year increased by
10% to 1,150 sq ft, as builders expected demand for
bigger flats to rise after the covid-19 pandemic,
according to property consultant Anarock. The
consultant said the average apartment sizes were
reducing year-on-year since 2016 but the trend has
reversed last year. The reasons for apartment sizes
reducing in previous years were affordability and
millennials’ preference for low-maintenance homes.
However, in 2020, as more people started
accommodating the work-from-home and learn-
from-home culture, flat sizes began increasing for the
first time in four years, reports PTI.
Sri Lanka reopens to tourists

SRI LANKA reopened to foreign tourists Thursday after a
nearly 10-month pandemic closure that cut deeply into the
Indian Ocean island nation’s lucrative travel industry. Full
operations also resumed Thursday at the island’s two
international airports, accommodating the commercial flights.
Under new protocols to prevent the spread of covid-19, tourists
must be tested for the virus in their country 72 hours prior to
their flight, when they arrive at their hotel in Sri Lanka and
again seven days later. They must stay in a “travel bubble”
designated in 14 tourism zones without mixing with the local
population. About 180 hotels have been earmarked for tourist
accommodations. The government had closed the country to
tourists last March. The resumption of tourism follows a pilot
project that began 26 December in which 1,500 tourists from
Ukraine visited Sri Lanka in such a travel bubble.
Counting elephants, but from space

SCIENTISTS ARE using images to count African elephants
from space. The pictures come from an Earth-observation
satellite orbiting 600km above the planet’s surface says the
BBC. The breakthrough could allow up to 5,000 sq km of
elephant habitat to be surveyed on a single cloud-free day. And
all the laborious elephant counting is done via machine
learning - a computer algorithm trained to identify elephants in
a variety of backdrops. According to Dr Olga Isupova, from the
University of Bath, scientists just have to present examples to
the algorithm and tell it, ‘This is an elephant, this is not an
elephant,’. By doing that, they can train the machine to
recognise small details that humans wouldn’t be able to pick up
with the naked eye. Scientists looked first at South Africa’s
Addo Elephant National Park because of its high density of
elephants, areas of thickets and of open savannah.
Curated by Sohini Sen. Have something to share with us?

Write to us at feedback@livemint or tweet to @shohinisen
PEANUTS by Charles M. Schulz
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HERO MOTOCORP SEES RURAL ECONOMY SEEING PHOENIX-LIKE

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AREAS DRIVE DEMAND IN FY22 uP3 REVIVAL, SAYS RBI PAPER uP22
50,184.01 (High)
49,624.76
(Close, 21 Jan 2021)
COURTESY GIGI SCARIA
Sensex almost doubles from its March lows to vault past
50,000
Nasrin Sultana the day, before giving up the gains in pected economic recovery, under-
Thursday’s rally caps a phenomenal
run that has lifted the stock markets
to a record amid a deadly pandemic
executive of Motilal Oswal Financial

nasrin.s@livemint.com
MUMBAI
a dramatic plunge on reports of a
deadly fire at the Pune factory of
India’s biggest vaccine-maker. The
lining India’s resilience and the
importance of the markets as an
engine of prosperity.
Services. Oswal expects the markets
to continue its northward march on
the back of an earnings rebound,
38,811.39
23 May 2019
FROM May till Jan
The 30 years that
T
2020, markets rally
he BSE Sensex index
vaulted past the 50,000
mark for the first time,
Sensex closed at 49,624.76.
The remarkable stocks’ rally was
seeded in March as local investors
“Indian markets have been wit-
nessing strong momentum over the
past few months on hopes of a faster
TURN TO PAGE 21
as government cuts
corporate tax rates
transformed India
capping a phenomenal started buying the panic, although economic recovery after lockdown. Index sets sights on 100,000 >P22 27,252.53 41,170.12
run that lifted the stock few could have predicted then that Positive global cues, sustained for- 9 Nov 2016 20 Feb 2020 Team Mint for the first time under a govern-
‘50,000 is just a number’ >P22 MARKETS fall as THE Sensex crashes
markets to a record amid a deadly the rebound would be so sharp and eign institutional investor inflows India demonetizes 13,000 pts in Feb-Apr
NEW DELHI ment with a single-party major-
pandemic. so soon. As central banks around the and strong corporate earnings high-value notes as India locks down ity under Prime Minister Naren-
I
The benchmark index climbed as world adopted expansionary mone- kept the sentiments high. The in wake of covid t was in 1991, three decades ago, dra Modi, since 2014.
much as 0.7% to 50,184 in intra-day tary policies to support their econo- upcoming budget could that India, left with little time or Today, India’s economy is fac-
20,946.65
trading on Thursday, almost dou- mies, foreign liquidity flowed into potentially lay the foundation 3 Mar 2014
options, ushered in pivotal eco- ing exceptional headwinds yet
bling from its March nadir. The Indian stock markets, driving the for a long-term economic IN Mar-May 2014, the Sensex nomic reforms. It opened up its again, battered by a pandemic. A
index broke through 50,000 with a unprecedented boom. growth path,” said Motilal climbs 2,000 pts as the Narendra economy and abolished the intri- potentially historic budget is at our
Modi government comes to power
gap-up opening in the morning, and The surge in equity prices was Oswal, managing cate system of controls that gave doorstep. The circumstances are
stayed above the mark for most of also fuelled by a swifter-than-ex- director and chief Sensex leaders... (CAGR in the past 10 years, in %) the state primacy in most aspects ripe for deep reforms. While the
Bajaj Finance 56 of business and daily life. “No immediate reality is difficult, the
4,981.74
1,320.54 8 Oct 1999 4,505.16 Bajaj Finserv 36 power on earth can stop an idea sentiment is on the upswing. The
21 May 1991 THE Sensex hits 5,000 after 17 May 2004
THE Sensex falls Asian Paints 26 whose time has come,” the then vaccine rollout has begun. The
ASSASSINATION of former PM Rajiv Gandhi BJP wins Lok Sabha polls
15.52% after Left Kotak Mahindra Bank 25 finance minister Sensex just hit an
3,896.90 9,026.72
and Congress win 24
28 Apr 1992
Lok Sabha polls 26 Nov 2008 Titan Co. Manmohan Singh INDIA’S all-time high.
THE Sensex falls 1,700 pts 2,361.15 3,388.59 10,614.35 MUMBAI terror attack said during his REFORMS STORY It’s an oppor-
in Apr-Aug following the 12 Mar 1993 13 Dec 2001 20,582.08 ...and the laggards
11 Jul 2006
Harshad Mehta scam SERIAL blasts rock Mumbai, ATTACK on SERIAL blasts in 10 Jan 2008 Oil & Natural Gas Corp. -6 1991 budget tune time to look
claiming about 260 lives Parliament Mumbai trains GLOBAL financial
NTPC -5 CAGR: compound
speech, quoting See Pages 5-18 back and take
crisis. The Sensex falls
6,984.55
12,000 pts in 2008-09 State Bank of India 1 annual growth rate French poet Vic- stock: How have
20 Jun 2005
AMBANIS settle row, Larsen & Toubro 6 tor Hugo. these 30 years transformed
Sensex hits 7,000 Bharti Airtel 7 If the reforms process started India? What’s the unfinished
999.26
2 Jan 1991
Source: Capitaline, BSE
SARVESH KUMAR SHARMA/MINT
under the government that faced agenda? What are the pitfalls to
a balance of payments crisis watch out for? What do the next
under Prime Minister P.V. Naras- three decades hold in store?
Sensex touching 50,000 is like Indian Markets are aided by a huge surge of If the Sensex returns 13% on a CAGR imha Rao, it has continued in fits Today’s Mint carries a special
team winning Test series in Australia global liquidity. This liquidity can also basis, it should get to 100,000 on a and starts under various govern- edition on India’s economic
+ against all odds of covid-19. cause volatility in the times ahead. higher base in the next 5-7 years. ments since then, shackled by reforms that tries to address these
Nilesh Shah MD, Kotak Mahindra AMC Gaurav Mishra Co-head, equities, Mirae Asset Amit Shah Head, India equity, BNP Paribas coalition politics or lack of con-
sensus at different periods, and TURN TO PAGE 3
Farmers reject govt offer to suspend reform laws

Sayantan Bera contentious laws for 18 months will be a legal entitlement. vey their decision at a meeting
sayantan.b@livemint.com and stuck to their demand for a On Wednesday, the govern- with the government on Friday.
NEW DELHI repeal of the laws. The leaders of ment offered to suspend the laws “In a full general body meet-
the agitation also said protests and continue with the dialogue ing of the Samyukt Kisan Mor-
F
armer unions on Thursday will continue until the govern- with the farmer unions. It also cha, the proposal put forth by the
rejected the Centre’s pro- ment assures that purchases at a urged farmers to withdraw their
posal to suspend the three minimum support price (MSP) agitation. The leaders will con- TURN TO PAGE 21
Scan & watch

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kills 5, output
of Covishield Now I initiate
is unaffected my foreign trade
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transactions online.
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NEW DELHI
F Kunal Saha
ive people died in a fire at a
Serum Institute of India Pvt.
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Ltd site near Pune on Thurs- Health & Personal Care Products
day, damaging equipment worth
hundreds of crores of rupees at
India’s top vaccine maker. The
cause of the fire was not clear at
the time of going to press.
The fire broke out Thursday
afternoon at the site in Manjri
near Pune where equipment to
produce non-covid vaccines
was being installed, a person
aware of the development said.
Serum’s covid vaccine Covis-
hield is produced at another site
in Manjri, and there is no impact
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02 FRIDAY, 22 JANUARY 2021
MUMBAI
PLAIN
FACTS
Covid abates, focus now on vaccine

Daily new case additions are now at a seven-month low. Only 21 districts—mostly in Kerala and Maharashtra—reported 1,000 or more infections this week
Nikhil Rampal rashtra, including Mumbai,
nikhil.r@livemint.com Pune, and Thane. Pathanam- MINT COVID TRACKER
NEW DELHI thitta recorded the biggest Chart 1 Chart 2
weekly growth (9%), followed Ernakulam and Kozhikode record biggest Kerala and Maharashtra accounted for
F
or the first time since by Idukki (8%), and Wayanad rise in coronavirus cases this week nearly 60% of India's new cases this week
June 2020, India has (8%), all in Kerala. New confirmed cases in each district in the last seven days New confirmed cases/deaths in the last seven days
added fewer than All weekly growth trends
100,000 new coro- are based on seven-day roll- Kerala
NA Maharashtra
navirus cases in a ing averages to minimize the Kerala 151 361
week, government data from effect of delayed and volatile 38,426
110 473 1,554 3,225
the past seven days shows. reporting by authorities.
India India
More than 1,100 people With this, India’s total cor- Others
died during these days, but onavirus cases have reached 98,790 1,142
36,288 Others
the weekly toll is declining 10.61 million and the toll has New cases 543 New deaths
fast as well. Just four months touched 152,869. A total of (last 7 days) (last 7 days)
ago, a similar number of 98,790 cases were added this
patients were dying every week, of which 39% were in
day. Kerala and 20% in Maharash-
With the virus largely in tra. Nearly 61% of the 192,308 Tamil Nadu Maharashtra West Bengal
control, the focus has moved currently active cases are in 4,128 19,948 87
Latest data as of 8am on 21 January
to the vaccina- these two states.
Chart 3
tion drive, which Fewer than 2% of The active cases
began on 16 Jan- the over 11 million tally is the lowest India joins the list of nations where covid-19 vaccination has begun
Number of covid-19 vaccination doses given so far
uary. A total of coronavirus tests since 27 June Germany
806,484 health- conducted in 2020. 1.3 mn
care workers got India’s case
India in the last Mumbai
their first dose in load grew just 1% 3,652
the first five days. two weeks have this week, but
UK
5 mn
Karnataka turned positive Kerala bucked US
16.5 mn
administered the trend with a
16% of these 4.5% growth rate. China
doses, Andhra Pradesh 15%, However, in terms of 15 mn
Telangana 11%, and Odisha deaths, Maharashtra contin-
and West Bengal 6% each. ued to perform worse than Kozhikode India
4,277 806,484
Kerala, the epicentre of the Kerala. One in three covid-re-
pandemic in India, lags lated deaths this week were in Ernakulam
5,895
behind on this front at this. Maharashtra (chart 2). 10K 100K 1M
The outbreak in the south- Lakshadweep, the only
ern state is not showing any place in India protected from
Data as of 7.30pm on 20 January Data as of 21 January Source: howindialives.com, MoHFW, Our World in Data
sign of slowing down. Thir- the virus so far, reported its
teen of its 14 districts added first set of cases this week. A
AHMED RAZA KHAN/MINT
more than 1,000 new cases person who travelled from
each this week, according to Kerala tested positive on than 11 million coronavirus month. ple have been vaccinated in 51 population (chart 3). More than 600 adverse which the vaccines came up,
data compiled by howindiali- Monday. Several of his pri- tests conducted in India in the Globally, the US continued countries as of Wednesday, India is administering two effects have been reported so and since one of the two jabs
ves.com on Wednesday even- mary contacts also tested pos- last two weeks have been pos- to add the most cases in the according to numbers from vaccines approved for use, the far among individuals who got approval with final effi-
ing. Ernakulam (5,895) was itive, and the case load rose to itive. Despite high testing, world, averaging 200,000 Our World in Data. The US Serum Institute of India’s have received their first dose. cacy results awaited. As the
the worst and Kasargod (502) 30 by Thursday morning. The Kerala’s positivity rate contin- per day. The administration leads the way with 16.5 mil- Covishield and Bharat Bio- The government said that vaccination drive picks up in
the only exception (chart 1). Centre rushed an expert team ues to be high at 9%. The state of US President Joe Biden, lion, followed by China (15 tech’s Covaxin. The turnout none of these cases were India, the central and state
Only eight other districts to take stock of the situation is expected to ramp up testing who took oath on Wednesday, million), the UK (5 million), of health workers registered severe or could be attributed governments have the task of
across India hit the 1,000 and containment zones were after a recommendation from is likely to announce fresh and Israel (3 million). Israel to get the jab has been lower to the vaccination yet. not only inoculating people,
+ mark during the seven-day declared. an expert team of the Union measures to curb the spread. had the best vaccination rate, than expected in states such Fears are understandable, but also allaying their fears
period, five of them in Maha- Fewer than 2% of the more health ministry earlier this More than 46 million peo- with 35 doses given per 100 as Punjab and Tamil Nadu. given the short time-frame in and building trust.
m OOGLE TRENDS DASHBOARD Social media can help brands gain loyalty
Across the globe, Google is the first port-of-call when it comes to checking the weather forecast, the cricket score, Shijith Kunhitty likely to be aware of fashion
or the news. And as more Indians get connected to the internet, data from the world's biggest search engine has feedback@livemint.com brands and have more buying
emerged as a powerful tool to quantify what the country is searching for. Mint’s Google Trends Dashboard provides THRISSUR power. Around 62% of those
a weekly overview of the top trending topics of the current week across ten select countries. It also shows the top surveyed were women, more
locations for the most searched topic in India and related terms linked to that topic.
F
ashion brands increas- than half were aged 18-25, and
ingly rely on social media 60% were unmarried.
COUNTRY MOST SEARCHED TERM REACH 2ND MOST SEARCHED TERM REACH to lure customers. Product An analysis of the survey
promotions, discount offers, results shows that social media
Australia Joe Biden 200K BOM 100K and even complaint resolutions activities of fashion brands do
Grêmio x Atlético-MG now take place on social media. encourage customers directly
Brazil 5M Palmeiras vs Corinthians 5M How does this online outreach and indirectly to buy products
Germany Joe Biden 1M Lockdown 1M impact custom- by strengthening
ers? A study in m SNAP FACT the customer- When fashion brands engage customers on social media, they are
India Rishabh Pant 2M West Indies vs Bangladesh 1M India finds that brand relation- more inclined to purchase their products, says a study. ISTOCKPHOTO
when customers ship.
Japan Akutagawa Prize 100K Nikkei average 50K get involved in online activities The authors observe the use giving customized recommen- strengthen the relationship.
of fashion brands, they tend to of different strategies by fash- dations (‘personalization’). The They also derive greater satis-
Nigeria Joe Biden 200K Arsenal vs Newcastle 100K become more eager to buy ion brand pages on Facebook, study finds brand pages faction. The authors suggest
their products. such as allowing customers to encouraging word-of-mouth that brands should structure
Russia With baptism 500K Putin's palace 200K The study’s authors, share opinions with others activities the most, followed by their online marketing around
South Africa Kaizer Chiefs vs TTM 200K Joe Biden 100K Sukanya Sharma of the Indian (‘interactivity’), keeping them trendiness and interactivity. generating trust, satisfaction
Institute of Technology Dhan- up to date with the latest design Customers engaged in these and commitment from users to
UK Joe Biden 1M Fulham vs Man United 500K bad and others, surveyed trends (‘trendiness’), giving activities form a stronger rela- encourage them to buy more.
around 300 Facebook users accurate details on products tionship with the brand. They Also read: Social media activ-
US Joe Biden 10M Garth Brooks 2M from three cities in eastern (‘informativeness’), letting cus- develop more trust in the brand ities and its influence on custom-
India. The survey took place in tomers suggest products to and see it as dependable, and er-brand relationship
malls, as mall-goers are more others (‘word of mouth’), and are more committed to (j.mp/3oSc1Ih).
MOST SEARCHED TERM IN INDIA: Rishabh Pant
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X
FRIDAY, 22 JANUARY 2021
MUMBAI 03
TOP ST RIES
Rural sales momentum to 5 die in fire at SII site The 30 years
that changed
FROM PAGE 1 to significant financial losses, he
the country
continue in FY22: Munjal walla told business news chan-
nel CNBC-TV18.
However, in a tweet following
the incident, he said, “I would
said. However, it will not affect
the launch of Covavax, Serum
Institute’s version of US-based
Novavax’s promising covid shot.
The fire was extinguished dur-
FROM PAGE 1
questions. It features essays by

like to reassure all governments ing the day, and search-and-res- and interviews with experts and
and the public that there would cue is on, Prashant Ranpise, chief some of the protagonists who
be no loss of Covishield produc- fire officer of Pune Municipal Cor- influenced policy at crucial junc-
Hero MotoCorp chairman expects budget announcements to boost rural incomes tion due to multiple production poration, said, adding they are tures. We have spoken with
buildings I had kept in reserve probing the cause of the fire. entrepreneurs about how these
to deal with such contingencies Maharashtra chief minister decisions shaped their busi-
Malyaban Ghosh at Serum Institute.” Uddhav Thackeray spoke to Adar nesses. The pages of our special
malyaban.g@livemint.com The full extent of damage and Poonawalla on the phone and will issue are illustrated with art
NEW DELHI impact on other vaccines will only inspect the site on Friday. “The CM curated from the past decade to
be determined in the next few will leave for Pune at 3pm. Around point to the ways in which con-
H
ero MotoCorp Ltd, days, the person cited above said. 3.30pm, they will inspect the temporary artists have docu-
India’s largest two- India Inc can The damaged site will now Serum plant in Hadapsar,” the chief mented and commented on the
address STEM
wheeler maker, skills gap in
have to be rebuilt and new equip- minister’s office said in a note. social, economic and political
expects the current Biden-led US: ment set up. This will hit the Kalpana Pathak from Mum- changes associated with a mod-
momentum in Nasscom launches of products and also lead bai contributed to the story. ern, more globalized India.
demand in the rural market to con- bit.ly/3qJsUVJ
tinue in FY22, riding on hopes of

further measures to boost rural
income in the upcoming Budget.
These measures are expected to
boost the sales of Hero’s entry-level
motorcycles in the coming fiscal,
said Pawan Munjal, chairman, Hero
MotoCorp on Thursday.
Sales of Hero’s entry-level
motorcycles surged post removal of
lockdown on the back of faster
recovery in demand in rural areas
and increased preference for per- Hero MotoCorp’s Pawan Munjal is banking on budget measures to boost the sales of entry-level motorcycles.
sonal mobility. It raised production
to 806,848 units in October com- products in both motorcycles and Xpulse motorcycles. ment, we are clearly targeting the
pared to 599,248 in October 2019, scooters to improve its market According to Munjal, nearly two- middle-weight segment.”
expecting a robust recovery in share and operating margins, eye- thirds of the new products will be in Following the success of Royal
demand during the festival season. ing an entry into the middle-weight the premium segment and the Enfield, most leading two-wheeler
“I think the momentum in rural segment that is currently domi- company has also changed its strat- makers have been eyeing a pie of
demand will continue and from this nated by Royal Enfield. A new egy to improve its exports, espe- the middle-weight segment. Honda
budget I expect continued focus on product is under development at its cially to Africa and Latin America. Motorcycle and Scooter India
the rural economy and agri sector R&D centre in Jaipur. “Our direction is very clear due launched its first offering in the
from the government, which they Over the past two decades, to recent product introductions. segment last year, while Bajaj Auto
did during the pandemic. and Triumph Motorcycles
This has an impact on our SHIFTING GEARS will enter it in 2022-23.
sales since a significant Germany’s BMW is also
chunk came from the rural HERO will focus on IT’S eyeing an entry NEARLY two-thirds THE company has preparing to expand its
market. I do see the govern- premium products
in both motorcycles
into the middle-
weight segment
of Hero’s new also changed its
products will be in the strategy to improve
portfolio in the above
ment focusing on the rural and scooters to that is dominated premium segment, exports, especially 300cc segment.
markets,” Munjal said in an boost market share by Royal Enfield according to Munjal to Africa, S. America The middle-weight seg-
interaction. ment is considered the
“In our country, we have most profitable among
a large pool of prospective custom- despite repeated attempts, Hero From 150cc we moved to 180cc and motorcycles.
ers who can be brought into this has not been able to improve its 200cc, and the progress will go on “I personally believe this is the
fold of entry-level products. That is market in the premium segment in the middle-weight (segment) best time to get into the thick of
something we will never lose track and compete with the likes of Royal where product development is things. If we were to wait for more
+ of,” he added. Enfield, Bajaj Auto and TVS Motor going on. We are also learning from time, then those companies will
The New Delhi-based company Co. In 2019, it re-entered the pre- our rally bikes,” he said. “The way increase their market share,” Mun-
will, however, focus on premium mium market with the Xtreme and we are going in the premium seg- jal added.
Real estate’s quiet transformation

R
eal estate developers
traditionally came from
a land or liaising back-
ground. As real estate had a lot
of legal and regulatory com-
plexities, skills relating to
those areas were important if
one wanted to succeed in the
industry.Oneofthedownsides
of this, however, was that
design and architecture were
not the focus for success in the
industry. The result? Most
buildings constructed in the
past are not comparable in
design and quality with those
in nearby countries such as Wide range of outdoor amenities at the ground level, like tennis, volleyball and basketball courts,
Singapore or Dubai. cricket pitch, children’s play area, amphitheatre, shared by very few apartments
Today, greater regulatory
and legal clarity has enabled a space than standard offerings
new group of technocrat-led in the market. Spacious rooms
companies and a new class of along with vast, expansive
developers to venture into the decks to help enjoy the city’s
real estate sector. A beautiful weather
prime example of are preferred by
this trend isthe new families who want
age fintech com- space for everyone
pany, SmartOwner. to work or study
A leading property independently.
investment man- Carefully select- Rooftop sky-lounge with a waterfall, 5-star hotel style
agement company, ed finishes adorn
SmartOwner has PRIME ONE each apartment.
ventured into real CORP For example, to
estate development reduce stress levels
through its in-house develop- while working from home, the
mentmanagementarm,Prime flooring in all the rooms is
OneCorp.PrimeOneCorphas made of polished Kota stone
a number of internationally - a material that has a relaxing
experienced architects, teal hue. Electrical switches
engineers and come from
designers in its One company is S c h n e i d e r ’s
team - people showing us what Unica range - as Stunning infinity swimming pool
who have the real estate they not only
worked on mar- sector will look like feel good but number of outdoor amenities Buyers can now have all
quee projects in future make less sound that one would normally see these amenities - shared only
throughout when switched only in much larger projects. by252apartments-inCentreo,
Asia and the US. on. Bathrooms have top qual- Top-of-the-line synthetic ten- unlike in the past where they
Prime One Corp’s luxury ity Geberit cisterns to ensure nis, basketball and volleyball wouldhavehadtobuyinavery
apartment project in South a trouble-free and long-lasting courts; a cricket pitch, a mas- expensive project and share
Bengaluru - Centreo, which is performance,whileCPfittings sive children’s play area, amenities with thousands of
situated just 215 metres from come from leading brands like cycling and skating areas and other apartments. Centreo
a metro station in the well Grohe for a luxurious experi- a beautifully designed amphi- thus brings wonderful news
established micro-market of ence. Windows are extra high, theatre at the ground level. forconsumers,whocanexpect
SouthBengaluru’sKanakapura going from floor to lintel level The rooftop has been trans- to live in homes that are on par
Road, enables one to live in so that more natural light formed into a clubhouse with with the best in the world.
Centreo and work anywhere enters the homes, while large anindoorgamesroom,library, With luxury apartments rea-
in Bengaluru. Designed by balconies allow one to have a party hall, gym, steam and sonably priced between Rs 1.2
acclaimed US-based architect, full-sizedpatiotherebyprovid- sauna facilities. And there is a and 1.8 crores, this is what’s in
Jeff Kiser, Centreo offers inno- ing each apartment with an spectacular sky lounge with a store for the realty sector.
vative floor plans with much outdoor living space. waterfall and a stunning
higher furnishable and usable Centreo also features a infinity swimming pool. Created by Mint Brand Studio
X
MUMBAI
S&P BSE Sensex Nifty 50 Nifty 500 Nifty Next 50 Nifty 100 S&P BSE Mid-cap S&P BSE Small Cap
CLOSE PERCENT CHANGE CLOSE PERCENT CHANGE CLOSE PERCENT CHANGE CLOSE PERCENT CHANGE CLOSE PERCENT CHANGE CLOSE PERCENT CHANGE CLOSE PERCENT CHANGE
49,624.76 -0.34 14,590.35 -0.37 12,015.95 -0.52 33,614.55 -0.89 14,686.55 -0.44 18,988.32 -0.88 18,615.10 -0.68
PREVIOUS CLOSE OPEN PREVIOUS CLOSE OPEN PREVIOUS CLOSE OPEN PREVIOUS CLOSE OPEN PREVIOUS CLOSE OPEN PREVIOUS CLOSE OPEN PREVIOUS CLOSE OPEN
49,792.12 50,096.57 14,644.70 14,730.95 12,078.35 12,154.70 33,917.40 34,165.50 14,751.30 14,840.95 19,156.32 19,286.30 18,743.39 18,856.16
HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW
50,184.01 49,398.86 14,753.55 14,517.25 12,167.95 11,959.60 34,242.95 33,451.15 14,860.85 14,613.35 19,334.36 18,891.67 18,886.01 18,573.21
m MINT SHORTS
Biden to tackle pandemic
Investors are willing to take more
by nixing Trump’s policies
US President Joe Biden in his first full day in office
plans to issue a sweeping set of executive orders to
tackle the raging covid-19 pandemic that will rap-
risk even as Sensex hits fresh high
idly reverse or refashion many of his predecessor’s
most heavily criticized policies. Biden is set to Harsha Jethmalani “Value endures. Prices driven only by “Expectations are that the second
invoke orders to overhaul and unify the US harsha.j@livemint.com liquidity don’t. The liquidity tap is half of the year will see a significant Complacency belies valuations
approach to virus testing, use federal powers to sta- gushing now, but can go off at any time increase in activity indicating that Despite Indian equity markets trading at expensive valuations, investors
B
bilize the supply chain for critical medical supplies, SE’s benchmark index, without warning. Investors need to be companies are factoring in a success- remain complacent.
and boost the government’s ability to provide rapid Sensex, rose above the mindful of this risk with valuations at ful vaccination rollout, which natu- India NSE VIX (Left-hand scale) MSCI India 1 year forward PE
and equitable vaccine distribution, according to a Gold prices 50,000-mark for the first record highs,” said Bharat Iyer, a sen- rally makes it a key downside risk for 100 25
today rise
Biden administration briefing. Biden is inheriting for 4th day
time ever on Thursday. ior market analyst. “The rally in small markets if governments fail to success-
from former president Donald Trump a covid test- in a row, Hopes of more stimulus cap stocks is also disconcerting, with fully roll out the vaccines,” analysts at 80 23.40 20
ing strategy and vaccine rollout he has called a “dis- silver rates from the newly elected US govern- sharp spikes in some counters without Saxo Bank said in their latest blog. 18.44
mal failure”, and he has warned that there will be move higher ment have aided sentiment. any change in fundamentals.” Even though BofA survey respon- 60 15
no quick fixes for ending the crisis. BLOOMBERG bit.ly/2KyTPUV US treasury secretary dents see better
nominee Janet RISK FACTORS prospects of a global 40 10
Yellen’s comments economic turnaround,

that, despite high SMALL cap stocks COVID vaccines ANY change in the they feel that the Goldi- 20 5
The duopoly national debt, policy- have rallied without pose a key downside easy liquidity locks scenario of higher 21.55
Ant, Tencent dominate the mobile payments a significant change risk if their rollout scenario may cause 0
11.60 0
makers should not in fundamentals, fails at the govt level, market volatility, growth and lower infla-
market in China. 1 Jan 2020 1 Jan 2021
refrain from major says an analyst Saxo Bank says says an analyst tion has peaked. Source: Bloomberg
5.6 stimulus have added to In fact, a record net
Others the optimism. One 92% of those surveyed SATISH KUMAR/MINT
view on the Street, then, is that the The BofA survey lists some other expect higher inflation in the next 12 to MSCI Asia Ex-Japan, which is trad- Therefore, with valuations reaching
high liquidity that has driven the mar- risks that can play spoilsport as well. months. ing at 18 times. As valuations are a optimization, returns may be subdued
kets to record levels will help sustain Global fund managers foresee three Analysts are also wary of the valua- function of earnings, corporate earn- in the short term. The easy liquidity
38.8
WeChat Market share
the rally as well. new tail risks for the markets. Covid-19 tions at which global equities are trad- ings growth has to be solid to support scenario globally is expected to sup-
Pay (in %) 55.6 Indeed, the latest global fund man- vaccine rollout, or the pace of it, tops ing. Valuations of Indian stocks are this multiple, analysts said. port valuations for some time, though
Alipay ager survey by BofA Securities showed the list of tail risks, followed by the racing ahead even relative to others. “With the strong market rally, valu- any change in stance could lead to
that 19% of respondents were taking possibility of a “tantrum” in the bond The MSCI India index is trading at a ations are looking elevated on various market volatility,” said Sampath
higher than normal risk. market, said the survey report. Infla- one-year price-to-earnings (PE) multi- parameters (be it price/earnings, Reddy, chief investment officer at
However, liquidity is fleeting. tion continues to be listed as a risk. ple of 30 times, a significant premium price/book, market cap to GDP). Bajaj Allianz Life Insurance.
Note: As of
30 June 2020 Source: iResearch
SATISH KUMAR/MINT
New curbs may sink Ant’s

valuation below $108 bn
Ant Group Co.’s valuation may be cut further under
Havells beats Street estimates Bandhan Bank shows rise in stress as
new measures proposed by China to curb market
concentration in its online payments market,
according to new estimates from Bloomberg Intel-
on rise in sales of durables Assam law, pandemic scar loan book
+ ligence. Jack Ma’s fintech giant may be worth less Ujjval Jauhari Aparna Iyer
than 700 billion yuan ($108 billion) under the draft Stellar show ment passed the Micro Finance The management assured that
proposals, which could reduce the value of Ant’s ujjval.j@livemint.com aparna.i@livemint.com Institutions (Regulation of Money the stress is temporary but also said
Strong revival in sales across segments is driving Havells India’s
Alipay service by half, according to senior analyst growth and forward prospects.
Lending) Bill, 2020, which put a cap that collections may take at least a
T I
Francis Chan. Ant Group’s valuation may plunge he strong show put up by ndia’s youngest lender Bandhan on the total outstanding loan for month to stabilize.
further if its payment unit is forced to break up due Havells India Ltd in the (in ₹ crore) 508.0 Bank showed the scars of a new micro finance borrowers in the That leaves stress from other
to potential antitrust probes by China’s central third quarter was driven Ebitda Net profit state legislation and a challeng- state. Further, the bill stipulated parts of the loan book.
420.7
bank, Chan wrote in a research note. The revised by secular growth across seg- ing pandemic. Repayments from that there could not be more than Here, too, the picture is not com-
estimate for Ant is a far cry from valuations that ran ments and divisions. Sales have 324.9 349.0 small borrowers floundered and two lenders per borrower. fortable. Adjusting for the judicial
as high as $320 billion before it was forced to scrap recovered since the lockdown 269.0
stress on the balance sheet surged. With Assembly standstill on bad loan
its record IPO in November. China’s crackdown curbs were relaxed, driven by a 245.3 Bandhan Bank’s provisions treb- election to be held The silver lining recognition, Bandhan
forced Ma’s firm to withdraw the $35 billion IPO steady improvement in con- 199.5 led from the year-ago period soon in the state, there in the bank’s Bank’s gross non-per-
177.2
just days before its planned listing. BLOOMBERG sumer sentiments. The Q3 per- 130.9 because the lender had to set aside is a worry that loan Dec quarter forming assets surged
formance was also helped by ₹1,000 crore specifically for pan- waivers, which performance to form 7.2% of its loan
63.3
the festive season, as well as the demic-related stress in the Decem- adversely affect credit book. The manage-
was its strong
Norges Bank’s hawkish work-from-home culture driv-
Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21
ber quarter. culture, will begin to ment has indicated
loan growth and that this stress may
ing sales of consumer durables. Additional stress on both asset be contemplated.
tone fans early hike bet As expected, the strong show
Source: Emkay Global Financial Services Ltd, Company
quality and loan growth emanated Indeed, Bandhan steady margins reduce in three
Norway’s central bank may raise its main interest was led by a 46% year-on-year SATISH KUMAR/MINT
from Assam where the government Bank saw its collection months. The large pro-
rate as early as this year, well ahead of peers, after (y-o-y) jump in sales of con- share as others heavily depend- improve margins with econo- passed a new legislation. efficiency for the quar- vision specifically
economists found hints in its latest statement sumer durables. Even products ent on imports faced supply mies of scale. The contribution With its operating profit being ter in the state drop to 78% from made towards the pandemic-re-
pointing to a more upbeat assessment of the future. classified under ‘Others’ chain disruptions. However, margins of 13.7% though signif- set aside almost entirely towards 88%, a direct impact of the bill. lated stress shows that the bank is
Norges Bank, which kept its benchmark deposit (motor, pump, solar, personal smaller players may see sup- icantly better than 7.8% a year provisioning, the bank’s net profit The bank is the biggest player in not out of the woods yet.
rate at zero as expected, said its official stance grooming and water purifier plies stabilizing in the coming ago, are still lower than contri- dropped 13.5% from the year-ago the state, but Assam’s share in the The lender has not restructured
remains that the first rate hike is likely to come in businesses) grew 53%. Seg- quarters. bution margins in other seg- period. Analysts had estimated a net total loan book of Bandhan Bank is any loan unlike other banks and has
early 2022. But the bank also signalled that the ments like switches, lighting Sales at Lloyd have also ments. The contribution mar- profit growth of about 10%. around 11%, according to managing chosen to focus on collections.
prospect of bringing the pandemic under control and fixtures and cables, with rebounded, after lagging ear- gins of 13.7% improved signifi- In December, the Assam govern- director Chandra Shekhar Ghosh. Overall collection efficiency stood
seemed slightly brighter than previously assumed, some depend- lier. Growth in cantly over 7.8% seen in the at 90% by value as of December.
in part thanks to Norway’s fast rollout of its covid-19 ence on institu- Havells clocked sales of air-condi- year-ago quarter, however, are Strained book The silver lining in the lender’s
vaccine programme. The krone rose about 0.4% tional sales, too Ebitda growth of tioners has been still lower than contribution Bandhan Bank’s gross bad loans sans the judicial forbearance on bad
December-quarter performance
against the euro, and was up 0.7% versus the dollar. clocked 27-32% 89% y-o-y, aiding supported by margins in other segments. loan recognition show the high defaults that piled up. was its strong loan growth and
The Norwegian central bank’s statement “was sur- higher sales. net profit growth restrictions on Havells clocked Ebitda Gross non-performing assets as % of loans Loan growth (in %) (Right-hand scale)
steady margins. The bank reported
prisingly hawkish, if you read between the lines”, Havells said its Chinese imports. growth of 89% y-o-y, aiding net a 22.6% loan growth for the quarter
of 75%, while 9 70
Nordea analysts Dane Cekov and Kjetil Olsen said consumer and Havells, which has profit growth of 75%, while rev- and the management sounded opti-
in a note to clients. BLOOMBERG residential port- revenues grew set up its own enues grew 39% y-o-y. Ebitda 7.5 7.2 60 mistic for the coming quarter. This
folio sales grew 39% y-o-y manufacturing stands for earnings before 6 50 led to a healthy 34.5% growth in
40% while indus- facility, is also ben- interest, tax depreciation and 4.5
33 40 core interest income for the bank.
trial and infra efitting from the amortization. Havells is firing Shares of the bank dropped 4%
Guarding stability grew in the mid-teens. same. Select pre-buying and on all cylinders, but maintain-
3 30
on Thursday, indicating that inves-
Bank Indonesia keeps rates on hold as Increased penetration in wider network coverage ing this growth trend will be 1.5 1.93 20 tors have taken note of the rising
currency wobbles and inflation ticks up. 22.6
smaller towns and rural areas through regional retailers have key. The stock is trading at 71 0 10 stress in the book. As for loan
17,000 Q3FY20 Q3FY21
Indonesian rupiah (per $) has kept up the sales momen- also helped sales. times FY22 consensus earn- Note: Gross NPA for Q2 and Q3FY21 are excluding Supreme Court’s standstill on asset recognition.
growth, much of the positive has
16,000
tum. Organized companies like The rising sales of the Lloyd ings estimates prior to results Source: Bank presentations
been priced in after the bank’s
15,000 Havells have gained market range bode well and will help as surveyed by Bloomberg. update on 7 January on key metrics.
13,639
14,000 SATISH KUMAR/MINT
13,000
14,035
20 Jan 2020 20 Jan 2021
4
2.98 Indonesia CPI (y-o-y)
3
1
2.68
Bajaj Auto shines in Q3 as two-wheeler sales complement exports
29 Feb 2020 31 Jan 2020
Source: Bloomberg and Badan Pusat Statistik Ujjval Jauhari last quarter were aided by festive The Latin American markets of vehicles are up substantially
SATISH KUMAR/MINT ujjval.j@livemint.com season sales. Hence, one will
Robust performance have also seen a good rebound. and pose cost challenges.
have to be watchful about the Strong export growth and rebounding two-wheeler sales drive Sales in the Asean region, how- Some analysts hope that this
Bajaj Auto’s financial performance.
B
ajaj Auto Ltd managed a pace of growth. One positive is ever, remain soft. Rising oil pri- will be offset given that the
Central bank of Indonesia stellar show in the Decem- the rising sales of the executive
Ebitda Net profit (in ₹ crore)
ces are, in turn, aiding economic momentum in export sales can
2,000
keeps key rate unchanged ber quarter, with the segment within motorcycles.
1,367.2
1,764
1,556
growth of oil-rich countries and continue with a further increase
Indonesia’s central bank left its key interest rate recovery in domestic two- The company is gaining market 1,500 providing traction to demand in in demand from key markets and
1,261.6
unchanged at a record low, projecting optimism wheeler sales complementing share in the 125cc segment. The these markets. revival in demand from Asean
1,000
that the economy is recovering and inflation will the strong momentum in market share for Pulsar125 in its With the rising export contri- countries.
remain tame even with new restrictions in place to exports. Domestic two-wheeler segment has grown to 22.8% for 500
bution, a favourable exchange “We expect Bajaj’s exports
fight a surge in covid-19 infections. Bank Indonesia sales rose 8% in Q3, after declin- Q3FY21, the company said. Pul- rate, rising executive segment business to witness a healthy 12%
held the seven-day reverse repurchase rate at ing 35% during the first half of sar sold more than 420,000 units 0 sales, and some price hikes, the growth in 2HFY21 on the back of
Q3FY20 Q3FY21
3.75% on Thursday, as expected by 28 of 29 econo- the fiscal year. Three-wheeler in domestic and export markets, Source: Motilal Oswal Financial Services Ltd, Company
company reported Ebitda revival in African market,” said
mists in a Bloomberg survey. Only one analyst pre- exports also normalized and which is the highest ever. This is growth of 25% y-o-y. Margins Mitul Shah, head of research at
dicted a 25 basis point cut. This decision is consist- helped the exports division. The also positive from a profit margin SATISH KUMAR/MINT
expanded 120 basis points to Reliance Securities Ltd.
ent with an inflation estimate that is still low and contribution of exports to overall perspective. Besides, price hikes The domestic commercial vehi- rising export contributions 19.8% and net profit grew 23% Shah also said that the domes-
maintained external stability, as well as efforts to vehicle sales grew to 53% in Q3 are also likely to accrue benefits. cle business remains impacted remain key drivers for the com- y-o-y. There is, nevertheless, a tic two-wheeler industry is likely
support economic recovery, central bank governor from 47% in Q3FY20. That said, the recovery in the because of inadequate demand pany’s performance. The African need to watch out for rising com- to continue positive traction in
Perry Warjiyo said while announcing the decision. The upshot: Bajaj Auto’s reve- three-wheeler segment, which for short-distance mobility, the markets that have been impacted modity prices. The prices of steel, FY22, while the domestic three-
The rupiah was up 0.3% to 14,000 per dollar after nues grew 17% year-on-year. commands high margins, is still company said. less by the pandemic continued aluminium and other precious wheeler business would bounce
the central bank’s decision. BLOOMBERG Domestic two-wheeler sales awaited in the domestic market. Strong growth in exports and to see good momentum in sales. metals used in the manufacture back strongly.
Mark to Market writers do not have positions in the companies they have discussed here
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Face to face, by Gigi Scaria, 2010, Inkjet print on archival paper COURTESY GIGI SCARIA
INDIA’S REFORMS
STORY
Like 1991, 2021 is an opportunity
C. RANGARAJAN
‘More than just a BOP issue’

MONTEK SINGH AHLUWALIA
30 years on, India at the crossroads

NIRANJAN RAJADHYAKSHA
The rise of India’s Goliaths

GITA PIRAMAL
‘A moment 18 months in the making’

RAKESH MOHAN
Healthy competition and open markets

KIRAN MAZUMDAR-SHAW
‘The banking sector’s learning curve’

K.V. KAMATH
Ignoring ecology is perverse economics

PRANAY LAL
‘Tossing out the rulebook’

N.K. SINGH
‘Only in a crisis does India reform’

RUCHIR SHARMA
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MUMBAI
INDIA’S REFORMS STORY
LIKE 1991, THE 2021 CRISIS PRESENTS

AN OPPORTUNITY
Even if the economy grows at 8.7% in 2021-22, we may remain at the level we were in March 2020. We will need to run faster to stay where we are
C. Rangarajan
feedback@livemint.com
W
ith the arrival of 2021, the
liberalization regime
launched in 1991 completes
30 years. 1991 was a land-
mark moment in India’s
post-independence history that changed the
nature of the economy in fundamental ways.
A severe balance of payments problem trig-
gered an acute economic crisis that year. In
response, India’s economic establishment
launched a multipronged reforms agenda to
repair India’s macroeconomic balance sheet
and ignite growth.
Three decades later, the country faces
another big test. The pandemic-induced lock-
down brought the wheels of economic activity
to a grinding halt, triggering a sharp economic
contraction in the first half of the fiscal year.
Despite an anticipated recovery in the second
part of the fiscal, the National Statistical
Office’s (NSO) latest estimate suggests an
annual contraction of 7.7%. If the Indian econ-
omy grows at 8.7% in 2021-22, we will be
where we were at the end of 2019-20. As the
saying goes, we need to run fast to stay where
we are.
Can this contraction trigger another set of
big-bang reforms? Can we get back to a sus-
tained growth path? To answer these ques-
tions, it is important to understand the nature
of the shift that 1991
+ Three decades later, we face signalled, and the
differences
another big test. The pandemic between then and
now.
brought economic activity to a India’s post-1990 It is important to create better and fairer conditions for doing business, build consensus on economic policies, and avoid socially divisive policies or actions.
halt, triggering a contraction economic strategy Art: Ringa Ringa Roses by Gigi Scaria, 2018, Bronze COURTESY: GIGI SCARIA/CHEMOULD PRESCOTT ROAD
entailed three
important breaks
with the past. One was to dismantle the vast tral government needs to work in tandem ments to boost growth. In a developing econ- scription has been to raise the level of public The government should maintain its expendi-
network of controls and permits that domi- with state governments and consult different omy, growth is sustained only by investment. spending, to raise growth, and crowd in pri- ture at a reasonably high level. The budget for
nated the economic system. The second was stakeholders impacted by reform decisions. What we have seen is a decline in the gross vate investments. Earlier, economists did not 2021-22 should lay out clearly the investment
to redefine the role of the state as a facilitator Timing and sequencing are critically impor- fixed capital formation (GFCF) rate, which has distinguish between different types of gov- plans of the government and public sector
of economic transactions and as a neutral reg- tant in the new reforms agenda. fallen from 29% of GDP in 2018-19 to 24.2% in ernment expenditures but most economists enterprises. A massive investment pro-
ulator rather than the primary provider of How criticism and protests are handled 2020-21. We need to reverse this trend. now advocate increase in capital expendi- gramme such as the Golden Quadrilateral
goods and services. The third was to move will be important. To ensure wider accept- A proper climate for investment must be tures, i.e., those expenditures which create highway project must be envisaged.
away from a regime of import substitution and ance of reforms, it is important that they are created. Changes in corporate tax rates assets and raise productivity. While it is desirable that the fiscal deficit be
to integrate fully with the global trading sys- seen as steps towards national progress. The announced some months ago will help once Over the past few months, the government brought down, the scope for it is limited in
tem. protests over the recent farm bills are a case growth starts picking up. Other factors also has announced several schemes to stimulate 2021-22. It could still be around 7% of GDP.
The 1991 reforms unleashed the energies of in point. The best course of action may be to impact investments. First, perceptions the economy but actual data on government Going forward, a new map for fiscal consolida-
Indian entrepreneurs, gave untold choice to leave these decisions at the level of state gov- regarding growth spending conveys a tion must be drawn up.
consumers and changed the face of the Indian ernments, which can choose which of the prospects are key. different picture. Growth should become the top priority
economy. That reform agenda constituted a farm laws they want to implement. That will Second, the policy How criticism is handled is vital. According to NSO, now, for the finance ministry and for the
paradigm shift, and has defined the broad set the stage for state-level innovations in framework must be To ensure wider acceptance of government con- entire government. It is important to create
contours of economic policymaking for three farm policies, and farmers would be able to supportive of fresh sumption expendi- better and fairer conditions for doing busi-
decades. Liberalization was adopted as the see for themselves which set of laws and investments so that reforms, it is important they are ture has declined ness, build consensus on economic policies
guiding principle of governance and all gov- institutions work best for different crops and entrepreneurs are seen as steps towards progress by 22% in the Sep- and avoid socially divisive policies or actions.
ernments since 1991, including the current regions. We must not learn the wrong les- encouraged to take tember quarter. We can put the pandemic behind us if the gov-
one, have broadly stuck to that path. sons from the 1991 moment. The 1991 risks. Third, non- Public administra- ernment is able to focus single-mindedly on
Today we don’t need a paradigm shift. We reforms package faced heavy criticism as economic factors such as a peaceful environ- tion, defence and other services declined by growth and economic progress.
need to look at individual sectors and see being dictated by the International Mone- ment and social cohesion are also relevant. 10.3% in the June quarter, and by 12.2% in the
which one of these needs reforms to create a tary Fund (IMF) and World Bank. Some of The government must begin to act on all these September quarter. A strong effort must be C. Rangarajan is a former chairman of the
competitive environment and improve effi- the reforms were criticized as a sellout to fronts. made by the government to raise spending in Economic Advisory Council to the Prime Minis-
ciency. The power sector, the financial sys- capitalists. Yet, under the shadow of a crisis, Yet private investments might take time to the current quarter so that the contraction in ter and former governor of the Reserve Bank of
tem, governance structures and even agricul- contentious reforms were pushed through. recover. In the near term, the government will 2020-21 as a whole can be contained. India. He played a key role in the two-step deval-
tural marketing need reforms. Such an approach won’t work now. need to boost public investments. In a situa- The same logic extends to 2021-22. Because uation of the rupee in 1991, and in the transition
Today’s reforms also require much more Apart from reforming key institutions, the tion where the economy is stuck because of of the growth in the economy, albeit from a to a market-determined exchange rate, two key
discussion and consensus-building. The cen- government will need to step up public invest- weak demand, the standard economic pre- low base, revenues should pick up in 2021-22. components of India’s liberalization agenda.
‘A moment 30 years ago that had been a year and a half in the making’
Puja Mehra strategy globally was that poor He asked, “Why do we have all been a year and a half in prepara- discussion currently on reskilling.
feedback@livemint.com countries have to grow through these controls?” I was economic tion. All the homework had been But worldwide, retraining has
industrial development. Import adviser in the industries ministry. done so that we could answer any never been easy. It is one of the
A
n adviser in the industry restrictions were needed because A.N. Varma was industry secretary. question anyone could raise. issues the US economy has been
ministry from 1988 and later we could not compete with devel- We worked intensively in 1990 to Urjit Patel, during whose term subject to with the rapid decline of
chief economic adviser in oped countries. Second, planning prepare an industry policy docu- as RBI governor the insolvency manufacturing. It has been conve-
the A.B. Vajpayee government, was needed to accelerate economic ment designed to decontrol indus- and bankruptcy code (IBC) nient to blame China for their man-
economist Rakesh Mohan is now development by channelling lim- try, invite FDI (foreign direct reform began to show results, ufacturing decline. It is not China. It
vice-chair of the Indian Institute for ited savings to desirable activities. investment), technology. It was has said dilution of the provi- is much more due to technology
Human Settlements. A former dep- Third, you needed industrial licens- tabled in Parliament in May 1990. sions is regressive… changes and movement in compar-
uty governor of the Reserve Bank of ing because the domestic market There was a pressure of ideas We need to stick with the IBC. ative advantage and that adequate
India (RBI), he was economic affairs was limited. It was a rational whole towards liberalization, mostly There is no question in my mind... It procedures and policies don’t exist
secretary in the Manmohan Singh in the context of the understanding within government. Then various is very simple conceptually: Com- to redeploy labour that is being dis-
government. He narrates how the that you can’t compete, and you political things happened. Chan- panies go bankrupt, the activities placed. The important point is if
logic-defying system of industrial have limited resources. The private drashekar rebelled, the VP Singh don’t. Let me put this in a simple you don’t have an orderly insol-
controls was dismantled, and dis- sector did not have financial resour- government collapsed, we had the example: When an airline company vency and bankruptcy code, bank-
cusses policies required to deal with ces or technology, so the govern- Rakesh Mohan, vice-chair of the Indian Institute for Human Settlements. MINT BoP (balance of payments) and eco- goes bankrupt, nothing happens to rupt companies will not get restruc-
the emerging challenges of rede- ment reserved large industries for nomic crisis in 1991. When the Nar- the aircraft, pilots, staff, travel tured, resources won’t get rede-
ploying labour and capital in indus- the public sector. Over the 1950s to Korea and Taiwan showed that 20 years late in changing. asimha Rao government came in, agents. It has to be restructured to ployed productively, leading to
tries running into losses. the 70s, this whole system became developing countries could export What steps were taken to dis- and had to take action, we had become productive again. When continuous all-round losses.
rigid, irrational and dysfunctional manufactured goods. There was a mantle this rigid system? everything ready. The government businesses get into trouble, you
Why was the industrial control even though the theory might have move towards freer trade, less plan- Through the 1980s, there was a came in late May and we produced want an orderly exit of the company Puja Mehra is an independent
system before 1991 irrational been well-intentioned to begin ning. This led to changes in think- slow domestic movement towards a fully reasoned document within but not of the activities... When we journalist, a podcaster and the
and dysfunctional? with. In the late 1960s-70s, there ing in India, but we were slower. liberalization. In 1989-end, in the six weeks, which was laid in Parlia- started the National Renewal Fund author of The Lost Decade (2008-18)
Soon after independence, the was a change in international devel- Finally, when the Soviet Union col- V.P. Singh government, Ajit Singh ment on 24 July 1991. The point I Proposal in 1993-94, we proposed How India’s Growth Story Devolved
dominant view in development opment thinking because South lapsed, we changed. We were 15 to was appointed industries minister. want to make is that it had actually retraining activities. There is a lot of Into Growth Without a Story.
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THREE DECADES ON, INDIA IS AGAIN

AT CROSSROADS
India needs to help create 100,000 competitive small enterprises over the next 10 years if it hopes to create 100 million well-paying jobs by 2030
Niranjan Rajadhyaksha
V
ishwanath Pratap Singh visited
Kuala Lumpur in June 1990 as the
Indian prime minister. He was
surprised with the economic
progress he saw around. Malaysia
was one of the handful of Asian countries that
had engineered an economic miracle by the
1980s, as it harnessed domestic capabilities to
build an export engine that pulled people out
of poverty. The average Malaysian was better
off in 1990 than the average Indian is today.
Singh later asked Montek Singh Ahluwalia,
who was then working in the Prime Minister’s
Office, to write a policy note on the steps India
needed to take to emulate what so many other
countries to the east of our borders had done.
The result was the “M-Document” that
brought together the thinking of economic
reformers who had begun to make an impact
within the Indian government over the previ-
ous decade.
This anecdote is part of the folklore of the
1991 economic reforms, introduced by the duo
of then prime minister P.V. Narasimha Rao
and finance minister Manmohan Singh when
India was on the brink of an international
default. It is also strikingly similar to the
epiphany Deng Xiaoping had—and the les-
sons he took back to China—at the end of his
Asian tour in 1978, soon after he had consoli-
dated his power following the death of Mao
+ Zedong. China embarked on its new eco-
nomic strategy soon afterwards. The Asian
model was worth emulating.
The role of the twin epiphanies should not
be exaggerated. Large countries do not
change their economic course only because of
what their leaders see on a foreign visit. How-
ever, the Asian story cannot be ignored either.
It tells us that economic success is not just
about accelerating the rate of economic
growth on a sustained basis; it is also about
structural transformation of the economy.
The process of structural economic trans-
formation is built around three interlinked
transitions—from farm to factory, from
informal to formal enterprises, from villages
to cities. Each of these transitions provide
opportunities for
people to shift from
Economic success is not just low-productivity to
about accelerating the rate of high-productivity
growth; it is also about structural activities, with
access to financial One of the great paradoxes is that Indian industry is capital intensive despite the country having surplus labour. Job creation in industry has been weaker than expected.
transformation of the economy capital, labour mar- Art: The Dismantled Wheel by Prabhakar Pachpute, 2020 COURTESY: PRABHAKAR PACHPUTE/EXPERIMENTER
kets and commer-
cial networks. Sev-
eral Asian countries—from Japan in the 1950s Yet the Indian farm continues to shrink in or the building of infrastructure. The inability
to China in the 2000s—successfully made size, as farming families divide land because of In the neighbourhood to provide quality jobs in modern enterprises
these transitions. the lack of economic opportunities elsewhere. How Asian economies stacked up when they were at similar income levels of economic development in effect means that the Indian state has been
In his landmark 1992 budget speech, Man- The average Indian farm is now just over one Comparison of Asian economies when they were at India's average income level of $2000 in 2019; figures in % forced to move from a development role to a
mohan Singh was clearly referring to the hectare in size. It was around 1.4 hectares in Employment in agriculture Employment in industry Industry/GDP Urbanization compensatory role, not exactly the best option
Asian success stories when he said: “We … 1995, a little after the 1991 economic reforms. 70 for a country at our level of development.
embarked on a medium-term programme of Indian agriculture has a problem of scale. 60 The task ahead is thus to double down on
structural reform, including new initiatives in That is why job creation outside farming 50
the goal Singh spoke about in his 1992
trade policy and industrial policy aimed at matters. Where have these sectoral migrants speech—to emulate what other countries to
40
improving the efficiency, productivity and been absorbed? The proportion of the Indian the east of our borders have managed. The
international competitiveness of the Indian labour force in industry climbed from 15.72% 30 Asian success stories have many common
industry. Our longer-term objective is to in 1991 to 25.57% in 2020. Industry in this con- 20 themes. The more orthodox economists stress
evolve a pattern of production that is labour text includes manufacturing, construction, on their export orientation, high levels of
10
intensive and generates larger employment mining and public utilities. Services sector domestic savings, a liberal import regime,
opportunities in productive higher-income employment rose from 21.72% in 1991 to 0
Thailand Korea China Indonesia India Vietnam Bangladesh
competitive exchange rates and macroeco-
jobs, and reduces the disparities in income 32.04% in 2019. The bottom line is that a fifth (1992) (1983) (2006) (2007) (2019) (2012) (2019) nomic stability. The heterodox economists
and wealth between rural and urban areas.” of the labour force has moved out of agricul- Source: World Bank; Akademische Arbeit, 1984 point to successful industrial policy, subsidies
It will soon be 30 years since the economic ture since 1991, a sign of structural transfor- to select sectors, preferential credit allocation
reforms of 1991. Much of the debate over this mation in progress. and administrative guidance. What both
period has focused on the second of the two One way to see how India is doing in com- 2.24 employees. This is in sharp contrast to a mixed one till now. agree on is that these countries pursued
themes mentioned above—the reduction in parison to some other significant Asian econo- the situation in China, where people leaving The biggest public policy challenge in the export promotion rather than import substi-
poverty as a result of higher average incomes. mies is to compare the structure of the econ- farms have been absorbed into large enter- coming years will thus be robust job creation tution, and invested heavily in human capital.
India has done reasonably well on the first omy today with that of its regional peers when prises that often have links to global supply through the growth of modern enterprises. It The 1991 reforms were a decisive turn away
front. The size of the Indian economy has they were at a similar level of development. chains. In a study done for NITI Aayog, does not help that the organized sector which from import substitution in a protected
increased from $274 billion in 1991 to $2.87 India had an average income of $2,000 in researchers at IDFC Institute pointed out that is better placed to create high-quality jobs has domestic market. India reintegrated into the
trillion in 2019. Average incomes have 2019, the year before the recession induced by most workers in India are employed by firms shown a marked preference for machinery world economy. Import tariffs have been
increased from $308 to $2,097 over the same the pandemic. South Korea was at a similar with less than eight people while most work- over men in recent decades. going up over the past few years. Industrial
period. The World Bank now defines India as level in 1983, Thailand in 1992, China in 2006, ers in China are employed by firms with One of the great paradoxes is that the Indian policy is making a comeback through incen-
a lower middle-income country. Indonesia in 2007 and Vietnam in 2012. Bang- 51-2,000 people. industry is capital intensive despite the coun- tives to specific sectors that have been identi-
Much of this is known. However, far less ladesh had a per capita income of a little less India needs to create 100,000 competitive try having surplus labour. Economists have fied by the government. Prime Minister Nar-
attention has been drawn to the equally than $2,000 in 2019. small and medium enterprises over the next pointed out the capital intensity of Indian endra Modi has maintained strategic ambigu-
important first theme—the structural trans- The table shows that India is broadly com- 10 years, each manufacturing has ity about what he means by atmanirbhar, but
formation of the Indian economy. Have there parable to these Asian countries when they employing about been steadily rising some of his ministers have been talking about
been enough opportunities for Indians to were at a similar level of economic develop- 500 people, if it The income squeeze in the since 1980, for a the importance of import substitution.
move out of their traditional occupations, ment. It is worth pointing out that urbaniza- hopes to create 100 Indian farming sector also means range of reasons, India is unlikely to slide back into a 1970s-
which are also often linked to caste hierarch- tion levels across countries are not strictly million well-paying from labour market style interventionist economy. Yet the deci-
ies? A December 2019 story in the Plain Facts comparable because each nation uses a differ- jobs by 2030. The that the domestic market for regulations to infra- sion to bank on the $3-trillion domestic econ-
section of this newspaper used data from the ent way to define a city, and India is far more proliferation of tiny industrial goods is quite limited structure bottle- omy rather than the $85-trillion global econ-
India Human Development Survey to show urbanized than our official statistics show. enterprises will not necks. The result is omy could be a strategic mistake—especially
that social mobility is still very weak in India: However, there are some major challenges do the trick. that job creation in at a time when international discomfort with
There is only a one in three chances that a son as well. Much of the industrial work that Indi- India is at the crossroads right now. Thirty the industry has been weaker than expected. Chinese aggression has hastened the shift of
born to a farmer or farm worker or construc- ans who have exited farming have got is not years after it reintegrated with the world Job creation is the best way to guarantee global supply chains from that country.
tion worker moves to a different occupation. productive enough to pay them good wages. economy, it is a lower middle-income country inclusive growth. The inability to do so since One insight from trade economics is that an
Indians have begun exiting the over- The reason: They have not moved from farm- that has sustained its economic momentum 1991 has meant that the Indian state has come import tax is in effect an export tax. India’s
crowded agriculture sector in recent decades. ing to modern factories or modern offices, but for three decades, one of the few countries to under pressure to use its fiscal resources to own pre-1991 record shows that protectionism
The proportion of the Indian labour force are finding work in stunted enterprises that do so. It has covered around a third of the long buy social stability, through programmes does not help build a competitive industrial
employed in agriculture has come down act more as social shock absorbers rather than journey towards an economy freed of mass such as the Mahatma Gandhi National Rural sector. The lessons from Asia are still key.
sharply over the past three decades—from engines of income growth. poverty. The biggest economic challenge over Employment Guarantee Scheme or the Prad-
62.56% in 1991 to 42.39% in 2020, according The average Indian enterprise is tiny. Only the next 10 years is to meet the aspirations of han Mantri Kisan Samman Nidhi. Niranjan Rajadhyaksha is a member of the
to estimates from the International Labour one in every 50 enterprises hires more than 10 a young population through the creation of Such income support programmes leave less academic board of the Meghnad Desai Academy
Organization. employees. An average enterprise has only jobs with decent wages. The record has been money aside for the provision of public goods of Economics.
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In a newly opened-up economy, first-generation entrepreneurs pushed forward, unsettling the traditional pecking order. Several prominent business family groups collapsed entirely, others simply slid down the rankings.
Art: The Indian Ambassador by Sunil Padwal, 2020 COURTESY: SUNIL PADWAL/GALLERYSKE
THE EMERGENCE OF 4 SPECIES OF

INDIAN GOLIATHS
Post 1991, Indian entrepreneurs curious to explore the world’s markets and technologies were encouraged rather than discouraged by the state
Gita Piramal its concomitant impacts on India’s economic, beneficiaries than townsfolk, as the farming ments. Mergers and acquisitions thrived in Rapidity, scale and success is as extraordi-
feedback@livemint.com financial, commercial and corporate struc- community now had access to price discovery this atmosphere, creating new goliaths. Resil- nary as was the journey of the Lever Brothers
tures. for their products. ient re-energized business families thrust in the colonial era.
As they mature, business sectors consolidate. It was against this backdrop that India’s As smaller and weaker players eased out, themselves forward, aggressively growing These once-small businesses benefitted
By its very nature, consolidation creates goli- goliaths gained size and power. Four factors even the Tata group, one of the bigger goliaths existing businesses or entering new domains. from key external factors. GDP growth com-
aths. drove business consolidation: the desire to in India, beat a retreat after mounting losses. Mumbai’s old textiles mills are an example bined with good monsoons enabled higher
I
n the 1990s, four species of goliaths expand the customer base, acquire the latest Consolidation left three goliaths still stand- where the owners used real estate to diversify per capita income, which in turn sparked con-
emerged in India. One was global: trans- technologies, constrain competition, and off- ing: Reliance Jio Infocomm Ltd, founded by into new businesses. Most companies sur- sumer spending.
nationals who collect companies across load debt and distressed assets. second-generation billionaire Mukesh vived, often because they were acquired by Banking, telecommunications networks
the world, including in India. The other In this era’s first year, the P.V. Narasimha Ambani; Bharti Airtel Ltd, set up by first-gen- fresh blood. A few continue to linger in pain— and the internet provided critical backbones
three are wholly Indian in parentage, sur- Rao administration (1991-1996) used a severe eration entrepreneur Sunil Mittal; and Voda- it’s not easy to close down a company in India. for business growth. Equally important was
facing from big business family groups, fresh balance-of-payments crisis to introduce fone Idea Ltd, a joint venture between a Brit- Examples of companies actually imploding the logistics revolution as inter-state borders
talent and the government. Almost every major structural reforms to “liberalize” the ish transnational and Kumar Mangalam Birla, are few. became easier to navigate. Early entrants such
major sector has its own sub-set of two or economy. In a country where business, eco- head of the Aditya Birla Group, one of India’s Most business groups underwent family as Hyderabad-headquartered Gati, set up in
three goliaths, drawn from any of the four par- nomics, politics and the state barely mesh, oldest business dynasties. In 2018, together separations, some more often than others, yet 1989, and older firms like Patel Roadways
entages. spaces are limited where players share a com- they accounted for more than 90% of revenue continue to contribute a family member to the expanded road and air transport and invested
The last three decades, from 1990 to 2020, mon ultimate goal despite differences about and 80% of spectrum holding. As on 31 Octo- list. For example, the Burmans developed a in warehousing and IT solutions. It became far
saw India face major challenges beyond how to get there. ber 2020, India’s telecommunication net- formal succession planning process. Loose- easier to build distribution networks.
unstable governments and coalition politics. Yet, over the next three decades, different work was the second largest in the world by tight structures knit the Godrejs and the TVS
A debilitating foreign exchange crisis and fall- relationships developed between the state number of telephone users (both fixed and group. Tight through the joint selection of the THE FUTURE OF COMMUNITY, CLASS
ing rupee led to an ignominious IMF (Interna- and business, relationships less antagonistic mobile phone) with 1,171.80 million subscrib- group chairman (usually the eldest family Being part of a business family group or busi-
tional Monetary than the previous four and a half decades. ers . member), and keep- ness community remains a key competitive
Fund) bailout in India could no longer refrain from participat- Lack of jobs ing each other advantage. Even entrepreneurs such as Nan-
Liberalization challenged 1991. ing in the global economy. Indian entrepre- rarely dethrone Being part of a business family informed of impor- dan Nilekani, part of the founding team of
traditional beliefs about doing Increasing bor- neurs curious to explore the world’s markets governments in group or a tight-knit business tant decisions Infosys, agrees. Trusted family members are
der tensions with and technologies were encouraged rather India. In a country through cross-di- a source of management talent as well as of
business, giving rise to the idea its neighbours led than discouraged by the state. Transnational where business, community remains a key rectorships of market and technical knowledge within an
of the business class to a war with Paki- corporations began to trickle into India. In economics, politics competitive advantage boards. Loose as industry or trade. In addition, if buyers and
stan (Kargil 1999), this mêlée, a shakeout in business family and the state barely business operations sellers are from the same community, it cre-
an attack on Parlia- groups, the traditional bedrock of entrepre- mesh, spaces are are independent of ates an environment of trust which lowers
ment in 2001, the Mumbai bomb blasts of neurship, was inevitable. limited where players share a common ulti- each other. transaction costs and time.
2003, 2006 and 2008, and several border dis- mate goal despite differences about how to get The focus of first- and second-generation “People talk about business communities.
putes with China. Religious tensions (Ayo- THE TELEPHONE’S CONNECT there. business family groups on knowledge-based I talk about business class,” countered the late
dhya, Gujarat 2002) shook the country as did India used to have a robust black market for businesses and consumer-facing companies historian Dwijendra Tripathi.
a string of natural disasters (Latur earthquake telephone lines. In March 2000, the Atal IN THE TRENCHES enabled them to seize the lead from tradi- “When you come from a particular commu-
1993, Odisha super cyclone 1999, Gujarat Bihari Vajpayee administration set a goal: Liberalization challenged traditional beliefs tional agriculture-based industries such as nity, and you are involved in business, willy-
earthquake 2001, Indian Ocean tsunami every normal middle-class family should be about caste, communities and business family cotton textile mills, sugar refineries and tea nilly you get concerned with business strate-
2004, Uttarakhand floods 2013, droughts in able to afford a cell phone. By December groups. A slow fade materialized, giving rise plantations. gies which have nothing to do with commu-
several states). And of course, demonetization 2002, the mobile subscriber base stood at 10.5 way to the idea of the business class. First-gen- In the pharmaceuticals sector, we saw the nity but which have something to do with the
in 2016. million. Fourteen years later, by December eration entrepreneurs pushed forward, unset- emergence of first-generation businesses kind of business environment that prevails,”
On the positive side was a rapprochement 2016, total tele-density across the entire chain tling the traditional pecking order. Several while the second generation expanded exist- Tripathi said. “People talk about the Parsi
between India and the US. The Manmohan of fixed lines, mobile telephony, international prominent business family groups collapsed ing businesses. business community, Marwari business com-
Singh administration launched the Mahatma long distance and internet was a remarkable entirely, others simply slide down. The third, and perhaps the most important munity so on and so forth. Today, the com-
Gandhi National Rural Employment Guaran- 1,151.78 million in a population of 1,324.17 mil- The 72% of the business family groups that difference between the two generations, is plexities are such that no community can
tee Act (MGNREGA) in 2005, an attempt to lion (older than seven years old). dominated the pre-liberalization period while many in the second-generation group finance an enterprise. The result is that busi-
guarantee the ‘right to work’. Narendra Modi By 2020, India was on its way to becoming dropped out of the league tables. Another set continued older manufacturing traditions, ness strategy completely cuts across the com-
in 2014 added the Jan Dhan Yojana scheme to a challenger to the world’s biggest telecom of 70% entered (family splits account for the the first-generation group mainly launched munity barriers. We are so preoccupied with
expand and make affordable access to finan- networks. Consumers appreciated benefits small difference between exits and entrants) consumer-facing businesses . certain folklores about Indian business that
cial services such as bank accounts, remittan- from the entry of private players to some and took their place. New, homely, entrant offerings such as we can’t get away from it.”
ces, credit, insurance and pensions. extent, but a true pricing revolution was The purge was severe but it would be facile glue, batteries, healing balm, television pro-
Transformations in banking and telecom- noticeable only after the introduction of new to jump to the conclusion that business fami- grammes, text messages and toothpaste tubes Gita Piramal is a writer, business historian
munications helped by the growth of the technologies. lies fell of the cliff and disappeared. Some translated into billion- dollar companies and and senior fellow at Somerville College, Univer-
internet, and the New Economic Policy, with Rural communities were perhaps bigger companies morphed under old manage- pan-India brands with pan-India availability. sity of Oxford
X
MUMBAI 09
1991 REFORMS AIMED AT MORE THAN

JUST BOP CRISIS
The balance of payments (BOP) crisis was the immediate trigger but the other challenge was problem of slow growth, says Montek Singh Ahluwalia
Puja Mehra
A
n economist of international
renown, Montek Singh Ahlu-
walia has been a key figure in
India’s economic reforms jour-
ney from the 1980s. As com-
merce secretary and then finance secretary
when P.V. Narasimha Rao was prime minister,
Ahluwalia was part of the team that ‘liberal-
ized’ India’s economy. He’d been an adviser to
former prime minister V.P. Singh, and took on
this position again in prime minister A.B. Vaj-
payee’s office. During the 10 years of the Man-
mohan Singh-led government, he was deputy
chairman of erstwhile Planning Commission.
Ahluwalia, the author of Backstage: The Story
Behind India’s High Growth Years, tells Mint
how a team of economists, politicians and
bureaucrats worked together to bring the 1991
crisis under control, cracking open a political
space to reverse the interventionist economic
policies of the first four decades after Inde-
pendence.
How did the 1991 reforms come about?
The reforms of 1991 are often seen as a
response to the balance of payments (BOP)
crisis of that year but in fact they were a
response to two distinct challenges. One was
an immediate crisis in the BOP and the other
was the challenge of overcoming the persist-
ent problem of slow growth in India compared
with other countries in East Asia.
+ The BOP problems began to surface in the
last years of the Rajiv Gandhi government
when fiscal expansion led to a widening cur-
rent account deficit. Since an election was due
in 1989, it was felt that corrective action could
be taken after the election. The coalition gov-
ernment headed by V.P. Singh that took over
after the election was preoccupied with other
issues, and no corrective action was taken.
The situation turned into a crisis when Sad-
dam Hussein invaded Kuwait in August 1990,
sending crude oil prices through the roof.
This happened at a time when V.P. Singh had
announced reservations for OBCs (other
backward classes), provoking student protests
and causing a break with the BJP (Bharatiya
Janata Party). Markets lost confidence in the
ability of the government to handle the situa-
tion. Foreign banks stopped extending new
loans while insisting on repayment of old
ones. NRI inflows turned negative. V.P. Singh
resigned in November 1990. The next govern-
ment under Chandrashekhar (started negoti-
ating with) the IMF
(International
The BOP crisis was used as an Monetary Fund).
opportunity to undertake But the IMF lends
only to countries
deeper structural reforms to willing to take the GDP growth is only one measure of progress; others such as poverty reduction, educational achievements and health indicators are equally important, says economist Ahluwalia.
unleash India’s growth potential difficult decisions Art: Charming Nation by N.S. Harsha N.S. HARSHA/CHEMOULD PRESCOTT ROAD
needed to bring the
BOP into equilib-
rium. The Chandrashekhar government was them was an additional incentive for export- economy and the role of persuasion in making viewed growth as the sole objective of policy. global supply chains. The message of integrat-
too weak to commit to such action. It fell in ers. This introduced a market mechanism for reforms politically saleable. He had the full In all our plan documents, we emphasized ing is the right approach but it is not clear that
March 1991 and a general election was called. limiting imports to a sustainable level. In less backing of Rao. The strategy was also unique. that GDP growth is only one measure of the specific actions we are taking will promote
A Congress-led coalition under P.V. Naras- than a year, the Exim scrip system was There had been considerable discussion in progress and there are others that are equally that objective. High tariffs, combined with a
imha Rao was sworn in and its first priority replaced by a dual exchange rate applicable to the 1980s inside government of the need for important such as poverty reduction, reduced message that reducing imports is a virtue in
was to deal with the BOP crisis. Foreign all foreign exchange earnings. By March 1993, change and many top civil servants were con- regional differences, progress in child nutri- itself, is not consistent with integrating into
exchange reserves were at rock bottom and we were able to unify the exchange rate. vinced we were falling behind other countries tion, educational achievements, health indi- global supply chains. Such integration
there were fears India would default on its An important feature was the coordination by not changing. cators... requires items to be imported from wherever
debt obligations. The new government, with of reforms in different areas to ensure internal It was the multipronged action, focusing on It is important to recognize that we cannot they can be produced cheaply, worked on in
Manmohan Singh as finance minister, contin- consistency and mutual supportiveness. policy change, that made the 1991 reforms assume that progress in each indicator can be the country for some part of the production
ued negotiations with the IMF to get loans Import liberalization was essential for indus- unique. Most budget speeches identify objec- achieved without rapid growth in GDP. India process, and re-exported. High tariffs will
that would tide over the immediate problem. trial liberalization to be meaningful. However, tives and announce new government pro- moved out of the category of low-income make us unattractive for integration into
It took strong action, including devaluation we also needed a mechanism for situations grammes to achieve those objectives... Singh’s developing countries in 2010 but it only global supply chains.
and reducing the fiscal deficit, but did not where the demand for imports might exceed 1991 speech was different because it talked entered the bottom of the middle-income cat- The import duty increases of the past three
limit itself to dealing with the BOP. It also took the foreign exchange available. The freely mainly of policies. egory. We need much higher levels of per- years have been implemented because seg-
up the other challenge of slow growth. floating exchange rate provided such a mech- True, we have not had a comparable burst capita income to improve the living standards ments of Indian industry have expressed con-
This challenge had been discussed through anism since excess demand for imports would of coordinated reforms since then. However, of the bulk of our people and for that we must cern that they cannot compete against
the 1980s and a consensus had evolved that lead to a depreciation which would help it must be admitted that the first burst of aim at growth rates between 7% and 8 %, while imports. Industry does have genuine con-
our system of control was too restrictive and equate demand for imports with available for- reforms was much easier to conceptualize also ensuring that the growth is as inclusive cerns about aspects of our policies that make
was preventing India from becoming a com- eign exchange. Tax reforms covering both because the Indian and sustainable as Indian producers uncompetitive. These are
petitive economy. The BOP crisis was used as direct and indirect taxes laid out by the Chel- economy was so possible. low-quality infrastructure, our labour skills
an opportunity to undertake deeper struc- liah committee were implemented over three constrained that it 1991 reforms had been criticized The growth of are not what they should be, our labour mar-
tural reforms which would unleash the years. Foreign capital inflows in the form of had become a for being too gradual, but crony capitalism is kets are not flexible enough, we score poorly
growth potential of the economy. portfolio flows were liberalized in steps. no-brainer that we indeed a serious on logistics and also on ease of doing business.
We were criticized at the time that all this My main point is that the 1991 reforms needed to change. gradualism had the advantage of problem, not just in However, the solution to these problems lies
was being done to satisfy the IMF. There is no aimed at much more than dealing with the Subsequent stages creating a consensus for change India but in all in redoubling our effort to close these gaps,
doubt that the IMF would have insisted on BOP crisis. They have been criticized for of reforms are more developing coun- not raising import duties.
action to restore equilibrium in the BOP, nota- being too gradual but gradualism had the difficult and tries. The solution Raising duties may make some producers
bly a reduction in the fiscal deficit and a deval- advantage that the changes were accepted require building of institutions which takes lies not in rejecting freer markets or becoming more competitive against imports, but it does
uation. But what we did in 1991 was much widely, and a consensus evolved in favour of time. suspicious of any large Indian company but in nothing to help exporters who suffer from the
more. change. This acceptance was reflected in the We now see considerable disenchant- ensuring that all such companies operate in a same disadvantages. In fact, it perpetuates our
What were the structural reforms? fact that subsequent governments of differing ment with the thinking that guided genuinely competitive environment, and that competitive disadvantage in world markets.
It began with a devaluation of the rupee in political hues, ranging from the United Front reforms since 1991. There is criticism government does not act to grant favours to These are not just my views. Arvind Pana-
two stages, on 1 July and 3 July 1991. This was government, which included the Communist about the system not delivering for all preferred companies. gariya, a distinguished trade economist, who
accompanied by a major liberalization of trade Party of India, to the BJP-led government Indians and the growth of crony capital- Some believe the thinking that led to was appointed the first vice-chairman of NITI
policy. We had one of the most restrictive under Vajpayee, all continued in the broad ism... trade reforms was flawed and, so, the Aayog, argued strongly that we should lower
import policies in the world... Consumer direction of the 1991 reforms. There is a lot of rethinking globally on vari- reversal of trade policy by the current our tariffs and reduce disparities across cate-
goods imports were banned. The new policy Commentators argue that the burst of ous aspects of economic policy and the limits government is justified. gories. Unfortunately, policy has moved in the
did not liberalize imports of consumer goods. reforms in 1991 was unique. Was this of market-oriented economies and we are no It is true that we have seen a series of opposite direction.
However, almost all intermediate and capital because of personalities involved or the exception. One line of criticism is that the increases in import duties in the past three Another unfortunate development is
goods, which earlier needed an import strategy itself? reforms and reformers have become exces- years... This is sometimes presented as a con- India’s decision to stay out of RCEP (Regional
licence, were allowed to be freely imported Personalities are always important and in sively focused on GDP growth as the sole sequence of the policy of Atmanirbhar Bharat. Comprehensive Economic Partnership). I
against Exim scrips issued to exporters at Manmohan Singh we had a finance minister objective of economic policy, which ignores We need greater clarity on what is meant by think this is contrary to the Act East policy
30-40% of export earnings. The Exim scrips who was respected and trusted across political environmental impacts. These are relevant atmanirbhar. The prime minister has said the enunciated by the prime minister. I hope the
were freely tradable and the premium on parties. He understood the workings of the considerations, but it is wrong to say that we government wants to integrate India into government will reconsider.
X
MUMBAI
INDIA’S REFO
INDIA: THEN
India’s tryst with economic freedoms began in the early 1990s, but it is a promise that has been fulfilled only in part. While the average Indian may be bette
Vivek Kaul
I
t was late in the evening and I was sitting
and watching the 1977 Hindi film Ghar-
onda (meaning “small house”), a timeless
saga about the trouble with aspiring to own
a home in one of the most crowded cities
on earth—Mumbai.
The song Ek akela is shehar main (single and
alone in the city) from the movie was playing
on the screen. Some 2 minutes and 50 seconds
into the song, there is a shot of Mumbai’s
famous Marine Drive full of Premier Padmini
and Ambassador cars.
Before any nostalgia could set in, my
17-year-old niece, who had been busy Snap-
chatting on her phone, was looking at the TV
screen all excited. “Oh, all those cars are so sim-
ilar to that old car in the garage.”
She was referring to the parrot green
Ambassador car which my father for emotional
and nostalgic reasons had never been able to
sell.
“Yes, it’s called the Ambassador,” I said.
“What a silly name for a car,” she retorted.
“Back then, one had a choice of just two
cars,” I said, pausing the song.
“Just two cars?”
“Yes. You could buy the Ambassador or the
Premier Padmini, until Maruti Suzuki came
along in the mid-1980s.”
“In a way, it was good na? Remember, last
time Ma wanted to buy a car, she had this huge
FOMO and
dragged us along to
The government ran many check out every
consumer-facing businesses, possible model,”
+ selling TVs, bread, Double 7 colas she said. “But tell
me something, why
and Allwyn refrigerators were there only
two car models
available?”
“Because of the licence raj.”
“Licence raj? That sounds like the name of
an old Mithun Chakraborty movie,” she
replied, having recently discovered the cult of
the Disco Dancer.
“The term refers to the control that the gov-
ernment had over businesses in India. Govern-
ment bureaucrats decided what businesses
could produce and how much they could pro-
duce. So, two companies had the licence to
manufacture cars.”
“Oh.”
“And because there was a quota on the num-
ber of units that could be manufactured in a
given year, there was a perpetual shortage.
Hence, second-hand cars and two-wheelers The burst of reforms of 1991 made it easier to do business in India—foreign companies were allowed into different sectors and private Indian companies also flourished
were more expensive than newer ones because Art: The Tourists by Nayanaa Kanodia, mixed media on paper
there was no waiting period.”
“That’s crazy.”
“In fact, the government itself manufac- Uttar Pradesh, Kerala and Bihar.” on 21 June. He soon realized that India was “Indeed. The only way to get out of this was India. Foreign companies were allowed into “So
tured a lot of products.” “Really? And?” bankrupt. In fact, earlier that year, we had to get rid of the licence raj and bring in eco- different sectors. Private Indian companies “Le
“Really?” “The government sold Modern bread and taken a $2.2 billion emergency loan from the nomic reforms. This is what happened when also flourished. In the 1990s, new banking had ar
I looked around the room for an apt exam- Double 7 colas. It also sold Allwyn refrigerators IMF. This loan was made against a part of our the then finance minister, Manmohan Singh, licences were given to the private sector after conce
ple. “Let’s start with the TV.” and HMT watches.” gold reserves which had to been flown to Lon- presented the annual budget on 24 July 1991. many years. All this helped to create jobs and mobil
“TV?” she asked. “But what changed all this?” she asked. don. Also, foreign exchange reserves were He ended his speech by saying, ‘No power on economic growth. The average rate of growth billion
“There were TVs with brand names like “Thirty years ago, the summer of 1991 hap- down to just two weeks of imports.” earth can stop an idea whose time has come’.” between 1951-52 and 1990-91 had stood at 4.2% rock-b
Uptron, Keltron and Beltron, manufactured by pened,” I replied. “P.V. Narasimha Rao and his “Oh, we pawned our gold? Really desper- “And has he been proven right?” she asked. per year. Since then, growth has averaged a sig- ment
companies owned by the state governments of cabinet were sworn in to govern the country ate,” she said. “Yes. It became easier to do business in nificantly higher 6.3% per year.” “Alm
From reforms to results How a series of economic reforms unleashed in the 1990s trickled
down to fundamental aspects of our lives—for the better.
HOME OWNERSHIP Workers by industry AFFORDABILITY MATRIX Lowering of import tariffs…

Move in today, pay over 15 years Share of workers (in %)
Agriculture Services Manufacturing
Grab a car or a computer Mean import tariff rate, weighted by product import share (in %)
1992 2000 2018
The pre-reforms generation bought a house using their savings 1991 64.8 22.5 12.7 In several big-ticket goods, the trickle-down effect of liberaliza- 27 32.2
and provident fund, and by borrowing from friends and family. 2001 56.7 25.9 17.4 tion—opening up of sectors, greater competition and choice, 23.4
Reforms brought in private banks and also gave banks greater 2011 52.5 29.9 17.7 more innovation—has meant an improved price-value offering
freedom to set interest rates and lend. As interest rates dropped, 2018 44.1 31.3 24.6 for consumers. Take cars. In 1992, a Maruti 800, an entry-level 14.7
the culture of home loans grew. Today, a home loan is the norm car, cost about ₹1.25 lakh. Adjusting for inflation*, ₹100 in 1991 is
to buy a house. Formalization of jobs in urban sector worth ₹269 in 2020. In other words, that ₹1.25 lakh in 1992 would 4.9 4 2.1 3.4
Employees by nature of job (in %) be worth about ₹3.36 lakh today. For that amount, a consumer can 1.6
As borrowing became cheaper… Urban males Urban females get the entry-level Maruti Alto—an offering that is a significantly India US China
16 100 100
superior piece of engineering.
Non-salaried Non-salaried …expanded the
That price-value play is seen in personal computers too. In 1991,
Average home loan rate (%)
an assembled desktop PC cost about ₹20,000. Adjusting for infla- basket of products 9,257 8,763
12 50 50 tion, that’s ₹53,800 today—good for a branded laptop that is gen- coming into India
erations ahead in performance. Coupled with the fact that Items as per 8-digit
Salaried Salaried incomes have risen, affordability is far greater. harmonized system codes
9.8
8 0 0 1997-98 2019-20 ts Exp 9,643
8.4 1983 2005 2018 1983 2005 2018 6,806 or
Purchasing power has surged
orts
Imp
Source: NSS Survey reports, Periodic Labour Force Survey (2017-18)

Approximate price in 1991 Current value of that purchase* Source: World Bank
4 Car Personal computer
1995 2000 2005 2010 2015 2020 JOBS PUZZLE
PRODUCT BASKET
The shift to services 1.25 lakh
…home loans shot up 9.8
The opening up of the economy to private enterprise found the 20,000
A greater array of choices
Outstanding housing loans 8.7
(% of GDP) greatest expression in the services and manufacturing sectors. A A prime thrust area of economic reforms was the reduction in
7.3 visible and continuous shift happened in the employment pat- import duties in order to boost trade. In 1991, India had a peak
6.6
tern: from agriculture and allied sectors to manufacturing and import duty of 150%. Even the average import duty, weighted by
services. While the quantum of shift away from agriculture is 3.36 lakh 53,800 share in the product basket, was around 27%. In 2018, this was
large, the pace at which non-farm sectors are creating quality down to 5%. The drop in import duties, plus a larger domestic
2 employment leaves much to be desired. Also, the number of agri- economy and higher disposable incomes, have added breadth and
1.1 1.3 cultural workers, in absolute terms, started declining only in the depth to the goods that come into India, offering greater choice
late 2000s. Formal jobs—which offer stability of income, some *Wholesale inflation, since retail inflation series to consumers and companies alike. However, since 2018, import
1990 1995 2000 2005 2010 2015 2020 labour rights and social security benefits—continue to remain a does not go back till the 90s barriers are nudging upward again, fuelled by global trade wars
Source: Reserve Bank of India, National Housing Bank
concern. Note: Wholesale Price Index values and linking factors sourced from the Reserve Bank of India and India’s own atmanirbhar tilt.
X
MUMBAI 11
ORMS STORY
N AND NOW
er off, only a few benefited tremendously
How the needle moved in 30 years
How India has changed since 1991 on 30 essential aspects that define the quality of life of its citizens.
While there are still many
gaps in financial inclusion,
the surge in access to banks
she said. (All figures in %) Then Now has been remarkable
“Did you know that when mobile phones Households with bank or
were first launched in the mid-90s, even an Bank account post office account 21 89
incoming call used to cost ₹16 per minute?”
Electricity Households with electricity
“And now, they are practically free!” she as primary lighting source 51 98
AMENITIES*
exclaimed.
“They are. The number of passenger cars Toilets Households with toilet 22 35
facility in premises
sold in 1991-92 was around 150,000 units. In
FY2020, 1.7 million units were sold. That’s a LPG Households using LPG/clean
fuels as primary cooking fuel 11 44
10-fold expansion. That many more Indians
can afford a car each year these days.” House Households living in a
pucca house 24 56
“What about two-wheelers?” she asked.
“In FY2000, 3.7 million two-wheelers were Households owning
sold. In FY2020, the number stood at 17.4 mil- Agri land 39 53
agricultural land
lion. Further, most Indians in 1991 had access
Fridge Households owning a
to only one TV channel, the government- refrigerator 7 30
owned Doordarshan. People in the bigger cit-
ASSETS*
2-wheeler Households owning TV outreach has become central

ies could also see DD Metro.” a two-wheeler 8 35 to Indian politics for a reason. Its
“Now, we have 257 channels, OTT stream- penetration improved the most
ing platforms and the internet, and nothing 4-wheeler Households owning among all household goods
a four-wheeler 1 6
interesting is on,” she said sarcastically.
“All of this reflects better purchasing power TV Households owning a
television set 21 65
as incomes have gone up. For the well-to-do
section, the fact that income tax rates came Population living in
Urbanization
DEMOGRAPHICS
down from 50% in the 1990s to around 30% urban areas 22 31

now has helped. The per capita annual
Family size Households with five
income was ₹29,686 in 1991. This has since or fewer members 57 69
improved to around ₹1.09 lakh in 2019-20.”
“What you are saying is the average income Youth People below 20 years
in population 49 56
of an Indian has gone up. But does that mean
that the income of an average Indian has also Sex ratio 93
Females per 100 males 96
gone up at the same pace?” she asked.
“Good point. If Mr Ambani were to walk into Married women using any
Family planning 41 65
this room right now, the average income of the family planning method
WOMEN
room would go up without your income or my Married women with more

How India halted its population growth
income changing. That’s the trouble with aver- Fertility 41 51 without a China-like 'one child' mandate
than two children is an unheralded success story
ages,” I explained.
Marriage Women aged 20-24 years who got 50
“What do you mean?” married after the age of 18 years 75
+ “In 1991, 62.6% of India’s workers were in
Literacy rate Literacy rate among women
agriculture and farm output formed 31.3% of aged above 15 years 34 66
the overall economy. Now, around 41.5% of the
total employment is in agriculture and it forms Place of birth Babies born in 94
institutions 32
around 15% of the overall economy.”
CHILDREN
“So?” Children under 2 years Nutrition has been a big failure.

Malnourishment not underweight Improvements have been very 53 64
“There are more people still dependent on
agriculture than what is economically feasible. marginal and India's children
Infant mortality Live births still await a better deal 91 97
So the benefits of reforms haven’t reached a
large section. The average Indian is better off
but hasn’t benefited as much as a few have. And Graduates Population >20 years
3 10
EDUCATION
who are graduates

some benefited tremendously.”
“Clearly, there is a problem.” Population >20 years from religious Enrollment in higher education
Graduates minorities who are graduates 3 8
surged after the mid-2000s,
“Also, what hasn’t helped is the fact that but most of India's population
India hasn’t improved enough on many social Population >15 years who've studied
Schooling till secondary school and above 6 36 is still poorly educated
indicators. Even a country like Bangladesh has
done better than India on some counts.” Workers People in working age with permanent or 60 Interestingly, the
“So tell me, where do we go from here?” she temporary employment 59
share of Indians who
EMPLOYMENT
asked. Women working/looking for work work in the prime

Working women 22 35 years of their life has
“For more jobs and economic growth, India among those eligible for work
dropped despite 3 decades of
needs another burst of economic reforms— Population employed in farm, rapid economic growth
like what we saw in July 1991. Also, we need to Agriculture 43 63
COURTESY: NAYANAA KANODIA/GALLERY VEDA allied activities
make sure that our real estate and construction
Industry Population employed in
sectors operate well, because it can create lots manufacturing, allied activities 16 25
o things have improved,” she said. of low- and semi-skilled jobs.”
MIGRATION
et me give you an example. In 1980, India By the time I finished answering the ques- Migrants Migrants in total population 28 38 Suspicion of outsiders and demands for
round 2.5 million landline phones, all tion, she was ready to leave. local job quotas have clearly prevented
entrated in cities. By October 2020, “Okay, gotta bounce,” she said. “My new Migrants and work 11 free movement of labour, a critical
Migrants moving for work 10 feature of the Chinese economic boom
le phone connections had touched 1.15 Zoom buddy is calling.”
n. Access to the internet is available at “Oh. Is he the one who was trying to slide 0 20 40 60 80 100
bottom rates. This is purely an achieve- into your Twitter DMs last week?” I asked. Source: NFHS (1992-93, 2015-16, and 2019-20); Census: 1991 and 2011; International Labour Organization: 1990 and 2019; Labour Bureau: 1990-91 and 2015-16
of India’s private sector.” “Okay, Boomer!” she said and walked away. *Note: National estimates for asset ownership and amenities is available only till 2016 since the more recent NFHS round was interrupted by the pandemic.
most everyone has a mobile phone now,” Vivek Kaul is the author of Bad Money.
GRAPHICS BY PARAS JAIN/MINT
INVESTMENTS From greater physical access… MIGRANT MARCH Share of population in Greater Mumbai
The household portfolio Bank branches and ATMs
per 10,000 people
6.89
9.65 Call of the city urban agglomeration (%)
Mumbai Mumbai Suburban Thane*
The presence of private players in banking, mutual funds and Census 2011 recorded that 45 million Indians moved away from
insurance, a capital markets regulator, the creation of the 5.96 their places of birth and were living as domestic migrants within 27.1
National Stock Exchange (NSE) which sidestepped the broker the country. In the 1990s, with few urban areas providing eco-
cabal by introducing online trading, and free pricing of capital nomic opportunities at scale, the primary destination for migrants
issues are all fruits of liberalization. was other rural areas (marriage being the top reason for move- 52.6
The new freedoms also induced excesses in the capital market, 2010 20 ment). However, migration to urban areas has since picked up.
05 1 5 10.85
notably in the 1990s, with the stock market getting rocked by a 20 The share of people who move for work-related reasons is still
Data for 2020
2020
1990
series of scams. But broadly, equities as an investment option has includes micro 0.68 low, though, indicating that Indian cities continue to be wary of 20.3
ATMs.
grown. And the investment portfolio of the Indian household has outsiders. This is contrary to what happened in China, where
diversified away from physical assets such as gold and real estate …to digital access men, and also some women, moved to economically vibrant cities 21.2 53.6 25.2 2001 50.9 32.4
to include financial assets like mutual funds and stocks. Share of Unified Payments Interface in digital transfer payments in large numbers primarily for work. 1991 2011
16.8
70 8
Volume Value (right-hand scale) 7
60 *Includes the following towns: Mira-Bhayandar, Thane, Navi-Mumbai,
Increase in Bigger businesses 50
(in %) 6 Migration to urban areas picks up Kalyan-Dombivli, Ulhasnagar, Ambarnath and Badlapur
5
financial assets come to the market 40 4 Share of migrants by destination (%)
Source: Census 2011
30 3
Share of financial savings in Average amount raised Migrating to urban areas Migrating to rural areas
20 2
household savings (%) per equity issue ( cr) SUBURBIA
10 1 1991 30 70
70 1,000
902
0
2016 2017 2018 2019 2020
0
2001 33 67
The satellites come of age
Source: Reserve Bank of India
In the 20-year span between 1991 and 2011, the population of
800 2011 39 61
60 Gurugram and Noida increased sixfold. They grew due to the
BANKING BOOM steady influx of a cocktail of new people, industry and real estate—
58 Marriage remains the top reason for migration all fed by the scope of possibilities and the sense of aspiration
600
From half a day... to immediate Reason for migration (%) which was unleashed by reforms. In different degrees, it was the
50 47 1991 2001 2011
Earlier, accessing one’s own money was a day’s chore. Now, it’s 46.3 same in nearly every major city. In Mumbai, the centre (Mumbai
400 a matter of seconds involving a few clicks. Liberalization paved Marriage district) had no space to grow. So the periphery (Mumbai Subur-
the way for private banks, whose service orientation compelled Work/Business ban) stretched itself. And it also went and attached itself to new
49.6
40 government-owned banks to transform. Regulation also 10.4 9.9 appendages like Thane. The result is that satellite towns like Soni-
200
strengthened. The 1990s and the first decade of this century were 5.5 pat (Delhi), Sriperumbudur (Chennai) and Tumkur (Bengaluru)
about building infrastructure like bank branches and ATMs in Education have grown massively and emerged as new economic hubs.
67.1
2.8
30 0 order to bring more people into the financial system. That’s pav- 1.1
2000 2019 1981-82 2019-20 ing the way for the digital leap that is currently under way, with 1.2 Data and text compiled by howindialives.com
Source: Reserve Bank of India new payment platforms like UPI clocking impressive growth. Source: Census www.howindialives.com is a database and search engine for public data
X
MUMBAI
HAVE WE FORGOTTEN ALL ABOUT

1970s SOCIALISM?
The pushback against liberalization and new protectionist policies and language indicate a dangerous nostalgia for control over industry
Rahul Jacob
T
he big new idea of 2020 was an old
one. The Modi government
brought back industrial policy, usu-
ally associated with the licence-per-
mit raj of the 1960s and 70s. Its pro-
duction-linked incentive scheme for mobile
phone manufacturers offered a wide range of
subsidies to Indian and Taiwanese companies
to boost mobile phone exports from India.
In mid-December, Ravi Shankar Prasad,
minister for electronics and information tech-
nology, went so far as to set a goal for the
industry in India to “surpass” China in manu-
facturing mobile phones. Even as dreams go,
this was wildly implausible: India’s mobile
phones production is just a fraction of China’s.
Just a week or two later, ominous signs loomed
over that sunny horizon. An industry body
representing mobile manufacturers said man-
ufacturers would likely miss the targets set for
this fiscal, but pleaded that they should not be
penalized for this.
Meanwhile, in an indictment of industriali-
zation led by the Indian state in earlier dec-
ades, the market cap of public sector compa-
nies declined by double-digits in market capi-
talization last year, despite a handsome rise in
the stock market index over the same period.
2020 marked an unabashed return to the
import substitution and industrial policy led
economic policymaking of the licence raj. Last
+ year, the decision not to join the Regional
Comprehensive
Economic Partner-
Through the 1990s, successive ship (RCEP) despite
governments showed a Japan and Austra-
commitment to reducing India’s lia’s suade
efforts to per-
India There have been reverses in trade policy, and the principal opposition today to 1990s-styled liberalization is spearheaded by ministers within the government rather than industry.
tariffs across the board amounted to turn- Art: Tape Recorder by Anjaneyulu G, 2019, oil on linen COURTESY: ANJANEYULU G/ART ALIVE
ing its back on the
trade liberalization
since 1991. manian, said, “There is no question that these “The volatility (through tariff increases on surged around the world ensuring that those merce rules are continually tweaked to make
On the surface, these moves appeared a are government-led initiatives. You have these inputs after lobbying by large corporate pro- with savings and equity investments have business more difficult for both Walmart-
reprise of ideas associated with the Bombay subsidies for investment and the decision not ducers) the smaller companies are put enjoyed an increase in wealth. owned Flipkart and Jeff Bezos’ Amazon.
Club, the moniker ascribed to those industri- to join RCEP. I don’t see any signs of it being through is huge,” said Sebastian Morris, a pro- Meanwhile, what has been termed a Meanwhile, changes in the regulatory
alists such as Rahul Bajaj who sought more reversed.” fessor of economics and public policy at the K-shaped recovery with the poorest across the structure that made it possible for one com-
protection for domestic industry in response Earlier this month, CII called on the govern- Indian Institute of Management in Ahmeda- world getting poorer while the rich get richer pany to own several airports helped the march
to the energetic delicensing and reduction of ment to create a roadmap to reduce tariffs bad. By contrast, through the 1990s and looks even more skewed in India as the of Adani Group. As Arvind Singhal, chairman
tariffs that followed 1991. While it attracted especially on raw materials and intermediate beyond, successive governments ranging amount of food consumed by sections of the of Technopak Advisors, the market research
headlines then, the Bombay Club’s influence inputs, warning that India’s duties regime was from P.V. Narasimha Rao’s minority Congress population looks set to decline further. consultancy, points out, there exists neither
and importance now seems exaggerated. making its products uncompetitive. government to the United Progressive Alli- The Centre for Monitoring Indian Economy the pressure of politics nor public opinion for
Shankar Acharya, chief economic adviser Last year, Subramanian, who is now with ance and the Vajpayee government, showed reports that almost three-quarters of the 4,234 the Competition Commission of India to
between 1993 and 2001, said: “It was not well Ashoka University, co-authored research that a commitment to companies in its police emerging monopolies and duopolies.
documented; it was more an idea that referred showed that India’s manufacturing sector reducing India’s sample cut their That may change. As 2020 drew to a close,
to the pushback against liberalization. They grew the third-fastest in the world in the dec- tariffs with the goal The increases in tariffs over the wage bill, kept it flat farmers protesting at Delhi’s border pledged
may have met a few times. I don’t think the ades since 1991 when tariffs were reduced and of bringing them past couple of years has made or did not increase it not to use services provided by either com-
‘Bombay Club’ was able to influence different industrial licensing done away with. “Why not down to East Asian beyond the rate of pany. In early January, RIL petitioned the
governments to change industrial policy.” build on that rather than abandon it,” he said. levels, s a i d business more difficult for many inflation in the courts to protect its communications infra-
The Confederation of Indian Industry (CII), Instead, the successive increases in tariffs Acharya. mid-sized Indian exporters quarter ended Sep- structure against vandalism from protesters.
for instance, was always pro-reform. over the past couple of years, and the more From ‘be vocal tember 2020, pri- The company clarified that Reliance Retail
Most observers believe the principal oppo- easily understandable use of non-tariff barrier for local’ to atman- marily through had never used “contract” farming and said
sition today to 1990s-styled liberalization is interventions last year on imports from China irbhar to voicing the need for Indian multina- slashing contractual labour. Many doubled that the conglomerate had no plans to do so.
spearheaded by ministers within the Modi in the wake of Beijing’s aggression at the tionals, there is no shortage of headline-grab- their profits as they did so. What might be called India’s pseudo-social-
government rather than industry, which in Ladakh border, has made business more diffi- bing pronouncements from the government. Every other month last year seemed to bring ism took another bizarre turn in 2020: the
many ways makes this reversal much more cult for mid-sized Indian exporters in indus- Meanwhile, GDP growth has been slower news of a foreign strategic investor buying into drumbeat of interventionist industrial policy
potent—and permanent. The steady rise in tries ranging from garments to furniture. every successive quarter even before the pan- companies that are part of Reliance Industries from New Delhi grew louder even as ground
tariffs, for example, marches along even as Longer term, annual export figures have demic. A family health survey released last Ltd (RIL). The most ironic were large invest- realities showed large companies and oligo-
government ministers voice their scepticism been flat for the past few years, suggesting a year but completed before the onslaught of ments by Google and Facebook that came polies becoming more dominant than ever.
and distrust of free trade agreements. loss of competitiveness made worse by such covid-19 showed that the improvement in about a year after Mukesh Ambani had warned
The Modi government’s chief economic misguided policy interventions and a peren- nutritional standards over the past five years against the dangers of data “colonization” by Rahul Jacob is former Hong Kong bureau
adviser between 2014 and 2018, Arvind Subra- nially overly strong rupee. had reversed course. Stock indices have foreign companies. The country’s e-com- chief for the Financial Times
‘Making decisions outside the rule book rang in telecom’s success’

Puja Mehra became a success story… decided to consolidate nuclear begun to look up, our economic of rates. Much earlier, the marginal
feedback@livemint.com Yes, banks had lent large resour- power, demonstrating the link strength gathered momentum, our tax rates on income were so atro-
ces to private telecom operators, the between economic reforms and confidence gathered momentum, in ciously high that the equation
F
ormer IAS officer N.K. Singh is private telecom operators were una- national security? 1993 we had paid off all the debt to between work and leisure tilted the
the chairman of the 15th ble to meet contractual obligations In 1991, we were dependent on the IMF. We were no more a pro- scales in favour of leisure. P. Chi-
Finance Commission. He’s had of the bidding process for telecom external balance of payments sup- gramme country of the IMF. All that dambaram’s budget of 1997, with
a seat at the table of most economic circles, the cost of each telephone port from the International Mone- when taken together really does which I was closely associated as the
and policy reforms that have taken for the consumer was exceptionally tary Fund, World Bank, regional bring out and highlight the impor- revenue secretary, took the auda-
place over last 50 years, as he details high and the market size remained development banks, Aid India Con- tance of economic strength and cious step of rationalizing income
in his biography, Portraits of Power: skewed. Vajpayee called us and said sortium. The US had a strong say in security flexibility. Only countries tax rates into just three: 10, 20, 30.
Half a Century of Being at Ringside. find a solution. The solutions were the decision-making process. As which are economically strong can There were no surcharges. The
He is also chairman of the Fiscal very complex. We had to move over long as we were dependent for our also hope to become important credit has to be given to Prime Min-
Responsibility and Budget Manage- to an NTP-99 [National Telecom balance of payments strategy on defence and strategic partners. ister H.D. Deve Gowda; his innate
ment review committee, which sets Policy] based on a revenue-sharing these entities, flexibility in the area You worked on the 1997 budget. judgement was favour of this. We
targets for the government to agreement. This resulted in a funda- of national security was limited. So a Why is it called the ‘Dream Bud- gave him two models. In the second
reduce fiscal deficits. He shares mental change towards telecom decision like the nuclear test— get’? model, the [upper] rate was higher
some big moments of the last 30 licensing. There were many hurdles, N.K. Singh, chairman of the 15th Finance Commission. MINT which everybody realized was a It’s a very difficult question. It’s because some people felt 10-20-30
years of India’s reforms story. including how the liabilities of the power statement—invited sanc- called a ‘Dream Budget’ I guess for a poor country like India was not
past would be discharged. Vajpayee minister himself. It was a very strate- decisions which were not in the rule tions, but the ability for the country because it took unconventional progressive enough. He was not
When A.B. Vajpayee became was sagacious enough to realize the gic intervention to prevent the col- book but were in the larger interest to withstand those sanctions were steps in the rationalization of direct necessarily a specialized economist
prime minister in 1998, the tele- multiplier effects of a good telecom lapse of what has turned out to be of the country. dramatically higher when Vajpayee taxes in general, and income tax in but he opted for a deep simplifica-
com sector was in disarray. He ecosystem. The portfolio was one of the important growth multi- Did 1991 reforms strengthen became prime minister. Following particular. Before that, India’s tax tion and rationalization of income
had it cleaned up and telecom changed, Vajpayee became telecom pliers of the economy by taking Vajpayee’s hand when he the 91 reforms the economy had regime was littered with multiplicity tax rates.
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MUMBAI 13
WHY LEGAL REFORM REMAINS AN

AFTERTHOUGHT
Reform policies are largely shaped by economists who do not possess institutional appreciation, and so legal reform rarely features in any discussion
Bibek Debroy Sixth, to state the obvious, enacted statutes

feedback@livemint.com often reflect a mindset of state control. There-
fore, a proper revamp of legislation requires
A
mong the films to watch in 2021 is us to take a position on what the government
Kaagaz, a biographical drama should do and should not do. To continue
directed by Satish Kaushik that with the Rajasthan example, should the gov-
documents the tribulations of a ernment control boating, as it does through
man called Lal Bihari. This gen- Regulation of Boating Act (1956)? Or, to men-
tleman was declared dead in 1975, struggled to tion more topical legislation, the Essential
prove that he was alive (though deceased in Commodities Act of 1955. What is the differ-
the records) and was finally declared alive in ence between control and regulation? Often
1994. a statute is in the name of regulation, but actu-
Umakant Sharma warrants a film too. This ally amounts to control.
postman was suspended in 1984 (because of a Therefore, seventh, introduce regulatory
discrepancy of ₹57.60 in the records he sub- legislation where none exists. And eighth, an
mitted) and was declared innocent in 2013. important point often ignored, ensure that
Then, in Doshipura (Varanasi) a dispute there is unambiguity in drafting, so that litiga-
between Shia and Sunni Muslims over two tion is avoided. In passing, the plain English
acres of land has been going on since 1878. movement has left both law and judgements
There are criminal cases pending for more untouched.
than three decades. As a back-of-the-envelope Finally, to return to the examples I men-
number, including all forums, the backlog is tioned initially, a legal system is only as good
35 million cases. Let’s say there are at least two as its enforcement, that is, speed of dispute
parties to a dispute (this is obvious for civil resolution. If it takes decades, the system isn’t
cases, though not necessarily true of criminal credible, to punish the wicked or protect the
cases). However, since a civil case will often virtuous.
have more than two parties, one can safely say The number of cases pending for more than
at least 70 million individuals are litigating 10 years is 1,200 for the Supreme Court,
today. With 250 million households, in 28% of around 780,000 for high courts and just over
India’s households, an individual spends time 2 million for lower courts.
in court. Several committees have told us what to do.
The strange thing is that you can think of The earliest government committee to exam-
the movie Damini which was made famous by ine the problem of pendency and arrears was
Sunny Deol’s tarikh pe tarikh (date after legal the Rankin Committee (1924). The most
+ date) dialogue. But there is also the judge’s recent was the Malimath Committee (2000).
remark in Jolly LLB-2 that citizens still Now it is time to reform.
approach courts in hope of justice. Law has
that Janus-like attribute. THE REFORM
In ancient Indian texts, the primary respon- One can detect at least four strands in pro-
sibility of kings was defence of the realm, proposed reforms. First, there is the question of
tection of the virtuous, punishment of the judicial strength, though the number and skill
wicked and a speedy system for dispensing sets of non-judicial staff are equally important.
justice. Plato, or more contemporary social This is a supply-side solution that is the most
contract theory, endorses this. If three organs commonly cited reason for court congestion
of state (legislature, executive, judiciary) can- and delays. However, this is also linked to
not ensure rule of law, the state has abdicated vacancies and the judicial appointment and
its responsibility. promotion process, as is judicial workforce
One doesn’t need the World Bank’s govern- planning.
ance indicators or doing business indicators Second, there is a set of reforms linked to
to underline India doesn’t do that well. In improving judicial efficiency and court pro-
1993, using cross-country ductivity, through educa-
evidence, an academic paper tion/training, better court
A proper revamp argued reform of India’s administration in non-judi- If dispute
of legislation legal system would lead to cial functions and improved resolution takes
incremental GDP growth of case and case-flow manage-
requires us to 1.5%. Obtaining such a pre- ment, facilitated by infra- years, the system
take a position on cise number is dubious. structure improvements. isn’t credible to
what government factory But the fact is the unsatis- This too is a supply-side punish the
legal system should solution. Third, as a sub-
should do and have been revamped even if strand to number two, infor- wicked or protect
should not do 1991 economic reforms mation and communication the virtuous
hadn’t occurred. The technology can be used to
reforms provided an addi- enhance productivity.
tional trigger. Whatever be the definition of Fourth, demand for adjudication can be
“reforms”, they involve reliance on markets, reduced through alternative channels of dis-
as opposed to state control. Markets are con- pute resolution (mediation, conciliation, arbi-
ceptual constructs used by economists. They tration) and reducing the government’s con-
aren’t APMC mandis where buyers and sellers tribution in civil litigation.
physically congregate to transact. Every mar- Supply, demand and productivity—these
ket functions in an institutional context and are the bare facts when you come down to
an important ingredient in that institutional brass tacks. All too often, when one talks to
context is the legal system. judges or reads committee reports authored
Yet, probably because reform policies and by judges, the emphasis is only on the first and
debates are largely shaped by economists who the others are rarely mentioned. In other
do not possess institutional appreciation, legal words, more courts, more judges, more court
reform rarely features in any discussion. staff, better infrastructure, better housing,
Hence, post-1991, laws primarily changed better cars, more money, financial autonomy
because of World Trade Organization (WTO) for the judiciary.
obligations (such as intellectual property) or Without evidence that the judiciary is seek-
because competition was introduced (infra- ing to reduce pendency, these arguments
structure, financial sector), not necessarily won’t have many takers outside the judiciary.
because it was explicitly on the agenda. Many procedural improvements can easily be
done. Productivity enhancement is about han-
THE ROUTE MAP dling cases more efficiently, that is, case-flow
There are slices in law and legal reform. First, Post-1991, laws primarily changed because of WTO obligations or competition, and not because it was explicitly on the agenda. management. When the Code of Civil Proce-
laws are often statutes. Under the Constitu- Art: Hesitant Attempt by Gigi Scaria, 2018, Bronze COURTESY: GIGI SCARIA/CHEMOULD PRESCOTT ROAD dure was amended in 2001 and 2002, we were
tion, both Union and state governments can told that, henceforth, the average civil case
legislate. As a citizen, duty-bound to obey the would be concluded within two years.
law, and ignorance of the law is no excuse. Therefore, “law” is what a government official Fourth, outright repeal is easy. More com- cial interpretations, causing further confusion If nothing of the sort has happened, that’s
Surely it should be one’s right to know what proclaims it to be. Since reforms are about monly, an entire statute cannot be repealed, in case law. because of the Supreme Court (2005) in the
existing statutes are. transparency and reduction in discretion, this but a section has become dysfunctional. That Factor markets are a prime example of this. Salem Advocates Bar Association versus
For the Union government, courtesy India is undesirable. To impart some optimism, an may be Section 377 of Indian Penal Code, Sec- For instance, at the Union government level, Union of India case. But this judgement also
Code, that’s available. For almost all state gov- exercise to incorporate state laws into Indian tion 69 of Transfer of Property Act, or the rele- there were roughly 54 statutes, directly or led to the eventual drafting of model case-flow
ernments, that information isn’t available. Code has started, but it’s early days. vant section of East Punjab Agricultural Pests, indirectly dealing with labour. Those under management rules. Though these were draft
Major statutes are available, certainly in Third, old laws become dysfunctional. Diseases and Noxious Weeds Act (1949), appli- administrative control of the labour ministry rules and adoption decision was left to high
printed form. But I meant all statutes, not only India doesn’t have a system of desuetude. In cable to Delhi, which requires locust invasions have now been unified into four codes. When courts, this is an eminently sensible idea.
major ones. (I chaired a two-member task plain language, they aren’t closed-ended, with to be announced through beating of drums statutes are unified, subordinate legislation Evidently, not all high courts thought so. A
force that examined Rajasthan’s laws, set up natural death after a prescribed time period. and musters of able-bodied male citizens to will automatically be unified. When one reads collation by Vidhi Centre for Legal Policy
by the then chief minister. For some statutes, They are open-ended and have to be specifi- fight them. a TeamLease report on the large number of shows that. This is an example of that reluc-
we discovered the government or assembly cally identified for repeal. Through successive This requires systemic scrutiny of statutes. regulatory clearances required at Union or tance to enhance productivity, not to speak of
didn’t possess the texts. We had to get copies Acts, the Union government has repealed Ideally, that should be done by the Law Com- state government level, one should realize larger issues like curbing appeals. Experi-
from the government printing press.) around 1,600 old statutes. mission, but recent reports of the Law Com- bulk of these concern labour. ments like lok adalats, fast-track courts, family
Second, laws are often not statutes, but sub- Aren’t old statutes harmless? Not really, mission have been infrequent and ad hoc, not For Rajasthan, after harmonization (and courts, mobile courts, gram nyayalayas, peo-
ordinate legislation in the form of rules, regu- they can be used for harassment. For example, systematic. Kerala and Rajasthan are the only some repeal), we were able to reduce the num- ple’s courts and women’s courts have also had
lations, notifications, orders, circulars. If stat- Sarais Act of 1867/1887 (now repealed) could states I can think of that have done such sys- ber of statutes from 900 to 250 (that figure of sporadic success because of that reluctance.
utes aren’t available, it follows that subordi- be used to harass hotels. However, after the tematic exercises. 900 gives us a rough idea of how many statu- Finally, one cannot forget police reform,
nate legislation isn’t available either, except Constitution was enacted in 1950, old statutes Fifth, while identifying old and dysfunc- tes there might be at the state level). Most of critically linked to reform of the criminal jus-
for India Code. In the case of states, except on state subjects have to be repealed by states. tional sections, one can rationalize and har- those 900 statutes were on land ownership, tice system.
those that are part of the department for pro- So, if we wonder why the oldest extant statute, monize. Statutes, in the same area, have been tenancy and land revenue. Across states, the
motion of industry and internal trade’s Bengal Districts Act of 1836, still exists, that’s enacted at different points in time, with vary- next frontier for a rationalization exercise Bibek Debroy is chairman, Economic Advi-
(DIPP’s) ease of doing business exercise. because repeal has to be done by West Bengal. ing definitions. This leads to alternative judi- remains that. sory Council to the Prime Minister
X
MUMBAI

Just what the doctor ordered: How reforms transformed healthcare
Deborshi Chaki & Puja Mehra I had to send patients abroad, and Preetha Reddy: What will hap- personnel. We have the youngest of hospitals so they can use technol-
MUMBAI/NEW DELHI not everyone could afford this. I pen in 2030 is what we have to think workforce globally, the largest ogy.That will bring down the cost.
thought to myself: How many are about. We’ve got great enablers. English-speaking workforce—how Preetha Reddy: We need to
D
r Prathap C. Reddy, 88, going to die because they can’t raise We’ve said we will make Bharat can we harness this? Again, when pick best practices from a neigh-
returned to India from the money? I decided to set up a hospital atmanirbhar, we’ve got Ayushman we’re talking about making in India, bour, like Singapore. The model
US in the 1970s and realized here. I made quite a few trips to Bharat. We need to be cognizant we can do more medical devices. should be such that those who can-
that specialized healthcare was out Delhi. The major change came in about building infrastructure Right now, we’re importing 75%. In not afford to pay will still be taken
of reach for the average Indian. In 1985. The government said hospitals because we don’t have adequate short, we need to scale up infrastruc- care of. If you look at data, when we
1983, he founded India’s first cor- could be funded like industry. Cus- infrastructure to treat everyone. We ture, manpower and manufacturing. started 80% of our revenue was peo-
porate hospital, Apollo Hospitals, in toms duty for medical equipment, need to find innovative means to Economics and health are directly ple paying cash upfront; 20% was
Chennai and expanded across the which was over 300% as a luxury build that infrastructure quickly. proportional. Unless we are able to third-party payment. The equation
country. Reddy and his daughter item, was brought down. The first We need to look at innovative take care of the health of the nation, has flipped because insurance mod-
and vice-chairperson Preetha medical equipment I imported was financing, innovative modelling. we will have a larger economic crisis. els have become better. There will
Reddy tell Mint how healthcare in a CT scan machine. Today, we have Apollo Hospitals founder Prathap C. Reddy and his daughter and vice- Second, we have to be realistic about India has never had public be a time in the next three years
India has changed over 30 years. thousands of them. All this hap- chairperson Preetha Reddy. how healthcare is delivered. The healthcare. What happens to when everybody will have some
What are the ways in which you pened because of the reforms that point of care is shifting from brick- the bottom of the pyramid? kind of insurance. People will have
found doing business in India started then. Today, India’s health- because of the ’85 reforms—that gest thing. Then because of the 1991 and-mortar systems to smart- Prathap Reddy: How do we access. But what we are not looking
different in the pre- and the care is equivalent to the world’s best. hospitals should be funded like transformation, people started phones. 5G is coming, so the regula- treat this large number of people? at is how are we going to build the
post-liberalization era? Would you say this was a direct trade or industry, that health insur- looking for better things, and better tions around digital have to be faster Insurance is one way. Telemedicine infrastructure when people have
Prathap Reddy: When I came consequence of the reforms ance would get a tax deduction, and health was also necessary. and forward-thinking. Skilling is is another. It is low-cost but gets the access. To me, that is where the
back to India, automation essential started in 1991? the rationalization of customs duty. What are the urgent pending another important aspect. We need best health advice to all. It is neces- focus has to be. Policymakers have
for cardiology was deficient. Often, There’s no doubt. All this is These three, for us, were the big- reforms in your sector? more doctors, nurses, healthcare sary the government meets the cost to look 5-10 years ahead.
KEEPING ALIVE THE GOOD, OLD

FAMILY BUSINESS
Family businesses post 1991 were shored up by the arrival of the next generation, many of whom were educated and had worked outside India
Goutam Das ‘all-weather AC’. The all-weather positioning,

goutam.das@livemint.com backed by aggressive marketing, firmly estab-
lished the brand in the consumer’s mind. Vol-
C
orporate presentations of Voltas tas also opened up many more distribution
Ltd today trumpet its landmark channels in modern retail, regional retail and
early years. In 1956, the company multi-brand outlets. “We have been the mar-
installed eight air conditioners ket leader with a huge lead over our immedi-
(ACs) at the Mumbai home of ate competitor for the last 10 years. Today, we
chief minister Morarji Desai. And in the early have a 27% market share in the AC category,”
70s, India’s first high-speed train, the Raj- Bakshi said. In 2019-20, LG, the No. 2 player,
dhani Express, was air-conditioned by Voltas. had a market share of about 14%, according to
The company, however, sold more than just market research reports. In 2011, LG led the
cooling solutions. In the decades preceding market with a share of 28%.
economic liberalization, Voltas was a distribu-
tor for Amul, Pepsi and Rasna. It sold tomato ELGi’S JOURNEY
ketchup and developed milk vending ELGi grew its revenues 28% between 1981 and
machines for the National Dairy Development 1990. The revenue growth nosedived to 10%
Board. The company lost its mojo as an AC in the next decade, between 1991 and 2000,
maker in the mid-90s when multinationals because of its reliance on domestic sales and
launched an array of good-looking products. weaker products. ELGi’s revenue growth con-
Broadly, this is the story of most Indian sequently picked up; between 2001 and 2010
companies, big and small. In the licence-per- the firm clocked a CAGR of 16%.
mit raj era, pre-1991, manufacturers were “We had to either sell or shut down most of
given licences to make products but the our businesses. We shrunk it down to two—
capacities allotted were limited. Businesses compressors and automotive equipment,”
couldn’t expand beyond a point in one prod- said Jairam Varadaraj, ELGi managing
uct category; they went horizontal, trying to director.
play in many industries. Some of the businesses the company sold
Take the example of ELGi Equipments Ltd, were profitable in the 90s. Nevertheless, Vara-
a Coimbatore-based mid-tier compressor daraj realized that market share and profits
maker. Pre-1991, the company sold compres- would be “illusionary” in the future because his
sors, automotive equipment, braking systems company didn’t have the technology required
for trucks, pasteurizers and washers for brew- to sustain many of the products it manufac-
eries and drip irrigation systems, among oth- tured, given the growing competition. The
ers. As the licensing system divestment took seven to
was dismantled, new market eight years.
Pre-1991, firms entrants with more capital The company then Most companies
couldn’t expand and superior technology ate invested heavily in the busi- that survived in
beyond a point in into the company’s share.
Nonetheless, both Voltas
nesses it retained, particu-
larly compressors. It built the post-
one category; and ELGi bounced back. stronger manufacturing sys- liberalization era
they went This is the tale of two Indian tems, quality processes and did things that
companies—a large con- developed its own technol-
horizontal, playing sumer-facing company and As the licensing system was dismantled, new market entrants with more capital and superior technology ate into older companies’ share. ogy while focussing on pro- seem common-
in many industries a smaller business-to-busi- Art: Fat Boy with Red Chocolate by Rajesh Deb, 2016, woodcut on canvas COURTESY: RAJESH DEB/ART HERITAGE FOR TAPX4 ductivity. sensical today
ness manufacturer—that “The Indian market size
learnt crucial life lessons was not big enough to jus-
after liberalization, adapted and eventually adopted process-improvement techniques Two firms, two stories director and chief executive officer of Voltas. tify the investment we were making. Our
thrived. like Six Digma,” said R. Gopalakrishnan, “In 2006-07, we set up a new factory at Pant- aspiration had to be global. It was a long haul.
VOLTAS LTD
While Voltas started in 1954, ELGi was author and a former director at Tata Sons Ltd. nagar in Uttarakhand and differentiated our We now sell in over 100 countries but strate-
established in 1960. Both the firms had a lean “The realization was that companies should THEN NOW ACs by introducing energy efficient and tech- gic markets are Australia, Indonesia, Thai-
10 years after the economy opened up. Voltas run irrespective of who was the boss,” he nologically advanced products at an afforda- land, Europe and America,” Varadaraj said.
Sales (in cr)
slipped in the pecking order, from being No. added. “Consumer goods companies would ble price. That is how we started clawing back From 2011, international sales for compres-
1 in the AC market to No. 7 between 1993 and manufacture everything internally before 1,441 7,627 a lead over our competition and regained our sors got a boost as ELGi made acquisitions in
811 (FY20)
2005. ELGi’s growth declined. Between 1991. They started shifting to outsourcing over (FY95) (FY05) market leadership.” Europe and the US. In 2019-20, 45% of the
1995-96 and 2005-06, the company grew by a period of time.” Before the new factory came up, Voltas had company’s income of ₹1,829 crore came from
about 6% every year while the economy manufacturing plants scattered across the international sales.
Slipped from No.1 Clawed back share in
jumped 7-8% in seven of the 10 years. THE VOLTAS TALE in 1993 to No.7 in 10 years, No. 1 AC
country because of the fragmented nature of Professor Kavil Ramachandran, executive
Voltas is back to being the No.1 AC maker Before India opened up, the consumer elec- 2005 in AC market maker again its business. From a vast array of products and director of the Thomas Schmidheiny Centre
today; ELGi, which mostly sold in the domes- tronics landscape in India had fewer players. services, the firm decided to focus on ACs and for Family Enterprise at the Indian School of
tic market and Russia before 1991, is now a Voltas dominated the AC market; BPL was commercial refrigeration products. It hived Business, said family businesses in the 90s
ELGi COMPRESSOR
global player in compressors, selling in 120 known for televisions; Videocon for washing off cost-heavy plants in cities like Hyderabad. were shored up by the arrival of the next gen-
Sales (in cr)
countries. machines and refrigerators. Around 2000-01, 1,649 The Pantnagar plant was a lean unit—just eration. “The manufacturing sector needed
How did the two companies turn around? the competitive landscape changed with LG, 181 183 (FY20) like carmakers, Voltas encouraged suppliers more competitiveness, technology, profes-
Turns out, most companies that survived and Samsung and Sony aggressively marketing its (FY96) (FY01) to set up ancillary factories around its plant. sionalism and working with non-family pro-
thrived in the post-liberalization era did products. Instead of Voltas investing in components, the fessionals. That was enabled by the arrival of
things that seem commonsensical today. For The multinationals came not just with deep Growth slowed, Among top 10 company’s suppliers invested in return for the next generation, many of whom were edu-
instance, focus on a few products they could pockets but with superior manufacturing divested to focus compressor makers promised business volumes. This turned cated outside India,” he said.
compete in rather than be a marginal player in processes. Indian manufacturers, like Gopala- on compressors in the world around Voltas’ cost structure. Profit after tax This certainly appears to be true in the case
many. Yet that period of adjustment took sev- krishnan mentioned, had high fixed costs. In stood at ₹22 crore in 1995. Profits doubled in of ELGi and other family concerns that have
eral years. the AC market, the multinationals started 2004-05 to ₹50 crore but spectacularly shot thrived. They managed to do this by shifting
“Indian companies ran on relationships introducing spiffier indoor units. Consumers, we realized that our products were getting up to ₹385 crore in 2009-10. the basis of competitiveness from managing
rather than processes. Because of the shift all of a sudden, were flooded with choice. irrelevant and that we had to create a differen- The second phase of the company’s turn- Delhi and getting licences to making products
towards cost competitiveness, companies “With the entry of multinationals in India, tiation,” said Pradeep Bakshi, managing around started in 2010-11 with the launch of an that are globally competitive.
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MUMBAI 15
IGNORING THE ENVIRONMENT IS

BAD ECONOMICS
While liberalization brought new ideas of global finance and free markets, it nudged India to the brink of an ecological crisis
Pranay Lal
I
n hindsight, India’s tryst with liberaliza-
tion came only a few years after a pivotal
but increasingly forgotten moment in the
world’s environmental history, the Bho-
pal Gas Tragedy of 1984. Globally, every
country introspected and examined, and
reformed its policies and policing to avert
such a tragedy. India, while burying its dead,
did the opposite. It developed a feeble frame-
work to protect ecology and people; environ-
ment remained a mutable variable of India’s
economic policy, appended to its corporate
growth.
New environmental rules that came into
effect in 1987, and amendments to the Facto-
ries Act have remained unchanged for over 30
years. In May 2020 in Vizag, a chemical tank
in a South Korean-owned plant exploded,
claiming 11 victims. The blame shifted
between the Centre and state governments
and eventually the state government paid
meagre compensation to the families of the
deceased. Needless to say, no one was
arrested, and no senior official took responsi-
bility or resigned. Just like Bhopal.
May 2020 also witnessed the largest oil and
gas flare up in the Baghjan oilfield, which is
surrounded by a sanctuary in Assam. The rav-
aging fire was
doused only in
Better taxation and investment November. The
+ policies are required along with National Green
Tribunal found Oil
government recognition that India Ltd in viola- Post-liberalization, tweaks to policy were made to ease trade, and the environment ministry has facilitated clearance for industry and found ways to extract resources within its purview.
locals can protect ecosystems tion of several leg- The Free Stamp, by Claes Oldenburg and Coosje van Bruggen, is the world’s largest rubber stamp ALAMY
islations. Imagine a
government enter-
prise not complying with the government’s again remained an afterthought. society space has weakened the cause of keeping efforts and conservation by communities both demanding an end to the loot by coloni-
own legislations. We also witnessed accidents Successive environment ministers and the ing earth and equity in balance. Civil society, and individuals, a small but important effort to alists. The covid-19 pandemic should be that
in Dahej in June and Ahmedabad in Novem- ministry of environment and forests (MoEF) communities or individuals can no longer bring nature back. People are more aware of moment when India needs to reimagine how
ber, where more people died. have failed as custodians of nature. The busi- imagine going to court or filing RTIs without their surroundings and about issues. Many it would like to bring fundamental changes to
There are thousands of Bhopals waiting to ness of the ministry has not been to protect the facing the threat of backlash or retribution. more turn up for meetings, for tree planting environmental and health security. While we
happen. The Indian government continues to environment but to facilitate clearance for India’s government and corporates are shred- and saving a pond or sanctuary than before, wait for the vaccination to stem the disease,
play both ways—it invests in and profits from industry and to find ways to extract resources ding nature’s fabric, which held communities and many react to issues on social media. The we also need to find an antidote for arrogance,
dirty companies, just as it had done in Bhopal within its purview. and cultures together. campaigns to protect Aarey Milk Colony in evidence-blindness and plain stupidity,
where the government stood before courts Politicians openly advocate for corpora- Governments, whether Union or state, have Mumbai, Mollem in Goa, the Aravalli Biodi- whether institutional, collective or individual.
both as a victim of the disaster as well as a per- tions and willingly allow transgressions into enough resources (funds, money, people, versity Park in Gurugram and to stop the Before we begin efforts to protect our land-
petrator (it had investments and a board seat what is under the ministry’s watch. Case in land) but are bankrupt when it comes to building of flyovers in Bengaluru show citi- scapes, forests and rivers, and water, air and
in Union Carbide, and had relaxed environ- point: the transport ministry’s quick defence intent, vision or leadership. Funds tied to zens are rising, at least to protect their neigh- soil, we must change the current discourse.
mental norms) for the deaths which took place of Volkswagen in December 2015 when the ‘reverse’ environ- bourhood. Luck and destiny will not shape what the new
under its watch. latter was caught cheating on its emissions mental damage like What is missing normal will look like; it is the choices that we
Such conflicts have multiplied since liberal- data in California. It was a concern in the US, District Mineral While the world reconsidered are large national make now and beyond. Will our respect for
ization and aggravated damage to the envi- not in India, it said, even though a government Fund, CAMPA and how it lived with the environ- movements like communities who safeguard our commons be
ronment. So, while the rest of the world rei- investigation found that the company had the Auto Cess Narmada Bachao restored? Will commerce tread softly on our
magined and renegotiated how they lived flouted emission norms in India too. Fund, among oth- ment, India produced a maze of Andolan and finite resources? Will evidence and science
with their environment, India, at best, pro- Our deteriorating environment—abysmal ers, are flush with policies, which are often ignored Chipko to protest find primacy in guiding policy, practice and
duced a maze of policies that are conveniently air quality, toxin-laden water, vanishing for- money, but the against the govern- investments? This is the moment in history
sidestepped and people are an afterthought. ests and rivers, persistent cycles of epidemics government clearly ment’s poorly con- when equity is most needed so that we can lev-
Even though liberalization brought new ideas and reducing productivity of farm soils—is lacks imagination and the competence to use ceived policies and terribly executed projects erage global interconnectedness, technology
of global finance, free trade and for the first quickly accepted as a ‘new normal’. it for good. like broadening highways, proposed inter- and resources to overcome vulnerabilities of
time we began to compare ourselves with the Protests by farmers from Punjab against the Sadly, public funds or incentives are now linking of rivers, mega-energy plants or com- people marginalized by climate change, pov-
West’s standard of living, ecology, equity and farm bills is as much ecological as it is eco- extended to for-profit players over communi- pensating the destruction of virgin evergreen erty and disease. The Paris agreement can’t
social justice continued to be accounted for nomic. Most often, the MoEF acts only if the ties and civil society. Why are there so few cor- forests in the Andaman Islands with afforesta- wait. Nor can citizens for a lungful of clean air
outside the realm of economics. more powerful Prime Minister’s Office or the porate-backed re-wilding initiatives, commu- tion in Madhya Pradesh. Virtually every good or a mouthful of untainted water.
Before liberalization, a goon squad with courts direct them to act. In most matters, it nity-based carbon capture projects, or environmental initiative has taken place out-
clout to procure licences could circumvent has no opinion, technical know-how or, more clean-up of rivers? Better taxation and invest- side of the government, without the govern- Pranay Lal is a public health advocate and
any law and trample over people’s rights to importantly, the intent to address problems. ment policies are required along with government’s resources or participation. writes on natural history. He is the author of
their natural resources. Post-liberalization, Post-2014, communities and their tradi- ment recognition that local communities are As we commemorate 30 years of liberaliza- Indica—A Deep Natural History of the Indian
tweaks to policy and regulations were made to tional rights over natural resources have been best suited to protect local ecosystems. tion, we also observe the centenary of the non- Subcontinent (2016) and is currently writing
facilitate trade and, unfortunately, the social threatened further by arbitrary allocation. A Not all hope is lost, though. The last decade cooperation struggle and the Malabar rebel- a book on the natural history of viruses, which
sector, and especially the environment, yet gradual but swift corporate takeover of civil has seen interesting experiments in re-wild- lion, two movements contrasting in style, but is due for release in summer 2021.
‘Only in a crisis does India reform and we’re seeing signs of it now’
Puja Mehra global economy. It marked a major some course correction. what life was like under socialism. of old-style export manufacturing.
feedback@livemint.com change in the mindset. The notion Now, there is a recognition that Young generations romanticize the And fourth, commodity prices are
of socialism made way for consum- the finances don’t allow the country idea of socialism, partly because poised to rise in the 2020s. Gener-
T
he author of Breakout Nations erism. It was a heady time of the to carry out a major stimulus, so capitalism in the way they know it ally, when commodity prices go up,
and The 10 Rules of Successful entry of major foreign brands into they’re carrying out reforms. Only hasn’t delivered in the past 20 it tends to help emerging markets.
Nations, Ruchir Sharma has India. The economic freedom, the in a crisis does India reform and years. Therefore, it is more difficult These are the four factors that
been studying emerging markets freedom of personal choice it we’re seeing signs of it now. to build up a consensus to carry out can help emerging markets over
for close to 30 years. He was 17 in brought—that’s how I read the For the first time since 1991, traditional economic reforms. the coming decade but it depends
1991 and remembers watching reforms. The distinction between hard-earned gains in trade pol- What reforms would you like to on how much momentum India
from the visitors’ gallery in the Lok business-friendly and market- icy are being given up. Some say see in the next few years? puts behind these. Despite reforms,
Sabha as then finance minister friendly, that hasn’t been resolved the model is not delivering for There are four factors that make India ranks relatively low on the
Manmohan Singh delivered the yet. One of the big faultlines of the all. Is the noise muddling deci- me optimistic about emerging mar- index of economic freedom. I wish
pivotal budget speech. Sharma boom of the 2000s is that it ended sion-making? kets such as India over the next dec- the political class would do more to
reflects on what India needs to do to up in so much crony capitalism. These put into context why car- ade. One, we don’t have the means increase economic freedom. The
join the comeback he expects to see That is a very big problem for India. rying out reforms in the early 1990s to stimulate our way to prosperity, irony is that we got a fair amount of
in emerging markets in the 2020s. Are we seeing a new wave of Ruchir Sharma, head of EMs, Morgan Stanley Investment Management. MINT was easier than now. In the early so we are carrying out reforms. Sec- political freedom quite early after
reforms in India now? 1990s, the consensus around the ond, there is a digital revolution. Independence but we haven’t got
It is said the economy moved Like most emerging markets, the IMF. That was the first time in the (Atal Bihari) Vajpayee gov- world was in favour of globalization, Third, traditional models of manu- the commensurate amount of eco-
from business-friendly to mar- India seems to carry out reforms India started reforms. 1991 did ernment about India’s slowing with the collapse of the Berlin Wall, facturing and exporting have nomic freedom. The reforms of
ket-friendly after 1991. Have when it has its back to the wall. much more to integrate India into growth and that led to another the demise of the Soviet Union. become difficult in an era of deglo- 1991 were one step in that direction
you seen this change? Once every 10 years, we get a major the global economy; then we had wave of reforms, including privati- Today, we are in an era of deglobali- balization. But countries such as but we are still far behind many
The 1991 reforms were really burst of reforms. We saw it in the the East Asian financial crisis in the zation, in the early 2000s. In zation; many countries are turning Vietnam and Poland are seeing other countries on that key metric
about integrating India with the early 1980s when India had to go to late 1990s. There was exasperation 2012-13, we had a crisis which led to protectionist. We are forgetting some economic growth on the back of economic freedom.
X
MUMBAI
THE HEALTHY COMPETITION OF

AN OPEN MARKET
Strong political will and decisive administrative action will help the country build a future-ready, resilient and competitive healthcare industry in India
Kiran Mazumdar-Shaw
I
ndia’s healthcare standards have signifi-
cantly improved over the past decades.
Life expectancy has doubled from 35
years in 1950 to 70 years today. Most
infectious diseases have been brought
under control. Many key indicators of rural
healthcare have also improved: infant mortal-
ity rate has reduced from 161 per thousand in
1960 to less than 30 per thousand today.
A direct outcome of the 1991 economic
reforms was the huge improvement in India’s
healthcare space. Liberalization moved the
economy from a closed market characterized
by extensive regulation, protectionism and
public ownership towards an open market-
based system that relied on fair competition
with the private sector playing a greater role.
The entry of private sector players led to huge
improvements in the accessibility and quality
of healthcare across the country. Today, the
private sector provides almost 80% of outpa-
tient and 60% of inpatient care. It led to the
relaxation of foreign investment curbs in the
hospital sector, medical devices and pharma-
ceuticals manufacturing and insurance.
Economic liberalization thus brought a sea
change in the Indian pharma industry. Expo-
nential investments were made by leading
Indian pharma companies in order to become
global players through a combination of rapid
indigenous expansion and overseas collabora-
+ tions. India became a biotechnology and
pharmaceuticals hot spot and a hub for manu-
facturing small molecule generics, vaccines,
insulins and other biologic therapies.
Today, India’s vaccine industry led by the
Serum Institute of India, Bharat Biotech, Bio-
logical E and others accounts for 50% of the
global vaccine capacity. By 2006, Shantha Bio-
technics and Bharat Biotech had disrupted the
monopoly of multi-
national corpora-
The entry of private sector tions for Hepatitis B
players led to improvements in vaccines not only in
India but through-
the accessibility and quality of out the developing The economic reforms agenda for the healthcare sector will remain unfulfilled till India is able to truly achieve universal health coverage.
healthcare across the country world with the help Art: Welcome to the Loot, by Manish Sharma, fibreglass and 24ct gold leaf COURTESY: MANISH SHARMA/GALLERY VEDA
of the World Health
Organization. Like-
wise, Biocon and Wockhardt have broken the led to the 2018 roll-out of the Ayushman Bha- research centres have led the way in the devel- based on jobs and investment; and subsidies applicants to pursue after completing their
insulin stronghold that Novo Nordisk, Eli Lilly rat programme. opment of vaccines, anti-virals, diagnostic kits for improvements in quality infrastructure. MBBS. This is a very important reform as
and Sanofi had enjoyed for decades. Biocon Universal healthcare coverage by 2030 is a and novel therapies for covid-19. The covid-19 crisis has made it evident that there is currently an 80% shortage of medical
has not only been instrumental in increasing pivotal commitment for India, as it will be crit- The government needs to increase funding India will need to invest massively in expand- specialists in government hospitals. This
affordable access for diabetics in India but ical to the achievement of all other UN Sus- to these institutes, establish new research ing its hospital infrastructure. In addition to could add at least 30,000 to 40,000 special-
serves patients the world over. tainable Development Goals. parks, support more incubators and cooperate viability gap funding to public-private part- ists in the next two years, thus helping plug
The economic reforms agenda for the The Indian healthcare industry has closely with academia and industry to lever- nerships for hospitals in tier-II and III cities, the deficit in medical personnel in public hos-
healthcare sector will remain unfulfilled till expressed its willingness to partner with the age the latent R&D financing for both pitals. The hunt for effective treatments and
India is able to truly achieve universal health government. The government, on its part, prowess in the capital expenditure vaccines for covid-19 has also demonstrated
coverage. Public spending on health has been needs to invest much more if it wants to attain country. The lack of healthcare reforms as well as operating the importance of having a strong clinical
stuck at around 1% of GDP for close to 15 years, the target of healthcare spending reaching India must also has led to the squandering expenditure should trials industry. Re-establishing India as a clini-
much below the average of 3.6% in BRICS 2.5% of GDP by 2025 from about 1% currently. make itself very be considered. cal trials hub can generate a million potential
countries. Low public health expenditure has To come up with advanced healthcare competitive in the of much of the gains from In addition to clinical research associate jobs and boost the
meant 63% of total spending on health in India products and technologies, India needs to manufacturing of earlier economic reforms building and healthcare industry as a whole.
is out-of-pocket, one of the highest globally. invest in creating world-class research institu- pharmaceuticals, improving hard Strong political will and decisive adminis-
The lack of healthcare reforms has led to the tions and infrastructure, high-end technical medical devices infrastructure such trative action will help India build a future-
squandering of much of the gains from eco- skills, and incentivize higher private invest- and other healthcare products because we as hospitals and medical equipment, there ready, resilient healthcare industry in India. A
nomic reforms among the poor. ments in research and development. already have the necessary skills and capabili- needs to be a focus on soft infrastructure. We reprogramming of national economic priori-
India set the ball rolling on universal health Despite a historically low public expendi- ties. Considering that this is a highly capital- need more doctors, both general practitioners ties will ensure that the task started 30 years
coverage with the approval of the National ture on research and development at just intensive sector, there is a need to provide and specialists. ago finally reaches fruition.
Health Policy 2017. The emphasis of a national under 1% of GDP, India is home to a large incentives for investment in greenfield and The Indian government recently approved
policy on preventive and promotive health- number of scientists and more than 100 brownfield projects and pharma parks; fast- the introduction of two-year postgraduate Kiran Mazumdar-Shaw is executive chair-
care with universal and affordable access has research centres. These scientists and tracking of clearances for pharma projects diploma courses in eight broad specialties for person of Biocon.
‘Last 15 years have been a huge learning curve for financial sector’
Sruthijith K.K. & Aresh Shirali others. It was so tight. Lending rates early 2000s, as lending was to the learn. If you look at the top 10-20 when the EMI became manageable,
feedback@livemint.com were 18-20%. Cut to 2000, you had manufacturing industry. In eight companies in any country, they will people took loans to buy a motorcy-
uncompetitive industry. Banks were years you could get your money churn. All this means your ability to cle, a car, a home. Has the retail bor-
H
e’s a veteran banker who led struggling. Some of us bet on the back. In the 2000s, when infrastruc- identify the winners and losers is rower gone over the brink? I don’t
ICICI Bank’s rise, building it retail engine. A helping hand came ture funding started, the tenure under continuous strain. So the think so. If you are over the brink,
up from an institutional len- from the Reserve Bank of India (RBI) requirement became 12-15 years. answer is that you keep learning. the covid challenge would have
der into one of India’s biggest corpo- through the first restructuring (of Banks were not in a position to How have attitudes towards thrown up more small retail borrow-
rate banks after liberalization in bad loans). This was not enough. address this. The last 15 years have credit changed? ers unable to repay. Behaviour has
1991. In a career spanning five dec- Interest rates were high which was been a huge learning curve for the There has been a sea change. Up changed but remained within
ades, K.V. Kamath has also headed killing industry. RBI and the finance financial sector. They had to learn to 2008-09, corporate India’s posi- bounds of prudence.
the New Development Bank of ministry brought the 10-year bond technology-driven banking, retail tion was “it’s the bank’s duty to lend. What are the most urgent
BRICS countries. He explains how to 5.5% from 11%. Suddenly funding lending. I will repay, and if I can’t, the banks reforms required next?
the banking sector evolved since the costs for a home loan went from 14% Public and private banks often will give me a hand”. Today the situ- We need to look at making the
1991 reforms began. to 7%, car loans from 18% to 9%, make poor decisions. How do we ation is different. Surprisingly this foundation of our banks sufficiently
motorcycle loans from 24% to 12%. avoid this? has happened during covid times. strong for a $5-trillion economy. We
How did the liberalization proc- Customers were able to afford the Credit risk was a learning curve. Corporate balance sheets have need to build scale and size in the
ess transform banking? low interest rates. K.V. Kamath, former chief, New Development Bank of BRICS nations. REUTERS We did not expect negative things. become healthier. The first thing a financial system. There has to be
We had a problem in access to How did lending to industry We worked in good faith. When I corporate wants to do is repay debt. dialogue between banks, capital
capital in the mid-1990s. When I change after 1991? short-dated money to lend long- of the decade. But in 2010-2020 sev- say, we, it is the collective banking On the retail side, typically, Indian market, insurance companies and
took over as CEO (of ICICI Bank in As scale of operations became big- term, started shrinking. Commer- eral issues slowed banks. The major sector. Given the nature of eco- borrowers were risk averse. By cul- regulators to make sure that we cre-
1996), we had to see if clients had ger, the ability of the banking sys- cial banks took the role from devel- challenge was tenure mismatch. nomic evolution in this country, ture, we are not inclined to borrow. ate institutions of a sufficient size to
surplus funds that we could lend to tem, which was primarily collecting opment banks for the first 8-10 years The tenure was manageable in the some of these things we continue to When credit became affordable, hold hands and evolve.
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MUMBAI 17
‘If you want to be a great economic power, you can’t be protectionist’
RAMESH PATHANIA/MINT
Aresh Shirali & Puja Mehra nomic, institutional and microeco- antodaya. Fairness is how you lift the was a crisis; this is also crisis, a differ- Centre to tax services. We thought
feedback@livemint.com nomic reforms in his two innings as weakest. Vajpayee introduced a ent one, but a crisis and a challeng- why not have a common tax for the
Prime Minister, and to what we now model of reforms that was not crisis- ing one. Centre and states. A bargain we can
A
n eminent economist and call cooperative federalism. The way based but consensus-based. What’s the back story of tax make with the states: they get new
technocrat, Vijay Kelkar is a he engaged with chief ministers was Does that consensus still hold or reforms done in your tenure? areas of taxation. In exchange, let’s
former finance secretary and incredible. When the NDA came to is it weakening? When Jaswant Singh asked me to harmonize the tax—a single rate
was chairman of the 13th Finance power, global and domestic interest What is weakening is the willing- work on tax reforms, we proposed called GST. Share it equally. That’s
Commission. Kelkar, who was an rates had declined sharply. ness to create consensus. To reach two ideas: Reduce overall tax rate how India would become a single
integral part of the country’s eco- State governments were bur- out, the way he reached out to coali- and eliminate tax relief and conces- market.
nomic reforms story, held key posi- dened with borrowings at high tion partners. He was very collegiate sions. They accepted our argument Because of our taxation structure,
tions in successive governments, interest rates because of fixed-inter- in running the government. He that this was the way to reduce the manufacturing and exports were
and is widely known as the architect est rate contracts. He saw the oppor- understood that if you want to be a cost of risk capital to industry. overtaxed. Naturally, people shifted
of the goods and services tax(GST). tunity to reduce the burden. The great economic power in the world, Indirect tax reform, we were to the non-tax sector. That’s why
Kelkar, the co-author of In Service of government of India did a swap of you cannot be protectionist. You lucky. Constitution makers gave services were booming and manu-
the Republic: The Art and Science of states’ high-interest-low interest have to engage with the world. He rights to tax agriculture to the states, facturing was declining. GST, we
Economic Policy, discusses the con- rates debt, and the entire fiscal cost understood the link—if you want to and industry to the Centre. They said, will remove this bias. But the
sensus-driven strategy for reforms. was taken by the central govern- Vijay Kelkar, former finance secretary and chair, 13th Finance Commission. become a great political power, you didn’t mention services. Distributive government fell. To his credit, the
Edited excerpts. ment. This was done suo moto. have to become a great economic powers came to the Centre. The ser- next FM Chidambaram announced
If you take the creation of fiscal government. The other major mac- He introduced reforms to pro- power. Without trade and invest- vices sector was expanding, so was that GST will be introduced by 2010.
What was the thrust of the Vaj- responsibility and budget manage- roeconomic move was tax reforms, mote competition, reduce cost of ment, you cannot do that. the [potential] tax base. Till then ser- It took a long time, but all countries
payee government reforms? ment (FRBM)—the idea that govern- which changed the cost of risk capi- capital and unleash the animal spir- This brutal attack on India by vices was taxed only by the central have taken a decade to implement
Vajpayee contributed to struc- ment ties its hands on fiscal (spend- tal and created conditions for the its of investors. He changed the fla- China is going to awaken us to speed government. Jaswant Singh said GST. The mistake was that it was not
tural, macroeconomic, mesoeco- ing) is unusual in any democratic investment boom. vour of distributive justice, calling it up and build a new consensus. 1991 amend the Constitution to get the simplified, as we proposed it.
EMPLOYMENT GENERATION IS
A JOB HALF DONE
The solution to the jobs problem, which has been discussed in Delhi’s policy corridors for 20 years, is a swift expansion in low-skill manufacturing
Ajai Sreevatsan force from the mid-2000s).

ajai.s@livemint.com Interestingly, many of these young men
who are stuck in unhappy short-term contract
I
n the eight years that Milan Poonia (25) has jobs have an undergraduate degree or diploma
spent on the shopfloors of the firms that (the higher education enrolment rate for
dot India’s largest automotive cluster in 18-23-year-olds shot up from 11% in 2006 to
Manesar on the south-western edge of 26% by 2016). Most are also willing to work
Delhi, his salary inched up from ₹8,500 to under “hire-and-fire” arrangements, with
₹10,200 a month (or, an annual hike of about some having been in such jobs for a decade
2.3%). When he entered the workforce in already. Yet, neither education nor greater
2012—as a trainee at the Hero Motors factory— flexibility for the employer has offered them a
he had many dreams. “Technical pasand hai. pathway to move up the salary ladder. Most
Nayi nayi machinae dekhna chahta tha (I like remain stuck at a wage that is close to mini-
the technical field. I wanted to see many new mum wage.
machines). I hoped to find passion and paisa While this is indeed a problem for those sad-
(money),” he said. dled with such jobs, it is not good for the
Now, on the cusp of the 30th anniversary of broader economy either, said Jayan Jose
India’s liberalization and in the midst of a long- Thomas, an associate professor of economics
awaited uptick in auto sales, Poonia is giving at the Indian Institute of Technology, Delhi.
up. “There is a serious demand issue.” And this is
He’s realized his polytechnic diploma can- what the Atmanirbhar Bharat scheme—which
not carry the weight of dreams. “I have worked expects domestic demand to pick up to com-
in six different companies in the last eight pensate for exports underperformance—
years. No job lasted misses. India’s poor-quality, low-wage job
more than a year. Yeh market cannot create broad-based local
Wait for work naam ki naukri hai. demand.
Since the late 1990s, very few Thekedaari hai. The solution to the jobs and wages problem,
new manufacturing jobs were
There is no life here. I which has been discussed and debated thread-
created and almost all of it was
low-wage contractual work. am heading back to bare in Delhi’s policy corridors for nearly 20
my village (in western years, is a swift expansion in low-skill manufac-
(Type of workers in organized and
unorganized manufacturing, in %)
UP) soon to try and turing. The production-linked incentive (PLI)
Directly-hired Contract Others
set up a small schemes that have been announced by the
mechanic shop. I Narendra Modi-led government is just the lat-
have no savings (after est in a long line of attempts.
23.15 21.62 the pandemic), but I’ll “We have consistently
15.59 try.” missed the boat on labour-
61.26
27.94 50.44 Thekedaari, or intensive manufacturing India may have
contract work, is a and, soon, there will be no modernized, but
2000-01 2015-16 pejorative allusion to boats left,” said Naushad For-
the traditional labour bes, co-chairman of Forbes the forms of work
Nearly 3 decades after chowk. In Poonia’s Marshall and a former presi- arrangement
liberalization, almost 90% of eyes, India may have dent of the Confederation of available to the
India's workforce is still stuck at a modernized, but the Indian Industry. If India
monthly salary less than 20,000 forms of work needs to have a real shot over vast majority
(income per month of arrangement availa- the next few decades, the remains the same
non-farm workers, in %)
ble to the vast major- mindset of many business-
32.4 <5,000 ity of young Indians men also needs to change, he
remains just the said.
34.62 5,000-9,999 same. It merely got an “Most Indian entrepreneurs think more
English term. Disillu- labour is bad. They don’t see themselves mak-
10,000-19,999
sionment and hopes ing fortunes employing lots of people. A few
21.96 20,000-39,999 of self-employment decades of rigid labour laws between the mid-
8.17 (which is how most 1960s and the early 90s created this mindset.
2.86 40,000 and up Indians still work) are Things have changed in the last 20 years, but
Source: ASI, PLFS, Azim Premji University an inevitable fallout. the mindset has not changed,” he said.
On many counts, it A large garment factory in India employs
could be said that the about 3,000-5,000 people, Forbes said, while
heady possibilities that seemed within reach a typical Bangladeshi garment factory has
when India opened up its economy in the early 20,000 people and a Chinese one has 50,000
1990s did not fully materialize. But that gap, people. “Perhaps if a few big foreign firms
between hope and reality, is perhaps the wid- come in and employ large numbers of people,
est when it comes to the job market. Over the the perception will change,” he added.
last 30 years, the bulk of the new jobs that were The gold standard for a good job—a written contract for 3 years along with benefits—is within reach for only 2% of the workforce. Among the many uncertainties that lay in
created fall into three broad buckets: construc- Art: Conditions Apply (from Triumph of Labour series) by Srinivasa Reddy N, watercolour on paper COURTESY: SRINIVASA REDDY N/APPARAO GALLERIES the days ahead for India as it slowly recovers
tion, contractual and high-skilled services. from the economic fallouts of the pandemic,
The last segment is the sole bright spot. By one thing is certain, said ICRIER’s Kapoor.
2018, over 12 million people were employed in contract work or no work. contract for three years along with benefits—is in contract jobs.” “If the growth recovery is not going to be
professional and business services—a catch-all “Globally, we stand out (among liberalized within reach for only 2% of the workforce, In the dusty villages that dot the Manesar job-rich, then we are going to have serious
term for a slew of new fields from computer economies),” said Radhicka Kapoor, an econo- Kapoor said. belt, where young auto workers stay in problems. The amount going into the PLI sub-
programming to call centre work. However, mist at the Indian Council for Research on “Because liberalization has not created that cramped row houses, there is even a term to sidies over the next few years could be as much
India has more than 400 million workers. International Economic Relations (ICRIER). many employment opportunities, the bargain- describe the helplessness. “Time kar le (Do as 1% of GDP. And this is going to some of the
Among them, the vast majority who step out- “The percentage of workers with social secu- ing power of labour has remained quite poor. some time)” is a refrain understood by most of biggest companies. Surely, we can link this
side a farm to scout for other opportunities rity benefits has actually declined.” People have to take what comes their way. the young men (and it is mostly men, since spending more explicitly with an objective like
have only two options: low-wage construction/ The gold standard for a good job—a written That’s why so many people are willing to work women began to simply fall out of the work- creating employment,” she added.
X
MUMBAI
(clockwise from top left) Stills from ‘Band Baaja

Baaraat’, ‘Pad Man’, ‘Rocket Singh’, ‘Sui Dhaaga’,
‘Guru’ and ‘Scam 1992’.
THE CHANGING FACE OF HINDI FILM

ENTREPRENEURS
From ‘Manzil’ and ‘Manthan’ to ‘Guru’ and ‘Scam 1992’, the idea of entrepreneurship in Hindi cinema has evolved with the times
Uday Bhatia into a cooperative. The 1976 film adapted the who run a struggling photo studio. time looked at business creation from a differ- boom, when everything centred around peo-
uday.b@livemint.com story of Amul and Verghese Kurien, the man With the economic reforms of the 1990s, ent lens. In Rocket Singh: Salesman of the Year ple—“your colleagues, your customers”, in
responsible for Operation Flood. Though it has Indian cinema changed as well, becoming (2009), Harpreet (Ranbir Kapoor) starts his Harpreet’s words.
L
ast year, for the first time ever, Hindi a top-tier Parallel Cinema cast and crew, Man- more aspirationally youthful, more conscious own rebel startup while still an employee of an In the decade past, it has become common to
film was comprehensively outclassed than today seems a bit too earnest and enam- of labels and brands. Rangeela (1995), with its established computer service firm. He soon see youngsters in films starting ventures of their
by streaming TV. And Scam 1992 (on oured of its selfless hero. The most remarkable many-hued exuberance and name-checking of attracts other disgruntled employees whose own. Happily, a fair number of these characters
Sony Liv), which told the story of thing is a title at the start of the opening credits: Cadbury and Amul and MTV, was the perfect talents aren’t being appreciated. Jaideep are women. Sonali Cable (2014) had Rhea Chak-
Harshad Mehta in granular detail, was “500,000 farmers of Gujarat present”. Half a post-liberalization film. Entrepreneurs, how- Sahni’s witty script skewers the mercilessness raborty running a small business supplying
the breakthrough series. It followed his rise million cooperative members donated ₹2 each, ever, were still in short supply—the anxieties of of modern corporates, while also remaining cable TV to her Mumbai neighbourhood. In Dil
from a lowly stockbroker to a messiah who con- making this the first crowd-funded film in the modern workplace figured instead in sto- clear-eyed about the many obstacles a heart- Dhadakhne Do (2015), Priyanka Chopra runs a
trolled the fate of the market, painting Mehta as India. ries about salaried employees trying to work on-sleeve venture like Harpreet’s would have successful travel portal. And in Piku (2015), both
simultaneously arrogant and ambitious, irre- In Yash Chopra’s Trishul (1978), Amitabh their way up the ladder, like Shah Rukh Khan to overcome to even compete. Deepika Padukone and Irrfan Khan run their
pressible and charismatic, leaping from risk to Bachchan grows a construction business from in Yes Boss (1997). No longer was corporate suc- One year later, in Maneesh Sharma’s Band own businesses: a design firm and a taxi service.
risk without a care for failure. It was the most scratch, though only to take revenge on cess anathema for Hindi film. Baaja Baaraat, two youngsters not yet out of Social entrepreneurship has continued to be
compelling portrait yet of an entrepreneur on wealthy magnate Sanjeev Kumar, whose ille- With the IT boom of the 2000s and the sub- college, Bittu (Ranveer Singh) and Shruti a popular trope—the scientist protagonists of
Indian screens. gitimate son he is. What with Bachchan beating sequent startup explosion, the entrepreneur (Anushka Sharma), start a wedding planning Swades (2004) and 3 Idiots (2009) opt to use
In the black-and-white era, as well as the first up goons single-handedly, it’s difficult to see finally started making regular appearances in venture in Delhi. They undercut their rivals not their talents to give back to society. Today, the
two decades of colour cinema in India, film his character as an entrepreneur. The film isn’t our cinema. Mani Ratnam’s Guru (2007), a by compromising on quality but by figuring out mantle has been taken up by Akshay Kumar in
characters with an concerned with the ins and outs of doing busi- barely disguised what their clients films like Pad Man (2018); even his space pro-
entrepreneurial ness—unlike Basu Chatterjee’s Manzil, which portrait of Dhirub- want and can afford. gramme film, Mission Mangal (2019), has a
Reflecting how hard it was for spirit were rare. arrived a year later. It starred Bachchan as a hai A m b a n i , In the decade past, it’s become Though Shruti tells rebel startup feel to it. Kumar’s films have nota-
youth to strike out, in the black- There were practi- very different kind of striver, a man of limited adapted the greed- common to see youngsters in Bittu that he bly dovetailed with the BJP government’s
and-white era, scripts rarely had cal reasons for this.
In the post-inde-
means, just about middle class but with ambi-
tions of the high life.
is-good ethos of
Gordon Gekko in films starting ventures. Business
shouldn’t expect
them to be more
schemes, as did the make-in-India story Sui
Dhaga (2018), in which Anushka Sharma and
entrepreneur protagonists pendence years, it After a few failed ventures, Ajay (Bachchan) Wall Street (1987) in is no longer a dirty word. than friends, attrac- Varun Dhawan start a small-scale clothing
was difficult for starts selling scientific precision instruments, an Indian context tion builds between business.
young people to buying them cheap with the help of a wily (and sentimental- the two and threat- In 2015, TVF produced a five-episode series
strike out on their own. When the hero in a dealer who represents the old ways of doing ized it). The film starred Abhishek Bachchan as ens to ruin their growing business. called Pitchers, about four friends who quit
1950s or 60s film ran a business—or ran from it, business. Ajay’s eternal optimism is that of an a young man with limited means and educa- Rocket Singh and Band Baaja Baarat are cut their jobs to found a startup. None of the actors
like Shammi Kapoor in Kashmir Ki Kali entrepreneurial spirit; “Let me strike once,” he tional qualifications but boundless ambition. from the same cloth—and not just because both was famous, the production was a bare-bones
(1964)—it was usually family-owned. Business tells his friend, “after that I’ll be rolling in He starts dealing in polyester, then manufac- are produced by Yash Raj Films. The startup one, but the show became a massive viral hit.
wasn’t seen as a very reputable line to go into. money.” He has some success, but then the turing it. Soon, through a mixture of smarts, frenzy had kicked off by this time, and the films This success would have been unthinkable a
Businessmen were staple villains in Hindi cin- equipment quality deteriorates and Ajay is ruthlessness and manipulation, he establishes capture that early excitement and desire to decade earlier. It showed how quickly and thor-
ema for over half a century, in a variety of ava- taken to court. His lawyer lays into the new cor- an empire. Guru isn’t a particularly effective rewrite the rules of the game. Both films argue oughly the language of the entrepreneur had
tars: the lascivious seth, the bandgala-wearing porate ethos, calling it a “conspiracy to keep film—Bachchan Jr can’t fill the screen the way success will come from going small, local, per- seeped into the public consciousness via film
businessman with a double life, the cigar- monopoly going”. This sort of pessimism would the role needs him to, and Ratnam is never as sonal. The protagonists in both films start off in and TV.
smoking smuggler, the corrupt builder or con- run through 1980s Hindi cinema, with busi- fluent in Hindi cinema as he is in Tamil. But the traditional corporate setups but find them soul- Today, we encounter countless popups and
tractor. nessmen as villains. Even the comedies were Indian reverence for success at all costs, what- less and inattentive to the consumers’ needs. In startups and small businesses as part of our
One of the first full-fledged entrepreneurs, about the corruption and reach of Big Busi- ever the moral compunctions, spoke to the both films, it’s the softer emotions that get them daily lives, which is reflected in the cinema we
albeit a social entrepreneur, was seen in Shyam ness—the crooked contractor Tarneja in Jaane times. into trouble—Harpreet’s moral compass, Bittu consume. Business is no longer a dirty word.
Benegal’s Manthan, starring Girish Karnad as Bhi Do Yaaro (1983) ultimately escapes the If Guru was an ode to the ruthless capitalist as and Shruti’s feelings for each other. The films And entrepreneurship, in films as in life, is no
the official trying to organize farmers in Gujarat investigation of protagonists Vinod and Sudhir, hero, two other films released around the same are a reminder of the heady days of the startup longer a pipe dream.
X
MUMBAI 19
TOP ST RIES
Jio Q3 revenue expected Sebi fines HDFC
Bank for invoking
to rise as Arpu improves pledged securities
Gopika Gopakumar
gopika.g@livemint.com
MUMBAI
Revenue from digital services, however, is yet to catch up with Jio’s telecom business
T
he Securities and
Good Host is a student Exchange Board of India
housing provider, with around Ishita Guha (Sebi) has imposed a fine
18,000 beds across Bengaluru, ishita.g@livemint.com of ₹1 crore on HDFC Bank for
Manipal and Jaipur. NEW DELHI invoking securities pledged by
BRH Wealth Kreators in viola-
R
Warburg eliance Jio Infocomm
Ltd’s revenue is expected ECB leaves
key interest
tion of the regulator’s interim
orders.
to rise in the December The markets regulator in an
Pincus to quarter driven by
improvements in key
rates
unchanged
even as
order issued on Thursday said
that the bank had extended loan Sebi has imposed a fine of
buy HDFC’s metrics such as average revenue per

user (Arpu) and the addition of high-
coronavirus
jitters grow
bit.ly/3o43kt8
facility of ₹87.75 crore against
shares to BRH and BRH Com-
₹1 cr on HDFC Bank. REUTERS
paying customers to JioFibre, the modities. However, it invoked ing the requisite notice of five
Good Host company’s fixed-line broadband
services.
securities pledged to the extent
of ₹158.68 crore without giving
days to the clients of BRH, thus
depriving them of a fair oppor-
However, the revenue of its par- any notice to the clients. tunity to claim back their securi-
Spaces stake ent Jio Platforms Ltd is yet to be on
par with the telecom segment as
The invocation of pledged
client securities was not in con-
ties.
However, the bank in its reply
businesses of various digital services formity with the directions con- to Sebi last year maintained that
Madhurima Nandy are still developing. Additionally, tained in the interim order it is entitled in law to appropri-
madhurima.n@livemint.com capital raised from global investors issued on 7 October 2019, the ate proceeds from sale of securi-
BENGALURU in 2020 is set to be utilized in the regulator said. Sebi has, there- ties for any outstanding of the
next few quarters, analysts said. fore, asked HDFC Bank to borrowers concerned, whether
A
Warburg Pincus affili- Jio Platforms Ltd, which houses deposit an equivalent amount of the securities were provided for
ate is set to buy mort- the telecom business and a slew of ₹158.68 crore along with inter- that specific facility or not.
gage financier HDFC other digital services such as Jio Platforms raised ₹1.52 trillion in 2020 from 13 global investors, and is yet to fully utilize these investments. MINT est from 14 October 2019 till “The bank humbly submits
Ltd’s stake in Goldman Sachs healthcare, payments, gaming, date at the rate of 7% per annum, that its actions are in accord-
Group Inc.-backed student cloud, over-the-top (OTT) content quarter to ₹19,300 crore in the 2019. However, Axis Capital said, “Net in a separate interest bearing ance with law … and thus, it
housing startup Good Host and music, raised ₹1.52 trillion in December quarter. The telecom Axis Capital said Jio’s revenue will subscriber addition will be muted, escrow account, till the settle- would not be correct to state
Spaces Pvt. Ltd, said a person 2020 from 13 global investors, arm is expected to clock a 3.7% grow in October-December as based on the October 2020 data ment of clients’ securities is rec- that the same are not in con-
familiar with the develop- including Facebook, Google, Silver growth sequentially and a 29.8% rise India’s largest telecom operator by released by Trai (Telecom Regula- onciled. formity with (the Interim order),
ment, requesting anonymity. Lake, Vista Equity Partners, Gen- in revenue to ₹18,130 crore from a market share is expected to add 6 tory Authority of India)”. The churn The interim order against whether for the reasons cited in
In a regulatory filing on eral Atlantic, KKR, ADIA, Muba- year ago, according to brokerage million subscribers and its Arpu rate, which heightened because of BRH banned the broker from your letter or otherwise. The
Wednesday, HDFC said it has dala, TPG, L Catterton, restrictions to contain the buying or selling any shares bank’s act of invoking the secu-
entered into a share purchase Public Investment Fund of PERFORMANCE METRICS spread of coronavirus start- from the market and also the rities provided under the over-
agreement to sell its 24.48% Saudi Arabia, Intel Capital, ing March, is expected to bank from selling off the draft/loan against securities
stake in Good Host for ₹232.81 and Qualcomm. THE revenue of Jio ARPU is expected to THE addition of ANALYSTS said the remain elevated. pledged shares. Following this facility for amounts higher than
crore. HDFC, however, did not Revenue from digital ser- Platforms is likely to
grow 4.3% q-o-q to
rise on the back of
annual recharges by
higher-paying protests by farmers
customers to JioFibre will have an impact
Analysts said the ongoing order, HDFC Bank had recalled the outstanding under the said
disclose the name of the buyer. vices will depend on how ₹19,300 crore in the residual subscribers may also support on Jio’s subscriber protests by farmers in the credit facilities from the bor- facility is in accordance with its
The stake sale is expected to be fast the products of Jio Plat- December quarter at higher tariffs Arpu growth. addition in Q3 national capital region will rowers as it had been called right of general lien as afforded
completed within four months forms are developed with have an impact on Jio’s sub- upon to honour the bank guar- under Section 171 of the Con-
once mandatory approvals are the investments made last scriber addition in Q3. “We antees it had issued for tract Act, 1872, which right is
received, HDFC said. year. “The gap between Jio Info- firm Axis Capital. should improve by 2% to ₹148 from expect net additions for Jio to exchange margin require- expressly reserved in the rele-
Goldman Sachs continues comm and Jio Platforms revenues Analysts expect that the Arpu of ₹145 a quarter ago. The addition of remain relatively modest at 7 million ments. The Sebi order said that vant loan documents executed
to be the majority shareholder would show how digital revenues the telecom business in the third higher-paying customers to JioFi- (versus 7.3 million in Q2). Farmers’ HDFC Bank did not conduct with BRH and BRH Commodi-
with a 75% stake in Good Host are trending,” BofA Securities said quarter will rise on the back of bre, which introduced cheaper protests in states like Punjab and adequate due diligence at the ties, respectively, as stated in
Spaces. “Warburg Pincus is in a report. annual recharges by residual sub- plans last year to cash in on the surge Haryana had an impact, in our time of creation of pledge and our letter dated November 7,
+ buying HDFC’s stake and will The revenue of Jio Platforms is scribers at higher tariffs for the first in covid-led internet demand, may view,” BofA Securities said in a that the bank also invoked the 2019,” the bank had said in a 14
also put in additional growth likely to grow 4.3% quarter-on- time since the hike in December also support Arpu growth. report. pledge of securities without giv- February letter to Sebi.
capital going forward. The stu-
dent living business is a capi-
tal-extensive business and
Good Host has a significant
expansion pipeline. The capi-
tal will help in developing the
pipeline,” said the person cited
above.
Riskier customers drive fintech defaults Mihir Dalal’s book on Flipkart
HDFC had acquired its stake
in Good Host in August, 2018
for around ₹69.5 crore. After
Shayan Ghosh
shayan.g@livemint.com
wins Gaja Capital’s book prize at 373,000 in January, it gradu-
ally rose to 947,000 in June,
the stake sale, Good Host will MUMBAI and was at over 1 million in July,
cease to be an associate com- before declining to 938,000 in Team Lounge and Exchange Board of India.
D
pany of HDFC. Spokespersons elinquent accounts for August 2020. feedback@livemint.com The jury praised the broader
from Warburg Pincus, Gold- India’s fintech lenders “Fintechs reduced new loan NEW DELHI ambitions of Dalal’s work
man Sachs and Good Host nearly doubled between originations and sourcing of beyond simply profiling the
M
Space declined to comment. August 2019 and August 2020 customers drastically just after int journalist Mihir fortunes of one company.
Good Host, one of the larg- as they disbursed loans to high- the pandemic hit, resulting in Dalal won the Gaja “Through this incisive and
est providers of student hous- risk customers, said a joint fewer fresh accounts. This, Capital Business Book deeply researched book, Mihir
ing with around 18,000 beds report by credit bureau Tran- coupled with higher run-offs Prize 2020 for his debut book, Dalal aims to answer the critical
across Bengaluru, Manipal and sUnion Cibil and the Digital due to short-tenure loans, led Big Billion Startup: The Untold question: What will the inter-
Jaipur, provides hostel servi- Lenders Association of India to a drop in the number of Flipkart Story. net economy in India look
ces, guest houses, service (DLAI). accounts in the standard (zero He was chosen from a short- like?” they said in their citation.
apartments and leasing of After the onset of the pan- day overdue) bucket.” list of six books, including The book was chosen from a “The Flipkart story reminds us
property for hostels, and has demic, fintech lenders saw a As the pandemic left millions jobless and impacted cash flows, The report added that with works by Sunil Munjal, Rahul short list of six books. that Indian entrepreneurs will
reported a turnover of ₹112.6 surge in delinquencies to 43%, borrowers struggled to repay existing loans. MINT fewer accounts in lower delin- Chandra, Tamal Bandyopad- forge their own independent
crore in 2019-20. Last year, it compared to 5% for private quency buckets, collection hyay, T.N. Hari, M.S. Subrama- Book Prize was instituted in paths of innovation, serving a
had acquired the land and hos- banks by August 2020-end. acquire personal loans,” the and build analytics-driven teams had fewer accounts to nian and Katherine Eban. 2019 to encourage Indian writ- diverse and very demanding
tel facilities of O.P. Jindal The report takes into account report said. models which will help them manage. “At the same time, the Established by the equity ers, journalists and entrepre- Indian consumer.”
Global University (JGU) in any loan where repayments As the pandemic left millions collect profitably,” said Anurag consumer cash crunch caused firm Gaja Capital last year, the neurs to tell our stories and tell Mihir Dalal is an editor with
Sonepat, Haryana, at an enter- were overdue even for a day. In jobless and impacted cash- Jain, president, DLAI, and older accounts to roll forward Gaja Business Book Prize seeks them well,” he added. Mint, where he has covered
prise value of ₹ 900 crore. August 2019, 22% of fintech flows, borrowers struggled to founder and executive director to higher delinquency buckets, to recognize business writing. The jury for the second edi- internet businesses for more
In 2018, an affiliate of War- loan accounts were delinquent. repay existing loans. Lenders of KredX. driving a rise in 90+ DPD buck- With prize money of ₹15 lakh tion featured leaders from the than five years. He has worked
burg Pincus partnered with “Compared to peer mem- with large concentrations of According to the report, the ets and impacting collections for the winner, it is the biggest world of industry, investments, at Reuters and CNBC TV18 pre-
mid-budget hotel chain bers, the huge volumes sourced borrowers with low credit rise in delinquent accounts efficiency.” business book prize in the academia, public policy, and viously. A leading production
Lemon Tree Hotels to create a by fintechs were largely small- scores were badly hit. (post-February 2020) is due to Analysts said auto-debit country. governance, with Manish Sab- house is adapting the book into
co-living platform. It was the ticket loans and from riskier “With the onset of the pan- accounts flowing to a higher bounce data is a key indicator of Announcing the 2020 win- harwal, chairman of Team- a web series.
investor’s first bet in the co-liv- segments. Banks have gener- demic and the increase in peo- delinquency bucket each distress among borrowers of ner virtually, Gopal Jain, Lease, acting as the chairman of Last year the inaugural Gaja
ing space in India, and the joint ally been lending to consumers ple migrating to their home- month — bloating the 90-plus fintech and other non-bank co-founder and managing part- the jury. Others in the jury Capital Business Book Prize
venture was expected to invest in prime and above-risk tiers, towns, collections have days past due (DPD) bucket. lenders. Last August, 40.3% of ner of Gaja Capital, spoke of the included Imran Jafar, manag- was awarded to writers Girish
₹3,000 crore to build shared, and those with a relatively sta- become a stressful and chal- For instance, while the number all auto-debit transactions had need to chronicle India’s ing partner and co-founder of Kuber and Vikrant Pande for
rental housing for both young ble flow of income, and leverag- lenging activity. Fintechs need of live accounts in the over failed, owing to insufficient growth story for the world. Gaja Capital, and U.K. Sinha, a their book Tatas: How A Family
professionals and students. ing their liability base to to increase focus on collections 90-day overdue bracket stood funds in borrowers’ accounts. “The Gaja Capital Business former chairman of Securities Built A Business And A Nation.
JSPL swings into black, posts

m MINT SHORTS funds will be used to improve the app’s personalization and rec-
ommendation engine and predictive analytics capabilities; dou-
ble headcount and set up a training platform. The company had
raised close to ₹6 crore through three angel rounds in 2020.
SC notice to Centre, others on
plea against series ‘Mirzapur’ ₹2,432-cr net profit in Q3FY21
New Delhi: Steelmaker Jindal BLOOMBERG
Iraq cuts crude oil supplies for ABHIJIT AHASKAR Steel and Power Ltd (JSPL) on
Read more on livemint.com Thursday posted a consolidated
most Indian refiners in 2021 net profit of ₹2,432.20 crore for
BLOOMBERG New Delhi: Iraq has reduced annual the quarter ended December
supplies of Basra crude oil to several Asian Paints December quarter 2020, mainly on account of
Indian refiners by up to 20% for 2021, increased income. The com-
persons in the industry said, in a rare
profit jumps 62% to ₹1,265 crore pany had recorded a net loss of
move by Opec’s second-largest pro- New Delhi: Asian Paints Ltd on Thursday reported a 62.28% ₹257.36 crore during the same
ducer. Iraq was the top oil supplier to jump in its consolidated profit to ₹1,265.35 crore for the third quarter a year ago, JSPL said in
India in 2020. Iraq’s Oil Marketing quarter ended 31 December 2020. The company had posted a a BSE filing. PTI
Company (SOMO) has reduced the profit of ₹779.71 crore during the same period of previous fiscal.
2021 Basra term volumes to several Revenue from operations for October-December quarter stood
Indian refiners by between 10% and at ₹6,886.39 crore, up 25.43%, as against ₹5,490.11 crore reported Westlife Development reports
20%, the persons said. in the same period of 2019-20 fiscal, the company said in a regula- New Delhi: The Supreme Court Thursday sought
REUTERS
tory filing. Amit Syngle, managing director and chief executive responses from the Centre, Amazon Prime Video and Excel
64% drop in third quarter profit
MINT officer of Asian Paints said Entertainment Pvt Ltd on a plea which has alleged that web New Delhi: Westlife Development Ltd, which owns Hardcastle
Short video app Bolo Indya to demand conditions contin- series Mirzapur has “completely tarnished” the historical Restaurants Pvt. Ltd, the master franchisee of McDonald’s res-
ued strong recovery across and cultural image of the place by showing it as a “city of taurants in West and South India, on Thursday reported a 64%
raise up to ₹51 crore by March business segments, and inter- goons”. A bench headed by Chief Justice S.A. Bobde issued drop in third quarter net profit at ₹8.19 crore. Total consolidated
New Delhi: Homegrown short video app Bolo Indya is in national business recorded notices on the plea which alleged that showing “shameless revenue for the quarter declined 24.9% at ₹325 crore, the com-
advanced talks with investors to raise $6 million-$7 million (₹45 double-digit volume growth, things” in the name of Mirzapur is an insult to the rich cul- pany that runs 304 McDonald’s outlets in parts of India said in
crore-₹51 crore), chief executive officer Varun Saxena said, add- strongly led by good growth ture of the city. REUTERS statement on Thursday. SUNEERA TANDON
ing the company hopes to finalize the deal by March 2021. The in Asia and West Asia. PTI Read more on livemint.com
X
MUMBAI
V EWS
OUR VIEW MY VIEW | TECH WHISPERS
REUTERS
Donald Trump’s exile and the

power of social media platforms
Tech companies can mete out a punishment that many might consider almost as severe as death
traditional fashion—speeches, state- tions. The platform company’s defini-

ments, videos—but they didn’t get far. tion of the internet as open was good as
This radical move by tech compa- long as it served them, but the moment
nies—to remove the president of their they became profit machines, their
own country from their platforms—has incentives were aligned elsewhere, with
had an expectedly vociferous response. users becoming ‘the product’. Their
His critics applauded the move. But reputation for neutrality took a hit after
many of them have also been horrified. they started the algorithmic manipula-
German chancellor Angela Merkel, var- tion of users to maximize engagement
JASPREET BINDRA ious French ministers, and the Mexican and profits, and stifle innovation. They
is the author of ‘The Tech Whisperer’, and President criticized the move. On Twit- extolled freedom of speech and the US
founder of Digital Matters ter, Russian dissident Aleksei Navalny First Amendment, projected them-
wrote: “This precedent will be exploited selves as pure ‘platforms’ with no edito-
by the enemies of freedom of speech rial control, and thus escaped responsi-
Reforms in this social

around the world. Every time when bility. In de-platforming the president,
they need to silence someone, they will they have clearly acted as publishers.
S
ince ancient times, to be exiled has say: ‘This is just common practice, even At the same time, these companies
been considered as definitive as Trump got blocked on Twitter.’” have the right to do what they did.
capital punishment. Under Roman The ones that have been universally “They can do whatever they want,” said
media era of post-truth law, in fact, voluntary exile was offered

to a prisoner as an alternative to death;
the word itself is derived from the Latin
‘solum’ or soil, and to be exiled was to be
criticized for this action are the plat-
forms themselves—not as much for
making the move, but either for doing it
too late or only when it served their
Kara Swisher, a tech journalist. “They’re
private businesses. Very similar to a res-
taurant where someone comes in and
rants and starts to threaten violence and
taken away from one’s soil or land. Srin- interests. As long as he was president, things like that... they get kicked out.”
ivasa Ramanujan, the Indian mathemat- who not only held political power but The real issue is not that these plat-
India’s shift from a mixed to a market economy was an idea whose time came 30 years ago, ics genius, agonized over going to Cam- was responsible for billions in advertis- forms are self-serving, but that they are
bridge since crossing the oceans would ing revenue, they pussyfooted around monopolies. Bigger, and less noticed
but the falsehoods that fill echo chambers online have got in the way of progress. Let’s fix this exile him from his community. Napo- his offensive and inflammatory state- was the move by AWS, Shopify and
leon Bonaparte and Bahadur Shah Zafar ments. Once he became a lame-duck Twilio to take out Parler, a Twitter alter-
both died in exile and ignominy, with president, they took him off, no doubt native and a prominent gathering place
the latter pleading for a measly six feet provoked by the storming of the Capitol of Trump supporters. If you are off
B
ack in the day, or on 24 July 1991 to within rarefied circles of policy wonks, though, of his homeland for burial. by the frenzied mob he used their plat- AWS, Azure and Google Cloud, you
be precise, there was no social which insulated them from a trend that has President Donald J. Trump would forms to instigate. cannot have a website; if Amazon and
have perhaps realized the true meaning The move is riddled with contradic- Shopify ban you, you cannot sell much;
media to capture, discuss and for- defined this period: the emergence of ‘post- of the word in the dying days of his pres- if Twitter, Facebook and YouTube
ward memes of the raptures that truth’ as a force. Picked by Oxford Dictionaries idency, as he was subjected to the mod- de-platform you, you lose your voice.
BSE’s Jeejeebhoy Towers was sent as its ‘word of the year’ for 2016, this adjective ern version of exile—de-platforming. Among the various firsts that he has
into by the budget speech of then “denoting circumstances in which objective Trump might have lived in the White QUICK READ racked up, Trump is the first president
finance minister Manmohan Singh. India had facts are less influential in shaping public House, but he existed on Twitter, You- to be impeached twice. But as New York
Tube and Facebook, his true homes. It Social media firms that have long Times’ Kevin Roose writes, “A successful
opened up its economy to foreign capital and opinion than appeals to emotion and personal was the systematic use of these plat- claimed they’re neutral platforms impeachment [with a conviction] would
domestic competition, and his audibility on TV belief” is apt for an era in which lies and dema- forms that made him president, and it without editorial control have be an embarrassing end to Mr. Trump’s
screens was soon drowned in roars of euphoria goguery can go viral and attain an almost hyp- was these platforms that sustained him. shown that they do indeed political career. But losing his huge
under that stock market’s canopy. The most notic sway over our online multitudes. While Twitter was his megaphone, the tweets intervene, most spectacularly in online following would deprive him of
+ resonant part of the speech had already been the ravages of a real-world virus could yet he sent equalled to executive orders, the case of Donald Trump. cultural influence long into the future.”
and YouTube and Twitter were where In this connected world, if your
voiced: “As Victor Hugo once said, ‘No power revive demand for scientific truth on social his conspiracy groups flourished. In one Expulsion from platforms that country deports you, there are many
on earth can stop an idea whose time has come’ media platforms, post-truth chatter has begun fell swoop, all of them were taken away keep people in touch with their other places you could live and stay in
... the emergence of India as a major economic to take a toll on reform efforts farther afield. as Twitter banned him permanently friends, family, culture, etc, is the touch with your friends, culture and
power in the world happens to be one such Farmer protests have forced the government and the others indefinitely. Since then, equivalent of exile, which has ethos. If tech companies de-platform
idea. Let the whole world hear it loud and to suspend a policy of lifting restrictions to let Trump seems to have gone silent. He historically been seen as a fate you, you might as well not exist, which
has tried to send out a few missives in a akin to capital punishment. is the true definition of exile.
clear. India is now wide awake. We shall pre- private investment and market mechanisms
vail.” Shorn of rhetoric, the actual idea was to play a major role in our farm sector. This resist-
move from a mixed to a market economy, a ance was stoked by echo-chamber fears on
shift prompted by a dollar crunch but urged social media of predatory corporations being
by the evident-by-then collapse of Soviet given a free rein to swindle farmers, take over
command-and-control. Business exposure to their farms, and deprive them of their liveli-
rivalry had a visible impact on various markets, hood. With economic theory not easy for all to www.livemint.com New Delhi, Mumbai, Bangalore, Kolkata, Chennai, Ahmedabad, Chandigarh*, Pune* Saturday, January 22, 2011 Vol.5 No.19 `5.00 12 PAGES
+ 20 PAGES LOUNGE + 4 MARKETS PAGES
our allocative efficiency rose, we found our- grasp, post-truth portrayals of the Centre’s Q&A: ‘India needs more world
class art institutions’ >4
SIMPLY ECONOMICS: Inflation, bonds,
stocks—what’s the link? >10
selves better off, and reforms quickly gained agrarian agenda have suffused online forums. EXCLUSIVE PARTNER
LEADING THE NEWS: Cigarette, packaged
food sales push up ITC profit >5
LAST WORD: Google co-founder Larry Page
to replace chief executive Eric Schmidt >12
Social media has taken
wide approval. Policy squabbles over welfare It has not squeezed out all space for talks, but it SENSEX 19,007.53 æ 39.01 NIFTY 5,696.50 æ 15.10 DOLLAR `45.61 Æ `0.08 EURO `61.77 Æ `0.47 GOLD `20,040 æ `230 OIL $96.82 Æ $0.4
NAC sticks to
over in America to such
‘UNDERPERFORMANCE’ QUICK EDIT
stand on food
Earnings shock at Wipro Chairman
versus market forces may have slowed further has made complex issues harder to take up. security Bill
B Y A PPU E STHOSE S URESH
appu.s@livemint.com Joint CEOs Paranjpe today, and we wish them well”,
WHO’S IN, WHO’S OUT
versus CEO
S ome people say Wipro
has seen a lot of
an extreme that to get

·························
NEW DELHI and Vaswani quit to he said.
Since the company was taking
CEOs come and go.
This newspaper believes
make way for Kurien; T.S. KURIEN
T he National Advisory the line that the exits were volun- otherwise. Wipro has had
market-orientation, but our liberalization The peculiarities of agriculture, for instance,

Council (NAC), which sets Premji says Wipro lags tary, Premji was asked if any at-  Will take over as CEO the same CEO for the past
the social agenda of the Con- tempts were made to retain  Currently chief executive of Wipro’s eco-energy division several decades, and that’s
gress-led United Progressive behind TCS, Infosys them, and whether one of them  A relative newcomer, he joined Wipro Technologies, the Azim Premji. To be sure,
Alliance government, on Fri- was considered for a single CEO firm’s global information technology arm, in 2000 his business card may say
day decided to stick to its B Y S RIDHAR K . C HARI position. He refused to answer, from GE Medical Systems, with which Wipro otherwise, but Premji is
stand on the proposed food se- sridhar.c@livemint.com calling it an unfair question. “Let the man who has called
························· has a joint venture
curity legislation, ignoring the us not split hairs here,” he said. the shots at Wipro and
BANGALORE
suggestions of a panel led by C. Wipro’s December quarter all indications are that
W
my own kids to look back
Rangarajan, head of the Prime ipro Ltd’s joint chief numbers lagged behind peers he, or someone who shares
thrust has acquitted itself well. Our software deserve to be analysed. The sector has not yet
RISHAD PREMJI
Minister’s economic advisory executive officers such as Infosys Technologies Ltd the surname, will continue
council on the Bill. (CEOs) Girish Paran- and Tata Consultancy Services  Will take over as chief strategy officer in February to do so. Indeed, across
In a separate development, jpe and Suresh Vaswani resigned Ltd (TCS), both of which  Joined Wipro in July 2007 at the sub-general many Indian companies,
NAC member Jean Dreze quit to make way for T.K. Kurien as Premji mentioned by name. To- manager level in the BFSI vertical and was later the CEO is not really
the working group on food se- CEO of Wipro’s information tal revenue across Wipro’s busi- promoted as general manager (treasury and the chief executive officer.
curity, citing exhaustion. technology (IT) business and ex- nesses was `7,829 crore in the investor relations) The chairman is. And
Dreze said in a text message he ecutive director of the company three months ended December, Wipro has had the same
remained a member of NAC. on the day it declared poor third below market consensus num- chairman for as long as this
Earlier, Dreze had criticized quarter results. bers of around `8,000 crore, an newspaper can remember,
story, for example, has clearly been one of rid itself of feudal vestiges, primary sellers
GIRISH PARANJPE, SURESH VASWANI
the suggestions made by the While Wipro chairman Azim increase of 1.6% from the pre- even as it has seen
Rangarajan panel. Prime Min- Premji acknowledged the ceding quarter. Net profit was  Both veterans with at least two decades several CEOs. Corporate
a week in their history is

ister Manmohan Singh had set “underperformance”, he refused `1,319 crore, at or just below at Wipro governance experts tell
up the panel to give its views to formally link the exit of the market estimates, a quarter-on-  Joint CEOs for three years, since the us that the best-governed
on NAC’s recommendation to CEOs with the quarterly results, quarter (q-o-q) growth of 3.36%. posts were created firms have split the posts
create a food security Act. Oth- saying the key trigger was that Operating margins remained flat of chairman and CEO.
er members of the panel are the joint CEO structure was bet- at 22.2%. They don’t tell us that this
chief economic adviser ter suited to dealing with the Wipro’s stock fell 4.5% to also entails a demarcation
Kaushik Basu and Sudha Pillai, economic slump. Given that `455.95, the most since 22 Octo- grew at 4.1% this quarter, while ALSO SEE of responsibilities, perhaps
global success, and a reason why India is fairly vastly outnumber direct buyers, and supply is
member secretary, Planning growth had returned, a “simpler, ber, according to Bloomberg profit increased by 9.3%. Wipro’s because this is sort
Commission. leaner” structure was required. data, pulling down the Bombay IT product revenue declined to >It was either both of us succeed or leave of implicit in the first
together: Paranjpe >P3
NAC, in October, recom- “It was not an easy decision to Stock Exchange benchmark in- `879 crore from `1,069 crore last recommendation. Indian
>Wipro did not call the upturn correctly:
mended that the government make,” Premji said. Vaswani and dex, the Sensex, by 0.2% to quarter. firms have been quick
a miracle, let alone

Lakshminarayana >P3
offer subsidized foodgrain to Paranjpe, who have been with 19,007.53 points. IT products constituted 11% of >Have to focus on the growth segments:
to split the post, but the
75% of the country’s popula- Wipro for 20 years, “have made The company’s IT services total revenue and IT services Kurien >P3 majority, like Wipro, hasn’t
tion—90% in rural areas and significant contributions to how revenue rose 5.6% to `5,949 >Wipro : Why the co-CEO model is difficult done so with the roles.
50% in urban areas. we have grown and where we are crore from the last quarter. TCS TURN TO PAGE 3® to pull off >P3
well poised today as we pivot to a cyberworld. seasonal while demand is inelastic. This does
Under the proposal, priority
households—46% in rural and
28% in urban areas—should
have a monthly entitlement of BIGGER ROLE IMPROVED MARGINS
35kg of foodgrain at `1 per kg
for millet, `2 per kg for wheat
and `3 per kg for rice. Reserve Bank favours subsidiary RIL profit surges on
100 years.
A PTI report quoted some
NAC members as saying they
route for foreign bank expansion strong local demand
The past half decade under the Narendra not mean that the classic market device of
had not received the panel’s
recommendations.
“There is no formal refer-
ence from the PMO (Prime B Y D INESH U NNIKRISHNAN, WIDER FOOTPRINT B Y A VEEK D ATTA change (BSE) on Friday to close
Minister’s Office) or from the J OEL R EBELLO & A NUP R OY aveek.d@livemint.com at `986.50. The Sensex, BSE’s
Rangarajan committee,” an ·························  RBI favours foreign players, including new entrants, to operate through the wholly owned ························· benchmark equity index, lost
unnamed member said, add- MUMBAI subsidiary (WoS) route MUMBAI 0.2% to end at 19,007.53 points.
ing NAC did deliberate on the
panel recommendations that S ix years after laying down the
road map for foreign banks
 Wholly owned subsidiaries will be required to maintain a minimum capital adequacy ratio of
10%, at par with new private sector banks R eliance Industries Ltd (RIL), Over the last year, RIL has
India’s largest company by underperformed the market,
Modi government has seen our lowering of price signals acting to get demand and supply
had appeared in the media. in India, the country’s central  At least 50% of directors should be Indian nationals residing in the country, and at least 50% market value, posted a 28.1% losing 6.39%, while the Sensex
should be non-executive directors. A minimum of one-third of directors should be totally
“We are not in the business bank is set to allow them a big- independent of the management of the subsidiary in India year-on-year (y-o-y) growth in has gained 11.47%.
of reacting to the Rangarajan ger role in the world’s second  Wholly owned subsidiaries could be allowed to raise rupee resources through issue of
net profit for the quarter ended RIL posted a significant im-
committee. The NAC recom- fastest growing major economy. non-equity capital instruments December, and attributed the provement in its gross refining
mendations on food security The Reserve Bank of India  Wholly owned subsidiaries could be enabled to open branches in tier III-VI centres except at a performance to strong domestic margin (GRM), or the difference
are in the public domain and (RBI) on Friday invited public few locations considered sensitive on security considerations, removing a World Trade demand and “highly competi- between the total value of pe-
we have invited suggestions on comments on a discussion pa- Organization restriction of granting only 12 branch licences every year tive assets”. troleum products sold and the
it. Let there be a debate on per that suggested almost dou-  Wholly owned subsidiaries’ priority sector commitment will go up to 40% from the existing RIL, which announced its re- price of crude. For the quarter
identifying the best way for- bling the role of foreign banks in 32% within a transition period of five years sult on Friday after market under review, RIL’s GRM
entry barriers complemented by an exit policy in sync will fail to work, only that we need a
ward,” the member said. the Indian banking system, say-  If a WoS is formed, it will come under the full purview of the central bank, and that hours, recorded a net REVENUE stood at $9 (`411 today)
could hamper foreign banks’ ability to float non-banking financial companies
STE V E N SP I E L B E RG
ing it will “incentivize” foreign profit of `5,136 crore and `62,399 cr per barrel, up from $5.9 a
 Foreign banks may not be given entry to ‘niche markets’ as they do not support
players to operate through the RBI’s financial inclusion agenda. RBI did not say what it means by ‘niche markets’ a turnover of `62,399 barrel in the correspond-
wholly owned subsidiary route crore for the quarter un- 6% ing quarter last fiscal. The
in the country. RBI has given der review. The turnover company attributed this
until 7 March for comments. bank NA, HSBC Holdings Plc conditions and thresholds man- was an increase of 6% over NET PROFIT to the efficient global
All new overseas entrants in and Standard Chartered Bank dated for subsidiary presence the year-ago period. `5,136 cr sourcing of crude and a
the Indian banking space will fall under this category. for new entrants...would opt for “Robust demand greater light-heavy crude
have to locally incorporate As an incentive to set up converting their branches into growth in home markets 28.1% differential (the differ-
for businesses, even as revisions of our taxation special safety net crafted for farmers to fall
themselves, and existing play- wholly owned subsidiaries, RBI wholly owned subsidiaries”. and highly competitive as- ence in prices of better
ers, particularly the systemically said it may allow them to raise On capital adequacy for new sets enabled Reliance to quality—or light—crude
important ones, will be encour- rupee resources in the form of players, RBI said subsidiaries of have industry leading operating and dirtier—or heavier—crude).
aged to go in for local incorpora- non-equity capital, adding that foreign banks will be treated at rates and margins,” RIL chair- High GRMs were also aided by
tion and act as subsidiaries of it will extend a “less restrictive par with new private sector man Mukesh Ambani said in a greater petrol, diesel and naph-
foreign parents, RBI said. Mint branch expansion policy” to for- banks and shall maintain a statement issued by the firm. tha cracks, or the spread be-
had reported this on 5 October. eign players by allowing them to minimum capital adequacy of Ambani also said that during tween the cost of these fuels
Systemically important banks operate in semi-urban areas. 10% of their risk-weighted as- the December quarter, petro- over the cost of crude.
are those whose assets become Noting that it may not be pos- sets. chemical and refining margins Analysts stated that the RIL
and monetary policies got a welcome impetus. back upon in case of failure. But first, let’s
0.25% of the total assets of all sible to mandate conversion of Once the policy is in place, continued to improve and “re- results were mostly in line with
commercial banks as on 31 existing players into subsidiar- RBI said it will be more liberal in corded historic levels” for cer- their expectations.
March, the central bank said. ies, RBI said “the regulatory exits branch licensing policy, but it tain products. “The results have been better
Mint is also available for R9.50 with Going by this definition, eight pectation would be that those RIL’s share price gained
Hindustan Times under a combo offer foreign banks, including Citi- foreign banks which meet the TURN TO PAGE 2® 1.73% on the Bombay Stock Ex- TURN TO PAGE 2®
Debates on the rationale of these stayed mostly accept that we can’t prevail if the truth doesn’t.
GUEST VIEW
The options we have to finance our economic revival

cycle? India is one of the world’s high saving through banks. For every ₹100 of deposits part of the assets created by banks from raise additional capital. After raising capital,
SAMEER NARANG countries, with a savings rate of about 30% of raised, banks have to invest ₹18 in govern- deposits could not service their principal banks will be in a position to start lending.
GDP. This is lower than the savings rate of ment bonds. The remaining can be lent to and interest payments. Non-performing For India’s economy to grow faster than
39.6% for Asian export-oriented economies, corporates or consumers to meet their loans as a proportion of overall advances 7% annually with inflation of 4% would imply
but higher than the global average of 27%. needs. This has not been the case this year. increased to 7.5% in September 2020 from nominal GDP growth of 11% plus. In the past
Still, India’s savings rate is not high The credit-deposit ratio of Indian banks has 2.25% in 2010-11. This is lower than the peak decade, the banking system’s deposit growth
I
ndia has been able to withstand the enough to finance its consumption and fallen from 76.4% as of March 2020 to 72.8% of 11.2% in 2017-18. Most of these non-per- has been 12.1%, which coincided with credit
impact of the covid pandemic far better investment. Thus, India runs a consistent as of December 2020. On the other hand, forming assets were with public sector banks growth of 12.7%. This was possible as the gov-
than most countries. Recent high-fre- current account deficit (1.3% of GDP over the the share of government bonds has (PSBs). Indian banks, in particular PSBs, ernment was able to rein in its fiscal deficit
quency indicators show demand is holding last 5 years), except this year, which in turn increased to 30.4% from 27.2%. have been able to clean up their books by from a high of 6.5% of GDP in 2009-10.
up and the covid curve is flattening. India is is financed by foreign savings. These come This is due to risk aversion as well as lack increasing provisions to write off these What if we were to step up our nominal
looking at a strong rebound, with gross in the form of capital flows. While foreign of investment opportunities. However, this loans. Their provision coverage ratio growth rate? During the 2000s, Indian
domestic product (GDP) likely to increase direct investment is relatively stable, foreign has not always been the case. The credit- increased to 72.4% in September 2020 from banks managed a deposit growth of 18.1%
10.5% in 2021-22. More importantly, some portfolio investment tracks the domestic deposit ratio of Indian less than 45% in 2014-15. and credit growth of 22.1%. This was possible
government initiatives, such as production- growth outlook as well as global liquidity banks had peaked at Non-performing loans as government borrowing was on the mend.
is chief economist, Bank of linked incentives (PLIs) and corporate tax conditions. 78.1% in 2011-12 from a QUICK READ are likely to increase on While the fiscal deficit is likely to narrow
Baroda reduction, have translated into a revival of Domestic savings are mostly generated by low of 53.1% in 2000-01. the back of covid. going forward, Indian firms and banks can
India’s medium-term growth prospects. Indian households (18.2% of GDP). As much This also coincided with Measures like output-linked According to the Reserve also look at foreign capital to finance domes-
Needless to say, more needs to be done. A as 63% of these savings go into physical an increase in India’s incentives and a lighter burden Bank of India’s Financial tic growth. Lower corporate taxes and
growth revival is contingent on investment assets or real estate. This leaves net financial investment rate from of corporate tax are helping the Stability Report, non-per- higher exports under the PLI scheme imply
picking up—more importantly, private savings at 7% of GDP to be invested. Most of 25.5% in 2000-01 to a Indian economy, but private forming loans are likely higher profitability and a better ability to
investment. Both household and corporate this finds its way into banks as deposits. The peak of 37.6% in 2010-11. investment needs revival. Where to increase to 13.5% of service debt. A similar model was followed
investment have been decelerating. On the remaining amount is invested in pensions, Since then, the country’s will the money come from? advances in a base-case by Asian exporters. Higher inflows that fund
other hand, government capital spending insurance and kept as currency. While the investment rate has been scenario. Recent bank corporate credit will coincide with relatively
has been stable. Kick-starting the capital corporate sector does save 10.4% of GDP, it in decline. India’s savings rate is not high results suggest this ratio benign global liquidity conditions.
expenditure cycle will require the govern- also invests and borrows from banks. Thus, Apart from finding few enough. Foreign capital can fill in is likely to increase, but But all of this will work if Indian banks
ment to step up its investment rate to crowd household savings are channelized to meet opportunities to lend, the gaps, but a scale-back of perhaps not to that level. start lending again, as was the case in the
in private investments. the needs of the corporate sector and gov- banks have also faced government borrowings would Indian banks, in particu- past. Lower government borrowings and
But who will finance the government and ernment spending. issues related to rising help by freeing up more money lar those with lower capi- surplus global liquidity will ensure that
then the private-sector capital expenditure The intermediation is largely done non-performing loans. A for banks to lend businesses. tal ratios, will have to banks have enough and more to lend.
X
MUMBAI 21
TOP ST RIES
Farmers reject
India-US trade deal may Sensex hits 50,000
Centre’s offer
to suspend before scaling back
reform laws be put on the back burner on news of fire at SII
FROM PAGE 1
FROM PAGE 1
government was rejected. A full
repeal of the three central farm Biden may instead focus on China strategy and restoring US credibility in forums continued inflows from foreign
acts and enacting legislation for portfolio investors, positive
remunerative MSP for all farm- developments on the vaccine
ers were reiterated as pending Asit Ranjan Mishra front, a broad-based economic
demands of the movement,” the asit.m@livemint.com recovery and low interest rates.
unions said in a statement. NEW DELHI Joe Biden, who took over as
On 20 January, the govern- the 46th president of the US on
P
ment extended the offer to sus- resident Joe Biden may Wednesday, is expected to
pend the laws for a limited not be too keen to imme- India to face push through a nearly $2 tril-
higher security
period to placate the unions who diately pursue the challenges in
lion US fiscal stimulus plan, a
are planning to take out a tractor India-US mini-trade deal line with rising move that may support stocks
rally in the national capital on 26 that was under negotia- stature, worldwide. From the lowest
January. The government pro- tion, choosing instead to focus on influence: point in March, the Sensex has From the lowest point in March, the
Army chief
posal came during the 10th chalking out a China strategy and bit.ly/2Y3H0VC
climbed 95.73% while the BSE Sensex has climbed 96%. BLOOMBERG
round of talks. Earlier the unions restoring US credibility in multilat- Midcap index soared 99% and
had rejected an offer to amend eral forums, including the World the BSE Smallcap index surged However, the MSCI Emerging
the laws. Samyukt Kisan Mor- Trade Organization. 113% till date. With an aggregate Markets index, which captures
cha, a coalition of farmer unions “We will pursue the pending current market capitalization large- and mid-cap representa-
leading the agitation, said in a mini-trade deal with the Biden of ₹196.51 trillion, the stock tion across 27 markets, has out-
meeting with Delhi Police on administration. However, we are markets have made investors performed with a 26% gain.
Thursday that farmers were not sure how interested the new wealthier by ₹94.64 trillion Analysts are optimistic that
requested not to hold the protest administration will be in the deal,” since last March. The Sensex the markets will continue to
march on Republic Day, but a government official said under contribution to the overall mar- surge ahead despite elevated val-
they were in no mood to relent, condition of anonymity. While ket cap is 49%, while the BSE uations, except for bouts of vola-
and will march with their trac- India was keen that the Trump Midcap and the BSE Smallcap tility around the Union budget.
tors along the outer ring road. administration sign the deal—even contribute about 13% each. “The positive thing about the
According to a farmer leader after the US elections were “The Sensex crossing the ongoing rally is that it has been
who did not want to be named, announced—the latter apparently important milestone is a telling fairly broad-based; across mar-
the day-long discussion among did not show interest. Biden has signalled that signing free trade agreements is not his immediate priority. REUTERS sign of the economy and market caps and sectors. As the
unions was a difficult exercise Biden has signalled that signing kets, shifting orbits on a broad- panic and crash was pandemic-
to build consensus. One group free trade agreements is not his Washington was expected to new US Trade Representative workers. And that starts with recog- based recovery induced, the pull-
was open to the idea of a coun- immediate priority. In an interview restore benefits accorded to Indian (USTR) Katherine Tai. nizing that people are not just con- and better days The index broke back was led by
ter-offer to suspend the laws with New York Times columnist exporters under the Generalised In her maiden speech after being sumers. They are also workers and ahead,” said Vijay through 50,000 with pharma. Since
indefinitely till a mutually Thomas Friedman last month, System of Preferences (GSP). selected for the post, Tai said, ear- wage earners,” she added. Chandok, manag- a gap-up opening in then, banks, infor-
agreeable solution was Biden said: “I am not going to enter Both sides were also supposed to lier this month, that the administra- Biswajit Dhar, professor of eco- ing director and the morning, and mation technol-
reached, while others were not any new trade agreement with any- remove the tit-for-tat tariff hikes tion will pursue a “worker-centered nomics at Jawaharlal Nehru Uni- CEO of ICICI ogy, automobiles,
stayed above the
ready to accept anything short body until we have made versity said he does not see Securities. “The etc., have also
mark for most of
of a repeal of the laws. major investments here at TRADE ROADBLOCK major changes in the US combination of
Thursday
joined the rally,”
The Supreme Court on 12 Jan- home and in our workers.” trade policy toward India in strong capital said Joseph
uary stayed the implementation At the same, in his inau- THE mini-trade deal BOTH nations were INDIA hopes to EXPERTS, however, the near term. “The mini- inflows, low inter- Thomas, head of
of the three farm laws and gural address on Wednes- was likely to cover going to remove the
tariff-linked sops for tit-for-tat tariff hikes
negotiate free trade
pact with US but a lot
see no major change
in US trade policy
trade deal was actually est rates and research, Emkay
formed a three-member panel, day, he pledged to “engage US farm produce, after US raised steel, of it depends on the toward India in the India’s wish list. The US was leaner balance sheets of Indian Wealth Management.
which met on Thursday to dis- with the world once again.” pharma products aluminium tariffs. new USTR Tai’s stand near-term at least cold-shouldering us in any corporates, along with govern- However, the valuations do
cuss the laws with 10 farmer asso- The mini-trade deal was case. It will be more of busi- ment measures to support look stretched, said Thomas,
ciations from across states. How- expected to cover tariff-re- ness as usual between the growth, is expected to lift the adding that earnings disap-
ever, the Samyukt Kisan Morcha lated concessions for US farm pro- after the US raised steel and alu- trade policy”, a position that looks two sides. Going back on Trump’s economy. The same is likely to pointments remain the key risk
declined to appear before the duce, especially dairy items, pricing minium tariffs. close to former President Donald ‘America First’ line will not be easy keep the markets buoyant.” at the current juncture. “The
court-appointed committee. of pharmaceutical products such as India also hopes to negotiate a Trump’s ‘America First’ approach. for Biden. If we think restoration of In the past year, India’s continuous upmove, not
Over 200,000 farmers are stents and knee implants, and free trade agreement with the US in “What it means in practice is that GSP and withdrawal of aluminium benchmark indexes rose 17% in backed by fundamentals, may
+ camping at different entry points information and communication coming days but a lot will also US trade policy must benefit regu- and steel tariffs will happen imme- dollar terms, on par with gains make the rally fragile going
to Delhi for nearly two months. technology products. In return, depend on the stand taken by the lar Americans, communities and diately, it is unlikely,” he added. seen in the MSCI World index. ahead,” he said.
Shopping, food top credit card spends in ’20

Suneera Tandon ping and food using credit plastic, which will improve in
suneera.t@livemint.com cards during the festive season the year ahead. However, cate-
NEW DELHI compared with the pre-covid gories such as health and well-
period, according to the data. ness, and infotainment have
I
ndians used credit cards to Cred, which incentivizes been last on the priority list of
spend more on food, grocer- customers for paying credit credit card spending for mem-
ies, shopping, and pay utility card bills, has 5.5 million members,” the report said.
bills in 2020, as spends on bers. In 2020, consumers also felt
travel and entertainment The pandemic has seen a the strain on household bud-
dipped sharply, as per data by shift in consumer spending, gets, a trend backed by Cred
credit card payment services benefiting some categories like data, which shows people
company Cred that scanned packaged food, electronics, turned to credit cards to make
spends of 1 million members e-commerce, while hurting banking and finance-related
across India’s top cities. discretionary goods, entertain- payments, including EMIs and
The data captures four peri- Credit card spends on travel ment, eating out, and travel- topping-up insurance policies,
ods, including pre-lockdown, dipped sharply in ’20. BLOOMBERG ling. Consumption-linked as the pandemic cast uncer-
lockdown, unlock, and the demand has thus been weak for tainty over incomes.
year-end festive season, across such expenditure in 2020, a several sectors. EMIs, which comprised less
several categories such as shop- behaviour driven by curbs. “Credit card spends across than 3% of credit card spends
ping, food, utilities, travel, Spends on shopping and other segments such as travel, across cities in 2019, rose to 8%
spends on fuel, and insurance. food recovered to more than banking and finance, as well as among members in Ahmeda-
Shopping, which includes pre-covid levels at the end of digital payments, have started bad and 7% in the National Cap-
apparel and electronics, and 2020, Cred said in its analysis increasing compared with the ital Region.
food, which includes groceries of credit card spends across lockdown and post-lockdown Meanwhile, spends on bank-
and ordering-in from eateries, Ahmedabad, Bengaluru, Chen- phases. This shows that the ing and finance increased from
saw the highest credit card nai, Delhi, Hyderabad, Kolkata, sentiment of members towards 23% of total spends pre-lock-
spends through the year, Mumbai, and Pune. Cred mem- spending is cautious still and down to 29% during the lock-
accounting for 36% of total bers spent 6% more on shop- shows a greater move towards down.
Home First IPO fully subscribed on Day 1

Ashwin Ramarathinam (Mauritius), investor Bessemer
India Capital Holdings II Ltd,
Growth is
ashwin.r@livemint.com
MUMBAI and two individual sharehold-
ers-PS Jayakumar and Manoj
not just about chasing success.
T
he ₹1,154-crore initial Viswanathan. Analysts at
public offering (IPO) of Motilal Oswal in an IPO note
Home First Finance Co.
India was fully subscribed on
said: “With the government’s
focus on ‘Housing for All’ by It’s also about learning from failures.
the first day of the share sale on 2022, affordable housing has
Thursday. The affordable seen strong growth over last
housing finance company’s
public issue received bids for
six years. Smaller players like
HFF have created a niche in Growth is...On.
16.2 million equity shares this space and are capitalizing
against the offer size of over The portion reserved for retail investors was subscribed 1.29 on this multi-year opportu-
15.6 million shares, data availa- times, while non-institutional investors picked up 10% of the nity.”
ble with the exchanges shares reserved for them. MINT “It (the company) showed
showed. resilience during covid-19
The portion reserved for The IPO will close on 25 The issue is priced at post- with more than 96% collection
retail investors was subscribed January. money P/BV of 3.4 times com- efficiency. The issue is valued
1.29 times, while non-institu- “Aided by its high growth pared to its nearest competitor at 4.8 times FY20 P/BV which
tional investors picked up 10% momentum on a smaller base, Aavas Financiers which trades is comparable to peers. We
of the shares reserved for superior underwriting stan- at 6.8 times on September recommend Subscribe for
them. dards, and efficient collections book value (BV),” said Yes Long Term,” it added.
The portion of qualified management, Home First Securities in a note. The company plans to util- Follow us:
institutional buyers was sub- delivered a healthy return on The public issue comprises ize the net proceeds from the
scribed 1.28 times the number assets (RoA) of 2.7% in FY20. a fresh issue of ₹265 crore and IPO to increase its capital base mint.live livemint live_mint livemint www.livemint.com
of shares on sale. The price Return on equity (RoE) of 11% an offer for sale of ₹888.71 to meet future capital require-
band for the issue, was fixed at looks modest owing to lower crore by the promoters, True ments to fund business and
₹517-518 per share. leverage at 4 times in FY20. North Fund V LLP and Aether assets growth.
X
MUMBAI, NEW DELHI, BENGALURU, KOLKATA, CHENNAI, AHMEDABAD, HYDERABAD, CHANDIGARH*, PUNE* VOL. 4 NO. 19 Rs 6.00
BAJAJ AUTO SHINES IN Q3 AS SALES BIDEN MAY PUT INDIA-US TRADE

FRIDAY, JANUARY 22, 2021 COMPLEMENT EXPORTS uP4 DEAL ON THE BACK BURNER uP21
LIVEMINT.COM
Sensex may breach 100k in Economic revival TWITTERVERSE
seeing phoenix-like
5 years as reforms take hold rise, says RBI paper
Gopika Gopakumar Tim Cook
@tim_cook
Growth will be led by IT services, financials, telecom, pharma and staples, say experts gopika.g@livemint.com
Congratulations to
MUMBAI
President Biden and
Nasrin Sultana Vice President Harris on
I
ndia’s economic recovery is
nasrin.s@livemint.com strengthening and policy- this historic day.
MUMBAI makers may soon have more Inspired by your vision
room for steps to support the of unity and your imme-
R
obust foreign liquidity revival, an article published in diate actions on climate
flows fuelled by ultra- India’s vaccine the Reserve Bank of India’s change, immigration
loose policies at global diplomacy in
January bulletin said. GDP growth in H1FY22 is likely and COVID-19. One
South Asia
central banks catapulted pushes back “Recent shifts in the macroe- to be consumption-driven, the nation, indivisible.
the BSE Sensex beyond against China conomic landscape have RBI paper noted. ALAMY
50,000 on Thursday. A revival in bit.ly/2MeZqjB brightened the outlook, with
earnings growth and structural GDP in striking distance of its traction and soon, the winter
reforms can propel the index to the attaining positive territory and of our discontent will be made
100,000-mark in the next five years, inflation easing closer to the glorious summer,” the RBI
or even earlier, market experts said. target. If these movements sus- paper said, quoting William
“Fundamentally, if you see, the tain, policy space could open Shakespeare.
last 20 years’ earnings growth for up to further support the recov- The Indian economy shrank
the Sensex has been 10.5% and the ery,” the article said. 23.9% in the first quarter and
returns over the same period have The article was accompanied 7.5% in the second quarter on
been 13% on a compounded annual by the usual disclaimer that account of the covid-19 pan- Hillary Clinton
growth rate (CAGR) basis. Assuming views expressed are those of demic. RBI expects the econ- @HillaryClinton
the same continues and on a higher the authors and do not necessa- omy to contract by 7.5% in the Right now, our country
base, we should be able to hit rily reflect the views of the RBI. current fiscal to March. needs caring, compas-
100,000 in next 5-7 years,” said The central bank cut policy An early revival in invest- sionate leaders who will
Amit Shah, India equity research The Sensex which first hit 1,000 in 1990 took almost three decades to touch the 50,000-mark. REUTERS rates by 115 basis points last year ments will be critical to secure act in service of every-
head, BNP Paribas India. to support the a durable turn- one in America, not just
According to Shah, the growth in 1990 took almost three decades to which would have a defining impact bright. Low awareness about equi- recovery but it has An early revival around and sus- those who voted for
will be led by IT services, financials, touch the 50,000-mark, crossing on consumption, growth outlook,” ties, the dominant share of tradi- left rates in investments tainable growth. them. There’s nobody
telecom, pharma and consumer sta- milestones such as the dotcom said analysts at Motilal Oswal. tional asset classes in households’ unchanged in The cash idling in better suited to this
will be critical
ples. “These sectors either have the boom and bust, followed by a global Foreign institutional investors led investments and the absence of recent months the balance sheets moment than @JoeB-
to secure iden & @KamalaHarris.
potential to be businesses of tomor- growth rally which ended with the the investments in Indian markets robust technology were key head- due to rising infla- of corporations
row or have businesses that can con- global financial crisis, then a sharp in 2010-20. During the decade, FII winds in India. In spite of these,
sustainable
tion. and banks and
tinue to reach the Indian masses and liquidity-driven rally, taper tantrum, investments in Indian equities stood Sensex registered around 14% The article said growth, noted reverse repo bal-
the RBI paper
+ hence ensure a sustainable CAGR growth over the last the number of ances with RBI
growth trajectory,” he said. BULLISH SENTIMENT 30 years, which is com- e-way bills issued must find their
Others concur. Amar mendable.” in December way into credit to
Ambani, senior president FASTER recovery, WE have entered a THE last decade also EQUITIES are likely According to Modi, ongo- 2020 was the highest ever, productive sectors and into real
and institutional research earnings revival and
reform hopes from
super-cycle for
Indian equities, as
saw near-historical
low interest rates,
to remain the best
investment avenue
ing financial inclusion, dis- “suggesting that the recovery is spending on investment activ-
head, Yes Securities, govt have fuelled we had seen back in which would leave an from the long-term mal returns from traditional no longer aloft on the fleeting ity before it imposes a persist-
believes that the Sensex may investor optimism 2003, say experts impact on outlook perspective: experts asset classes, improving tailwinds of festival spending ent deflationary weight on real
cross the 100,000-mark by share of households’ invest- but is rising phoenix-like on the activity, it said. Dr Harsh Vardhan
2025. “We have entered a ments in equities/deben- wings of an intrinsic momen- The article reiterated RBI’s @drharshvardhan
super-cycle for Indian equities, as European debt crisis and the cov- at $107.38 billion, with only four tures and rising awareness among tum”. stance that the financial sec-
we had seen in the year 2003. We id-19 pandemic. years of outflows. Domestic institu- millennials are likely to aid equities The article noted that in the tor’s balance sheet could inten- #COVID19vaccines are
see a high possibility of decisive Indian corporate earnings have tional investors (DIIs) have invested in the long run. first half of 2021-22, GDP sify with the expiry of the safe & effective. To end
reforms from the government, been muted in the decade gone by. $23.94 billion in Indian shares, with “Equities are likely to remain the growth will benefit from statis- standstill on asset classification. this #pandemic, it’s
accelerated earnings growth and a “Hope for an earnings revival, as mutual funds being the major con- best investment avenue from the tical support and is likely to be However, banks this time are essential for all of us to
continued liquidity flow chasing ever, remains intact as India emer- tributor, which tapered off in 2020. long-term perspective, and the mostly consumption-driven. better prepared to handle the come together & allay
growth, in a period of weakening ges out of the crisis. The last decade Binod Modi, head of strategy at benchmark index is poised to main- “Recent high-frequency crisis with stronger capital buff- any doubts related to
dollar,” he said. also saw near-historical low interest Reliance Securities, said, “Outlook tain a long-term growth rate of indicators suggest that the ers than the at the time of the the #vaccines.
The Sensex, which first hit 1,000 rates, both in India and globally, for domestic equities remains 13-14% in subsequent years,” he said. recovery is getting stronger in global financial crisis.
‘50,000 is just a number; one Modi to get

must stick to asset allocation’ vaccinated
Tinesh Bhasin dotcom bubble bust. A year
in phase 2
tinesh.b@livemint.com later, I changed jobs and Neetu Chandra Sharma
MUMBAI shifted cities and sold off neetu.s@livemint.com
stocks that I had accumulated NEW DELHI
With the Sensex touching over time.
P
the 50,000-mark for the When markets started ris- rime Minister Narendra
first time, Mint kicks off ing from 2003, I realised that I Modi along with several
‘Sensex and me’, a series had made a mistake. I would other ministers over 50
where finance profession- have reaped huge profits if I years of age are likely to be
als and ordinary investors had held on to those stocks. vaccinated for covid-19 in the
document their lives along- The regret went on for a year. next phase of the immuniza-
side the Sensex in all its ups I decided to remain invested tion drive starting around
and downs. In the first for the long term instead of May, a senior health ministry
instalment, Malhar Majum- trading. official said.
der, a Kolkata-based Trading in stocks made me Modi said he will interact
mutual fund distributor realize that investors can make with beneficiaries and vacci-
and partner, Positive Vibes Malhar Majumder, partner, money in equities only if they nators in Varanasi on Friday
Consulting and Advisory, a Positive Vibes Consulting and remain invested for the long to hear their first-hand
firm that distributes finan- Advisory. term. account of the vaccination
cial products, narrates his I evaluated and consoli- drive.
journey since the early A few months later, how- dated my mutual fund portfo- The interaction follows
1990s. ever, the Harshad Mehta scam lio, which I had for about seven continuous dialogue and dis-
broke out, wiping out most of years. cussion by the Prime Minister
N
either new highs nor the gains. Nevertheless, I man- In 2005, I became a certified with scientists, political lead-
steep corrections aged to sell the investment at a financial planner. A year later, ers, officials and other stake-
bother me. Sensex profit of ₹8,000. But the quick I was advising clients on their holders to proactively ensure
reaching 50,000 is nothing money that I made got me investments while also con- smooth conduct of the
more than a number. I let asset interested in the stock market. ducting training for bankers world’s largest vaccination
allocation take care of the vola- Like many novice investors, and employees of mutual fund drive, the Prime Minister’s
tility. I thought the stock market is a houses. Office said in a statement.
It took me quick way of When markets corrected According to the opera-
almost a decade to m SENSEX becoming a ‘crore- during the Global Financial tional guidelines for vaccina-
become what D I A R Y pati’, a popular Crisis, most of my equity tion issued by the health min-
many would call a term to denote a investments were through istry, the vaccine will be
“savvy” investor. During the person’s networth is over ₹1 mutual funds. I stuck to the offered sequentially to
period (1996-2006), I traded crore. asset allocation plan, which healthcare and frontline
stocks based on news, tracked Experiences that followed yielded results a few years workers, people over 50
market movements passion- are common to the journeys of down the line. The crisis had years, and then those younger
ately, and lost money. many other “savvy” investors. put my beliefs and financial than 50 years but with
My first equity exposure was As soon as I started working, I planning fundamentals to test, co-morbidities. Finally the
in 1992 when an uncle made read books on stock investing, and they worked. remaining population will be
me invest ₹2,000 in SBI learnt technical analysis, and Since then, I am dispassion- vaccinated based on the dis-
MMS90 scheme. I thought it began trading. When I made ate about market movements. ease epidemiology and vac-
was a stock even though it was profits, I thought no one is as I am not even worried about cine availability.
a mutual fund. The fund’s net smart as me. correction going forward, and The total number of vacci-
asset value (NAV) went from In 2001, however, I suffered would continue to stick to nations reached nearly one
₹10 to ₹160 in no time. losses in some stocks when the asset allocation. million on Thursday.
X

Friday, January 22, 2021: Sensex Almost Doubles From Its March Lows To VAULT PAST 50,000

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MUMBAI, NEW DELHI, BENGALURU, KOLKATA, CHENNAI, AHMEDABAD, HYDERABAD, CHANDIGARH*, PUNE* VOL. 4 NO.

FRIDAY, JANUARY 22, 2021

FRIDAY, JANUARY 22, 2021

SENSEX NIFTY DOLLAR EURO GOLD OIL

In Quebec, the curfew dragnet

London’s poshest homes are sitting empty

US rejoins WHO on Biden’s order

Eyes on Turkey as Ankara FM visits

Covid’s impact on housing

Sri Lanka reopens to tourists

Counting elephants, but from space

Curated by Sohini Sen. Have something to share with us?

PEANUTS by Charles M. Schulz

HERO MOTOCORP SEES RURAL ECONOMY SEEING PHOENIX-LIKE

Sensex almost doubles from its March lows to vault past

executive of Motilal Oswal Financial

Farmers reject govt offer to suspend reform laws

Scan & watch

Covid abates, focus now on vaccine

FOR ANY QUERIES/DELIVERY ISSUES

questions. It features essays by

tinue in FY22, riding on hopes of

Real estate’s quiet transformation

Yellen’s comments economic turnaround,

New curbs may sink Ant’s

‘More than just a BOP issue’

30 years on, India at the crossroads

The rise of India’s Goliaths

‘A moment 18 months in the making’

Healthy competition and open markets

‘The banking sector’s learning curve’

Ignoring ecology is perverse economics

‘Tossing out the rulebook’

‘Only in a crisis does India reform’

INDIA’S REFORMS STORY

LIKE 1991, THE 2021 CRISIS PRESENTS

THREE DECADES ON, INDIA IS AGAIN

INDIA’S REFORMS STORY

THE EMERGENCE OF 4 SPECIES OF

1991 REFORMS AIMED AT MORE THAN

HOME OWNERSHIP Workers by industry AFFORDABILITY MATRIX Lowering of import tariﬀs…

Source: NSS Survey reports, Periodic Labour Force Survey (2017-18)

2-wheeler Households owning TV outreach has become central

down from 50% in the 1990s to around 30% urban areas 22 31

room would go up without your income or my Married women with more

“So?” Children under 2 years Nutrition has been a big failure.

who are graduates

asked. Women working/looking for work work in the prime

INDIA’S REFORMS STORY

HAVE WE FORGOTTEN ALL ABOUT

‘Making decisions outside the rule book rang in telecom’s success’

WHY LEGAL REFORM REMAINS AN

Bibek Debroy Sixth, to state the obvious, enacted statutes

INDIA’S REFORMS STORY

KEEPING ALIVE THE GOOD, OLD

Goutam Das ‘all-weather AC’. The all-weather positioning,

IGNORING THE ENVIRONMENT IS

INDIA’S REFORMS STORY

THE HEALTHY COMPETITION OF

Ajai Sreevatsan force from the mid-2000s).

INDIA’S REFORMS STORY

(clockwise from top left) Stills from ‘Band Baaja

THE CHANGING FACE OF HINDI FILM

MUMBAI, NEW DELHI, BENGALURU, KOLKATA, CHENNAI, AHMEDABAD, HYDERABAD, CHANDIGARH, PUNE VOL. 4 NO.