Friday, August 19, 2011


It is simply mind-boggling – the manner in which the GMR group is allowed to get away with anything. Just recently – on August 7, 2011 – the 'most modern and sophisticated' T3 terminal of Delhi Airport that is being run by a consortium led by GMR, went on the blink for more than 5 hours due to a power failure. Sure, there were allegedly enough back-up generators to take care of the blip. But for some strange reason; the back-up failed and thousands of passengers were left literally groping in the dark in the wee hours of that Sunday morning.

Put this in the context of a story that was broken by the news channel Headlines Today in late July. The channel used hidden cameras to actually demonstrate how the construction of five star hotels and malls in a 'hospitality' zone called Aerocity at Delhi Airport by GMR is a grave security threat. The news report stated in its headline: 'Delhi Airport a sitting duck for terror attacks'. Top officials of Delhi Police told Headlines Today that no security clearance had been given for the Aerocity. And yet, the GMR-led consortium brazenly continues to construct the same. It defies logic: how well connected can the GMR group be that none seems to be putting a stop to a project that could actually jeopardise the lives of airline passengers and thousands working at the airport?

Then consider this: just a few days ago, Member of Parliament K. N. Balagopal requested the Prime Minister in the Rajya Sabha to ensure that the Rs.15 oddbillion "illegally" collected by the GMR-led consortium as development charges be taken back. Regulators and authorities have long ago decreed that the exorbitant charges collected by GMR are illegal. And yet, no steps have been taken to take the money back. Of course, in early August, the business daily Financial Express carried a story stating that the GMR-led consortium had defaulted on interest payments on loans taken for the project for the third consecutive month. I am compelled to repeat my question: how well connected is the GMR group?

There is more. The media has stated that the GMR consortium is spinning off 11 joint ventures that will look at the 'non-core' aspects of the airport like food, hospitality, retail, cargo services and so on. The consortium is obliged to share 46% of its revenues with the Airports Authority of India. But much revenue will be swallowed up by the joint ventures, with AAI ending up the loser. It has also been pointed out repeatedly that these joint ventures will again fleece passengers by fixing or hiking 'charges'. Nothing; no action has been taken against GMR on this front too!

Has GMR been punished? Far from it. It was recently awarded a Rs.55 billion contract to improve the 555 km highway linking Kishangarh and Jaipur with Ahmedabad. By doing this: the message that is going out very loudly and very clearly, is that you can violate every norm, every rule; you can cheat and fleece passengers; you can even put their lives in jeopardy. But if you are well-connected like the GMR group surely must be, you will be rewarded rather than punished for your follies!

If this is not crony capitalism, what is?


Friday, August 5, 2011


When bad news comes cascading down like torrential rainfall during monsoon, it is very easy to ignore good news. Something similar is happening in India where scams, scandals, political logjams and widespread fears of an economic slowdown – even as inflation rages on – have become the staple of media outlets. So it was not very surprising when the phenomenal growth delivered on the export front was reported in a matter of fact manner, and then consigned to that dustbin called stale news!

But I personally think that the export performance delivered by the Indian economy is not just a silver lining; it holds the promise of transforming India’s economy and its employment generation potential in this decade.

The facts first. In June 2011, the value of exports from India virtually touched $30 billion – up more than 46% compared to the same month in 2010. If you take the first quarter as a whole, the value of exports from India approached $80 billion – an increase of about 45% as compared to the April-June quarter last year. Even die-hard pessimists now agree that Indian exports will cross $300 billion in the current fiscal. This spectacular performance despite two powerfully inhibiting factors: the uncertainty and continued sluggishness in the global economy, particularly Europe and North America and the high rates of inflation in India that should make Indian exports less competitive.

There are two potentially game changing trends visible if you examine the trade figures a little closely. The first: Europe and America now account for just one-third of the total value of exports from India. Clearly, Indian exporters have been smart and have diversified their portfolio of destinations. The second, even more important trend is the fact that exports of products were double the exports of services in the April-June quarter. For long, everyone seems to have swallowed the myth that India will forever be the back office of the world, even as China continues to be the factory. There definitely was some merit in that argument in the past, but you cannot deny facts which indicate a startling structural change in the Indian economy. The fact is that manufacturing is growing and at a healthy rate. This is absolutely crucial for employment generation.

Just one policy announcement from the Prime Minister Dr. Manmohan Singh can make this export miracle a genuine and sustainable reality for this decade and beyond. Labour reforms in India have been largely stuck for about two decades because they are politically sensitive and pampered and powerful unions (that account for just about 3% of the total work force in India) have stalled them. Yet, imagine what could happen if Dr. Manmohan Singh announces that his government will guarantee the salaries of workers in key export industries like textiles, ready made garments, leather and others? The actual cost to the government will not be huge; but there will be a massive increase in investments in these key sectors to propel exports. Just the number of new jobs that will be created as a result – along with schemes like NREGA – will ensure that the UPA will continue to lord it over India. And who says there is no money to finance this game-changing export policy?