6 ISSUES AND INSIGHTS MUMBAI | THURSDAY 28 NOVEMBER 2019 >

LVMH wants it as part of its 75- plus > brands including Dior, Vuitton, Fendi, CHINESE WHISPERS Startling parallels between Tiffany, Flipkart Celine, Dom Pérignon, Tag Heuer, Sephora, Moët & Chandon, spanning cat- egories such as fashion, watches, jew- Onion protests The two got new owners at an identical deal size. But the similarity ends there... ellery, wine, spirits, retail, beauty and As onion prices touched ~100 a kg in some hospitality. In fact, in 2017, the French parts of the country, an MLA of the the identical size of the two deals — major LVMH or Louis Vuitton. operations. “We’re excited about what’s fashion house had acquired Dior in a deal Opposition RJD in Bihar turned up in the $16 billion. Beyond that, Flipkart and Tiffany happening at Flipkart and PhonePe,” said worth $13.1 billion. In that sense, Tiffany, Assembly wearing a garland of onion bulbs Made famous by Audrey Hepburn- hardly converge. Tiffany, with more than Doug McMillon, president and CEO of not really in high spirits due to falling on Wednesday. Raja Pakar (Vaishali) MLA starrer Breakfast at Tiffany’s, perhaps 300 stores across the world and $4.2 bil- Walmart. tourist demand in the current economic Shiv Chandra Ram raised slogans and more than by the diamond it sells to the lion in annual revenue, is treated as a her- Walmart, having failed to start its mul- slowdown, may not immediately add to attacked Chief Minister Nitish Kumar for his rich and the famous, the chain with its itage brand in America, looked up to by ti-brand business in the country because LVMH’s bottom line. In fact, the effort “empty promises” of setting up stalls where flagship store in Fifth Avenue has a sim- stars and politicians alike. Its iconic of regulatory issues after waiting for long, will be to revive and re-invent the Tiffany onions were supposed to be sold at ~35 per ilarity with Flipkart’s origin too. The des- engagement rings and the blue boxes are possibly saw Flipkart as a gateway to the brand, which is not as popular with the kg. He said his protest was aimed to tination store for top-end jewellery had a reference point in the deal documents increasing buying power of the Indian millennials looking for deals and may be "compel the CM to take started out as a stationery outlet almost with LVMH. Flipkart, though a poster- middle class. With that, the Bentonville less expensive engagement rings. Reports some serious action". two centuries ago. Needless to say that boy of Indian e-commerce, is just an (Arkansas)-headquartered retailer also show that lab-grown diamond, believed Earlier this month, NOT FOR PROFIT Flipkart had begun its start-up journey online marketplace hosting thousands opened a front to compete with its to be cheaper, is gaining in popularity some of his Congress from a two-bedroom Koramangala flat of vendors who in turn sell products — American rival Amazon in a new battle- with the younger lot. Tiffany hasn’t counterparts in Delhi NIVEDITA MOOKERJI in Bengaluru as an online book store. electronic goods to furniture, grocery to ground — India. offered that option yet. had worn onion If Tiffany & Co was founded by two apparel — to pin codes spread across the In that context, $16 billion was a price Bernard Arnault, founder, chairman garlands as a mark hat’s common between the 20-something entrepreneurs, Charles country. Why then are Tiffany and Walmart was ready to pay for the oppor- and the largest shareholder of LVMH of protest against 182-year-old New York jew- Lewis Tiffany and John B Young, it was Flipkart being acquired at the same price, tunity it was getting. With e-commerce and one of the richest in the world, may the state W ellery major Tiffany and a little the same at Flipkart — co-founded by barely one year apart from each other? still having a single-digit market share attempt to change that to attract high- government over the over-a-decade-old Bengaluru-headquar- Sachin Bansal and Binny Bansal. In both When Walmart bought a 77 per cent in the overall retail universe of the coun- earning-but-not-rich-yet millennials to issue of increasing onion tered Flipkart? Nothing at all, you would the cases the founders became friends as stake at $16 billion last year, valuing try, $16 billion was perhaps the world’s Tiffany. Depending on whether or not prices. They were say, but think again. If Tiffany was students. And if Flipkart entered into a Flipkart at around $20 billion, its share- largest retailer’s bet on the future he’s able to revive the fortunes of a protesting in front of the acquired in the largest luxury deal of the trans-national deal with American retail holders had reacted with anger. But one of shopping. brand made memorable through state secretariat. world earlier this week, Flipkart got a new giant Walmart, so did Tiffany to strike a year later, in the recent earnings call, In the case of Tiffany, which caught Hollywood, the $16-billion deal may owner last year. And, what’s striking is cross-border transaction with French Walmart sounded pleased with Flipkart the imagination of many generations, find a new meaning.

Turmoil continues The turmoil in the Uttar Pradesh unit of the Getting station redevelopment on track Congress party refuses to die down. Now Raebareli MLA Aditi Singh (pictured) is in the line of fire. The party moved a petition in the After 15 years of unsuccessfully trying to attract the private sector, the public sector seems Uttar Pradesh Legislative Assembly seeking her disqualification. She had been served a to have taken the lead in developing the mega-programme show-cause notice after she defied the party whip and attended the special session SHINE JACOB Sivadasan, former finance commis- CEO, Railway Board chairman, of the Vidhan Sabha on October 2. But she sioner with the Railways. Secretaries of Department of failed to offer a response, said Congress t was way back in 2004-05 that the These uncertainties remained Economic Affairs and Urban and Legislature Party leader Indian Railways first thought when the Railways launched the first Housing Affairs. Aradhana Misra. Earlier I about the redevelopment of a rail- phase of station redevelopment pro- “What lies deep among all these on Sunday, the party way station. Old timers in the Railway gramme covering the commercial issues is slow pace of real estate growth expelled 10 senior Board still believe the masterplan for development of 23 stations for ~9,000 in the country for the past few years. leaders for opposing the New Delhi station submitted in crore in February 2017. This plan to The government can compensate with the state unit 2006 by Terry Farrell and Partners, a revamp the appearance of stations by more attractive proposals for land leadership at a Hong Kong-based architectural firm, providing digital signage, escalators, usage, as it did by allotting 30 per cent public forum and including a project of 16 commercial self-ticketing counters, executive for housing,” said Prateek Kumar, an “tarnishing the towers extending up to Connaught lounges, restaurants, malls and movie analyst with Antique Stock Broking. party’s Place from the Paharganj side of the halls attracted scant industry interest. As things stand, the state will now image”. station, would have transformed No matter, the project was later bear the burden of modernising Lutyens’ Delhi. extended to a ~1 trillion project cover- India’s stations. Some experts indi- On February 8, 2008, at least 35 ing 400 stations. But the interest cate that the government may have to companies — including Reliance remained tepid. “Following demands consider charging the passengers for Energy, GMR, DLF and Videocon from real estate players, the govern- a dedicated station redevelopment Philippines can wait Industries — had expressed interest in ment extended the lease period from fund, so that the Railways can take up modernising the station too. The pro- 45 years to 99 years but the risks of the project on its own. Indian Railway ject, which was seen as a showpiece investing in a new venture and doubts Stations Development Corporation ahead of the Commonwealth Games in over rates of return persisted,” said Jaipur. So the government will have track by February 2019. Close to 80 per (IRSDC), the nodal agency for station 2010, was dropped after objections Vijay Dutt, former additional member to ensure there are access roads or ele- cent civil work is completed so far. On redevelopment, is in talks with Indian from the Delhi Development of the Railways. vated roads to approach these selected the other hand, the Rs 4,000 crore Railway Finance Corporation (IRFC) Authority (DDA) over the Many point to the case station,” Sivadasan pointed out. Gandhinagar hub project, taken up by and the World Bank for funding of sta- proximity of the project to of the commercial com- In October 2019, the slow pace of Kunal Structure in January 2017, is to tion projects. These includes Anand Connaught Place. plex at the state transport station redevelopment again be commissioned by Vihar, Bijwasan and Chandigarh. The government is now bus station in came to limelight when it invit- On February 8, 2008, March. Kant asked the Apart from that, private equity play- planning to commission Thiruvananth ed criticism from NITI Aayog at least 35 Railways to take up at ers and pension funds have also been upgraded versions of the apuram to highlight the Chief Executive Officer companies had least 50 stations on a invited for partnerships to fund rede- Uttar Pradesh deputy chief minister Dinesh Habibganj and lack of potential in Indian Amitabh Kant. In a letter to the expressed interest in priority basis. velopment for at least 10 high-poten- Sharma (pictured), who was scheduled to Gandhinagar stations by TAKE transport hubs. The Kerala Railway Board, Kant said modernising the Kant also suggest- tial stations. visit the Philippines during November 25- March 2020. If this dead- TWO Transport Development despite the commitment to New Delhi Station. ed a solution for the To speed up the process of redevel- 28, has had to shelve his travel plans after line is met, it would mark ANALYSIS BEHIND Finance Corporation take up 400 stations for last The project, which lack of co-ordination oping another 39 stations, five public the foreign ministry failed to clear his tour. the realisation of an ambi- THE HEADLINES (KTDFC) had to invite as several years, “actual imple- was seen as a between the railway sector undertakings — NPCC, Although the UP deputy CM had applied for tion that has been as a many as 11 tenders, after it mentation has not happened showpiece ahead of ministry and the Engineering Projects, MECON, RITES, permission three days before his scheduled non-starter for the past 15 remained a “ghost build- except for a few isolated cases the CWG in 2010, was urban development Bridges & Roof Co — have also been departure, the approval could not come on years. “A major reason the New Delhi ing” for several years. Initially, ideas in which a few stations have dropped after ministry over land roped in. The companies are cush- time. Such applications are routed from the project did not take of was the lack were floated for the Railways too to been taken up through EPC objections from the lease clauses at ioned by the commitment that if the Union home ministry to the foreign of co-ordination between various join the project, but it did not go ahead mode.” The isolated cases that DDA Bijwasan and Anand contract is not awarded in three years, ministry; the requisite nod in this case could government agencies, including the citing viability issues. “A major con- Kant mentioned were those of Vihar in Delhi, that they will be paid an 8 per cent return not be processed as External Affairs Minister DDA. Concerns among industry play- cern for developers was the accessi- Habibganj and Gandhinagar. led to cancellation of on expenditure. S. Jaishankar dashed off to Colombo on an ers over the real estate revenue bility to stations as most of the For Habibganj, the ~400-crore project tenders of those stations. He asked to For the time being, the iconic sta- unscheduled visit last week ahead of his of potential may be another prime rea- approach roads were congested, a was allotted to the Bansal group in set up an Empowered Group of tion redevelopment plan is still a work trip to Japan. son for its slow pace,” said R problem that we faced in stations like June 2016 and is expected to be on Secretaries comprising the NITI Aayog in progress after 15 years.

INSIGHT > LETTERS

rather than as collaborators in a clan- complicated. It may be assumed that Why trust laws need a makeover Act responsibly destine, political schemes. the stage has now been set for the Shiv Shreyans Jain New Delhi Sena-NCP-Congress combination to This refers to the editorial, “Get down come to power, but there may also be the trusts made their biggest mistake of the courts. to business”, dated November 27, 2019. There’s many a slip... more surprises to unfold. The The second part of an analysis of The present imbroglio is the problem That politicians make strange bedfel- Tarique Anwar Karnataka the laws governing trusts shows how the child of tax amendments and the trusts’ lows was visibly evident from the emer- current imbroglio is the problem child decision to voluntarily surrender its gence and subsequent coming together A vicious cycle of an amendment to the IT Actsecond exemption. Without going into detail, of regional satraps with divergent views With central GST collections going part of an analysis of the laws governing suffice it to say that if exemption and and conflicting ideologies in the after- down, states have begun to feel the trusts shows how the current imbroglio registration are treated as a favour by math of the 2019 Assembly elections in pinch. States with less than 14 per cent is the problem child of an amendment the tax authorities, the law cannot force Maharashtra. It was not surprising to per annum tax revenue growth are to to the IT ActseekThe second part of an anyone to avail of the favour. see bitter relations among various tra- be compensated by the centre. At least analysis of the laws governing trusts Thus, the argument of the trusts that ditional rivals turn cordial and dema- five states claim overdue transfers of shows how the current imbroglio is the they surrendered their registration and gogues finding commonality in their up to ~40,000 crore. This needs timely J N GUPTA problem child of an amendment to the exemption, and such surrender be recog- views on secularism, social justice, attention. The decline in growth is at a IT Acting cancellation rather than ques- nised as complete from the day the appli- agrarian crisis, and governance to "save seven-year low at 5 per cent. The ero- tioning the logic of amendment. The cation was made has merit. There can’t democracy". Each faction was led by The BJP’s ignominious attempt to grab sion in the economy is wide ranging -- mong the other issues that trusts amendment begs the question: Was this be even an issue that application was an overly ambitious political leader power in Maharashtra, illegally and ille- banks, businesses, exports and hence face its corpus, tax status and intentional or unintentional? Logical or incomplete, because the application was who tried to flame regional passions for gitimately, has come to an end, at least job creation. The unemployment rate Awithdrawal are also open to inter- illogical? Nothing could be more illogical to surrender a notional benefit and not more political space. The incumbent for now, with the resignation of Chief is the highest in decades and invest- pretation. than the proposed amendment. Why? to seek something new. It is not prepay- Bharatiya Janata Party dispensation Minister Devendra Fadnavis (pictured) ment — government and private — has The Free Dictionary describes the While the trust does not pay any tax ment of a term loan, which needs the was projected as arrogant, anti-devel- on Tuesday evening. Fadnavis had no dipped; the manufacturing index has term corpus as "the capital or principal on its income derived in form of interest, lenders’ approval. The authorities also opment and anti-minority that could option but to quit after Ajit Pawar of the gone negative. Against the estimate of amount, as of an estate or trust”. In the which is not taxed at any stage, it would cannot make the case that they have fun- only be defeated by a "pro-poor" and NCP, who had promised to the BJP the revenue collection at ~24.5 trillion, the normal course, the corpus of a trust is be required to pay tax on dividend damental and unquestionable right to "secular" alliance. support of the Sharad Pawar-led party, April-September inflow is at just Rs 9.3 sacrosanct and cannot be touched income, which is already taxed twice in delay taking a decision and the burden It is unfortunate, however, that and had been made the deputy chief trillion. By its very construct, GST dis- unless the settlors have given directions form of corporate tax and dividend dis- of delay is to be borne by the applicant. despite the BJP-Shiv Sena combine minister, resigned in the wake of the advantages manufacture-oriented to the contrary. Therefore, if settlors tribution tax! Keeping in mind the pub- The way forward: Having come to being rewarded with the mandate to Supreme Court directive to hold a floor states and should these now be denied make any contribution in the form of lic good that trusts are serving, this this stage, unless the tax authorities take form government, the two parties could test on Wednesday. The court did well equalising central transfer, our manu- shares and the income arising out of change was not at all in consonance with a suo motu decision to review the tax not iron out their differences. The BJP's to order the early test, though the BJP facturing base itself gets destabilised. these shares is intended to be used for objective of exemptions given to trusts. laws and its inconsistency with objec- nocturnal capture of power and the wanted two weeks’ time to prove its A vicious cycle then follows. charitable objectives, the trustees can- Therefore, the trusts should have sought tives, a legal remedy is the only option. governor intervening in a partisan strength in the Assembly, which itself R Narayanan Navi Mumbai not liquidate this investment and the clarification and requested exemption And in times like this that the trusts manner was an equally reprehensible was a sure sign of lack of majority in law should not override such stipula- because it appears that the provision would be missing a legal luminary such and dispiriting episode in Indian the House. The court could have issued Letters can be mailed, faxed or e-mailed to: The Editor, Business Standard tions unless there are cogent reasons for was not well thought out -- unless the as the late Nani A Palkhivala. democracy. Former Prime Minister Atal the order for an immediate trial of Nehru House, 4 Bahadur Shah Zafar Marg doing so. Therefore, if Tata Trusts are objective was to ensure that trust would A relook at the laws related to trusts Bihari Vajpayee, when faced with a strength as soon as the matter came New Delhi 110 002 holding on to shares they are doing so only invest in government securities. is vital because the laws are archaic, floor test in Parliament, made an before it, because the issues to be decid- Fax: (011) 23720201 · at the express wish of the settlors. This Could this have been done? Probably without any justifiable rationale, are not oblique reference to Sharad Pawar and ed were clear and simple even then. E-mail: [email protected] practice could still be a case of a techni- not, since it would amount to a situation contemporary and are hurting the objec- very cogently said, "If power comes in Unfortunately, and unnecessarily, the All letters must have a postal address and cal violation of law, but it does not pass that government was using tax provi- tive of public good. Those violations that my hand by breaking the party and issue got prolonged and perhaps more telephone number the litmus test of rationality. sions to force trusts to invest in its secu- occur must be addressed and punished forming a new alliance for power, I Tax exemption: It appears that the rities. In such cases, would dividend adequately, with individuals at fault would not like to even touch such pow- > trusts could not treat dividend income received from public sector companies penalised rather than the trusts, unless er with a pair of tongs." It is time the HAMBONE as exempt following the amendment of be taxed or exempt? there is a doubt about the charitable central government refrained from the IT Act in October 2014 (effective Voluntary withdrawal: In a knee-jerk activities of the trusts. While the jury is indulging in political misadventurism April 2015) relating to general exemption reaction to tax changes, finding that a still out, very few Indians would doubt by attempting to install a government provisions applicable to trusts and can- trust would be a loser from all sides if the charitable intentions and activities either run or backed by defectors. cellation of registration of trusts in case the status quo continued, trusts decided of the Tata Trusts. (Concluded) Toppling popularly elected state gov- of non-compliance. to voluntarily surrender their exemp- The first part appeared on Wednesday ernments and then resuscitating them The Tata Trusts deriving the major tions and registration in early 2015, by offering outside support in. It is chunk of their income from dividend rather than fight and test waters with The author is founder and managing director imperative for all stakeholders to act as were hit badly. And it is at this stage that the authorities and later possibly with of Stakeholders Empowerment Services guardians of the constitutional order OPINION 7 > STAY INFORMED THROUGH THE DAY @ WWW.BUSINESS-STANDARD.COM

Volume XXIV Number 75 ILLUSTRATION: BINAY SINHA MUMBAI | THURSDAY, 28 NOVEMBER 2019 The Mudra problem Directed lending always builds up bad loans in banks n Tuesday, Reserve Bank of India Deputy Governor M K Jain high- lighted a dangerous trend: The rising levels of bad debt in the small- scale loans being handed out under the government’s Mudra scheme. vations, was raised to ~8 lakh per annum. It is unclear The location where he made this remark is significant: He was speak- how this maximum permissible annual family O income of ~8 lakh is estimated on a reliable and con- ing at a microfinance conference organised by the Small Industries Development sistent basis across the country. Bank of India, which is the underwriter and the owner of the risk management There have been numerous debates in the protocols for the Mudra loans. Mr Jain said that banks would have to do both a Constituent Assembly, in state Assemblies and the better job of establishing the capability to repay when the potential loan is being national Parliament about the need to correct past evaluated, and also “monitor the loans through the life cycle much more closely”. injustices by enabling weaker sections to obtain Although Mudra loans are typically relatively small in size, a large number of employment and entry to institutions set up by gov- ernment. The consequent reservation policies have them has been handed out and they are generally free of collateral, making served India well. At the same time, over the decades, them a significant point of vulnerability for banks that are just beginning to human capital has been diluted due to a progressive emerge from an existing crisis. It is not surprising, therefore, that the banking increase in reservation quotas and reductions in min- regulator is worried — even the Governor, Shaktikanta Das, has raised concerns imum educational qualifying standards. Further, Competition versus caste and OBC reservations have unintentionally cre- about this in the past. These concerns are entirely warranted. When collateral-free loans were first ated privileged categories among the disadvantaged. For instance, reservations have not helped an over- suggested, it was foreseen by many that the consequences would be a worrisome whelming majority of those who are deprived increase in bad debt. The question is certainly one of capacity, as the regulator reservations because of their lower educational levels compared seemed to argue. The number of Mudra loans is so large that the capacity to to the better off among the quota eligible communi- both evaluate and monitor is significantly constrained, especially at the level at ties. In any case, job quotas within the organised sec- which these loans are being handed out. Yet even beyond capacity, there are Reservations have eroded human capital in the Indian government, tor cannot address widespread Indian underemploy- problems of intent that must be taken on board. The simple fact is that the gov- ment since about 77 per cent of the country’s regulatory and public sector institutions workforce is self-employed or casual labour. ernment has made it very clear that handing out money through Mudra loans is The most valuable “capital” in any country has a political priority. Senior politicians in the ruling party have consistently men- he promise of India endures yet in Delhi and one else’s responsibility. Glaring examples of per- to be its stock of public-spirited non-partisan spe- tioned the amount and number of Mudra loans as an achievement, and tied it several urban areas in the country where we sonal interest driven politics, as was amply evident cialists, accomplished professionals and academics. to claims about entrepreneurship and even job creation. Given these clear T have been inhaling toxic air particularly dur- in Maharashtra on November 23, 2019, have become Currently, many in crucial official, regulatory and political signals, it would be futile to expect any change in how the programme ing winter months. The June 2013 television images all too common. All this and more are the sad reali- specialised positions, including some who were is being implemented on the ground. No banker in the state sector is likely to of buildings in Uttarakhand collapsing into swirling ties that Indians are witness to with regularity. selected on the basis of quotas, do not meet basic waters, annual floods in Assam, Uttar Pradesh and The environmental degradation, worrisome standards of domain knowledge. This tends to lower defy a clearly stated government preference. Bihar, disruptions during the monsoons in Mumbai internal security situation and economic slowdown standards in non-official circles too. An important This combination of directed lending and a high presence for the state in add to a sense of outrage. Not everyone is that con- are not merely due to insensitive officials, inade- step towards better governance would be to mandate the banking sector is a recipe for disaster. Government orders to the banking cerned though since the affluent quate domestic savings, doubts that all government, regulatory and public sector sector, whether sectoral or of the sort that the Mudra programme is, are detri- counter pollution with imported air- about corporate creditworthiness positions are staffed by those who have been selected mental to the due diligence work that is integral to a healthy financial sector. filters. In such circles, the commen- inhibiting fresh lending, overval- through competitive processes. More than 70 years Loans where there is a government mandate are always going to be scrutinised tary is about escaping to alternative ued rupee and so on and on. It is after independence, it is high time we started ending homes in the hills, flying off to stay also about the significant erosion all forms of reservations including informal religious differently than those where the bank’s own concerns are at stake. The constraints with relatives abroad or emigrating of human capital in government, affiliation-based quotas. A reasonable approach put on the loan are substantially different. If the government wishes to retain a for good. regulatory and educational circles would be to halve reservations by 2024 and drop large stake in the banking sector, then it must realise that it simply cannot hand A couple of days back while clear- that has contributed to distortions these altogether by 2029. out directives. As in any bureaucracy, there will be a rush to comply with orders ing out old papers I chanced upon in competent and impartial deci- Media reports suggest that to increase their vote but such a rush is fatal to the health of the banking sector. Directed lending in a letters I had written to my future wife sion-making. share the National Democratic Alliance (NDA) par- system like India’s leaves the banking sector susceptible to crises. in the mid-1970s. A letter dated April As of now, at least 49.5 per cent ties led by the Bharatiya Janata Party (BJP) made a 27, 1977, when I was stationed in JAIMINI BHAGWATI of vacancies are mandatorily pitch for the support of the majority Hindu com- Jalandhar district training as a recent reserved for Dalits, Scheduled munity in the 2014 Lok Sabha elections. The same recruit to the Indian Foreign Service Tribes and Other Backward strategy combined with an additional 10 per cent (IFS), refers to my meetings with the deputy com- Classes (OBCs) in most states and the central gov- reservation for the EWSs probably contributed to missioner and commissioner. When asked neither ernment. Tamil Nadu has passed legislation for a an even larger number of seats for the BJP in the The right blend of them was willing to talk about why an under-trial higher level of 69 per cent reservation in that state. general elections of May 2019. Religion-based politics The present biofuel policy is invitation to ecological disaster prisoner accused of petty theft was tortured to death There is talk about reservations of jobs in Madhya was a key element in the electoral strategies of most in a jail located in the heart of Jalandhar. That was Pradesh and Maharashtra for those who are deemed Indian parties from 1971 onwards and has proved to iven the huge gap in the availability and requirement of ethanol for blend- 42 years ago and perhaps there is greater account- indigenous to those states. be divisive. Similarly, the political self-interest driven ing with petrol, the need to step up its production is indisputable. But the ability now. However, the rape and murder in On January 12, 2019, the central government noti- support for reservations has resulted in resentments same cannot be said about some of the measures mooted by the govern- Badaun (Uttar Pradesh) of two minor girls in May fied an additional 10 per cent reservation for “the within and across communities. One way to stem 2014 and the rape of another girl and killing of her advancement of any economically weaker sections this inexorable slide towards mediocrity, and worse ment to achieve this objective. The most debatable among these is the G relatives in Unnao (UP) during 2017-19 paints a pic- (EWSs) of citizens”. This reservation would be for in matters that impact India’s overall development, permission granted to ethanol manufacturers — mostly sugar mills that produce it ture of despair about India’s justice system. families with income below ~8 lakh per annum. This is for a new political party to represent the 50.5 per from their byproduct molasses — to convert sugarcane juice directly into alcohol As for the opportunity costs of the ongoing slow- amendment of Articles 15 &16 of the Constitution cent of the population who are currently excluded and also use surplus sugar and foodgrains, such as wheat, rice and corn, for this pur- down in India’s economic growth and consequent thus raising total reservations to 59.5 per cent is from reservations. pose. Going a step further, the government has chosen to incentivise the use of these frustrations caused by burgeoning underemploy- inconsistent with a 1992 Supreme Court ceiling of questionable raw materials by fixing relatively higher prices for the ethanol produced ment, there is little left to say. To add insult to injury, 50 per cent for all reservations put together. In The writer is former Ambassador, senior Ministry of we are subjected to inane homilies by central-state September 2017, the maximum family income for Finance official and World Bank Treasury specialist; from them. government officials/ministers about why it is some- three consecutive years, to be eligible for OBC reser- [email protected] This move would, obviously, open the doors for the sugar factories to buy sug- arcane — and for the farmers to grow it — just for producing biofuel rather than for making sugar from it. Considering that sugarcane, wheat and rice are water guzzlers, besides being input-intensive crops, their use for biofuel production is virtually an invitation to ecological disaster. The true value of the scarce water that goes into the Wanted: The woke corporation cultivation of these crops cannot be measured in economic terms alone. The social cost of such water use may be far higher than the economic gains from ethanol he reputation of corporate India has not stood ences to answer the surveyor’s question. It is incon- “significant other”. doping of petrol. Moreover, a land-stressed country like India — where land is hard up to scrutiny in the run-up to — and the ceivable that there are no gays working in Indian A big part of the problem is that the Indian to find even for infrastructure, industries and other purposes — can ill-afford to use TIndian government’s subsequent rejection corporations but obviously, the subject remains banking and insurance industries are yet to change it exclusively for growing biofuel crops. of — the Regional Comprehensive Economic taboo enough in the workplace for those of alter- their policies to enable account-holders to nomi- Where foodgrains are concerned, though the present glut may give the impression Partnership. Indian businesses apparently believe nate sexual orientation to feel safer remaining in nate non-relatives as beneficiaries. Multinationals they will not be able to compete with Chinese enter- the closet. get around the problem by buying insurance poli- that part of the surplus stocks can safely be diverted to biofuel production, given the prise over a 25-year framework, the adjustment This perception should not be surprising, judging cies from global service providers that do offer rampant malnutrition and hidden hunger in the country, it may be difficult to justify period that RCEP negotiators had worked out. Then from the loud silence from corporate boardrooms such facilities, but they employ a minuscule pro- it. In fact, many of the land-rich and industrialised countries, which have gone far again, the pusillanimity of Indian business leaders when the Supreme Court read down section 377 of portion of India’s white and blue-collar workforce. ahead in admixing crops-based biofuels with gasoline, are also revising their policies. when it comes to standing up to the Indian Penal Code, effectively These initiatives are but progressive drops in an Studies have revealed that this has distorted the cropping patterns and spiked food the government has long been its decriminalising homosexuality. The ocean of homophobia on which corporate India worst-kept secret — the rare CEO issue of LGTBTQ rights is not seen floats. No surprise, then, that 54 per cent of the prices in those countries. The advisability of clearing forests to grow biofuel crops, as who voices even mild criticism as a cause worthy of the public rela- respondents say their companies will never hire has been happening in Brazil and some other land-surplus nations, has also begun publicly always makes headlines. tions energies that are poured into any LGBTQ professionals. to be challenged by environmentalists. Now it appears India Inc remains CSR programmes for building toi- There is much more disheartening information Another fact that needs to be kept in view is that India has substantial potential pretty regressive when it comes to lets and dispensing midday meals in the survey about corporate hiring policies to produce ethanol and other types of biofuels from non-sugarcane and non-food its hiring policies too. to poor schoolchildren. towards specially-abled professionals, and women, sources that are currently under-exploited, if not wholly untapped. The National No, this is not an impending It is also striking that some 65 most of which are so well known that people have outburst against the lack of gender per cent of employees say they have stopped commenting on them. That private sector Biofuel Policy of 2009, amended in 2018, lists rural and urban garbage, cellulosic and diversity in corporate India (though not seen any change in policies promoters remain distressingly communal, too, lingo-cellulosic biomass (agricultural dry matter), and crop residues like wheat and there’s that too) but the readings after section 377 was read down — was highlighted by the Sachar committee report rice stubble amongst the suitable raw material for making ethanol. Though such from a recent eyebrow-raising sur- SWOT though the survey does not reveal long ago. But one small finding offered an inter- second generation (2G) ethanol turns out to be slightly more expensive than the vey on “Diversity and Inclusion” what kind of changes were effected esting insight into the kind of culture that typifies molasses-based alcohol, it recompenses the additional cost by mitigating the dreadful conducted by the jobs portal KANIKA DATTA in corporations employing the 35 most Indian corporations. Some 40 per cent of environmental pollution due to burning of urban wastes and farm residues, including TimesJobs, owned by the Bennett per cent of respondents who pre- respondents said “physical appearance” — eth- Coleman media conglomerate. The biggest take- sumably say they have seen some change. nicity and personal likes and preferences — were crop stubble. Fortunately, oil marketing companies have reacted favourably to this away from the survey is that India Inc remains What kind of policy changes should be expect- the principal factors on which they were judged idea and are already in the process of setting up a dozen 2G ethanol refineries in 11 innately homophobic. More than 77 per cent of the ed? Extending benefits to same sex/common law in the workplace. That’s human nature, of course, states. This trend needs further impetus. Promising results have also emerged from 1,137 professionals surveyed across diverse compa- spouses (since same sex marriage hasn’t yet been but surely managements operating in competitive the ongoing research and development work on producing ethanol from a non-food nies said they have no LGBTQ colleagues and more enabled by the law) and their children is the most environments should force themselves to give and fast-growing bio-source like algae. Such novel technologies hold the key to aug- than 83 per cent said they had no one with alternate basic of them. A handful of companies have made some importance to ability and talent. For those menting supplies of environment-friendly biofuels without any adverse effect on sexual orientation in senior leadership positions. some changes in their HR policies — the Godrej who wonder why work culture in 21st century The question to ask, of course, is how the group and Infosys, for instance, extend such ben- Indian corporations is mired in the early 20th cen- ecology or food security. employees in the survey above thought they could efits to the “partner” without specifying the gen- tury, the answer could lie in micro-findings such judge their colleagues’ and leaders’ sexual prefer- der and OYO’s group insurance policy covers a as this.

promises to shine the spotlight on these Financialisation is a big social malaise, exact issues and recommend solutions in not just an economic one like the way the Financialisation and its discontents an “easy and accessible” read. book treats it. The best brains in society The book is a masterful collection of are drifting to jobs that merely move to the economy. Colliers is an a pass where firms that add much lower lawyer, crashes his oversized car into a charts, data, research references, money rather than solving real problems intermediary that enabled a smooth value to the larger economy are valued school bus because he is texting about an important personalities, theoretical of health, education and livelihoods. The transaction, which is a valuable service higher? What does this mean for society at impending derivatives trade”. Such a constructs and historical events. It delves best brains are lured to these inane but perhaps not as vital to the economy. large? These are the kind of questions that description beautifully captures deep into the causes of excessive pursuits of predicting future stock prices So, logically, companies like Amazon and the book Rise of Finance. Causes, everything that is wrong with the world of financialisation in today’s economy and due to the potential to earn vast sums of L&T will be better known, attract better Consequences and Cures attempts to finance, albeit with some moral lays the blame primarily on loose money by doing so. Betting on future BOOK REVIEW talent and its employees will typically answer. When I judgements. The monetary policy that fuelled the stock price predictions pays a lot more earn more than those working in Colliers. received the request THE RISE OF debauchery and addiction to debt and the US dollar’s money than say building satellites PRAVEEN CHAKRAVARTY Let’s now assume that Amazon also to review this book, FINANCE: Causes, sins of rapacious primacy as the global reserve currency. because of excessive financialisation of needed fresh capital to expand. Capital is my eyes lit up Consequences finance These points are argued cogently backed the economy. Such enormous wealth mazon recently acquired a large available with investors such as mutual because the And Cures professionals have by copious empirical evidence. The earned relatively easily is being used to office in the HITEC City office funds, pension funds or wealthy deleterious impact Author: V Anantha been well authors also have strong words for former shape a nation’s democracy through Acampus in Hyderabad. It is very individuals. For Amazon to get access to of “excessive Nageswaran & documented and Federal Reserve Chairmen, Alan control of political funding. With control likely that you have heard of Amazon, the the available capital, it typically hires an financialisation” in even portrayed Greenspan and Ben Bernanke for their of politics, heads of hedge funds, world’s largest e-commerce company. intermediary such as a JP Morgan to modern economies Gulzar Natarajan through complicity in exacerbating investment banks and stock exchanges HITEC City is a project developed by broker this transaction, similar to how is an issue on which I Publisher: mainstream financialisation. While three-quarters of exercise clout and mould tax and other Larsen & Toubro (L&T). It is very likely Colliers brokered a property transaction hold strong views. Cambridge cinema. the book is devoted to global events and policies to suit their interests, which that you know of L&T too, the business for Amazon. But in this case, JP Morgan, Further, one of the What is less trends, there is an entire chapter on perpetuates this vicious cycle. This is the Price: ~750 conglomerate that also develops the intermediary, is more powerful, more authors of the book understood is the “Finance in India”. The authors conclude real social problem of financialisation. commercial real estate. This transaction valuable, deemed more systemically is a fine scholar with larger social that financialisation is not yet a big The book is a valuable addition to between Amazon and L&T was brokered important to the economy and attracts extensive domain experience in financial ramifications of how have we reached a problem for India since Indian finance is university libraries and students. But it by Colliers International. It is perhaps better talent with vastly higher pay than services, which made it even more stage where finance professionals that dominated by banking and banking is will perhaps not add much to the issue of unlikely that you have ever heard of Amazon. interesting for me to review. add so little value to larger society have dominated by public sector banking. In a excessive financialisation, similar to the Colliers International, a real estate agent. What is it about the world of finance The book is expectedly erudite and appropriated so much wealth, wield somewhat contrarian way, the authors issue of income inequality. Amazon and L&T are real businesses and capital, that the intermediary agent is scholarly. It even has an evocative start, enormous influence and perpetuate a even highlight the benefits of the 1969 that contribute to the economy, create more valuable and powerful than the quoting an ethicist as “a pill-dependent vicious cycle of “tails they win, heads we bank nationalisation programme, citing The reviewer is a political economist and a thousands of jobs and add immense value principals? How have things come to such smoker who, on the way to his divorce lose”. The book’s Introduction chapter evidence from another book. former scholar in a think tank