Fake Cake

If our prime minister and his cheerleader economists and journos look at the big picture, they will know that the Corus or Novelis takeovers add little to the national bottomline and only the foreign debt has gone up

Mohan Guruswamy Helsinki

Corporate India is experiencing a good year. The order books are full and profits are at a record high. The country’s stock is soaring abroad where corporate chieftains and government officials schmooze together, on other people’s money; the big chiefs on their shareholders’ money, and government officials, by the kind courtesy of the companies. Then they all laugh together all the way to their banks.

If it is Davos, the banks are close by. Finally, we are on the American radar screen and the people who matter in India at present are thrilled to bits. Though little has changed for the vast multitude, India is booming, a global success story. With such conducive atmospherics, our corporate chiefs are prowling the global markets like hungry predators looking for companies to buy.

It’s not that our chiefs do not own businesses abroad, but now it is all official. This is different. They do not anymore need shadowy lawyers and bankers to tend to their businesses.

Under the earlier dispensation, even the big boys had to go to the hawala operators and crooks in freewheeling ports like Dubai, Singapore, Bangkok, Vienna, Nassau and so on to assemble their war chests. It is well known that even the redoubtable Dawood Ibrahim financed a corporate chief or two. All he did was to tell the big shot that he was the boss who could call the shots, whenever. It is said that all he said at the time of bidding goodbye was a terse, "Time pey vapas de dene ka hai seth!"

This being February, it is the silly season for pre-budget talking- heads. Last night I heard an alleged economist describing the Corus takeover as the defining moment of the year, as the pink paper pundit sagely nodded. It does not seem to matter to such worthies that industry now accounts for only about 20 per cent of the GDP and the organised sector employs just seven million persons out a national workforce of about 400 million. They have an uncanny way of knowing which side their bread is buttered on.

Lest we forget, it was Dr Manmohan Singh who described the bull-run of the early 1990s as proof of the success of his policies. The fact is, the economy was actually contracting and the incremental growth of the first post-reforms decade was only 0.2 per cent more than the previous decades. Actually, the bull-run owed more to Harshad Mehta than Manmohan Singh.

The problem is that once again the good doctor seems to be deluding himself. But if the economist prime minister and his cheerleader economists analysed this event from the larger perspective of an entire country, even they will come to the conclusion that the Corus or Novelis takeovers add little to the national bottomline and only the foreign debt has gone up. Nevertheless, it’s an event for corporations to cheer. Unfortunately, the business of India is still not business and that is at the crux of our problems. India’s industrialisation and the overseas acquisitions of a few Indian corporations are two different things. Let’s not confuse one with the other.

That Indian companies are gaining critical momentum and are able to acquire productive assets abroad is a good thing — for them. It gives them more access into the global marketplace and a greater role in it. But will Corus or Novelis swell Tata and Birla bottomlines is another matter. The dividend stream is always the smallest outflow from a corporation’s coffer. Neither Tata Steel nor Hindalco will have any worthwhile integration with Corus or Novelis.