Mesmerised by the glitz of money bags and a bloating stock market and sensex, the political-corporate regime missed out a crucial sign: Satyam is just an aberration. The epidemic is entrenched and spreading in the new political economy of superrich fat cats
SANJAY KAPOOR DELHI,
IN THE LAST five years we have seen the stock market jump from 6,000 to 10,000, and then, dizzyingly, to scale a new height of 21,000 odd points. It was breathlessly maddening till it lasted. No one had the time to answer questions about from where the money was coming in and what it was doing to the economy. All kinds of spurious brick and mortar companies that did not have a roof over their head were attracting mind-boggling funds from unknown sources. On a scale of AZ, the companies that were lowest in the scale (T-Z) were getting funds that defied logic. Why? We asked not so easy questions. Hardnews got no answers.
Stock market players, bullish by the flow of funds, never got tired of saying: "This is real money. It is turning India around." Yes, it worked in some ways. Greed was celebrated and so was recklessness. Fancy cars, malls and every symbol of vulgar affluence began to reveal themselves as if India had suddenly become Manhattan where there was only glitz - and no slums, no slumdogs.
We asked probing questions from the government about the trajectory and content of growth. We wanted to refocus attention on the large mass of people who were left behind in this one-dimensional, pro-rich race for high sensex and growth rate. We saw and smelled organised corruption and how the chimera of growth was feeding this Leviathan. Billionaires were being born overnight and wealth was being generated with no real effort. Money was changing hands with money and ‘some' people were getting obscenely richer.
However, wealth was not being created through production or manufacturing. If one looks at the balance sheets of a few companies over the past few years, it would be visible that their growth and profits far exceeds even their productive capacity. Many of these companies were helped by the global accounting companies that valued enterprises way beyond their intrinsic or future worth. Also, they projected the future growth of sectors that did not square with ground reality. Information technology, biotechnology, real estate were some of their favoured sectors. Not unexpectedly, this led to a boom in the economy that pulled funds from other sectors too. Seeds of a scam were being sown in an environment of easy money. Regulatory authorities and auditors were deliberately too lax to be seen as party-poopers. They seemed to be winking whenever they sensed corporate houses orgiastically making money the wrong way.
The Satyam fraud is a case in point. Their brazen ways included rigging up books and coming out with public issues. All kinds of shady companies came out with IPOs and made money. Gujarat, especially, was swimming in the tide of dubious public issues.They raised money from the market without really investing in any productive use.
Large companies were no better. Money collected through global depository receipts (GDRs) were also parked in high interest yielding fi nancial instruments without putting them into a stated purpose. It seemed like a huge money laundering exercise that used the stock market to improve valuation and get richer.
Most of the big companies, whether they are in IT, BT, real estate and many others, are extremely dubious and they have looked big because of how they have rigged their account books and the stock market. Many of them are bigger because of their proximity to rich politicians who look at these companies to park their ill-gotten wealth. As Subramanian Swamy perceptively says, the bulk of India's development is funded by politicians' dubious money who invest without really bothering about economic fundamentals. Almost $1.5 trillion is reportedly parked in Swiss banks alone. A lot of it comes back through the Mauritius route to fuel the Indian dream.
In other words, the sordid Satyam saga, where the promoter was found pauperising his own company, is not such an aberration as is made out to be. Satyam's Ramalinga Raju was found out due to the economic slowdown and the collapsing value of real estate. If the stock market would still have been 10-12,000 high, and if he had friends in the central government to bail him out, then he would not have owned up his crime. Raju's fall is indicative of the souring Indian dream: how organised mafia style corruption and brazen immorality of the money bags has resulted in the country squandering a meaningful opportunity to create employment and transform a poor democracy on the constitutional principles of economic equality, social justice and human dignity.