Mohammad Jamil
AS Chief Minister of Gujarat, Narendra Modi had claimed that his state was a ‘model’ of development. While his government in Gujarat had achieved a remarkable growth rate, his public policies as well as his politics had resulted in growing inequalities. BJP had won 2014 elections on the basis of slogan that it would play an economic miracle, but Modi’s policies resulted in chaos and confusion by implementing RSS policy of turning India into Hindutva state. Today India is burning; there is violence in many states after amendment to Citizenship Law. Economy has slowed down unemployment has increased and especially corporate sector is on the verge of collapse. Power, steel, communications – the main pillars of economy – are the areas that have been hit because of Modi’s policies. The collapse of Corporate India could have serious repercussions: The FDI by global investors like Saudi Aramco may have to rethink their investment strategy.
In November 2019, the Supreme Court of India had dismissed review petitions of top telecom firms including Bharti Airtel and Vodafone Idea seeking review of its earlier order asking them to pay Rs 1.47 trillion in past statutory dues by January 23 saying it did not find any justifiable reason to entertain them. India’s Supreme Court also rejected an application from telecom companies to defer paying billions of dollars in historic levies to the government, in a ruling that leaves Vodafone’s local joint venture on the verge of collapse. Telecom companies, including Vodafone Idea and Bharti Airtel, were ordered to pay $13bn to the government by March 17, said a court judgment, which chastised them for not depositing dues earlier. Vodafone Idea’s shares plunged after the ruling.
Prime Minister Narendra Modi had won a second term in office promising to make India a $5 trillion economy by 2025, but simultaneously he continued with his policy of repression on minorities. Analysts say that India’s banking sector, which is struggling to regain confidence as the country’s slowdown enters its third year, is expected to suffer in the event of a collapse. It would also hit the government’s annual revenue from the telecom companies. Turmoil in the telecom sector is set to exacerbate pressure on India’s financial system, still reeling because of banking crisis, which would add to banks’ reluctance to lend. Vodafone Idea reported a third-quarter loss, as it shed millions of subscribers as a result of the industry price war.
A report by Belgium-based International watchdog, CADTM (Committee for Abolition of Illegitimate Debt) in Jun 2019, the corporate debt in India is spiraling up and it might not be long when it reaches alarming levels. As per LiveMint report of 7th December 2019; former Reserve Bank of India (RBI) governor Raghuram Rajan said India is in the midst of a “growth recession” with signs of deep malaise in the Indian economy that is being run through extreme centralization of power in Prime Minister’s Office and powerless ministers. According to this report, the Collapse of Private Banks, Aviation sector and Finance corporations in 2018-19 eroded confidence of investors. Big names like Ambanies, Tatas, Mittals and Mallyas may have looted India through connivance with BJP government and their empires are collapsing, total debt held by these families is almost 200 billion dollars.
According to a report, Air India with a debt of 14 billion dollars is for sale, with no buyers. Five sectors, finance, telecom, steel, aviation and energy were considered pillars of corporate India; these have become liabilities. Early signs of collapse of corporate sector appeared in 2017-18 affecting aviation and private banking sector. Jet Airways (one of India’s top three airlines) had the largest market share in Indian aviation industry. Abu Dhabi’s Etihad Airways owned 24 % shares of Jet Airways and had to struggle to sell it back to Indian State Bank last year when Jet Airways collapsed. Jet Airways had a net debt of Rs. 72.99 billion ($1.2 billion) and defaulted on loans that were due by December 31, 2018. In 2012, Kingfisher Airlines, founded by beer tycoon Vijay Mallya, ended operations after failing to clear its dues to banks, staff, lessors and airports. Corporate India has some big names and brands like Tatas, Birlas, Ambanies and Mittals; the bubble of these seems to be bursting. ‘India Today’ story of 15 March 2019 should have rung the alarm bells in international business community. The story with title, Anil Ambani: The Fall of a Billionaire, from being one of India’s star businessmen to a defaulter facing a jail term, talked of the Indian tycoons and their collaboration with BJP. Anil Ambani’s business debacle is a textbook case of unbridled ambition and risky business ventures gone wrong. ‘The plight of Tatas’: A BBC report of 5 Jan 2020 points to a dismal picture of steel industry as well. The Chairman of the Tata group has said “company can’t have a situation where India keeps funding losses at its Port Talbot steelworks in UK”.
According to an analyst in a national English daily, “the international business community must realize that Indian economy is in deep recession and FDI will remain very risky. Gulf countries, especially KSA and UAE may have to weigh their options and analyze if India was a bad idea to invest and spiraling trends in Telecom and Financial sector would negatively impact Saudi investment in Reliance Conglomerate. These trends could accentuate Indian domestic chaos when common Indians learn that Modi has not only imposed his Hindutva agenda but also played havoc with Indian economy”. The emerging collapse of Corporate India has alarmed international community; especially UAE and KSA that their investment in the hollow basket of India is likely to be doomed.
—The writer is a senior journalist based in Lahore.
