Posted by: John Elliott | December 28, 2011

Is the Lok Pal Bill, and Ambani brotherly love, for real or just for the numbers?

India has a government that cannot govern

Dec 30: Once again, as has happened many times since the 1960s, politicians have blocked the introduction of a Lok Pal anti-corruption ombudsman.

The Lok Pal Bill floundered at midnight last night when a day-long debate in Parliament’s Rajya Sabha (upper house) ended in chaos and uproar as MPs on all sides shouted and argued about what to do with 180 amendments that had been tabled.

The Congress-led coalition government is being accused of orchestrating the chaos to stop voting taking place, fearing defeat on key issues such as government on control of the CBI and the impact on states (see below) because it does not have a majority in the Rajya Sabha.  The Bharatiya Janata Party-led opposition is accused of scuppering the legislation by proposing amendments unacceptable to the government. Parliament is now in recess till the Budget session starts in late February or early March, when the government says it will re-present the Bill after studying the amendments.

Last night’s debacle showed, once again, that India currently has a government that cannot govern.

__________________________________________________________________________

Dec 28: It’s always best in India, when assessing events, to turn them upside down and see what they then look like, rather than accepting them at face value. So applying that test to headlines that dominated this morning’s newspapers, do politicians really intend to make sure that the Lok Pal (anti-corruption ombudsman) legalisation currently passing through Parliament actually does curb extortion and fraud, and do Mukesh and Anil Ambani, who control rival business both carrying the Reliance name tag, really intend to become friends after a high profile family love-in yesterday?

It would be good if both events were for real, and were not just manoeuvres aimed at quite different goals. India desperately needs governments at both the national and state level that seriously try to curb endemic corruption, and both India and the Ambani family would benefit if the brothers, who head two of the country’s largest conglomerates, co-operated.

Anil (left) and Mukesh Ambani

It seems likely however that the Congress Party, which heads the governing coalition, is more  interested in improving its overall anti-corruption image and in boosting the number of seats that it can win in February’s key Uttar Pradesh state elections than in tackling graft.

The Ambani brothers (left), especially Anil, undoubtedly hope that the pictures of a colourful family get-together yesterday will improve the numbers on their stock prices, their banking viability and, ultimately, their bottom lines, as well as protecting their fading image.

The Lok Pal legislation was passed by the Lok Sabha (lower house of parliament) late last night and will be debated – after extensive politicking today – in the Rajya Sabha (upper house) tomorrow where it could still be defeated by opposition parties. It has been on governments’ legislative agendas since the late 1960s, but has been constantly delayed by objections from MPs and others who feared they would be subject to ombudsman investigations.

.

The government has been forced to introduce the legislation now by a mass campaign led by Anna Hazare (right), a populist Mahatma Gandhi look-alike, who has built up the pressure with massive middle-class support since April when he staged a fast in Delhi.

Hazare has humiliated the government into a rare frenzy of activity and concessions, but virtually all politicians still want to curtail and control its independence and impact, and there are also genuine concerns about a loss of parliamentary authority.

Consequently, Hazare and his team of social activists and hangers-on have not won all that they have wanted – for example the extent of the Lok Pal’s investigatory powers and its authority over the prime minister and the Central Bureau of Investigation (CBI), and coverage of companies. Now there are demands from opposition leaders and individual states that the requirements for state level ombudsmen (Lokayukta) should not be binding.

Hazare’s campaign seems to be losing its impact now that parliament is debating legislation. A rally and fast in Mumbai has been abandoned today along with other planned protests, and 74-year old Hazare’s health is not good. This switches the focus to the government and how it introduces the Lok Pal (assuming it gets through parliament tomorrow) and backs it up with other anti-corruption measures. Many critics – in addition to questioning the government’s real commitment – fear that the Lok Pal will merely become another overstaffed and cumbersome part of a basically corrupt bureaucracy.  

.

As for the Ambanis’ love-in, there is heavy scepticism about how genuine and far-reaching this morning’s news really is. The brothers fell out after the death in 2002 of their father, Dhirubhai, who had founded the textiles to oil and telecoms group. They split the business in 2005, and then signed a peace pact last year after a bitter public fight. Since then Mukesh Ambani’s RIL group, though one of the two biggest in the country, has lost its aura of invincibility – and its shares have fallen nearly 30% over the past year. Anil Ambani’s ADAG group has built up massive debt and other problems, mainly in its telecom businesses which have some $6.5bn debt – an unsustainable figure – and its share prices have halved, though there has been some recovery in recent days on speculation of the better relations.

Both groups are the subject of official inquiries into business practices and the Ambani and Reliance names are losing their sheen. So a make-over is needed, especially by Anil Ambani. The Economic Times, which is renowned for displaying stories that please corporate friends, triggered that when it splashed the family’s party across its front page this morning, headlined Ambani Family Drama ends with Dandiya (folk dance). There were more pictures inside the paper, one of which showed the brothers talking to each other.

The party (above) took place in the family’s original Gujarat home town on the eve of Dhirubhai Ambani’s 80th birth anniversary today. The family usually get together on the anniversary but this event was carefully orchestrated and even choreographed. It started with Dhirubhai’s widow, Kokilaben, who has tried since her husband’s death to minimise the conflict between her sons and encourage them to co-operate, making an  unprecedented television statement on Monday night . She said that there is still “love among the brothers” and that her family were “all united”.

It has been known for some months that the brothers have been liaising on how to handle negative publicity and events. There has also been extensive speculation, which is widely believed to be correct, that Mukesh Ambani, who is building up an internet telecoms business, is negotiating to use telecom transmission towers belonging to his brother’s business, instead of hiring facilities from other companies. There are also reports that Carlyle and Blackstone, two US private equity groups, might buy into the towers business – presumably as part of a deal that could include Mukesh Ambani. But I have not found anyone in Mumbai who expects deals between the two men to go much further.

So, as with the Lok Pal legislation, one should not expect too much from the Ambani’s party publicity splurge that continued on television this evening. However, as with all families, it is good when the warring stops, and that does seem to have happened – just as it is good when the need to attack corruption becomes a national issue, even if governments are loath to act.

1 Comment

Posted in Ambanis, Anil Ambani, India, India corruption, India politicians, Reliance Communications, Reliance Industries | Tags: , , , , , , , , , , , , , ,

Posted by: John Elliott | December 24, 2011

Merry Christmas!

Merry Christmas to all of you who have come Riding the Elephant in the past year. Have a great holiday weekend and come back soon – Cheers  John

.

 

 

 

2 Comments

Posted in India | Tags: ,

Posted by: John Elliott | December 16, 2011

Delhi marks 100 years of ‘re-emergence’ and bypasses a British century

India hasn’t known quite how to mark the first centenary this week of the founding of its modern capital city, Delhi, by Britain’s King George V in 1911. Though many of the country’s elite continue to polish their English accents, and relish their links with long-dethroned maharajas and lesser royal families, it is not quite politically correct to celebrate things done by former colonial masters.

So, after much debate (while British High Commission diplomats kept their heads well below the parapet), it was eventually decided earlier this year to celebrate the historical “re-emergence” 100 years ago of Delhi as the capital – a sly dig at the British who had earlier moved the capital from Delhi to Calcutta in the late 18th century.

Yesterday morning I drove to the north-eastern outskirts of the capital and found 200 or so labourers shifting earth and chipping stone walkways to turn that “re-emergence” into new ornamental gardens.

They were working at Coronation Park, where statues of King George (above and below) and other dignitaries were dumped on brick plinths in the 1960s by a government that was unsure what to do with these embarrassing relics of a not-so-distant past – totalitarian regimes such as the Soviet Union and China (plus the US in Iraq) demolish such statues, but the world’s largest democracy was more self-consciously caring. (King George had previously stood under a canopy at India Gate on central Delhi’s grand Raj Path).

King George’s statue, and a ceremonial column with a plaque (right) that he unveiled in 1911 to mark his coronation a few months earlier, will be the notable features along with four other remaining British statues.

“How does it matter – it’s history,” says A.G.Krishna Menon, who heads the Delhi branch of INTACH, a conservation organisation that is running the work with Delhi authorities. “It doesn’t matter if it was the Moguls or the British. We are interested in conserving history and we can’t not do it just because it’s King George the Fifth”.

There have been no celebrations at Coronation Park this week, but events in the past few days have included receptions to launch a splendid book, Delhi – Red Fort to Raisina, published by Roli Books, and an associated exhibition. The book includes a wide range of photographs (see durbar below) of old Shahjahanabad, now known as old Delhi, mostly assembled by J.P.Losty of the British Library with essays by Salman Khurshid, a lawyer and writer who is currently India’s law minister, and others. There has also been an exhibition and music evening at the Indian Council of Cultural Relations and a grand maharajah’s dinner, appropriately in Delhi’s Imperial Hotel. More events are planned during the coning year.

The forsaken Coronation Park location was apt – not only was it largely hidden from view, but it was also the site of three imperial British durbars. The third of these huge celebrations of colonial pomp and power was the one in December 1911 when King George visited the country with his wife Queen Mary to mark his coronation a few months earlier. Addressing some 100,000 spectators of varying grandeur, he announced the new capital that was eventually built in the 1920s and 1930s some 15kms south in what is now New Delhi.

While Delhi was growing into a conurbation of approaching 20m people, grass grew around the crumbling imperial monuments, encircled (as I discovered when I last went there a decade or so ago) by a wall and rusty gate with a padlock that a bored attendant would sometimes open to curious (usually British) visitors. Several statues vanished, leaving topless plinths that added to the desolate symbolism. Some of the statues went I am told to welcoming destinations in the UK, Ireland and Australia – Rufus Daniel Isaacs, the 1st Marquis of Reading and a Viceroy of India in the 1920s, now stands in the English town of Reading.

the 1877 Delhi durbar

Conservators have sometimes tried to renovate the Coronation Park site. An attempt in 2007 was stopped because it was the 150th anniversary of what the British called the Indian Mutiny but is now seen as the First War of Independence, when the British demolished significant parts of Shahjahanabad near the Red Fort. Eventually Delhi authorities agreed that the park should be renovated and expanded, and that is what is now happening (below), with the main part due for completion next August.

The Delhi of today is a city of immigrants. Hindus and Sikhs who fled from Pakistan after independence in 1947 and turned it into a major business centre as well as a seat of government. Now it is home of millions who throng here for work, especially from the poorer states of Bihar and Uttar Pradesh, as well as multi-national companies and others that have helped build the chaotic under-resourced satellite city of Gurgaon and the neater satellite of Noida.

It is a city of energy, vibrancy, resourcefulness and skills – all more evident in old Delhi than the wide and elegant but rather anti-social avenues of the 20th century city. And it has a rapidly growing and efficient metro railway. But there is also worsening pollution, corruption, illegally dangerous buildings, poverty and the brash selfishness of the newly rich. Last year’s Commonwealth Games were a low point on many counts – prompting politicians and others to call this week for a renewal of the city’s values and pride.

But though often condemned by its residents, with the best-off usually saying they would prefer to live somewhere else, it is a place that people always come to with hopes and dreams. That has probably applied to all the eight (some historians say nine) cities that have been built here since it became the first capital of Muslim India in 1193 (plus an earlier one dating back to 5000 BC).

Soon King George V will be able to survey this vast mosaic from his restored lofty perch in Coronation Park (below), saved from the rubbish heap by conservationists’ sense of the city’s history.

10 Comments

Posted in Delhi, Delhi Metro, India, India UK | Tags: , , , , , , , , , ,

Posted by: John Elliott | December 6, 2011

Is India’s problem too much democracy or a Soviet-style prime minister?

Does India have too much democracy and would it be better off with less? The question is inevitably raised whenever comparisons are made with China, where totalitarian rule has enabled dramatically faster and more efficient economic growth and development than has been possible in India since the two countries began to liberalise controls 20 years or so ago.

Alongside that, does India have a strong enough political leadership, and does the current Sonia Gandhi – Manmohan Singh (below) split between party affairs and government work? The answer of course is “no” to the last two points, whereas the democracy point is debatable.

The past few days have been a good time to revisit such topics because of the petty politics, democratic chaos and official mismanagement surrounding the Indian government’s attempts (postponed indefinitely on Dec 7 ) to open up supermarkets to foreign direct investment (FDI). Opposition to the FDI has led to parliament being inoperative for two weeks (I wrote about this on December 1).

That has coincided with a visit to Delhi by one of Asia’s most effective critics of too much democracy, Mahathir Bin Mohamad, Malaysia’s former prime minister.

.

Mahathir (left), now 86, ran Malaysia for 22 years from 1981 till 2003, accumulating power at the expense of both individual freedoms and an independent judiciary and media. But he nevertheless maintained the semblance of democracy, winning five general elections, and he won acclaim for building his country into a strong and successful economy, and for bucking some of the demands and advice thrown at developing countries by the West.

“Sometimes democracy can paralyse decision-making because people oppose for the sake of opposition,” Mahathir told a Hindustan Times conference in Delhi last Friday, hitting the spot at a time when the government’s fractious coalition partners, especially Mamata Banerjee, chief minister of West Bengal, have been playing political games over the FDI plan.

“Democracy is the best form of government mankind has ever invented but it is important for the world to understand its limitations. India could be China if it were not for too much domestic politics and abuse of freedoms to protest and argue at will,” said Mahathir.

That is undoubtedly correct. India’s combination of noisy fractious democracy, plus its coalition governments and mostly pliable media, spells disaster for reforms that challenge vested interests, whether those interests are the rural poor rightly trying to protect their livelihoods or rich businessmen trying to protect their often illicit sources of wealth. Add widespread corruption to that mix and the result is often negative.

.

This contrasts sharply with Mahathir’s Malaysia where corruption got things done – a friend who did business in Malaysia in those years quickly found that success came by hiring a close Mahathir relation as an agent. A construction industry friend who was used to paying just once in Malaysia, laughed at problems his counterparts had in India. In such a democracy, he said, one should make staged payments as a project progressed, always keeping something in the kitty for new demands from the ever-changing ranks of politicians and officials.

So Mahathir’s truncated democracy was much more effective, as is China’s undemocratic authoritarian system. But India lacks something else that Malaysia also had, namely strong political leadership to manage the problems arising from the pushes and pulls of democracy

Communist-style governance

This was raised at the Hindustan Times conference by L.K.Advani (below), 84-year old leader of India’s main opposition, the Bharatiya Janata Party (BJP). Scoring a neat political point, he suggested that Manmohan Singh was a weak prime minister. He was, said Advani, “not able to exercise all the authority of a prime minister” because of his “acceptance of a communist model of governance, namely where it is the party chief who is more important than the prime minister”.

.

He mischievously likened that to the way he had been told to give precedence to the Soviet Union’s Communist Party chief Nikita Khrushchev rather than premier Nikolai Bulganin when the two leaders visited India in 1955. “I was surprised to hear this,” he said.

Advani then criticised Sonia Gandhi’s style, saying: “In a democracy you cannot have as number one a person who people do not know”.

Anand Sharma, the minister for commerce and industry, who is responsible for the retail FDI policy, has explained Sonia Gandhi’s behind-the-scenes role. Speaking in television interviews over the past few days. he has said that she does not interfere in the detailed running of the government but does let her views be known, and those views are then followed.

That however is not leadership, and it is not an effective way of running a government. Neither Gandhi nor Singh are natural leaders. The former likes to lead from behind while the latter believes it is neither his job nor wise to lead from the front. Singh has broken out just once – on India’s nuclear deal with the US three years ago, where he led from the front with Gandhi’s support. On retail FDI, he has tried the same tactic but Gandhi has not yet fallen in with him, mainly I guess because she has some sympathy with the view that it might not be good for poor farmers, and partly because she thinks the policy might have to be abandoned or at least shelved.

So given that there is no chance of India abandoning democracy, nor of accepting a Mahathir version, it is to Advani’s remarks that one has to turn for a solution to the current muddle.

The Gandhi-Singh duo is not working. India’s coalition government desperately needs a strong and able political leader. Until it has one, the worst effects of democracy will continue to prevent the country being run effectively.

7 Comments

Posted in India, India China, India corruption, India democracy, India economic reforms, India FDI, India politicians, Manmohan Singh, Nehru-Gandhi dynasty | Tags: , , , , , , , , , , ,

Posted by: John Elliott | December 1, 2011

Wal-Mart & Co fuel Indian political crisis

Wal-Mart & Co won’t have India supermarkets any time soon.

December 7: This morning, after opposition protests stopped parliament operating for two weeks, the government announced that the FDI plans are “suspended” till a “consensus” is reached by all political parties and state chief ministers. This surely means that it will not be introduced before the next general election – which is not due till 2014, but arguably should be much earlier, given the government’s appalling record.  

See later blog post – Is India’s problem too much democracy or a Soviet-style prime minister? wp.me/pieST-1ve

_________________________________________________________________________

Dec 1: I’ve never understood why India wants international supermarket chains like Wal-Mart (especially) and Tesco to trample across the country, supposedly providing consumers with a good deal while actually giving a far from good deal to employees and to farmers and other suppliers. But I guess one has to be relieved that the Indian government has at last come to a decision, after over 15 years of being pushed around by vested-interest opposition from existing retailers, traders and other distribution middle-men, plus leftist political parties, and relentless pressure to open up from the US and elsewhere.

.

The decision to allow foreign direct investment (FDI) in supermarkets was however suddenly announced last week in such a cack-handed way – and at the start of the winter session of parliament – that it has caused a major political crisis. It is one of the very few major policy changes introduced by the government since the 2009 general election, and the crisis could easily have been avoided by waiting till the end of the month when the parliamentary session will be over. Instead, it has prevented parliament doing any business for eight of its 21-day winter session. Today there has been a nation-wide protest strike by retailers and wholesalers.
 
The reaction has been so strong that, taken together with the avoidable freezing of parliament’s business,  many politicians and commentators are suggesting that the government’s cack-handedness was intentional. They say it was at least partially aimed at deflecting attention from other crises and at preventing contentious anti-corruption Lok Pal legislation being debated quickly in parliament.
 
The protests have been basically driven by the Bharatiya Janata Party-led opposition that wants to seize on any issue to undermine the beleaguered Congress-led government’s weak leadership and fractured unity – especially ahead of state assembly elections next year. Conveniently, the BJP is also pandering to politically important traders’ and small shopkeepers’ lobbies that oppose retail FDI (though the party did briefly back the idea a few years ago) and which will be important in the state elections, especially in Uttar Pradesh.
 
The real fears however should stem from Wal-Mart’s appalling international record of treating suppliers harshly and employees shabbily. The latest opposition to its worldwide ambitions came in South Africa a few weeks ago, and there are frequent campaigns elsewhere against its expansion. Tesco is only a few shades better and its expansion around the UK is constantly opposed.

Any idea that Wal-Mart will treat farmers enormously better than the often crooked and corrupt traders and middlemen that they have to deal with currently is far-fetched, as are government claims that the advent of foreign investment will rapidly create jobs and bring down prices, helping to curb India’s currently high rate of inflation.

Contract farming

Experience has shown that farmers have problems with the bulk buying and contract farming that Wal-Mart and others will want because they find it difficult to sell below-standard produce that is rejected by their primary buyers. Anand Sharma, the commerce minister, was last week quoted saying 10m jobs would be created over three years, which is frankly ludicrous (maybe he was misquoted!). It will take three years at least for FDI to make any real impact on jobs and prices and it could be far longer, given regulatory and other hurdles that companies would have to tackle.

The retail sector’s restrictions on foreign investment began in 1997, six years after the start of India’s general economic liberalisation. It currently remains one of the most controlled areas, along with defence manufacturing and insurance. The 1997 change allowed 100% FDI in cash and carry (wholesale) stores, thereby effectively banning it from the rest of the sector. Almost a decade later, in 2006, it was allowed up to 51% for single-brand retail shops such as upmarket luxury brands (which had already been working as franchises), and that also facilitated Marks & Spencer. Multi-brand retail however was blocked to prevent FDI in supermarkets that sell farm produce.

.

By the mid-2000s, India’s general consumer market was opening up and Indian businesses, led by Mukesh Ambani’s Reliance Industries (RIL) and by Kishore Biyani’s Future Group (Pantaloon stores), started developing supermarket chains and other retail outlets.

Fearing they were losing opportunities to enter India, foreign multi-brand supermarkets began to move in. Wal-Mart joined up with the Bharti group (which was diversifying from telecoms) and Tesco went with the Tata group, in both cases restricted to wholesale cash-and-carry stores that could provide Bharti and Tata shops with supplies.

But this was not enough for companies like Wal-Mart, Tesco – and Carrefour that has tiptoed into India (the opening of its second wholesale store – above – in Jaipur, was disrupted by demonstrations and a fire earlier this week). Such companies have continued to pressure the Indian government, backed by the US government and international agencies, and that led to last week’s decision to allow 51% FDI in multi-brand supermarkets and 100% in single-brand outlets.

So the question to be asked it why, if big Indian groups like Reliance, plus Wal-Mart and others from abroad, were expanding in what is known as the (wholesale) back-end, is it necessary to open the (retail) front-end up to FDI? The answer is that no Indian company has the will to tackle the politically-ridden areas of farming, produce trading and distribution – Reliance was driven out of some of its early attempts, and Bharti abandoned a farm-to-fork enterprise (which I wrote about in Fortune magazine over-optimistically in 2006).

It is the back end that urgently needs to be developed because India has few freezer-based chains and the other logistics needed to carry farm and other goods – over 40% of produce sent from farms to urban areas is wasted, which is appalling for a country that is the world’s second largest producer of fruit and vegetables. Reliance has done relatively little, as has multi-national Hindustan Unilever and other possible candidates.

Reluctant to invest

Wal-Mart and Tesco meanwhile have not wanted to commit heavy investment because they have not been able to invest in front-end retail shops, where the profits are, and because there have not been enough shops to justify a supply chain. The government hopes that the 51% FDI limit in retail and 100% in wholesale will give sufficient incentive for foreign companies to invest heavily, building the linkages that India undoubtedly needs, and maybe spurring Indian groups to do more.

In order to try to appease the opposition, the government is limiting the concessions to the 53 largest cities that have populations of over 1m. It will then be up to individual states to decide whether they want to allow the stores, and to draw up planning and other regulations restricting their operations. At least 30% of goods will also have to be sourced from Indian small firms (last week the announcement omitted the word “Indian”, which raised the spectre of supermarkets being swamped with cheap Chinese manufactured goods).

These safeguards look sufficient to limit the impact that the foreign firms might have, and they answer my original point of not knowing why India wants to let Wal-Mart trample across the country. India undoubtedly needs to smarten up its appalling logistics and farm-to-fork distribution, and tackle the mafia of middlemen and traders. Wal-Mart however has such an appalling international image that it is arouses instant opposition and makes it easy – and understandable – for those who want to block progress.

As I write, it remains to be seen whether prime minister Manmohan Singh will ride out this crisis and enforce the new policy, or whether he will be forced to shelve the plans by his Congress Party, led by Sonia Gandhi and her son Rahul Gandhi whose reputation hangs on the coming Uttar Pradesh state elections. Neither Gandhi has yet spoken in favour of the FDI.

9 Comments

Posted in FORTUNE magazine, India, India corruption, India economic reforms, India FDI, India industrial policy, India politics, India retail, Manmohan Singh, Tata | Tags: , , , , , , , , , , ,

Posted by: John Elliott | November 24, 2011

Dynastic shift at Tata keeps the clan intact

Watch out Rahul Gandhi! Yesterday’s news that Noel Tata, a reticent low-key member of the Tata family, will not be the next head of India’s biggest and most respected business group shows that reluctant dynastic heirs do not always win by default. Gandhi of course is showing less reluctance now that he is wading into Uttar Pradesh’s coming state election campaign, but he is still an uncertain heir and questions are being raised about the wisdom of his dynastic succession at the top of the Congress Party – most recently by an international magazine, The Economist.

Gandhi has the advantage that he is backed by Congress’s current president, Sonia Gandhi, his mother, whereas Noel Tata was not backed by Ratan Tata, his half-brother who retires as chairman of Tata Sons at the end of next year. Ratan has said publicly that Noel, 54, who heads some of the group’s retail and other businesses and till yesterday evening was the seen as the front-runner, was not ready for the job.

Instead of Noel Tata, it is Cyrus Mistry, a 43-year old businessman, who is to take over from Ratan Tata at the end of next year. This does however keep the job within what is a complex extended Parsi family. Mistry (left) belongs to the Pallonji family and Noel is married to his sister.

He and his elder brother Shapoor are, with their reclusive father Pallonji Mistry, the largest single shareholders (with a combined 18% stake) in Tata Sons. The Tatas’ personal equity stake is small, though philanthropic Tata trusts hold some 66% of the group.

Mistry was yesterday appointed deputy chairman of Tata Sons. He will work alongside Ratan Tata, 73, heading a group that has a combined market capitalisation of nearly $80bn with 425,000  employees and revenues of $83.3bn covering businesses in India and abroad that range from tea, salt and hotels to steel, telecoms, autos and missiles. He graduated in civil engineering from London’s Imperial College and went on to the London Business School.

His appointment has been publicly welcomed by India’s business fraternity, with people who know him talking about his intelligence and good strategic judgement, though there were some private criticisms and also inevitable queries about his ability (as there once were about Ratan Tata). He was originally on the five-man committee set up last year to select Ratan Tata’s successor, so there will be questions about how  he came to get the job himself once other candidates had been put aside. There will also be questions about how the direct influence of his family on Tata companies will play out.

Presumably, Mumbai speculation suggests, his family saw the problem the committee was having finding a successor, especially given Tata’s (unexplained) lack of enthusiasm for Noel Tata (left), and decided to seize the opportunity to capitalise on its majority shareholding, shifting the dynasty from the Tata name to Palonji-Mistry. If Ratan Tata had backed Noel, it might have been difficult for Mistry, as Noel’s brother-in-law, to object and a Tata would have remained in charge.

Reports suggest that Ratan Tata respects Mistry’s business acumen, and there is also the advantage of his relatively young age. Mistry is currently managing director of the construction part of the Shapoorji Pallonji group, named after his grandfather who founded the business nearly 150 years ago. With revenues of some $2bn a year, which he has built up, it has been responsible for major projects in India and the Middle East and Africa. This means Mistry has been exposed to the ways of one of India’s rougher industries, though maybe not so much as his elder brother Shapoor, whose responsibilities include real estate. Both brothers are directors of various Tata companies, and Cyrus Mistry has been on the Tata Sons board since 2006.

Cyrus Mistry will therefore have useful experience for steering the Tata group’s basically clean reputation. This possibly gives him an advantage over Ratan Tata, who has always seemed uncomfortable with the complexities of political and corporate corruption that has grown enormously in India during the 20 years he has headed the group. “I can say, with my hand to my heart, that we have not in fact partaken in any clandestine activity,” Tata said two months ago when being questioned about his group’s involvement in India’s far-reaching telecoms scandal.  “I think there are many honest businessmen. There are many that bend. I am happy that I have not bent”.

So while the direct line of the Tata dynasty is being broken after three generations, control of the group stays within the extended Tata-Pallonji family and thus within the fold of the Parsi community and (Zoroastrian) religion.

Ratan Tata (right) will probably continue to head some of the Tata trusts, building up their charitable work, and non-family members might become chairpersons of major companies like Tata Motors and Tata Steel that are currently headed by Ratan Tata.

This looks a sound way to cover both dynastic succession within the clan, and shareholder power, bringing in a young executive who can gradually assert his authority, as Tata has done.

And the lesson for Rahul Gandhi? Start performing like the national leader India desperately needs. As The Economist put it, “the consequence of being in thrall to a bloodline is a weak party that lacks shared policies or common values”. Tata, which is far from weak, has managed its succession after some debate about admitting outsiders. Are Congress and the Gandhis strong and self-confident enough to do the same, should their heir apparent remain reluctant?

Leave a Comment

Posted in India, India corruption, India politicians, Nehru-Gandhi dynasty, Rahul Gandhi, Tata | Tags: , , , , , , , , , , , , , , , , ,

Posted by: John Elliott | November 23, 2011

Topical ‘miniatures’ from Merseyside’s Singh Twins

It seems such an unlikely success story – identical twins of Indian origin, born in the UK, become famous artists and depict their home city of Liverpool (left) and other more controversial scenes in the style of Mughal miniature paintings, inspired by the intricate and colourful miniatures seen as teenagers when their father drove them round India in a converted bus.

That is the story of the Singh Twins, Amrit and Rabindra, now in their 40s, who have just completed a month’s tour of India where they were feted in Delhi and Mumbai.

Mughal miniatures are usually small in size, just a few inches square, and rarely more than an A4 sheet of paper, but the twins produce works of more than 2ft by 3ft which mix miniatures’ traditional minute detail with a form of pop art. Alka Pande, a Delhi-based artistic curator and author, says the twins are “brilliant colourists who have taken Indian miniatures to a completely new level with reflections on contemporary life”.

Since the late 1980s, they have had solo as well as group exhibitions in many UK locations including the National Portrait Gallery (March 2010), as well as in the US and Canada. In India, there have been numerous shows including one at the National Gallery of Modern Art in 2002-03. In the past month, they have been showing The Making of Liverpool – portraits of a city (and an accompanying film) at Delhi’s Art Alive Gallery, and a series of Tarot card images at Mumbai’s Sakshi Gallery and at the British Council in Delhi with Gallery Nvya.

There are two main strands to most of their work – recording the lives of Indians as they merge with British culture, and attacking what they see wrong with society, especially increasing commercialism and the misuse of power and challenges to Indian culture.

“We saw our works as being important to challenge established cultural biases,” says Rabindra. “So we moved away from traditional miniature subjects to things like Indians living in the UK, against a background of Liverpool, with subjects like arranged marriages, celebrating our traditional heritage and making our culture positive rather than outdated, so celebrating both that and British culture,” they add in unison.

Their father, a Sikh, who accompanies them (together above) on all their trips, emigrated to the UK in 1947 and settled on Merseyside, practising as a doctor. They were heading towards medical careers when he took them to India in the converted bus in 1980. There they bought a book on Mughal miniatures that transformed their lives. At their Roman Catholic convent school there was no-one to teach them miniature art, so they copied pictures from the book. Their next stop was London’s Victoria and Albert Museum, where they photographed and enlarged miniatures so they could study the brush strokes.

These two petite and always identically dressed women make all their decisions jointly, sometimes arguing, but always agreeing on social and political views and on what to do. They occasionally paint separately but usually work together, sometimes forgetting later who did what on the bigger works.

It is difficult to tell them apart, though Rabindra is slightly more sparky. “We are ‘twindividuals’, she laughs, rebutting their college tutors’ view that they were not being individual enough. Amrit says they have only been apart for one week when one of them was in hospital. That, they say, means there has been no time for the complications of other relationships – which of course strengthens the uniqueness of the Singh Twins brand.

They have been fighting convention since they were at university in Liverpool, where they were told that Indian miniatures were not relevant and they should be learning from Matisse, Gaugin and Picasso. “We said that Gaugin and others had been influenced by India and other foreign works, and that we were being denied our own way of expressing ourselves,” they say. ”There was pressure to conform to Western ideas but we were challenging accepted notions of heritage and identity”.

Their recent shows in India (above and top) are striking in artistic and technical detail, depicting scenes against a backdrop of Liverpool’s monumental skyline and showing what Pande calls the twins’ “quirkiness and humour”.

But they are mild compared with earlier controversial work. In 1998, the twins painted Nineteen Eighty Four, The storming of the Golden Temple, which depicted (left) the Indian Army invading the Sikhs’ Golden Temple in 1984.

The temple stands in a startling red pool of blood, and the late Indira Gandhi, the prime minister who ordered the attack, watches (with Bill Clinton and Maggie Thatcher) from the turret of a tank as men, women and children flee for their lives, or lie dead. Then there is Partners in Crime, Deception and Lies, (below) with president George W. Bush and prime minister Tony Blair standing cockily on a burning blood-strewn globe of the world after the invasion of Iraq.

Those two works are painted on mountboard with poster colours, gouache and gold dust, and 1984 is their largest work at almost 30in by 40in. Now they have moved on technologically.

.

The Liverpool works they took to Delhi were limited editions of giclee prints, individually produced and coloured by the artists with digital scans (approx 30in x 22in, priced at around Rs200,000 – $4,000, £5,000), and smaller hand-painted mixed media digital originals (about half the size and twice the price of the giclees).

The originals of 1984 and Partners in Crime are in the twins’ personal collection, but they have been reproduced in special editions – 1984 in an edition of 1000 prints and Partners in Crime in a signed and numbered giclee run of 25.

The 1984 work was seen by some in India as being violent and controversial, but the twins say that both works were taken, as was intended, “as a commentary on the stage of politics globally – and how political greed, corruption and abuse of power is a universal concern that effects and threatens us all”.

“Our role is political and social, documenting and commenting,” adds Rabindra. “The 1984 work is not just about the event, but about political greed and the misuse and corruption of power”.

Images © The Singh Twins

This article originally appeared in a shorter form on The Economist’s Prospero arts blog

2 Comments

Posted in India, Indian modern art | Tags: , , , , , , , , , ,

Posted by: John Elliott | November 15, 2011

Few friends for India’s king of good times

.

It must have been a devastating shock for Vijay Mallya, India’s most flamboyant and image-conscious businessman, when the media and top business colleagues turned on him in the past few days over the plight of his loss-making debt-ridden Kingfisher Airlines.

The Mail Today’s front page yesterday (left) was the unkindest cut, but others also piled in. The Times of India today says “it isn’t the government’s business to bail the airline out”, and the Indian Express simply says “No Bailout”. Rahul Bajaj of Bajaj Autos said he saw “no logic in bailing out any private sector company”, voicing a widely-held corporate view.

Mallya said today that he had not asked for a bail-out, though he did want some help, and he has been lobbying politicians in the last few days. It was in fact prime minister Manmohan Singh who, flying back from an international conference, kindly but unwisely told reporters two days ago that “we have to find a way to get Kingfisher out of trouble”.

The prime minister would do better if he took advantage of Kingfisher’s crisis to clean up the government’s administration of the aviation sector, which has been riddled for more than a decade with corrupt and crony links between the aviation establishment and the private sector. That establishment embraces successive aviation ministry politicians and bureaucrats, other branches of government, and Air India, the government-owned, chronically inefficient and cosseted airline (with includes the former Indian Airlines domestic carrier).

Ratan Tata, head of the Tata group, has said he was not able to start an airline joint venture (about ten years ago) with Singapore Airlines because he was not willing  to pay a minister a suggested Rs15 crore (then about $3.5m) bribe.  Crony links have grown since then – especially between 2004, when the current Congress-led coalition government came to power, and a ministerial reshuffle in January this year. (I alluded to the links on this blog three years ago).  During that period private sector airlines were encouraged, while Air India was decimated by a series of government decisions that included its nominal (still incomplete) take-over of Indian Airlines, questionable large aircraft orders, and foreign airlines being allowed to take over lucrative routes.

.

This is not to suggest that Mallya’s airline has benefited most from this cosy relationship, close though he is to many ministers and bureaucrats – six years ago The Economist said he was “famous for his racy, party-loving lifestyle” and for his not unconnected “skill at managing his relationships with government”.

Jet Airways, Kingfisher’s main long-term rival, has had its own deep associations for years. It benefited most from the Tata-Singapore link being scuppered by the government banning foreign airlines from investing in Indian carriers because this blocked a potential serious rival. The fact  that Jet had to lose two foreign airlines that were then its equity  partners was a small price to pay for seeing Singapore off.

Now Mallya is urging the government to end that foreign direct investment (FDI) ban on foreign airlines. Whether this would bring an airline into Kingfisher, given its present dire financial straits and Mallya’s erratic management style, is another question – Mallya says he has an offer from one would-be investor and there are rumours of others.

Today he has tried to stem the tide of bad news with a long televised press conference, where he appeared calm and confident. He produced no solutions to the airline’s problems, but  correctly claimed that Kingfisher’s performance is no worse than competitors’. Its primary financial problem is crippling interest on $1.3bn long-term debt, and it urgently needs fresh working capital.

All airlines, as Mallya said, are hit by sharp rises in fuel costs, a rapid decline in the value of the rupee, and rising interest rates (now near 14%). He is negotiating with exasperated banks, which want him to produce more equity, and the State Bank of India is advising on restructuring the debt. In addition to the FDI change, Mallya is also asking the government to allow airlines to avoid sales tax by importing fuel themselves rather than through state-owned oil companies, and also wants duties charged by individual states to be reduced.

.

Mallya’s primary business is the highly profitable United Breweries (UB) group, which he inherited from his father. It is the world’s largest spirits business and India’s biggest brewer – producing Kingfisher Beer that gave the airline its name.

The airline has never made a profit since it was launched six years ago as part of Mallya’s “king of good times” mantra.

Last month it ended its Kingfisher Red cut-price operation that it has run, somewhat reluctantly and with muddled branding, since it bought Air Deccan four years ago. It has also abandoned some loss-making routes, and has cancelled flights because it has been re-configuring aircraft interiors – all of which has helped to escalate the sense of crisis.

As I said, it must be devastating for Mallya, who partly models himself on Virgin airline’s Richard Branson, to find himself so publicly shunned. He has for years wined and dined politicians, bureaucrats, opinion formers and journalists on his private jet and yacht, and at a stud farm, IPL private sector cricket tournaments (he owns a team), and many beach and city homes in India and abroad, as well as on Kingfisher aircraft. Only a month ago he was visibly shaken  (above) when he had to admit India’s Sahara group as a 50-50 investor in his cash-strapped Force India Formula One racing team, now renamed Sahara Force India.

But what a marvellous chance his airline’s plight gives Manmohan Singh and Sonia Gandhi, the Congress Party chief, to begin to honour their pledges of tackling India’s endemic corruption and crony capitalism by dealing with Kingfisher transparently and openly. It could allow foreign airline investors to have minority equity stakes, and provide a level-playing field in India’s rapidly expanding aviation market – even if that leads one day to either or both Kingfisher and Air India closing down.

5 Comments

Posted in India, India airlines, India corruption, India FDI, Manmohan Singh, Tata, UB gropup, Vijay Mallya | Tags: , , , , , , , , ,

Posted by: John Elliott | October 30, 2011

India shows what it can do with a winning Formula 1

It is often said that everything and the opposite is possible in India, and so it has been shown today. Just a year after the Indian government’s humiliating and appalling preparations and administration of Commonwealth Games in New Delhi, the private sector this afternoon delivered a spectacular Formula 1 Grand Prix race on time, efficiently, and without any mishaps.

.

With a crowd of 95,000 and an international television audience said to total 150m, Sebastian Vettel (left) continued his winning F1 streak by driving his Red Bull Renault to victory at the end of a 90-minute 307km race.

Warnings about excessive dust blowing (and stray dogs walking) onto the new Buddh track in Noida, a Delhi satellite city, from nearby arid farmland did not materialise.

A rush in the final weeks to complete and tidy up the site appears to have worked and Vettel, along with other drivers, praised the track.

This showed what can be achieved when India’s bureaucrats stay largely out of the picture and politicians, probably taking a cut, allow the private sector to perform.

As is inevitable in India, there are stories of shady dealings, controversies, political rivalries and damaged egos. There is also serious concern about the way that the poor were ousted from their land to build the track and allied developments over the past year or so, and about low wages paid to the construction workers.

The Jaypee construction group which built and runs the race track has close links with Mayawati (presenting the trophy above), the egotistical chief minister of the state of Uttar Pradesh, which includes Noida – though the race has been seen as a Delhi event and a Delhi success, it is actually a success for one of India’s poorest states that is known more for corruption and lawlessness than business success and efficiency.

photo: Gurinder Osan - AP

The Jaypee group and other companies manage to straddle these potential contradictions. Jaypee housing and other projects linked to new highways that are also linked to the Buddh track (right) were at the centre of mass protests earlier this year against the transfer of land for business purposes.

Rahul Gandhi, heir apparent to India’s ruling dynasty, hit the headlines when he joined the demonstrators in May, protesting at the low levels of compensation that had been paid. As a result, Mayawati has had to amend the government’s land compensation policy and there have been court rulings blocking the use of some land for housing.

An article in Delhi’s Caravan magazine estimates that Jaypee will have made up to $30m in revenue from tickets, but will make a $35m loss on the race itself after sanction fees and other operational costs are paid – plus the $200m cost of the track itself. It suggests that while the track could turn in a profit within three or four years”, its real profits will come from real estate development. Sameer Gaur, a senior Jaypee executive and son of founding chairman Jaiprakash Gaur, has said that the group has around 1,500 acres of real estate to develop, which it obtained from the UP government on favourable terms.

.

Jaypee has had front-page newspaper advertisements (right) this week for luxury housing with associated hotels and sports city that it is planning alongside the track at Jaypee Greens where the F1 teams have been staying in a golf resort.

There have also been criticisms about the price of tickets ranging from $55 to sit on the grass to $22,000 for corporate boxes that are way out of reach for the vast mass of Indians, as were concerts by Lady Gaga and Metallica  (the latter was abandoned).

But it is inevitable in a country like India that there will be such disparities. Jenson Button, a British McLaren driver who came second today, has said that coming to India was “difficult” for the drivers, who had been stunned at the living conditions visible outside their luxury hotels. “You can’t forget the poverty in India. It’s difficult coming here for the first time, you realise there’s a big divide between the wealthy people and the poor people,” he said.

Anand Mahindra, one of India’s top industrialists who runs an autos-based group and is an avid tweeter, commented on Twitter today: “The F1 is a turning point. I see Indians becoming the most car-crazy&car-knowledgeable people on earth.. Now, let’s build those roads.”

And also, he could have added, let’s make sure that in future the private sector is given the chance to build and run India’s potential success stories. If bureaucrats and politicians had not stupidly decided for prestige reasons to locate the Commonwealth Games in the middle of Delhi instead of a place like Noida, and had not handed it over to corrupt politicians and bureaucrats, that could have been a success too. The possibilities are endless, if only governments are prepared to paint themselves out of the picture.

Mayawati, who loves grandiose projects,  runs a corrupt state in UP and that casts a stigma over all that she does. However, the success of the Grand Prix raises an uncomfortable question – is it better to have international success on Mayawati’s terms or the Commonwealth Games type of humiliation allowed by India’s Congress-led government?

Photo: Prashant Vishwanathan - Bloomberg

10 Comments

Posted in India, India corruption, India land, India politicians, India sport, Rahul Gandhi | Tags: , , , , , , , , , , , , , , , ,

Posted by: John Elliott | October 25, 2011

Bhutan’s King brings his bride to celebrate ties with India

It is a measure of the close ties between the world’s smallest kingdom and largest democracy that Bhutan’s King Jigme Khesar Namgyal Wangchuk has come to India on a state visit with Queen Jitsen Pema less than two weeks after they were married in a spectacular ceremony in Thimpu, the tiny Himalayan country’s capital.

.

King Jigme – known in Bhutan as K5, the fifth king – has been holding official talks in Delhi for the past two days with prime minister Manmohan Singh (greeting him and the queen, left), Sonia Gandhi (below),  and other top ministers and officials. The president hosted an official banquet last night.

The 31-year old king and his 21-year old bride are in India for nine days, combining official duties  with a honeymoon railway journey through the Rajasthan cities of Jaipur, Jodhpur and Udaipur.

Sandwiched between the potentially hostile nuclear powers of India and China, Bhutan is a sensitive buffer state that has been fully aligned with India for over 50 years. It is therefore specially significant that King Jigme should be in Delhi so soon after his marriage and before a state visit next month to Japan. It shows that the links, which India guards jealously, will continue into the future.

Rahul Gandhi, dynastic heir to the leadership of India’s Congress Party and a potential future prime minister, was one of the few official foreign guests at the wedding (picture below), reflecting friendship between the two families.

Bhutan has no formal relations with China, much to Beijing’s angst, though the two countries do meet for talks on their un-demarcated mountainous border where China is claiming two stretches of land for its region of Tibet. It is also reported to be establishing links in Bhutanese villages.
 
China has a much more militarily sensitive and hotly disputed border with India, where its claims include sovereignty over the state of Arunachal Pradesh to the east of  Bhutan.
 
Some Bhutanese officials speculate that links with China will be relaxed in the future, but this week’s visit by the royal couple shows where the king’s primary focus lies. These issues have been discussed by the King in meetings today with the head of RAW, India’s intelligence service, and the army chief.
 

.

In Bhutan, the King Jigme has the tough task ruling over a new democracy that was initiated in 2006 by his father King Jigme Singye Wangchuck, who then abdicated in his favour. Earlier, his father started the policy of aiming for Gross National Happiness, which involves maintaining traditional culture, good governance, and a sustainable environment, as well as economic prosperity (he explained the policy to me in an interview in 1987).

 
K5 has broken with tradition in one significant way by declaring that he will have only one wife, abandoning the Bhutanese form of polygamy where men and women, particularly in rural areas, sometimes take several sisters or brothers as partners. His father married four sisters and they all have the status of queen mother, but it is clear that he intends that Jitsen Pema (see above left, with him at their wedding) should be the only queen.
 

with Sonia Gandhi

When they have finished their state visit and holiday in India, the royal couple will return to Bhutan and continue a series of journeys around the country that they started after their engagement was announced in May.
 
 On Sunday evening, they told me that they had already visited about half of the country, including areas hit by a recent earthquake. “We have been struck by the warmth for my family and the great response we have received,” said the king.
 
That bodes well for them as they tackle the difficult task of leading this traditional country into the western ways of a democracy and consumer society, while also balancing Bhutan’s strong Indian ties with China’s looming presence just across the mountains.

Former King Jigme Sinagye Wangchuk at the wedding with three of his wives and Rahul Gandhi

 
 

1 Comment

Posted in Bhutan, India, India China, Nehru-Gandhi dynasty, Rahul Gandhi | Tags: , , , , , , , , , , , , ,

« Newer Posts - Older Posts »

Categories