Archive for April, 2007

The Bakshali Inheritance

Convocation Speech: IIM Calcutta, 1st April 2007

Let me start by telling you a modern tale: Five private equity funds get together to buy a large international steel company. The seller states his price: he wants half the money that the first fund has plus all the money the other four have. He gives them other alternatives as well: he will sell his company for a third of the second fund plus all the money of the others, or a fourth of   the third fund plus all that of the others, and so on.

The question is: what is the price the seller wants for the steel company and what size fund does each private equity player have?

Those of you who are mathematically inclined will recognize the problem as one of solving a set of indeterminate equations [1].

Those of you who are students of history will recognize this as one of the many problems from the Bakshali Manuscript [2]. This manuscript, written on pieces of birch bark, was found by a peasant in 1881 [3] in a village called Bakshali near Peshawar. It is written in a language that was a precursor to Sanskrit [4] and has been dated as from between the 2nd century BC and 2nd century AD [5].

In the Bakshali manuscript, it was five merchants who set out to buy a jewel and not five private equity funds to buy a steel company. But otherwise, the formulation of the problem and the method of finding the answer is the same. 

I can see from your faces that  you are all  eager to go on to the real world of business. I want you to remember that the Bakshali manuscript serves as reminder of the great intellectual tradition you come from. 

In 1971, I remember waiting in cap and gown, like you wait today, eager to receive my diploma and set forth to conquer the world. It was on a day much like today, the romantic Calcutta winter had receded into memory but the dog days of May had not yet set in.  But it was different in other ways. There was the sound of guns outside, some from a distance, some from quite close. They served as a humbling reminder that though we were armed with the latest tools of operations research and psychology, there were fellow citizens outside fighting more basic battles. It was the peak of the Naxalite uprising. The government, desperate to find a solution, called an Election. The usual election officers, the state and central government employees were wary of volunteering so they called for students. I was eager to contribute to a solution to the strife and volunteered for election duty.  

Thus I found myself, Sonagatchi, the red light district of Calcutta, soon after graduation assigned the job of marking indelible ink on the fingers of voters while guns went off all around us

This is why I have boasted for years that I have held hands with most of the sex workers of Calcutta.

As I stand here today it is quiet outside. The social battles of the 1970’s seem so far away and quaint. 

What is different in today’s India compared to when I graduated in 1971? I suppose the e big difference is that the world’s macro economic factors have swung India’s way.

It started with the Western world’s information technology industries developing in the 1990’s  an insatiable demand for low cost English speaking manpower to convert billions of lines of computer code that had been patched together in the early days of the computer industry. India luckily had large numbers of such programmers idling because Indian trade unions at that time would not allow computers to be introduced
[6]. Smart entrepreneurs seized the opportunity to ship these programmers abroad and moved on from there to build IT services companies that are now the envy of the world [7].

This labour cost arbitrage
[8] opportunity has continued. Western financial service, health care and customer service industries have started a transition from a craft mode to an industrial mode. During this transition, they need a large supply of reasonable skilled, low cost, English-knowing workers. Low telecom costs [9] have made it possible to serve this need long-distance from India [10]. When that transition is complete [11] the arbitrage opportunity will disappear but that is still some time away[12].

A second fortuitous wave that is propelling India farther forward- the tremendous liquidity surplus in the world. Capital today is gushing out and finding its way to Indian equity markets, into real estate, into almost anything that you can name.

But big questions stare us in the face and yours is the generation that will have to find the answers to these questions.

What if the rupee that today trades at about Rs 45 to a dollar goes to Rs 20 or even Rs 10 per dollar in the next decade

What if the current excess liquidity situation in the world tightens and capital becomes risk averse and expensive

What if millions of our countrymen say we too want to be part of this Shining India
[15] that is currently available only to the sons and daughters of people already in the middle class [16].

Remember, one day, one of you will be invited to make a Convocation Speech just as I have been invited today. If it takes the same time it took me to be invited, it will be the year 2040.

By that date, some say
[17], India’s GDP in US$ terms will exceed not only the European countries and Japan but also perhaps the United States.

But what these reports also say, and this part is often overlooked, is that in 2040, , India’s per capita GDP will be just 15% of that of the United States and a third of that of even Russia.

Another way of putting it is that even thirty five years from now, the average Indian will earn just Rs 5000 a month. On this income he will have to feed and educate his children, look after their healthcare needs, afford entertainment and life insurance. This means he must have a place to stay with clean water supply at say Rs 200 per month
[18], un-interrupted electric power perhaps at 50 paisa per unit at the consumer level, medical insurance at say Rs 10 per person per month and Life insurance perhaps at Rs 5 per person per month.

If we have to achieve this we need to convert our economy to one that has the lowest transaction and transformation costs
[19] in the world.

These seem impossible targets to achieve using the current management methods and present economic institutions. We need to devise new paradigms that achieve these targets without any subsidies, and one that allows businesses that provide these  services excellent returns on their capital.

In finding answers to such challenges, in the past, all of us in Indian management have borrowed paradigms from the west and force-fitted them into the Indian situation.

For example, we often hear calls for reducing “labour rigidity” in India. Every such call should remind us that we are trying to force fit   Henry Ford mass manufacturing system to India. We forget that this paradigm
[20] assumes a social system in which business cycle down-turns can be dealt with by lay offs and production cuts. It assumes both a labour shortage economy where people who are laid off quickly find jobs and a social security system that pays you for the time in between jobs.

Similarly, when people cry to “improve quality”  as  a panacea for competitiveness problems ,they forget that the Six Sigma Quality paradigm was developed by Deming
[21] in the context of the 1960’s Japanese consumer electronics  boom [22]. It works very well in industries like electronics and auto where efficient assembly is the key to success. Transplant it to creative software product development, for example, and it becomes merely a marketing gimmick and makes little difference to results [23].

Finally, a third example, the much admired US National System of Innovation
[24] as it applies to the healthcare industry. We forget that it assumes a State [25] that lays out vast amounts of money in research, allows private companies and individuals to own the patents that rise out of this research, employers who bear the cost of the resultant high-priced health care system. US companies in the older industries [26] find themselves in an impossible situation today and American business and political leaders are desperately trying to find a way out of this debilitating system.

In a few years many of you will head large corporations and will be responsible for producing the vast array of products and service that our fellow country men will need. Others among you will hopefully join academics and contribute to theory. Whatever you do, please remember the inheritance you carry within you and the obligation that you owe to your less fortunate countrymen.

Please remember that each management paradigm
[27] has its societal context and cannot be that easily borrowed. Original management paradigms [28] to address the Indian challenges have to be developed and it is your generation that will have to do that.

Be inspired by the early examples that demonstrate such a possibility:
The Aravind Eye Care System  that treats over 1.4 million patients each year, two-thirds of them – or almost a million patients – for free is often cited as an example. They apparently succeed because they have improved surgical practice and invented low-cost eye implants

If you succeed in doing this
[30] you will release a tsunami-like demand  that  will not only create jobs for the millions coming on to the job market but also allow them to live a fulfilled life in which life’s necessities are within their reach.

If you succeed, Indian managers and management theory would have made its own unique contribution to the world and you will personally have lived a worthwhile life.
Our ancestors have been doing cleverer things and for very long. The Bakshali Manuscript is evidence of this.

If you occasionally wonder whether this immense task is within your talent, remind yourselves that you come from ancestors that created the Bakshali Manuscript. If you ever doubt the power of ideas to transform the world, be inspired by the Bakshali Manuscript- it’s written on crude birch bark, the language in which it is written has been long extinct, but the power of its methods is relevant even today.

Thank you very much for inviting me today – I wish you all a very successful management career.


[1] The  equations take the following form: x1/2 + x2 + x3 + x4 + x5 = p, x1 + x2/3 + x3 + x4 + x5 = p and so on
  As  x1/2 + x2/3 + x3/4 + x4/5 + x5/6 = q the equations become (377/60 )q = p with a  number of possible answers. If q = 60 then p = 377 and x1 = 120, x2 = 90, x3 = 80, x4 = 75 and x5 = 72

[2] The original manuscript is in the Bodleian Library; a reprint of G.R.Kaye’s first translation is now available at Aditya Prakashan, Delhi

[3] This account appeared in the Bombay Gazette on August 13th, 1881:”The remains of a very ancient papyrus manuscript have been found …[near] mounds believed to be the remains of a former village…while digging in a ruined stone enclosure on one of  these mounds…much of the manuscript was destroyed by the ignorant finder in taking it up from the spot where it lay in between the stones…”

According to Dr Hoernle, the head of the Calcutta Madrasa who gave a description of the manuscript to the Asiatic Society of Bengal in 1882,  it is in the Gatha dialect, “the literary form of the ancient North Western Prakrit ( or Pali). It exhibits a strange mixture of what we should now call Sanskrit and Prakrit forms.”

[5] There is a vigorous debate on the dating of the manuscript.

Protracted negotiations between the government and the unions of the nationalized banks resulted, in the late 1980’s,  in the unions agreeing to the introduction of microcomputers as long as these were called “Advanced Ledger Posting Machines”  and not called computers. Since computers arrived late in India, many earlier generations of programming languages were skipped- most Indian programmers went straight to Unix and Cobol and used relational database systems like Oracle which were just coming in to the world then.

An authoritative account of the processes which led to this success has yet to be written. Most of us who lived through that period remember the GE teams visit in the late 1980’s as the first big round of orders for the nascent software industry. The next big step up in scale was the Y2K orders in the late 1990’s.

Domestic inflation through the 1960’s and 1970’s  contributing to improving this arbitrage by  forcing the depreciation of the rupee at periodic intervals.

[9] Students of  history will remember a parallel development in the 15th century: ocean freight rates sharply declined and led to a great resurgence in world trade.

[10] At the moment, most of the manpower in the Indian BPO industry is deployed in Call Centres. Call Centres became popular in the United States post the 1973 oil shock and the advent of 1-800 number technology. It was originally an attempt to save on the cost of traveling salesmen. US Call Centres, originally located in cities, progressively shifted first to rural areas of the US in an attempt to save costs and then moved to India as further cost savings were pursued. Forward looking Call Centre companies in India are attempting to use the relationships created with call centre orders and move up the value chain by taking on a bigger piece of the customer service process of which the Call Center is one component.  A minority of business now done within the BPO rubric is in transaction processing  which is believed to be less immune to pricing pressure and has higher switching costs.

For instance, if current research on voice to text conversion bears fruit, the Call Centre opportunity will decline sharply.

[12] For a ranking of jobs based on  their potential to be outsourced, see the McKinsey report  “The Next Revolution in Customer Interactions”, McKinsey Quarterly, December 2005

The Goldman Sachs  BRICs Report assumes an annual appreciation of the rupee of 2.5%.

[14] How dependant the Indian equity markets are to international financial institutions entry and exit has been observed in recent steep one-day falls and gains. Anecdotally, again, 70% or more of funds deployed  in the Bombay Stock Markets are of foreign origin

Politicians now understand that small, single digit swings in votes can lead to regime change in India, as has been observed in the defeat in the Chandra Babu Naidu’s government in Andhra Pradesh and the BJP Coalition’s defeat  in the Lok Sabha Elections

A recent study published in the Economic and Political Weekly shows that both the parents of   most employees of Bangalore IT Services companies  are  graduates.

India’s Rising Growth”, Goldman Sachs January 2007. This is an update of an earlier report” “ Dreaming with Brics- the Path to 2050”, 1993

[18] These are arbitrary numbers that I have chosen.

[19] This is going to be as much a political challenge as it is an economic and management one. As the New Institutional economists have demonstrated, transaction costs arise from the rules that govern the working of institutions- these rules are , in turn, made by powerful interest groups. Bringing  transaction costs down will mean working around these interest groups.

The original drive was to have pistols with interchangeable parts so that they could be repaired in the field. The innovation was to have workers specialize in each operation, deployment of specialized machines like milling machines and piece-rate payment. These methods soon spread to the making of clocks and sewing machines making these products affordable by common people. Viewers at the First Industrial Exposition in London in the 1850’s were amazed at all this; a British Parliamentary Committee investigated these new methods dubbed it the ‘American System of Manufacture’. Ford used these methods in planning his new car plant.

Mainstream US interest in Deming’s work was sparked by the airing of NBC’s documentary, “If Japan Can, Why Cant We?”

Sub-contracting of  TV set assembly by US manufacturers ( and later the Japanese)  was a key ingredient in the growth of the Tiger economies of Asia in the 1960’s. This arose because of  the nature of  elecronics technology: capital intensive component making which the US companies specialized in combined with labour-intensive final assembly which was farmed out to Asia. India missed this whole boom because autarky was at its peak in India during this period.

In the United States, particularly in the Silicon Valley, where most software innovation in the world takes place, there is no talk of statistical quality control methods.

The concept of  a National System of Innovation was proposed by Richard Nelson ( “National Systems of Innovation”, Richard Nelson, Ed, Oxford, 1993) and by this he meant the set of institutions whose interactions determine the innovative performance of national firms.

Nearly half of the R&D amount spent in the US Pharma industry comes from the US Federal Government.

The current travails of the US auto industry on account of health care benefits to retired employees is an example of this.

For a panoramic review of management paradigms: Thomas Clarke and Stewart Clegg, “Changing Paradigms: The Transformation of Management Knowledge for the 21st Century.”

CK Prahlad and Stuart Hart first raised the possibility of  a new way of thinking in  “The Fortune at the Bottom of the Pyramid.” They presented this as an opportunity for large multinational companies to make profits and help development by selling products to those earning $2 a day on a PPP basis. They have not touched on what management paradigm it takes to do this profitably.

[30] Clayton Christensen ( “The Innovators Dilemma”) discusses this challenge from the perspective of successful incumbents who have to make their products affordable for new classes of customers who do not value all the features in the high end products they currently make. His insight is that the very practices that make these companies successful are what prevent them from serving these new customers.


If You Are A Sikh, A Muslim Or A Journalist…

…or lawyer or a software professional or self-employed, you will have a tough time getting a credit card in India. The credit card industry believes that it’s just too risky to let you have one.

But this is not a story about bigoted credit card companies. This is about how a laizez faire approach by government regulators can lead to the law of the jungle in which ordinary citizens will suffer.

Lets first start with why credit card companies use these obviously medieval practices in approving credit card applications.

They believe they have heard of enough instances where a lawyer delays payments, the credit card company pursues him too energetically and the lawyer fends them off by filing a frivolous case that takes many years and much expense to resolve that it is more prudent to deny cards to lawyers.

They believe they have heard of enough cases of delinquent journalists who have writing negative articles about his ‘harrowing experience’ in an attempt to evade the bill collector.

They believe they have heard of enough delinquent software professionals who have taken assignments abroad to keep out of reach.

They believe they have heard of Sikhs or Muslims who live in enclaves like Bombay’s Mohammed Ali Road who physically threaten bill collectors who go there to collect delinquent accounts.

They believe self employed people have no predictability to their income and thus find it difficult to meet their fixed monthly payment obligations.

The customer they love the best works in a salaried job in government or in a large, well-known private sector company.

The credit cart companies that use these practices are not, as you may imagine, unprofessional holes-in-the-wall operators. They are among the most prestigious professionally managed corporations in India and are otherwise exemplary in their dealings with their staff as well as their customers.

They are forced to do this kind of profiling because the credit card industry in India is forced to grope in the dark.

Though the small plastic card issued looks the same, a credit card is different from a debit card in that it does not remove money from the user’s account after every transaction. In the case of credit cards, the issuer lends money to the user; a credit card allows the consumer to ‘revolve’ their balance, at the cost of having interest charged

When they issue you a credit card they have no way of knowing what other credit cards you may already have and how much of a balance you may have run up against each. When you pay their monthly bill, for all they know, you could be drawing on another credit card to do this, merely rotating their credit. If you abandon a credit card after running up a large balance and apply to another credit card company, that company has no way of knowing that you owe dues to the first company.

In countries with more evolved financial systems, credit card companies are protected from such risks by a credit information sharing system. Information about users who are delinquent in their payments with one credit card company is made available to all other credit card companies. The consequence of delinquency are so severe (you may not get a card for some years) that by and large consumers meet their payment obligations.

India did set up such a common credit rating bureau under the Reserve Bank of India in, but foot dragging by the incumbent leaders of the credit card industry and lack of focus by the authorities has prevented this institution from performing its duties.

Add to this the perception among our policy makers that credit card usage is something for the well to do; the Finance Ministry issues threats from time to time promising investigation of all credit card high spenders to check if they have filed their income tax returns.

The consequence of all this is that India has just ten million active unique credit card users where this by any account should have been closer to fifty million.

Widespread credit card usage would support the nascent modern retail sector, stimulate ecommerce in the country, and reduce the use of cash in retail transactions. It is an essential part of modernizing the financial system.

The credit card industry performs far below it potential in India because the government regulators haven’t done enough to herd all the players in the credit card industry into a common credit rating system.

Perfectly credit worthy Sikhs and Muslims, journalists, software professionals and self-employed businessmen are denied credit cards merely because they are ‘profiled’ as belong to a category. And bill collection is governed sometimes using the laws of the jungle.

The past excessive role of the government in economic matters has made us all look askance whenever government steps in but it is important that government does what it legitimately must do: function as a strict umpire such that all economic players play by the rules. This is the only way by which ordinary citizens get their due rights.

Too little government can be as dangerous as too much government.


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The Return of the One Minute Movie

In a move that may have marked the start of a new era, the legendary former Disney CEO Michael Eisner unveiled plans to produce 80 episodes of a serial called “Prom Queen.” This by itself may not have caused a stir except that each episode will be just 90 seconds. “Prom Queen” is a serialized mystery and will begin on April 2nd and roll out over 80 days. It has been billed as “a blend of love, gossip and betrayal”. The series will run on the studio’s own site, on a show site, on Youtube the popular video sharing site, on Veoh a file sharing site and arrangements are being made to distribute it on wireless and handheld video devices. Ads will run before and after episodes.  Eisner also announced this week the formation of a studio, Vuguru, that will acquire and develop short videos for the web.

User created One Minute videos have been around ever since the dramatic drop in price of video cameras. But what makes the Eisner move different is that he plans to have his 1-minute videos “professionally produced”, using top Hollywood talent.

What this will do to the movie industry that has marching towards ever larger production budgets and ever lengthier durations and ever plusher multiplexes is too complicated to imagine. Are we going to now see the movie industry subjected to siege by the internet folks just as the newspaper and magazine industry has been?

Those with a longer view of history will not be surprised at these developments. Movies as we know it now, a projector projecting things on a screen and a group of people watching it, is the invention, in 1890’s, of the French Lumiere brothers. Up until then, movie watching was a different experience:  Thomas Edison that indefatigable American invented his Kinetograph that shot movies but these movies had to view using another of his inventions, the Kinetoscope, through a peep hole one person at a time.

The Lumiere brothers had the brilliant idea of projecting films on a screen so that many people could view at the same time and, in addition the idea of charging for this experience. Their first screening of films to a paying public happened in 1895, at Paris‘s Salon Indien du Grand Café, and their first film, hold your breath, was of 45 seconds duration. Titled, “Workers Leaving the Lumičre Factory.”

The Lumiere brothers were enthusiastic promoters of this idea and soon undertook a promotional tour of several cities in the world, including Bombay, laying the foundation for Bollywood. The repertoire of films that they unveiled to a wonder struck world included the original “Workers Leaving the Lumiere Factory” and a clutch of sub 1-Minuters with self explanatory titles such as “The Trick Horse Riders” (46 seconds),  “Fishing for Goldfish” (42 seconds),  and “Baby’s Meal” ( 41 seconds).  Watch these films (available free at the website and you start wondering whether the current swing to the 1-Minute film is a mere circling back to film’s origins.

What then made films bloat from their elegant 45 second origins to the current multi-hour blockbusters? Early American entrepreneurs quickly figured out that extending the early 45 seconders to longer durations immediately lengthened the queues waiting to watch them so much that these queues had to wind around whole Manhattan blocks. The movies industry had found not only its business model but also its phrase for a successful movie- the “blockbuster”. An early blockbuster, the longish and extravagantly produced  filming of the stage version of Dante’s Inferno, played for two weeks compared to the usual two days for shorter films, setting the stage for extravagant productions which reached their peak during the time Michael Eisner ruled Disney and Hollywood.

There are several insidious trends that are eroding this tried and tested block buster model that Hollywood has operated with ever since. Hollywood core faithful, late- teens-to-early-twenties Americans are flocking in ever larger numbers to the broadband internet. Armed with cheap video cameras, free editing tools and sites where they can publish their work for free, these young people are launching a revolution that has reached such tsunami-like scale.  A recent study shows that two-third of all content viewed by these young Americans is user generated, as opposed to professionally produced.

Even more insidiously, the viewing occasion is also changing. Wired magazine quotes a recent study that lists the many new venues for movie watching:  the 15 seconds that you are in a lift, the minutes you spend at the bus-stop waiting for your bus to arrive, the 30 minutes of the bus ride, even the 5 minutes you are in the loo. The 1 Minute Movie is clearly an invention that is overdue.

The size and duration that we take for granted for art forms: the short story, the novel, or the newspaper column, for instance are grounded in technological developments and human attempts to adjust to them.

Take, the last, the newspaper column. Websites of many famous newspapers in with world are by now free-to-use – except their columnists. Because, it takes a user about just 5 minutes to read a column of 800-900 words, like this one, they may be signaling that this is about the bite size of time they can invest on a topic and consequently are ready to pay for.

The One Minute Film movement may just be one such signal to the movie establishment.


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Rescuing Failed Entrepreneurs

I was idly watched ships gliding into Bombay harbour from my balcony  on a recent Sunday evening when  my phone started to ring insistently.  I felt too tranquil to pick it up , waiting for it to go into the answering machine. did. After a few minutes, the phone  resumed ringing again and once more I let it go to the answering machine.

When it rang the third time,  I reluctantly went to pick up the phone ready to curse whoever was the person calling us as a wrong number.

“I need to speak to you urgently,” said a vaguely familiar voice.

“What wrong, Vikram?”, I asked. “What’s so urgent on a Sunday evening that you should call me after so many years of not being in touch?”

“ The bank is auctioning my flat this week, I need money to pay them off immediately and you are the only one I could think of.”

Over the next few minutes, he recounted his story. I hadn’t met Vikram since the early nineties. When I had last heard from him, he was running a small manufacturing unit in a small town outside Bombay, making plastic  parts for a nationally famous luggage manufacturer. As the luggage manufacturer prospered so did Vikram. Not bad for an engineering graduate from a Tier 3 college, he used to boast. Vikram’s bar was always well stocked, he took his wife and daughter occasionally to Singapore and Phuket for shopping and holiday trips. Vikram worked long hours.


And then the economy got reformed. Instead of multiple suppliers of plastic raw material who Vikram could deftly play against each other and get cheap prices, his suppliers merged or were bought over by the dominant one who now dictated his  and demanded cash on deliveries. His main  customer who he had served so faithfully all these years, suddenly found a Chinese vendor whose landed prices  in Bombay were so low that Vikram’s proft margin’s became wafer thin. He was forced to extend more credit to his customers hoping to keep the business.  Strapped for cash, Vikram pledged his factory real estate and his residential flat to a nationalized bank for desperately needed funds for working capital. The spiral was slow but certain and finally the day dawned when the bank manager could no longer be “persuaded” to wait. His case was declared sick and sent to the Debt Recovery Tribunal who after a few hearings issued an order to recover the bank’s dues by auctioning off his assets. The only catch was that, by now, the amount he owed the bank was far in excess of the value of the assets he had pledged.

It was mid morning, the next day when I went to visit Vikram to see all this for myself. I found him with a glass of vodka at the kitchen table in his tiny flat, watching his wife cutting vegetables for lunch. He was only in his early fifties but looked like he was in his seventies.

“Why aren’t you at work?” I asked.

“The bank has out a padlock on my unit door, some months ago. They don’t let me operate till I pay back the dues.”

Later that morning I went around with him to the other units in that industrial estate. Many of them bore that seal of entrepreneurial death,  “This unit is pledged to…[bank name]” that allows a bank a risk free recourse to the entrepreneur’s assets in case anything goes wrong.

When we meet at conferences on entrepreneurship and venture capital, its not units and entrepreneurs like Vikram who we have in mind. We think of software or biotech companies started by bright young men with glittering degrees from the IITs and IIMs.  Yet, entrepreneurs like Vikram, running low tech businesses, employing a dozen or so workers constitute the vast  majority of Indian businesses.

What financial institutions and laws govern their fate?

While it is hard to argue that such units should be “protected” either through differential excise duties, or indirect or direct tax breaks, we need  to  study  how   other countries deal with  issues of this kind..

In the United States, where we normally assume the free market to behave in the most heartless manner, several states statutorily bar lien on the primary residence of entrepreneurs.

Fortunately, this story may have a happy ending . In the months  that it has taken  the courts to finish its hearings and get down to auction, property prices in Vikram’s area  have risen so sharply that what was once a factory asset worth well below the amount due to the bank, now almost covered the dues.  Vikram, may , with luck, and if the property prices keep rising, may pay back his dues and still have his apartment , at least for himself.

Now, a year or so from that first phone call I am back agin on my apartment balcony watching ships glide into Bombay harbour, trying to figure out what the moral of these events in Vikram’s life.

Is it that successful economies, like the US one, view business failure as a natural consequence of enterprise and set up institutional processes which encourage people to take risks by protecting them from the consequences of policy change? Is it that prejudice against businessmen, unless they are large or successful or graduate from elite institutions run so deep in our veins, as Indians, that these prejudices subtly are reflected in our institutional processes? Or is that so long as the economy grows at a rapid pace, things will take care of itself as it may in Vikram’s case?



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