I was idly watched ships gliding into
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
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
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..
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
Is it that successful economies, like the