Moments That Defined India
1991 UNION BUDGET
The First Form of Reforms Liberalisation is In –
John Samuel Raja
JUNE 1991 CAN BE DESCRIBED as the watershed month in Indias economic history since independence.Foreign exchange reserves dipped to a low of $896 million by the middle of June 1991,enough to pay only a fortnights import bill.Faced with the real possibility of default,the government decided to sell 60 tonnes of gold.RBI shipped 40 tonnes of gold to the United Kingdom,as part of the sale to Bank of England.At todays prices,the value of these sales would be in excess of 13,400 crore.
It all began when Saddam Hussein invaded Kuwait in August 1990,resulting in international oil prices going through the roof.The conflict ended on February 28,1991,but oil prices took a longer time to come down.All this meant nearly tripling of Indias oil import bill.Central bank and finance ministry officials tried every trick in their books to prop up foreign reserves,but their combined efforts could not stop reserves from draining fast.Sovereign credit rating tumbled and international capital flows also dried up.Even non-resident Indians withdrew close to $1 billion of their deposits in the three months till June 1991.
Those days,there were a lot of uncertainties surrounding the entire external sector, says M Govinda Rao,member of the Economic Advisory Council to the Prime Minister (PM EAC).Events were happening fast.One set of devaluation of rupee was not enough.RBI had to devalue again in less than two days. He was referring to the RBI decision to devalue Indian rupee by 21-23 % in quick succession (July 1 and July 3,1991) to four currencies,including the US dollar and Pound Sterling.In addition,the central bank increased the bank rate by one percentage point on July 4,1991.While devaluation was meant to make exports competitive,increasing the bank rate was aimed at reducing demand in the economy so that import could be curtailed.With the benefit of hindsight,after nearly two decades,it is easy to decipher what triggered the crisis.Indian economy was registering an average growth rate of 7.4% for three years till March 1991.
This growth was not driven by the private sector but by excessive government spending,leading to continuous fiscal deficit in excess of 8% of the Gross Domestic Product (GDP) for six years till March 1992 (except for the fiscal 1988-89 when it was 7.8% of GDP).Imports increased as domestic demand exceeded supply.In addition,the fiscal deficit had to be financed by external debt,either by way of external assistance or deposits by nonresident Indians.The widening fiscal deficit meant higher debt burden,both internal and external.The size of the internal debt at the time of the crisis was 45% of GDP and it accounted for one-fifth of government expenditure.Similarly,servicing external debt accounted for a fifth of the current account receipts.Thus,the budget deficit was gradually transmitted to the external sector,resulting in current account deficit in balance of payment (BoP) at 2.5% of GDP.The crux of the balance of payments problem during the recent years has been the large and persistent trade deficit and the declining capacity of invisibles to finance this deficit, the government admitted in the annual economic survey for 1991-92.Though the external payment crisis cornered policy makers,it also provided an opportunity to initiate radical change.
The crisis kept the opposition under control, says Suresh Tendulkar,former head of the Prime Ministers Economic Advisory Council.He was referring to two general elections in two years time.In addition,very few of the incumbent members of parliament got elected.Consequently,the newly elected did not make an attempt to defeat the government, he adds.These conditions provided the perfect opportunity for the PV Narasimha Rao government to initiate economic reforms and lay out the road map in the budget speech by Manmohan Singh,then finance minister,on July 24,1991.Crisis is the mother of reforms, says Govinda Rao,who at that time was working in the National Institute of Public Finance and Policy (NIPFP).
The landmark budget announced a slew of measures,like ending the licensing era for most industries,lowering import duties,thereby exposing domestic companies to greater competition,deregulating export controls and divesting stake in staterun entities.Two decades after the landmark budget,the Congress-led alliance at the Centre is not able to move forward with the reform agenda.Fiscal deficit and current account deficit are still high.But the key difference is India now has foreign exchange reserves of $299 billion,and short-term external debt forms a only small portion of Indias debt burden.The key question is whether India would survive an external shock where import bill spirals,and capital receipts,export earnings and remittances by Indians working abroad dry up.
-24 july 1991 INTERIM ANNOUNCED.
-13.6 The rise in Consumer Price index in 1991
RIGHT TO INFORMATION
Unlocking the Power In Information
The right to know,even if it came late,opened a new chapter of transparency in the history of Indian democracy.It has also opened up a Pandoras box – Naren Karunakaran
Bone-weary and exasperated,but not broken,a clutch of peasants and workers of Devdungri village in Rajasthan gathered to commiserate,and lament,their woes.Denied the minimum wages they were entitled to,under the governments employment generation schemes,the haggard lot had deployed every tactic to lay their hands on the labour rolls and voucher records.All members of the newly-formed Mazdoor Kisan Sangharsha Sanghatan,led by Aruna Roy,they had tried protests and sit-ins too,but nothing seemed to work.The documents were official secrets,they were told,and fobbed off.Mohan Meghvanshi,or Mohanba,venerable Dalit and the village bard of sorts,stood up at the meeting and proclaimed: There is some magic in those records;we should get them;only then will we get our legitimate wages. The words were electrifying.They decided on a sustained campaign on their right to know,right to their entitlements and livelihoods.It took the shape of the now well-know jan sunwaayis (public hearings ) of the early 1990s,which eventually caught the nations imagination.The epochal Right to Information (RTI) Act came into force on October 12,2005.
In keeping with the Acts genesis,a survey revealed that much of the information being sought (39%) relate to the grassroots panchayats,municipal bodies and an overwhelming 85% revolve around common mans problems.Yet,a PriceWaterhouse Coopers study indicates only 13% of the rural population and 33% of urban population are aware of the Act.A lot remains to be done for the Act to alter the power balance and usher in new governance structures.In the last five years,the interpretative phase as it were,the Act has seen its ups and downs,and also repeated attempts by vested interests to maul and dilute its rules.Civil society has managed to defend the Act.
The governments ability to dent it has dwindled considerably, says Shailesh Gandhi,Information Commissioner,Central Information Commission (CIC).But,he isnt sure whether the Act is beyond peril.It will have to be ring-fenced for another five years, he says.Gandhi is an activist turned commissioner.The other danger,of an immediate nature,is a possible collapse of the institution under its own weight.A human resource plan for the CIC is virtually absent.In the absence of support staff,Gandhi has been dipping into his salary,around 50% of it,to pay interns who help him with the paperwork for adjudicating cases that come to him;he clears around 5,000 cases a year;unprecedented,but unsustainable.The danger of the information administrative structure going the way of our legal system with cases piled sky high is real.The tendency to challenge in courts the decisions of the Commission is also a concern.The question now is,what next RTI activists feel it is about time to ratchet to the next level of an open society.State departments ought to follow a system of voluntary disclosures.If information the citizenry seeks is readily available,then where is the need to file RTI applications, asks Narayan Varma,of the Bombay Chartered Accountants Society and the Public Concern for Governance Trust.In fact,a few months ago,a circular was issued by the CIC to all government departments,in keeping with Section 4 of the RTI Act,seeking suo moto disclosures,and the need to appoint transparency officers.Unfortunately,and ironically,the Department of Personnel and Training has opposed this move, says Varma.The veteran chartered accountant has been engaged in transparency campaigns amongst the citizenry and across the bureaucracy.Its yielding results.The Income-Tax department in Mumbai,for instance,is now seen as much more responsive,with a citizens charter and clear service delivery standards for itself.Baby steps towards an open society are being taken.Even the private sector is being weaned,in a way.A few weeks ago,Gandhi wrote to the Planning Commission to bring all public-private partnership (PPP) under the Acts purview.Why not go the whole hog and herd the private sector too under the Act,as in South Africa The private sector does have a bearing and influence on governance,as is now evident,with scam after scam coming out of the closet,again much of it due to RTI activism.It would be too much,too soon,feels Gandhi.It will be politically difficult,the system will hit back, he says.For starters,Gandhi asks: Can we find 100 Indian companies willing to display details of all their government contracts on their websites Answer awaited.
The Right to Information (RTI) Act came into force on October 12,2005 The Act applies to all states and Union territories,except the state of Jammu and Kashmir Only 13% of the rural population and 33% of urban population are aware of the RTI Act There is the danger of a possible collapse of the institution under its own weight
New Wave in Telephony Breaks Barriers
As far as revolutions go,nothing beats mobile telephony.In 1994,when the National Telecom Policy drafted rules for mobile telephony,India had a teledensity of 0.8,among the lowest in the world,falling behind even Pakistan and Malaysia.The waiting list for landlines,which would easily stretch to a couple of years,was 2.5 million.Mobile telephony would help a nation starved of basic communication needs leapfrog into a new era.Mobility was waiting to happen.It was the way of compensating for poor infrastructure, says D Shivakumar,VP & MD,Nokia India.Yet,when mobile telephony started on July 31,1995,it was dismissed as the tool for the rich.Basic phones cost more than 25,000.Call charges were at 16.80 a minute,with incoming calls being charged too.Western operators,unable to find either subscribers or a viable business model,fled the country.The New Telecom Policy of 1999 ironed out the flaws,ushered in models like pay-as-yougo and calling-party-pays,and the revolution finally took off.It gave people the ability to talk and stay connected at very low costs, says Kamlesh Bhatia,principal research analyst,Gartner India.Pre-paid calling was a local innovation,as was outsourcing.The telecom world watched in awe when Bharti,the largest operator,outsourced technology to IBM and networks to Nokia and Ericsson.Such models cut costs and led to mass adoption,and now,mobile telephony is morphing into a tool for social and financial inclusion, says Bhatia,principal research analyst,Gartner India.From 5 million in 2000,the subscriber base touched 742 million by end 2010.Robert Jensen,development economist at Harvard University,found Keralas fishermen who used mobiles registered an increase in income,while fish prices went down.Leonard Waverman,economics professor at the London Business School,said an extra 10 mobile phones per 100 people in a developing country leads to an additional 0.59 percentage points of growth in GDP per person.Mobile telephony has helped teledensity in India jump to more than 50%,and has spawned an information and entertainment boom that will only accelerate with 3G and 4G services.
31 JULY 1995 MOBILE TELEPHONY WAS BORN
when mobile telephony started on 31july 1995 it was dismissed as the rich man’s tool.Basic phone cost Rs.25000/- call charges were 16.80/-per minute.As price dropped the subscriber base touched 742 million in 2010 from 5 million in 2000.
36m US DOLLORS Sanctioned to C-DOT when it was set up in 1984.
THE PCO REVOLUTION
Public Phone Booths Voice Travels Far
IN THE EIGHTIES,INDIANS settled abroad were only too happy to have left behind the hardship and scarcity in their homeland for a life of prosperity.Quite unlike the recent opportunity thats been drawing NRIs by the droves,India then was still grappling with developmental challenges.So when Sam (Satyanarayan Gangaram) Pitroda,a bright electrical engineer from the US who had lived out the proverbial American dream,decided to change a few things in India,it was a most unusual choice.Not for Pitroda,though.
After selling his company Wescom Switching to Rockwell International,hed made his millions and held several technology patents to his name.At that time,India barely had 25 lakh telephones,most of them in big cities.For a country so vast and populated (around 70 crore),this was a drop in the ocean.With an early childhood spent in one of Orissas least developed areas,Pitroda knew the difference a telephone could make to the lives of Indians and push economic progress.
A newspaper clipping sent by a friend in 1981 set things in motion.It reported that then PM Indira Gandhi had set up a highlevel committee to review Indias telecom development.He wrote to its chairman explaining his desire to help modernise Indian telecom.Soon,he made his pitch before the committee,who in turn recommended him to the PMs office.Pitrodas hour-long presentation was sweeping in its vision,yet focused in its specific goals.He spoke about developing smaller digital exchanges instead of importing expensive and,often obsolete,equipment from western countries.A step up from the older mechanical switching exchanges,these would be adapted to Indias extreme and rugged conditions,thereby helping telecom networks reach rural areas.He was on.C-DoT was set up in August 1984 as a non-profit with government funding and complete autonomy.
It was sanctioned $36 million to develop a digital switching system suited to Indian networks.The 512-line rural digital exchange was an instant hit.Yet,the number of public telephones in the country was a pathetic 12,000.Clearly that had to change for people in 6 lakh villages to be able to use a phone.That was where the idea of a metered public phone or PCO came about.A drive to launch 200,000 phones was started,and within a few years STD-ISD-PCO booths were dotting Indias landscape.Offering outstation calls at a fraction of the existing overpriced and inefficient trunk call,the PCO was a path-breaking idea.It was a great business opportunity and a new breed of entrepreneurs was born.Things began to change as mobile call rates dropped.PCO owners have been forced to close down.Between September 2009 and 2010,a net of 40% of PCOs shut shop (new ones minus closures ),from 60 lakh to 35 lakh.The survival of the PCO will be put to the final test once 3G services are fully rolled out by private operators across the country.To create something new,the old has to die.The first phase of the telecom revolution is beginning to end, says Pitroda.
The Vehicle That Held the Great Indian Family Together Bajajs scooters defined the way India travelled in the 1970s and much of the 1980s.But over the years,its popularity has faded,making way for the motorcycle
Rahul Bajaj most certainly wasnt the only person who was upset when son Rajiv announced his decision to stop manufacturing scooters in 2009.Rajiv felt the flagship product of Bajaj Auto,the scooter,had by the end of the 2000s outlived its utility.The outpourings on the web by many one-time scooter owners,however,told a different story,including that of pride at being self-reliant,of having arrived in the world that was pre-liberalisation India.After selling Vespas,the Italian brand of scooters manufactured by Piaggio,in India,Bajaj Auto received permission to manufacture twoand three-wheelers in 1959.That in itself was no small achievement since it was at the peak of the quota and licence raj.The company started producing two-wheelers in 1961,and by 1970,its plant had rolled out the 100,000th vehicle.However,it wasnt until the 1970s,when the agreement with Piaggio came to an end,that it started selling the scooters under its own brand.Bajaj Auto launched the now iconic Chetak in 1972.Its easy to forget that the India of the 1970s was vastly different from the country it is today.Owning a two-wheeler at that time was a status symbol.Not surprisingly,the demand for the scooter went through the roof and a waiting period of a few years was normal.Whats more,people were willing to wait up to 10 years just to be able to ride home on a Chetak.Those who couldnt wait paid a premium to pick it up from the black market.Often,a foreign exchange deposit could get one on to the priority list.Rahul Bajaj is known to have said that in North India,a Bajaj Chetak was a non-negotiable part of the brides dowry.Instances of weddings being postponed just to accommodate the delivery date of the scooter too were not unheard of.A measure of its popularity is that just five years after its launch,the Chetak managed to sell 1 lakh units in a single year.The story goes that the government threatened to send Bajaj to jail for exceeding the production quota allocated to him,to which he is said to have retorted,Sir,my grandfather went to jail for my countrys freedom.I stand ready to do the same for producing on behalf of my motherland. Over the years,though,scooters began losing the popularity battle to motorcycles.The sense of machismo that was built around the bike was completely missing in scooters,which were seen as staid family vehicles.And,as the consumer started getting younger,the modest scooter started losing out.Even within the Bajaj portfolio,bikes had started scoring over scooters,despite the significant difference in price.Over the years,the company did try to keep pace by introducing updated versions of the scooter,but it too realised that bikes were a more profitable business.Eventually,it assigned its iconic product to the history books.However,the enduring image of a couple on a Bajaj Scooter,with one child squeezed between them and another standing in front of the father,will for a long time continue to remain the defining image of the middle class India of the 1970s and 1980s.
A scooter that could take around more passengers than a car
The foundation of Bajaj Auto was laid in Pune in 1945 with its first plant at Akurdi In the early 1970s,the Chetak model of Bajaj scooters revolutionised the scooter industry The Chetak was a 145cc,2-stroke scooter,which was later enhanced to the 4-stroke segment After Chetak,a plethora of models was launched by the company,like Bajaj Super,Priya,Sunny,Classic,M 50 and M 80 In the 1980s,Bajaj entered the US with little success,only to return in the early 2000s.Bajaj USA died in 2006 and became Argo USA Bajaj Auto closed its scooter segment in 2009 The plant at Akurdi has been converted into an R&D centre
Common Mans Car Wind Called Maruti
AT 87,HARPAL SINGHHAS lived a full life,like his first car Maruti 800.The first-ever customer to be handed over the keys to the peoples car expresses his anguish at the idea of seeing Maruti 800 being phased out.It disappoints me that the company has decided to shelve it, he once told a news channel,with a tinge of sadness in his wavering voice.I wish they wouldnt do so.
After all,the iconic Maruti 800 served the nation and impacted the lives of its people well.At the time of its launch on December 14,1983,there was skepticism within the industry on whether the economy could absorb another 100,000 over and above the 40,000 cars selling at that time in the stagnant market.The Maruti project was marred by controversies involving Indira Gandhis son,Sanjay,and was largely seen as a political project.A public sector company getting into the business,when cars were the last thing on the priority list of most Indians,was being questioned.
The then director (marketing ) of Maurti Udyog,RC Bhargava,was,however,bullish.People didnt have the remotest idea about how the car would ultimately impact not just the auto industry in the country,but also the entire manufacturing ecosystem, he recalls.Maruti 800 did that in more ways than one.Its entry marked the next generation of motoring in India and freedom for the Indian customer from the rickety gas guzzlers Ambassador and Fiat.Maruti 800 took to the roads amidst skepticism,but remained the darling of the Indian people for close to three decades.It did more than revolutionise the car industry.Marutis advent created a whole new manufacturing culture that swore by quality and productivity, says Bhargava.Prior to that,India was looked upon as unsuitable for manufacturing exports.
There was no auto component industry to speak of at the time.So,Marutis founders,in addition to setting up a car facility,helped set up scores of units from scratch to manufacture car components.One of the big contributions of Maruti was to encourage entrepreneurs to participate in joint venture with the company, says Surinder Kapur,chairman,Sona Koyo (then Sona Steering).Today,many auto component makers are names to reckon with,be it Asahi Glass,Amtek Auto,Sona Koyo,Subros or Jay Bharat Maruti.Maruti Suzuki has a base of 225 vendors and business associates spread across the country,who grew along with the company over the years,and eventually became suppliers to other global auto manufacturers.
At the same time,Japanese manufacturing practices that MUL brought in with the launch of Maruti 800 have had a huge impact on the manufacturing industry in the country,says Kapur.For one,it institutionalised quality.CII adopted the companys Total Quality Management clusters.Today,India boasts of over 135 Total Productive Maintenance awardees,instituted by Japan Institute of Plant Maintenance,and over 30 Deming awardees,both the highest in the world after Japan.In 1992,when the economy was liberalised and foreign investment allowed into India,auto component companies set up and nurtured by Maruti Suzuki became the foundation for global car companies.They found an accomplished and experienced auto component industry,encouraging them to invest in India.The Indian car market,which was stagnant till 1983,has now attained a volume of around 25,00,000 units.From the two-car models 27 years ago,India today has over 55 models produced by more than a dozen manufacturers.The overall turnover of the Indian automobile industry is over 1,50,000 crore.Every new car that rolls out of a factory in India generates 5.3 jobs across the economy,says an ICRA study.The Indian auto industry contributes 6% to the total industrial output of India and 17% of the total indirect taxes to the state exchequer.What began as a Maruti 800 three decades ago is today a precious national asset.
14 DECEMBER 1983
MARUTI 800 WAS LAUNCHED
The Maruti 800 will be phased out of 11 cities.But the car triggered the growth of a sector that is expected to generate output of $145 billion by 2016.
26lakh UNITS OF Maruti 800 cars sold so far in 26 years
The Flight Everyone Could Hop On To
Arati Menon Carroll
The year was 2002 and the Indian airline industry was creeping towards a standstill.Amid growing cartelisation,consumers were being charged inordinate amounts to fly,and only a lucky few could afford it.The economic indicators,meanwhile,were a counterpoint to this there was more money in the hands of the aspiring middle classes than ever before.Watching all this unfold was a certain Captain GR Gopinath.Having tried his hand at multiple businesses,he was looking out for his golden goose.It came to him on a helicopter ride from Goa to Bangalore.Flashing at him every few seconds were hundreds of dish antennae that dotted the rural landscape.Later,he was heard saying,for far too long,Indians had thought of India as a country of a billion poor,hungry people.This sight changed it for him.He realised that it was now a country of a billion hungry consumers.At that time less,than 1% of Indians travelled by air;Gopinath decided that his new business model would address the other 99%.Air Deccan became Indias first low-cost carrier and quickly climbed aboard an ambitious growth trajectory.In four years,it grew to revenues of 2,500 crore,deploying 45 aircraft across 67 cities,many of them having their first airport.India,Gopinath had decided,didnt just live in Mumbai and Delhi,it lived in Gwalior,Jabalpur and Kannur.Gopinath worked extensively with the civil aviation ministry,the Airports Authority of India and the home ministry,pushing for airports to be opened or upgraded each month.The other challenge was that the stock Boeings couldnt land in these new,small airports.So,smaller aircraft were purchased and routes were designed around linking small towns with each other and to metro cities.Gopinath also had to innovate on the distribution front to simplify air travel.If people in Himachal Pradesh wanted to buy a ticket they couldnt possibly come to Delhi to buy it.Setting up brick-and-mortar offices in every small town wasnt cost effective,so Deccan equipped 1,000 post offices with a ticketing desk in return for a 5% service charge.Petrol stations,internet cafes,even bakeries had Air Deccan booking capabilities.It wasnt scared to use technology either,building VSAT broadband lines and starting one of Indias first call centres with secure payment gateways.Ultimately,Gopinath always said,you had to find ways to fill the planes and the best way to do that was by putting inventory in the hands of the consumer.In four years,Air Deccan became the biggest airline company in the country and spawned copycats.Critically though,it had not broken even.Gopinaths strategy of growing fast,so that scale would crunch many cost aspects,didnt ensure profits.In the end,unable to overcome investor skepticism,he sold it out to Kingfisher in 2007 with assurances that the brand would be retained.It wasnt.Today,Air Deccans competition is booking profits on the model it spearheaded.Low-cost airlines are matching full-fare airlines in market share and even exceeding them in seat occupancy,netting new flyers as well as converting the old ones.
THE BHAKRA NANGAL DAM
A Temple to a Nations Vision of Growth
The dam was newly-independent Indias prized achievement.Few projects came close in terms of scale and self-reliance.It played a crucial role in making India self-sufficient in food production
Bhakra-Nangal was the first of the large dams that former Prime Minister Jawaharlal Nehru called temples of modern India.Widely perceived to have played a crucial role in India becoming self-sufficient in food production,it gave a newly-independent India a feeling of self-reliance and pride in its achievements.Located in the village of Bhakra in Himachal Pradeshs Bilaspur region,amidst the lusciously green Sutlej-Beas river valley,the dam took 12 years to build,starting in 1951.Towering at 740 ft,it is one of the highest gravity dams in the world.Three times taller than the Qutub Minar,it irrigates 7 million acres in Punjab,Haryana,Himachal Pradesh and Rajasthan.The dam sent ripples beyond the region.For every 100 of direct benefits irrigation and hydropower Bhakra generated 90 in indirect benefits for the regional economy,says a 2005 study that assessed its impact.Besides benefitting agricultural production,the dam has been used for transportation and by the fisheries industry, says AB Agrawal,chairman,Bhakra Beas Management Board.This was Nehrus vision for the project when he commissioned it.He inaugurated the Bhakra Canal System on July 7,1954,and dedicated the dam to the nation on October 22,1963.The project is considered landmark for another reason: Indian planners and engineers took some ground-breaking decisions.One was to build the Bhakra Canal System before the dam,while the other was to construct the dam with the help of foreign experts.The decision to build the Bhakra Canal System before the dam,so water supply would be available to farmers as early as possible,is a landmark in the history of river valley projects.The uniqueness of this project was in the soundness of its management and coordination,says Agrawal.In the 1950s,high-tech machinery was not available.Coordinating and managing small units of manual work was a mammoth task,which this project accomplished.Today if we had to mobilise manpower on such a huge scale,it would be very difficult, says Agrawal.Nearly five decades on,the dam has run without major hitches.A lift,with a carrying capacity of 24 persons,built back then at the side of the dam is still in operation without any jerks, says Agrawal.Interestingly,Nehru visited the project 13 times during its construction because of his fondness and pride for the project.The place where he stayed during his visits has been kept intact;even the crockery he used at the time has been preserved, says Agrawal.The then Punjab chief minister,Bhimsen Sachar,has said Nehru had resolutely refused to let the dam be named Nehru Dam. Instead,the Prime Minister suggested to the Bhakra Control Board that when the work was completed,a simple memorial be erected.The Bhakra Dam project is today used as a model to justify large dam programmes elsewhere in the country.The Bhakra Beas Management Board irrigates 50,000 sq km of land and provides 2800 MW of hydropower.The dam has two exclusive power houses with a total capacity of 1,325 MW on either side of the river.The power generated at Bhakra power houses is distributed among Punjab,Haryana,Rajasthan and Himachal Pradesh.But if the dam has its votaries,it has an equal number of opponents.It led to the displacement of 36,000 people and submerged Bilaspur,a town with a population of 4,000 people,according to a report titled,Unravelling Bhakra: Assessing the Temple of Resurgent India by Manthan Adhyayan Kendra,headed by Shripad Dharmadhikary.Many of the oustees have still not been settled fully,and government efforts in this direction have been sporadic,says the report.The report also points to the environmental impact of the dam which includes the loss of forests,wildlife and fishes,and an increase in the incidence of disease among those living near the dam because of the excessive use of chemical fertilizer and pesticide in the command area.Evaluating the impact on the ecological health of Punjab and Haryana has been difficult because of the lack of data before the dam was built and not enough monitoring of the area after it was constructed.Agrawal disputes the numbers,but says a balance has to be created between large and small dams.Large dams help meet demands for drinking water,agriculture and irrigation, he says.
TOTAL PROJECT COST
TYPE OF DAM
Concrete straight gravity Height above the deepest foundation: 740 ft Height above the river bed: 550 ft Elevation at top of dam above mean sea level: 1,700 ft Steel used: 101,600 TONNES SOURCE: WATER RESOURCES DEPARTMENT,GOVERNMENT OF RAJASTHAN
22 OCTOBER 1963
BHAKRA DAM DEDICATED TO NATION
Pandit Nehru declared at Nangal on November 17,1955 that India would,in the days to come,undertake bigger projects than Bhakra-Nangal and that dreams for the country’s progress were bound to be fulfilled
12 YEARS THE TIME IT TOOK TO BUILD
Road to Prosperity Golden Highway
INDIAS MOST AMBITIOUS road infrastructure project is said to have begun by fluke.As the story goes,soon after taking charge for a stable third term as Prime Minister in the NDA government,Atal Behari Vajpayee was to address a business gathering at Siri Fort auditorium in New Delhi.But he wasnt happy with the speech handed to him;it lacked punch and didnt say anything substantive,he pointed out.
A last-minute change was made and in his revised speech,Vajpayee announced the linking of Kashmir to Kanyakumari through a modern highway,to be built through public private partnership.It had a strong patriotic ring to it,and delivered in Vajpayees celebrated oratory,was a powerful message to the business community.But at 1,Eastern Avenue,Maharani Bagh in South Delhi,members of the newly-formed National Highways Authority of India were caught unawares watching the PMs speech on TV.So were ministers in the Union Cabinet.
The project was staggering in scale and scope,and unprecedented,and no one had any idea of how it would be achieved.Vajpayees plan didnt seem viable under a PPP model as the proposed routes were not remunerative enough.Later,it was quietly changed to whats now Phase-II of the 60,000-crore National Highways Development Programme,known as the North-South and East-West corridors.And what took its place was the Golden Quadrilateral,the first phase that would connect the four metros Delhi,Mumbai,Kolkata and Chennai through four to six-lane expressways,along roads connecting these centres with ports.It was the first time in independent Indias economic history when a major road project encompassing the whole country was launched, says Vinayak Chatterjee,chairman,Feedback Ventures,an infrastructure services company.
For two or three centuries roads had been laid by the Public Works Department.Now they were being handed over to the private sector.It was a huge mindset change. What it now needed was someone who could take this huge project forward.Bhuwan Chandra Khanduri,a retired major general with 38 years in the Armys Corps of Engineers,was the man for the job.Assuming office as minister of state with independent charge for road transport and highways in November 2000,Khanduri was hands-on and focused on execution.The initial target for completion of the proposed 5,846 km was 2004.The initial set of challenges included land acquisition which took several months,arranging funding from the World Bank,and getting enough qualified contracting firms to execute.Only 10% of Indian firms were up to the mark.We had to generate confidence in Indian contractors that we could do this. One way was to provide exemption in customs duty for importing advanced road construction equipment.And while there was a penalty on overruns,Khanduri introduced something unique a performance bonus of 1% of the contracted amount for completing before the deadline.
That was a huge amount.I gave out 4-5 crore as bonus myself, he says.Such was the zeal to get things done that contractors did not wait for land acquisition money to be disbursed by the government (which took up to six months),and paid farmers from their own kitty.Levying toll tax for vehicles on these roads was also met with resistance.In the Rajya Sabha,my answer to a question about toll taxes went on for 55 of the allocated 60 minutes, he recalls.In 2003,while inaugurating the coastal road connecting Andhra with Orissa,Khanduri was confronted by roadside motor repair mechanics,who told him how this would kill their livelihood.Khanduri laughed,suggesting they set up shop near the restaurants that would come up along the highway.With the Golden Quadrilateral nearly complete at 5,811 km,Indias road network,at 42.4 lakh km,is nearly twice its length two decades ago.National highways have more than doubled to 70,000 km in this period.To think that one speech could have made this happen..
INDIAS FIRST SATELLITE ARYABHATTA LAUNCHED
When the Satellite Reached For Stars
On April 20,1975,the reader could be forgiven for not paying much attention to the days main headline,even if it was the announcement of a groundbreaking event the launch of Indias first-ever satellite,Aryabhatta,into space.In 1975,India was ruled by chaos.On the brink of a socialist revolution,labour militancy in the country was at its peak,with the existing political leadership in complete disarray.Bombay,the countrys commercial heartbeat,had come to a standstill,with union leaders such as George Fernandes forcing the citys myriad mills and factories to shut shop.Barely a month later,Prime Minister Indira Gandhi,under attack by calls for total revolution,but supported by a weak-kneed President,Fakhruddin Ahmed,promulgated her infamous state of Emergency,and suspended all civil liberties.In the backdrop of such massive civil and political unrest,the launching of the Aryabhatta satellite from the remote region of Kapustin Yar in the erstwhile Soviet Union,by the still-nascent Indian Space Research Organisation (ISRO),had perhaps not received the importance it deserved.Named after the fifth-century mathematician and astronomer,the satellite was built to conduct experiments in solar physics,among other things.But more importantly,Aryabhatta served as the blueprint for ISRO to make future satellites,especially in the still-emerging areas of communication and television broadcasting.It also played a pivotal role in developing and gathering information in resource surveys and meteorology.
The launch of the satellite,on April 19,1975,came at a time when India was looking to build a strong and thriving scientific and technological base.Aryabhatta had ensured that the country became the 11th nation on the planet,and the third in Asia after Japan and China,to send its own satellite into space.But the programme had undergone its share of time overruns.Originally scheduled for launch in 1974,there were delays due to the fabrication of the flight model.The help provided by the then Soviet Union kept the satellite in orbit.The launch of the satellite had a political impact too,with Mrs Gandhi brazenly using the scientific achievements for her own gains.Never had the term,India is Indira,and Indira is India, coined by her political sycophants received such a boost.Further,the actual gains from the Aryabhatta satellite have been the subject for much debate.A power failure halted all experiments after four days in orbit,and all signals were lost after barely five days of operation.The satellite re-entered the Earths atmosphere in February 1992.Thirty-six years down the line,with ISRO now confidently stating their mission to put a man on the moon by 2015,the Aryabhatta satellite may become just another footnote in history.But there is no doubt that the satellite was one of the first-ever symbols that the so-called cowdung society had finally entered the space age.
Named after the great India astronomer ARYABHATT was luanched by the erstwhile Soviet Union on April 19,1975 from Kapustin Yar using cosmos -3M Launch vehicle
Fire in the Desert The Buddha Laughed
FOR THE SIX MEN SITTING IN A sparsely decorated room on Race Course Road,it was an anxious wait.They were often acknowledged as the backbone of the ruling government.But,on that hot and muggy afternoon of May 11,1998,their thoughts were dominated by something beyond the usual political horse trading,which they the ultimate power brokers had no control over.At 3.47 pm,even as the nuclear shock waves tore through the swirling sands of the remote Pokhran test range in the Rajasthan desert,the phone rang incessantly from an adjoining room.Brajesh Mishra,the Prime Ministers principal secretary and lead enforcer,lifted the receiver hesitantly to hear an excited voice exclaim: Done! For Atal Behari Vajpayee,Lal Krishna Advani,George Fernandes,Yashwant Sinha,Jaswant Singh and Pramod Mahajan,it was a moment of triumph.The BJP-led government had delivered what it had promised to ensure Indias destiny as a nuclear power.With Operation Shakti,India had spectacularly gatecrashed into the hitherto-rarefied nuclear states club and rewritten the existing global strategic agenda.The Buddha had not just smiled,it had laughed ferociously.The story of how the countrys bomb makers,with the invaluable help of the Indian Army,went about making India a nuclear state could have come straight out of the pages of a pulp fiction novel.Subterfuge,intrigue,code words and red herrings the saga had it all.The level of preparation was awe-inspiring.For example,to avoid detection by CIA satellites that were closely monitoring the area,the mounds of sand used to seal the shafts where the explosions were to be conducted,were actually aligned according to the direction of the wind.The army had realised that,in 1995,the US satellites had detected fresh activity in the area by studying how the wind shaped the mounds.The audacity of the May 11 nuclear tests shocked the world,and highlighted the massive failure of the American intelligence agencies.However,in India,a feeling of emotional triumph and euphoria swept the nation as the news broke,with the countrys political elite,barring the Left,coming together to celebrate the so-called Swadeshi bomb.The comparisons to the 1974 tests could not have been starker.Pokhran-I was conducted barely a decade after India received a sound military whipping from China over border disputes,and the nation was yet to formulate its nuclear deterrent policy.The tests had done little to showcase Indias nuclear weapons capabilities,or to increase its standing in the international community.The 1998 tests had a far stronger shock value.With the decline of the Cold War,the arms race had practically ground to a halt,and countries were well on their way to reducing their nuclear arsenal.Separately,given the tension in the region,nuclear testing was perceived as not only the worst strategy possible to aggravate the already-fragile security environment,but was also seen as a direct blow to the ongoing global non-proliferation efforts.The BJP,which was leading the coalition government at the Centre,had long promised,as part of its national agenda,to induct nuclear weapons into the countrys arsenal.Separately,the success of the tests were a political manna for Mr Vajpayee as it served as a binding force that kept the fractious coalition government together.The international communitys response was swift,with then-US President Bill Clinton immediately imposing stiff sanctions on the country,and other Western nations following suit.The term,rogue state,was also bandied by certain sections of the international media.Indias political elite were accused of having an under-siege mentality and questionable motivations in their pursuit of making India a nuclear weapons state,and the declarations of the Vajpayee government were seen as a perfect example of Hindu nationalism riding a Viagra high.The aftermath of Pokhran-II also saw Pakistan coming out with its hitherto clandestine nuclear programme and declaring itself a nuclear weapons state by conducting reciprocal tests at Chagai.Thirteen years down the line,the geopolitical agenda has once again seen a complete turnaround.The Washington-New Delhi strategic honeymoon continues to bloom,with the US looking to ally itself with India to check the ever-growing Chinese threat perception in the Asian theatre.1998 seems a distant memory now.While the nuclear tests may have shocked the global community in 1998,it has now been forced to recognise Indias value as an anchor of democratic stability,especially in the East Asian region,and which has been further enhanced by its growing economic clout.Few would disagree with the perception that Pokhran-II,however inexplicable,kick-started the countrys revival of faith in itself.
18 MAY 1974
FIRST NUCLEAR DEVICE DETONATED
THE FIRST SHOT
Pokhran-I was conducted a decade after India received a sound military whipping from China over border disputes.But the tests did little to showcase Indias N-power
The Dabhol Power Project,in which Enron had invested $900 million,was mired in a series of controversies.It was later re-named Ratnagiri Gas and Power Pvt Ltd (RGPPL).It began operations in May 2006,after a hiatus of over 5 years.
56 PER CENT Average literacy rate of Pokhran
FIRST RELIANCE IPO
From Aden to Eden Fabric of a Journey
DHIRUBHAI AMBANI HAD a penchant for doing things in uncommon ways.That led him to focus his conversation with a broker about the superiority of his textiles unit,a few days before the initial share sale of Reliance Textiles Industries in November 1977.Anyone else in his position would perhaps have requested the broker to help sell his IPO.Dhirubhai did never ask me to buy his companys public offer.He repeatedly enquired about how did I find his textiles plant in Ahmedabad.That struck me the most, recalls Ajit Day,owner of a Kolkatabased share brokerage Dayco Securities.Day was part of the 30-odd brokers who were flown to Mumbai from across the country to participate in the brokers conference that RIL organised to sell its IPO.As part of the package,they were sent to RILs textiles unit in Ahmedabad.On return to Mumbai,a white-safari clad man sporting chappal came to see them well before the conference in a south Mumbai hotel.That man introduced himself as Dhirubhai and sat on the floor,legs folded.And spoke about his companys expansion at great length.The 22-year-old Day was bowled over by Dhirubhais simplicity,a scarce commodity in Indias family-run business houses.He was also moved by Dhirubhais ability to explain his grand vision in common mans language.Next morning,Day bought 2,000 shares at a premium in the Mumbai grey market and a suit length of Only Vimal the RIL brandat a discount (that he got in the conference).Going back home,he preached in favour of the IPO.Day proved to be right.His Only Vimal suit length lasted for over 10 years and RIL shares brought many-fold returns.Day,who later became President of Calcutta Stock Exchange,then Indias second biggest bourse,held on to those RIL shares till recently.Day and his clients were among the 58,000 retail shareholders who bought 2.82 million RIL shares,helping Reliance Textiles Industries (the then avatar of RIL) to raise 2.82 crore in Indias largest IPO then.To put the number in perspective,the synthetic filament yarn maker posted a turnover of 65.08 crore in the 15-month period ended September 1976.It was implementing a 12.5 crore expansion plan.Cut to present: RIL posted turnover of 192,461 crore last year.Dhirubhai was perhaps the first entrepreneur of this era to show that one could start a large business in India without seeking support from government-owned lending institutions, says Jayanth R Varma,a Professor at Indian Institute of Management,Ahmedabad.Dhirubhai found merit in raising funds through an IPO,a hitherto uncommon avenue.Most of the entrepreneurs in his times would rather go to the state-owned lenders to borrow money.And they would later offer equity to the lenders by converting loans at par.Dhirubhai was too confident to give away control to state lenders at a cheap rate.Taking debt from lenders would also attract their intervention.Dhirubhai hated it too.That IPO sparked a revolution in India.Dhirubhai,who often drew criticism for evading taxes and being non-transparent,was widely credited for setting the stage for equity cult in the country.Post the public issue,he won investors confidence by delivering performance.Later,he launched non-convertible debentures to retail shareholders,another first in India,to cash in on the trust he earned from retail investors.His timing was also correct: the financial market was slowly being de-regulated in the early 1980s.He cashed in on his performance and the conducive environment by launching innovative products like convertible debentures.Dhirubhai was one of the creators of the market;he was also a product of the market, says Varma.In the early 1970s,the government forced multinational companies to limit foreign ownership mostly at 40%.It was capped at 51% for some technology companies.MNCs were asked to offload the balance shares at the government determined price.Retail investors took advantage of this law and got MNC shares cheap.They discovered the benefit of putting in money in equity.It was an inflection point which Dhirubhai later cashed in on with his companys initial share sale, says a large investment banker,who does not want to be named.Both were mutually reinforcing cycles, adds Varma.The banker said Dhirubhai might not have seen the same success had he launched his public issue 10 years ago.According to Varma,Dhirubhais advantage was that he could foresee the policy changes and did prepare himself accordingly.Thats why when the government permitted the domestic companies to raise funds from the overseas market,RIL was the first to launch a global depositary receipt issue in Luxembourg in 1993.Dhirubhai had convinced retail shareholders that he would take good care of their investments.His standing to common investors was God-like.No wonder,he had to accommodate over 35,000 investors at his AGMs in the 1980s.
RELIANCE GOES PUBLIC
58k NUMBER of investors who subscribed to the first IPO
Aditya Vikram Birla spearheaded the Birla groups march overseas,with operations in Thailand,Malaysia,Indonesia and Egypt,as well as diversifying into areas like cement,chemicals,financial services and software.AV Birla died at 51,and his son,Kumar Mangalam Birla,took over the reins at the age of 28.
A Mouthful of Sky & Some Soap
The Gulf War opened the floodgates of cable television for Indians whose daily fix of news came from radio and Doordarshan.It gave them footage that was available only in the developed world
It took the mother of all battles the Persian Gulf War that began in 1990 for Indian viewers to wake up to the excitement of realtime news coverage.As images of bombardments and missile attacks flashed on the small screen,broadcaster CNN and its journalists like Bernard Shaw and Peter Arnett became household names.It was indeed a baptism by gun (fire) for Indians who,till 1990,were accustomed to getting their news fix either from the radio or the state-run broadcaster Doordarshan.The Gulf War,seen on CNN,opened the floodgates for satellite television in India.Star TV then a joint venture between Hutchison Whampoa and its owner Li-Ka Shing and Subhash Chandras Zee TV followed even as Doordarshan expanded its bouquet.Since then,the Indian market has grown to over 300 satellite television channels slugging it out for advertising revenue thats worth an an estimated 22,000 crore.Ronnie Screwvala,founder & CEO,UTV Group,says that before the advent of satellite television the business was primarily concept selling.As at that time there was only one terrestrial channel (Doordarshan),Indians didnt even have the concept of a remote for their TV let alone switching to another channel or the concept of choice, says Screwvala.The choice began with India getting a taste of entertainment right from real time war to live sports to high-fashion and high-drama soaps like The Bold and the Beautiful and Santa Barbara.The open sky coincided with the liberalisation of India and led to the creation of generation X children of liberalisation who opened their eyes to see India looking to globalise and shake off its socialist moorings.The Gulf war also made me appreciate the reach,influence and importance of TV as a communication medium.I was convinced that India needed an impartial independent TV medium,which was possible only though the private sector, says Subhash Chandra,chairman,Zee Entertainment Enterprises and Essel Group.Over a period spanning two decades,India has over 100 million households with cable & satellite television.Along with cable & satellite television,direct-to-home (DTH) broadcasting has witnessed an annual growth of over 25%,with an estimated 20 million households currently.Satellite television has had a profound effect on Indian viewers,exposing them to geographies,cultures,cuisines and personalities they would never have otherwise encountered from the security of their living room.It also gave Indians the confidence to aspire for the best things their counterparts in developed markets were purchasing.Such exposure also helped narrow the gulf between Bharat (rural India) and the countrys city-slickers.Audiences began to get exposed to shows much bolder and fresher and more interactive, says Screwvala.As the subscriber base has grown,and the number of channels too,judicious media planning for brands to communicate more effectively by cutting through the clutter has resulted in numerous innovations.For example,a telecom brand initiated a media roadblock across well-known general entertainment channels by simultaneously broadcasting the same campaign to announce a change in brand name.Content providers meantime have been taken to the cleaners for regressive soaps and over-the-top news reporting.But then it has not been all down hill.As Chandra says: Yes,there have been a few drawbacks too in terms of regressive and commercialised programming,especially in the news and information space.However,in the final analysis the benefits far outweigh the drawbacks and this augurs well for the influence and existence of satellite channels in the daily lives of individuals.
Starting with 41 sets in 1962 and one channel,by 1991 TV in India covered more than 70 million homes The viewing population had also grown to more than 400 million individuals watching more than 100 channels India now has over 134 million households (out of 223 million) with television sets,of which over 103 million have access to Cable TV or Satellite TV,including 20 million households that are DTH subscribers It is also estimated that India now has over 500 TV channels covering all the main languages spoken in the nation TV owning households have been growing at between 8-10 %,while growth in Satellite /Cable homes exceeded 15% and DTH subscribers grew 28% over 2009
NATIONAL STOCK EXCHANGE
In a Flash,Trading Moves to Screens
Sometime in 1992-93,GV Ramakrishna,a career bureaucrat who had taken over as chairman of the new securities market regulator the Securities and Exchange Board of India wrote to Indias finance minister making a strong case for a new stock exchange without having on board any brokers associated with the Bombay Stock Exchange.There were good reasons for Ramakrishna to suggest BSE brokers ought to be kept at bay.In those days of paper-based trading and settlement of stocks,these powerful brokers with patrons in New Delhi were used to closing down the exchange often.It was an era when price manipulation by brokers was regular.Settlement of trades was a challenge given the problems associated with physical shares.India ranked almost at the bottom of the heap in rankings on capital market infrastructure a shade above Russia.Thats when despite severe resistance from brokers,the government moved to promote the National Stock Exchange of India,which became operational in 1994.This was followed up a few years later with the countrys first depository the National Securities Depository Ltd which ensured that securities were held in dematerialised or paperless form,putting an end to problems like bad delivery,and cutting transaction costs substantially.Those were defining moments in the liberalisation of Indias financial sector.RH Patil,the first managing director of NSE,says the exchange was the most important catalyst of the transformation of the Indian stock markets over the past decade.It was one of the earliest exchanges in the world to adopt demutualisation or the separation of ownership,management and trading rights.Convincing brokers and investors that the market was not limited to Bombay (as it was called then),but was an electronic screen on which they could trade from any part of the country,was a huge challenge.BSE brokers who had kept away were forced to adapt to the screen-based anonymous order matching trading system,signalling the start of a remarkable transformation of the countrys financial markets.The NSE then started a clearing corporation to guarantee all settlements,which led policy makers to think of dematerialisation of shares and the setting up of a depository.Chitra Ramakrishnan,joint managing director of the NSE who came intially on deputation for the project from IDBI then a powerful financial institution recalls how the NSEs original mandate became broader.We learnt different lessons on the way and much of it was born out of necessity, she says.Patil calls it an ecletic approach which later led to shortening of settlements,launch of futures and options and several other products.The other game changer was the NSDL,whose success in maintaining ownership records of securities in paperless mode helped ensure that the Indian capital markets could make the transition from a weekly settlement to rolling settlement,minimising risk and boosting efficiency.Settlement costs have dropped from half a per cent in the early 1990s to a few rupees.The NSDL now handles in its demat custody securities worth $1,398 billion or Rs 63,07,166 crore,which is over 80% of the securities held and settled in dematerialised form in the country.
IIT AND IIM
Institutes of Excellence Power to Intellect
Sreeradha D Basu
POLITICS IN INDIA AROUND the time of Independence wasnt about riots,rabble-rousing and hooliganism.The champions of Indias movement for freedom from British rule were the intelligentsia or the thought leaders.They understood,only too well,that scholarship was essential to struggle.This is why Mohandas Gandhi was the product of the hallowed court,the Inner Temple,in London.Motilal Nehru was a celebrated barrister while his son Jawaharlal,the countrys first prime minister,studied at Harrow and Cambridge before being called to the Bar in 1912.Vallabhbhai Patel studied law in India.Subhas Chandra Bose was a first-class in philosophy and stood fourth in the Indian Civil Services examination.The list goes on.When India finally got Independence,the founding fathers placed education high on the list of priorities.The seeds were sown by,among others,Nalini Ranjan Sarkar,member of the Viceroys Executive Council a sort of interim cabinet during the changeover from colonial administration to Independence.It is to Sarkar,an educationistentrepreneur,that the Indian Institutes of Technology (IITs) and the Indian Institutes of Management (IIMs) owe their existence.He was the first to float the idea of setting up institutes for higher,technical education across the country.Sarkars initiatives led to the founding of the first-ever IIT in the country,at the site of a defunct prison,the Hijli detention camp,in Kharagpur in May 1950.On the recommendations of the Sarkar committee,IIT Bombay came next,in 1958,followed by Madras and Kanpur (1959),and Delhi in 1961.The IITs were mandated to produce the brains that would take the country into a new era of technology and industrialisation.The birth of the IITs epitomised modern engineering education in India, says Prof M Chakraborty,director of IIT Bhubaneswar and formerly deputy director at IIT Kharagpur.The need of the hour was to generate a high-quality pool of technical manpower,with a solid foundation in both the sciences and humanities.The establishment of the IITs,modelled on MIT,provided excellent opportunities to many. Maulana Abul Kalam Azad,while inaugurating IIT Kharagpur,said the institute should have 2,000 undergraduate students and 1,000 students for post-graduate studies,who would emphasise the role of higher technical education.If science was to take India into a new age,could industry be far behind With the first IITs on the ground,the Planning Commission was entrusted with setting up the Indian Institutes of Management.The commission invited Professor George Robbins of the University of California on whose recommendations the government decided to set up two elite IIMs the first in Calcutta (as it was then known) in November 1961,in collaboration with the MIT Sloan School of Management,the government of West Bengal,the Ford Foundation and some industry leaders;and the second in Ahmedabad,that same year.Coming almost a decade after the IITs,these were to provide management education to professionalise the running of vital sectors.Institutes at Bangalore in 1973,Lucknow in 1984,Kozhikode in 1996,Indore in 1998 and Shillong in 2008 followed.Last year,they were joined by institutes at Ranchi,Rohtak and Raipur.What the IIMs and IITs did was free education from obsolescence, says Amitava Bose,former director and currently professor of economics at IIM Calcutta.Earlier,higher education was confined to universities bound by rigid norms.The IIMs and IITs emerged as a kind of education powerhouse which helped infuse new ideas and new disciplines into education. Undoubtedly,the biggest achievement of both the IITs and IIMs has been to create several generations of talented,grounded and aspirational youngsters who can,today,compete with the best minds in the world.Says IIM alumnus and CEO (FMCG) at Reliance Retail,Ninu Khanna: The IIMs helped offer the youth a good career opportunity and the freedom and scope to contribute to the building of businesses and the country. It is unfortunate,he feels,that the institutes are stymied by bureaucratic control,and trapped in divergent visions.The government needs to convert these institutes into stand-alone,selfreliant,self-funded and autonomous bodies that can cater to their requirements,as opposed to operating within narrow,bureaucratic confines, says Khanna.
Dr.radhakrishanan at MUMBAI IIT in 1962
Family Jewels Get Some Air
It is not a stand-alone turning point that defines Indias disinvestment process initiated in 1991-92.Though the total realisation to the government from different rounds of disinvestment till 1999-2000 stood at 18,638 crore,the big-ticket disinvestments stand out as a true measure of success in the entire process.Indias disinvestment experience can be clearly demarcated into three phases.The first was between 1991 and 1998 when small holdings of public sector companies were sold;the second lasted from 1998 to 2006 and featured the strategic sale of firms such as VSNL,Bharat Aluminium Co (Balco) and Maruti Udyog.In the third phase since then,the government has been back to selling small chunks.The second phase,which saw the government loosening its control over big-ticket public sector enterprises,was crucial.However,the strength of Indias disinvestment lies in the collective moments of strategic sale.To begin with,in February 2001,the government struck its first disinvestment deal of the millennium by approving the sale of 51% stake in aluminium major Balco to Sterlite Industries for 551.5 crore.In 2000,Balco,a profit-making public sector company under the ministry of mines,had a turnover of 898 crore and a profit of 56 crore.Next in line was the strategic sale of VSNL in the summer of 2002 wherein the government decided to sell its 25% stake in the telco giant to the Tatas for 1,439 crore.The company now became Tata Communications even as its monopoly over international longdistance telephony came to an end ahead of the promised deadline.Not only did VSNL have a strong position in the international longdistance voice and internet segments of the telecom business but also a solid infrastructure and good technical staff.Besides,VSNL also offered a strong balance sheet that enabled the Tatas to use the cash judiciously,transforming the company into a global operator of undersea cable networks and satellite links.Finally,in 2002,Suzuki Motor Company,the joint venture partner in Maruti Udyog,shelled out 1,000 crore as a premium to take over control of Maruti.After the dilution,the governments stake was reduced to 20.8% and Suzuki Motor Corporations stake increased to 54.2%.The remaining equity belonged to institutional and individual investors.As of May 2007,the government sold its complete share to financial institutions.The Maruti disinvestment issue gains credence as a classic case of a foreign company buying the stake held by a public sector undertaking.Jawaharlal Nehrus view that the state should control the commanding heights of the economy started losing steam from the 1980s when the countrys fiscal deficit started getting out of control.While the figure stood at 5.4% of the GDP in 1979-80,it shot up to 10% by the end of the decade.As government expenditure climbed,interest payments further dented the situation in the absence of returns on productive capital expenditure.The Gulf War of 1990 added to the governments worries,as NRI deposits started flowing out and the balance of payment condition worsened.Disinvestment was born out of this crisis when the newly-elected government in 1991 promised macroeconomic stabilisation by reconstituting the industrial sector.Ever since,theres been no looking back.
An Odyssey in the Supermarket With its arrival in 2001,Big Bazaar flagged off the best decade so far for Indian consumer culture
Big Bazaar,a ubiquitous symbol of Indian consumerism,started with not just a bang but,quite literally,a crash.The main glass facade door came crashing down on the second day of business at the flagship store in Kolkata,as shoppers eager to make their purchases during the Durga Puja season arrived in great numbers.At Hyderabad,the franchise had an infrastructurecrippling 35,000 footfalls on day one.The publicity blitz around the opening led to many people confusing the store for a mela happening in the city at the same time.Rajan Malhotra,president – retail strategy,Future Group,recalls,The air conditioning failed.We had to block people and assure them that it was not a one-day sale. In 2006,the franchises first ever Republic Day sale ended with the police called in to control crowds at Lower Parel,Mumbai.Launched in Kolkata in October 2001,Big Bazaar has played a role in or at least coincided with the surge in consumerism across India.If modern trade was valued at a meagre $2 billion according to Technopak estimates for 2001,it is currently valued at $21 billion.However,it is arguable that Big Bazaar just happened to be at the right place at the right time.Through the last decade,India unshackled itself from what social scientists refer to as brahminical restraint and embraced consumerism.According to marketing consultant Nabankur Gupta,There was more expendable income.TV brought products into homes and created a desire to own.This was compounded not just by advertising but serials that showcased a degree of opulence and interface with products that connote a certain lifestyle. The infrastructure for a nationwide shopping spree was already in place.Banks were eager to dole out credit cards,pre-approved loans,and attractive terms on life altering investments like homes or vehicles.Successive governments focussed on roads and highways,allowing products to reach formerly remote areas.As the job market grew more competitive in urban India,salaries were hiked making consumers aspire to a higher standard of living.Through this decade,Indians began to feel confident about the future,secure about spending and less inclined to save.This was particularly true of young India.The BPO industry changed the lives of youngsters who traditionally led a precarious existence financed by handouts from their parents.Since most of them still lived in their family homes,with food and shelter taken care of,they viewed their salaries as purely disposable income.Marketers were more than ready to meet them halfway.For instance,Levi’s India pioneered the concept of paying for jeans via EMIs,making a premium purchase far more accessible.According to Gupta,Consumption patterns across India are easily two-and-a-half times what they were 10 years ago for an average Indian household. Consumers today are more willing to upgrade,opting for fourwheelers instead of two or splitlevel air conditioners instead of the wall-mounted models of yore.Dipankar Sen,group business director,IMRB International,believes,Consumerism is driven from the top,and creates aspirational needs down the ladder.In rural India,there has been a distinct change from constrained living to more urbanised choices,from cost-led to convenience-led purchase,albeit at best value.In urban India,the swish upper SEC is moving to a global league in travel habits and destinations,food habits and eating out,fashion and design,and brand repertoire. Besides,malls have an impact that extends beyond how Indians shop.According to Pinakiranjan Mishra,partner and national leader,consumer products practice and retail,E&Y,Some larger formats are destinations for entertainment and weekend getaways. The Indian consumers desire for a better experience has broken the confines of modern trade.It has changed the way they view neighbourhood kirana shops and the way the stores view themselves.Big Bazaar and its ilk may not have driven these outlets out of business,but have spurred them to modernise.Through the late 2000s,HUL played retail consultant to kirana stores looking to get a more customer friendly makeover.A chaotic avalanche of products has given way in some cases to a roomier,more navigable shop.Jostling for space with jam and ketchup at the local grocery are imported Ferrero Rocher and olives;products the typical Indian consumer only saw being doled out as largess by generous NRI relatives a little over a decade ago.
If modern trade was valued at a meagre $2 billion for 2001,it is currently valued at $21 billion At Hyderabad,Big Bazaar had an infrastructure crippling 35,000 footfalls on day one Consumption patterns across India are easily two and a half times what they were 10 years ago for an average Indian household
TATA CORUS DEAL
Steeling In Going Abroad
HE WAS DRESSED IN A G-SUIT.His hand clutched the railings of the ladder that was perched on to an US Air Force F-16 jet.His hair was tousled by the stiff breeze.He smiled,waved,disappeared into the cockpit and took off for a 35-minute sortie his first flight on the fighter.But not before the cameras clicked,capturing what may well come to be the defining Ratan Tata image of the decade.It was uncharacteristically flamboyant of Tata to express himself this way at the Bangalore Aero Show in 2007.Perhaps this was his way of celebrating barely a week before the flight,Tata had wrapped up the $12 billion acquisition of Corus on January 31,2007.This is still India Incs largest global buyout ever.The deal was audacious in every sense Corus was four times the size of Tata Steel.Exactly a century ago,the British powers are said to have pooh-poohed the idea of Jamshetji Tata attempting to start a steel company in Jamshedpur in 1907.And here was the same company buying up Britains largest steel producer in 2007.The buyout fired the imagination of industrialists and entrepreneurs.Those were the days of easy money.India Inc followed Tatas cue and embarked on a global buyout binge.In the years running up to the Corus deal,between 2005 and 2006,India Inc had invested $14.2 billion in global acquisitions.After Corus,between 2007 and 2010,it had signed deals worth $58.83 billion.The acquisition itself was an inspiration for other Indian companies, recalls Ashvin Parekh,partner and national leader,financial services,Ernst & Young.A month after Tata Steel announced its acquisition of Corus,the Aditya Birla Groups flagship company,Hindalco,announced its $6-billion acquisition of Novelis,the worlds biggest producer of aluminium rolled products.A year later,the Tata group itself made another breakthrough acquisition with Tata Motors buying Fords Jaguar Land Rover operations for $2.3 billion.And finally,the last big deal,in March 2010,was Bhartis acquisition of Zain,which turned it into the worlds third-largest telecom company,with a footprint covering 15 African nations and India.In between,several mid-sized Indian companies,too,found the cash and the courage to go after their own global acquisitions.The Tatas were no strangers to global takeovers especially British takeovers when they acquired Corus.For example,Tata Tea had bought Tetley,a company three times its size,in 2000.But Tetley cost only $271 million.Indeed,one of the most interesting things about the Tata-Corus deal was the way it brought into focus the new global business dynamics in steel.In 2006,Tata Steel was one of the worlds most efficient steel producers,with operating profits of $840 million on sales of 5.3 million tonnes,compared with Coruss $860 million in operating profits on sales of 18.6 million tonnes.Tata Steel was self-sufficient in raw materials,whereas Corus was dependent on imports.For Tata Steel,the acquisition was a long-term strategic move.The company believed there would be synergies in the form of shared raw material sourcing,research and development,which would result in cost reductions.It would also give the Tatas access to the markets of Europe.Still,Tata Steels shares fell by 10% when the takeover was announced and the global economic downturn that followed soon after didnt help.The cash deal was financed through $4 billion of internal accruals,and $8 billion worth of new debt.Two years ago,shareholders felt Tata Steel had made a mistake in acquiring Corus,but they no longer feel that way, adds Parekh.The Tatas have demonstrated a remarkable capability to manage in great adversity.
Ratan Tata sits in the cockpit of an F-17 fighter plane during Aero India 2011in Banglore