Subba’s Serendipitous moments

January 22, 2007

India contines to be a messy affair

Filed under: India — Subbaraman Iyer @ 4:40 pm

Well, Eric Ellis does inject a sense of reality and all the issues that he faces is not unusual. How long is the impressive growth sustainable in the face of such creaking infrastructure is something that I have been pondering over a long time.

My sense is not that long; the bubble has to burst. Be it airports, or the internet or for that matter any other infrastructure, there’s very little attention paid to it. India seems to be in a make believe world !

Booming, business-mad India is not the full story, as Eric Ellis discovers, to his cost.
Eric Ellis is South-East Asia correspondent for Fortune.

http://www.smh.com.au/news/business/india-just-as-messy-as-it-has-always-been/2007/01/21/1169330765863.html

STANDARD-sized condoms might be too big for Indian men, or so says a much emailed recent medical study from the sub-continent, but not so Western businesses for India Inc.

Roused by a long-overdue boom, Corporate India has been plundering Western capital markets – witness Tata Steel’s $11 billion joust with Brazil’s CSN for the Anglo-Dutch steelmaker Corus. Or pharma group Dr Reddy’s $800 million purchase of German drugmaker Betapharm US. Or Tata Tea of Britain’s Tetley for $500 million, and oil major Videsh’s $2 billion entry into Brazilian resources.

PricewaterhouseCoopers tallies the 130-odd major deals that India Inc did offshore last year to be $US25 billion and that was before Tata’s tilt at Corus.

That India is booming is beyond dispute: 10 per cent annual growth, $200 billion in foreign reserves and next stop, with The Bomb and a huge consumer market in hand, permanent membership of the UN Security Council.

But what type of boom is it? After three weeks reporting on a country I know well and enjoy very much, I’ve concluded it’s a patchy boom, perhaps even dangerous.

I write this sitting on the floor of Indira Ghandi International Airport in Delhi, delayed four hours for a flight. The filthy airport, regarded as one of India’s better ones, may well be a disgrace to her legacy but I think it’s a fair reflection of it.

India’s boom was unleashed in 1991 by long-overdue deregulation after 40 years of the so-called “licence raj”, Nehru’s muddle-headed almost-socialism his daughter Indira did nothing to reform. Her licence raj provided permits to a few companies to produce a single product or service. It held India back for years, created monopolies, bad products, rampant corruption and woeful infrastructure.

The giant family companies of India Inc didn’t much bother improving. If there’s no competition and high demand, why invest? Protected by the state, they got fat and lazy. And Indians got bad products and still have appalling infrastructure.

I’m on the floor of the airport named after the champion of the licence raj because it’s the only place I found a live electricity socket to plug my laptop into, an abandoned Lipton’s tea booth with no seat. The other 15 sockets tested didn’t have any current. (Alas, I write too soon, the airport has just had two successive blackouts: at 9.30am. I lose my wifi connection, for which I’ve paid $US10 an hour, and can’t reconnect.)

I got here on a state-owned Indian Airlines flight that was one of the most dangerous I’ve ever taken. About halfway through the flight, a blue-liveried plane streaked past the right wingtip, no more than 300m away. The internationally-accepted distance standard is about 500m vertically and about five kilometres horizontally. This near-miss was more horizontal than vertical. Landing at Delhi, there were two alarming aborted attempts. The pilot, who didn’t discuss the near-miss (maybe it’s so common in India it doesn’t register) explained the airport was busy. I’m not surprised. More than a dozen new airlines have launched in recent years, over-burdening an airport infrastructure that was already mayhem when there were just three; Indian Airlines, big sister Air India and Jet Airways.

Now there are carriers owned by a brewer (Kingfisher), two by textile companies (Go Air and Paramount) and one by a public relations agency (Magic Air). Bizarrely, the flyer that sprung from aviation roots, Air Deccan, is regarded by Indians as the worst of the lot, maybe one reason why it’s the cheapest. But what does a brewer bring to the aviation sector? Can you imagine flying Foster’s Air?

I know how bad Air Deccan is. I booked three flights over the net. It took my credit card details but the confirming emails never arrived. I only knew I’d actually made a transaction when I got an SMS saying my Trivandrum-Cochin flight was cancelled, while en route to the airport. I then had to drive six hours to Cochin, and missed a Go Air connecting flight to Mumbai.

Air Deccan’s great $19 fare ended up costing me an extra $250 and a day. I only got a refund when I emailed the chief executive. He noted my media credentials and my foreign name and sent a sycophantic apology, privileges Indians don’t have.

The best flight of the eight I’ve taken in the last month was Druk Air of Bhutan, which wet-leased to Indian Airlines a new clean Airbus that left on time, the only flight to do so. Indian aviation is an accident poised to happen.

Technology, too, has issues. India’s image today is one of cutting-edge innovation and, true, one of the best products I’ve seen is a nifty Reliance Industries broadband laptop card that connects to mobile phone towers. But try logging on to the net conventionally in Bangalore, India’s Silicon Valley which advertises itself as having the world’s fastest broadband – “warp speed,” that’s if you don’t get trapped in darkness mid-floor in the elevator of an average but overbooked hotel you’ve paid $US300 ($381) a night for when the power fails – while running late for the airport. Yes, Indian engineers are performing programming miracles in the cumin-scented back offices of Bangalore’s myriad companies at a tenth the cost – and with twice the education – of their Western counterparts. But their skills aren’t being evenly spread, or perhaps just reserved for penny-pinching Western clients.

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1 Comment »

  1. Well Eric mate, there’s only one of two ways to look at it! Either the glass is half full or the glass is half empty.

    Comment by Kash Patel — January 23, 2007 @ 7:26 pm | Reply


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