15th April

Quick settlement for Satyam

The article, while praising the agility shown by government to solve the Satyam crisis, also demands such nimbleness in dealing with other bankruptcy cases as well.

The urgency by the government was perhaps mainly due to the fact that the company is listed overseas and that it could taint the entire IT industry. Also it was this urgency that prompted Tech Mahindra to pay Rs. 2889 crore for the 51% stake. However, the steps taken in Satyam case can very well be replicated in other cases of corporate fraud as well as bankruptcy. According to WB’s “Doing Business” report, while it takes 10 years in India to settle a bankruptcy case, the creditors recover only 13 cents to a dollar. Compare it with UK having an average time of a year and recovery rate of 92 cents to a dollar. Delay in settlements not only locks the productive assets from being utilized but also lose its value over the period of time. This denies credit t small borrowers/businesses. The Securitization and Reconstruction of Financial Assets and Security Interest Act 2002 has managed to empower creditors having secured interest to seize the assets but not takeover the management. 

Finally, like other countries, we need special bankruptcy courts. Also existing owners should be prevented from stalling the process by new buyer. Equitable access to credit is not possible without sound insolvency regime.

Futile leadership debate

The article talks about the crisis that is concerning mainly to the nationalist parties with respect to the identity management. With national issues being taken over more by the regional concerns and communal agendas, debate for a national level leadership becomes futile.

Today, a common man exercising his voting right in general elections has very little to do with identifying a national leader. The political class is playing all around the national, regional, local and communal issues. These issues are more or less becoming the deciding factors on how an average Indian electorate would caste its vote at the end. Thus the debate, whether Advani is strong or Manmohan, holds very little significance. Post-independence although there has been enormous churning witnessed by Indian polity, the competitive identity politics has always remained core. While the parties make sure they play well the sectional interest groups very well and even these groups managed to get the share in the developmental pie, the split in the Indian polity will endure. 

Finally, the political party will succeed, that cleverly micro-manages the caste equations at local/regional level.