How Baba Ramdev became a millionaire

There is much noise, angst and I guess envy too around the eye popping valuations of Indian e-commerce startups these days. Considering that Amazon is within touching distance of a market cap of USD 200 billion over the course of its 21 yearlong roller coaster ride, Flipkart having already exceeded the USD 10 billion mark in less than eight years has made a whole army of equity analysts (especially those who track Indian indices) eat plenty of humble pie. The undisputed Pied Piper of retail Indian investors, Rakesh Jhunjhunwala, has been expressing his acute discomfort at the rocket like vertical trajectory of Flipkart’s valuation and that of some of its contemporaries despite the unlikeliness of any bottom line in the foreseeable future. Another wily old fox, who has survived many bloodbaths of the Sensex, Sameer Arora, has gone to the extent of branding the popular valuation model of e-commerce upstarts (GMV aka gross merchandise value) as ‘Gross Misstated Value”.

Many others are not going public with their consternation at the billions that the Bansals (there seem to be a disproportionate number of guys with this surname in e-com!) and their tribe have made in almost next to no time without having broken the backs of public sector banks or cheated retail investors. After all, the majority of post-independence era palatial residences, private jets and luxury yachts have been funded by collusive government owned banks who have crawled when merely asked to bend by minions of the Finance Ministry in these last sixty eight years and gullible retail investors who rushed in where venture capitalists dared not to. Criminal diversion of bank & shareholder funds from stated to contrived assets has been the sine qua non of Indian industry.

That Vijay Mallya still finds support from fellow industrialists (I have often wondered how this serial destroyer of public wealth ever found the time for work or “industry” in between calendar shoots, fashion shows, exotic holidays and Hedonistic parties) after being declared a willful defaulter by a clutch of banks is symptomatic of the entitlement mindset of our entrepreneurs who earned their spurs during the pre-liberalization era by merely cornering licences and bank funds thanks to their friends in high places. That the banks took more than five years to bell this fat cat (Kingfisher showed first signs of irreversible trouble at the turn of this decade) also speaks of their clear collusion with Mallya. A certain Kirloskar (another family that profited from our license Raj regime and have experienced a rather flat growth ever since) who sided up with Mallya recently as a “good friend” should know that public demonstration of such private emotions is not exactly warranted in a situation where an unpaid employee has committed suicide.

The gross non-performing assets of our state owned banks (basically organizations that we taxpayers own) are reportedly breaching the Rs 200,000 crores mark which, to set the context, is bigger than the 2G scam as quantified by the perspicuous ex CAG, Vinod Rai. But if stress tests of global standards were to be applied to our weak kneed PSU banks, I suspect the NPA number could well be close to three times what is being reported. A disproportionate ratio of these NPAs are actually bank loans that have been put to private and wasteful uses by patently dishonest borrowers who manipulated the system for their personal benefit buy paying off a slew of ministers, bureaucrats and bankers. As Harshad Mehta once very pithily remarked ‘Behind every big house in South Mumbai, there is a bigger crime.” Give the devil his due!

So you have scores of willful bank defaulters in their fifties and sixties who are today ranged against thirty something technology savvy entrepreneurs who don’t carry any institutional loans on their books – only equity of the institutional variety and almost all of it of foreign origin. If they were to go bust (as the bank swindlers are fondly hoping) a lot of jobs might be lost but no bank funded by you and me will fail. Isn’t this reason enough to celebrate the slow and sure death of crony capitalism?