Glorifying the speculator - The Honest Truth By Ajit Dayal
Investing in India - Honest Truth by Ajit Dayal
Glorifying the speculator A  A  A
6 MAY 2009

In an incredible story that defies "journalism" but typifies what New York City stands for, the New York Times (May 4th) carried a "front page" website article: "India, starved for investment".

The article begins with a powerful and colourful opening "Sumit Sapra is a member of that ambitious, impatient generation of young Indians who rode the crest of the global economy. In five years, he changed jobs three times, quadrupling his salary along the way. Even when satisfied with his position, he kept his résumé posted on job sites, in case better offers came along. And he splurged. In three years, he bought three cars, moving up a notch in luxury each time. For weekend jaunts, he bought a motorcycle."

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The article then rues the downfall of Mr. Sapra who, "armed with a prestigious degree", has been laid off and now will not have his multiple job offers awaiting him each time he opens his email inbox.

From the decline of this individual's excessive lifestyle, we are taken to the cranes of Gurgaon where, "A few short years ago, construction sites here buzzed 24 hours a day, crews working through the night, cramming down food from onsite trucks during breaks in the twilight. Now real estate sites lie fallow. The once-booming art market has slowed to a crawl. And charmed professionals with coveted degrees, like Sumit Sapra, are unemployed or taking pay cuts to hold on to their jobs".

(It has come to our notice that the facts pertaining to Sumit Sapra were not cross-checked with Mr. Sapra. And he seems to have been mis-portrayed. I know this now because Mr. Sapra emailed us with his response that the NY Times did not cross-check the facts with him. I had relied on what the NY Times had written, assuming that the "facts" were cross-checked.)

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India needs foreign capital, muses the article, and there was a lot of it around. Now, all those who believed that India was sheltered from the global economy have to eat humble pie. India is crumbling and India desperately needs foreign investment.

To prove this point the article then turns our attention to DLF - the symbol of progress in the blurry eyes of the New York Times "DLF turned to foreign lenders and investors like D. E. Shaw, the New York-based investment firm, because they provided money "at lower rates of interest and in larger amounts," said Rajeev Talwar, an executive director at New Delhi-based DLF. "Today, you have no choice but to go to the Indian banks."

What cheek!
DLF borrowed money that looked like it was cheap. Any lender in a bull market will happily give you money at low rates of interest because - by virtue of being in a bull market - they know you can repay the money from all the sales of land banks. Any idiot will borrow this "cheap" (or even "expensive") money because they expect to make even more from their business. Particularly when their only business is to take barren land and enrich them into some fantasy "land bank" because of some friendly re-zoning from corrupt partnerships with politicians!

DLF - like Unitech and a host of other developers - are stuck in debt which they cannot repay. Even though they were obtained at "lower rates". "Cheap" has suddenly become "expensive". Because the markets have turned and the "land banks" are now good for letting cows do what cows do best on land: irrigate the soil.

But the real insult comes in the ending "Today, you have no choice but to go to the Indian banks".

The cheek of it all!
The Indian banks were forced to lend money to these robber real estate companies (the RBI data announced a few weeks ago confirms the surge in lending; what these real estate companies have done to consumers confirms their pedigree). The forced lending - egged on by political support - was to ensure that the DLF's of the world would not head from insolvency to bankruptcy.
And here is an Executive Director of DLF - a rescued company - saying almost in desperation, as if he has been asked to bed with the last living woman in the world, "Today, you have no choice but to go to the Indian banks".

If I was the Indian bank, I would ask for my money back.
Like Pronto!

And send DLF off to the haven off crony capitalism - New York City - with hat in hand.

Foreign capital not foreign punters
Sure, as one economist noted, "If India wants to go back to the 8 to 9 percent growth rate, private investment and low cost of capital is essential".

I agree. India needs more private investment and probably more foreign capital.
But it does not need the gunslingers and the gunrunners who barged in to the Great India Party with their short-term, how-much-money-can-I-make-by-tonight attitude. And India does not need companies like DLF who prevent free competition and survive on government largesse.

India does not need to "loosen regulation" to get its animal spirits going, as another economist pointed out. What India needs is to enforce regulation that punishes the crooks. Knowing that there is one law that works for all will allow all the animals to come out - without being scared of the lions, the hyenas, and the loan sharks.

India needs long term capital for sure - including foreign capital - and a more transparent business environment that is not scared to shut down the crony capitalists.

But, yes, India does need rotten stories like the one just carried by the New York Times to remind us what we do not need - an elegy for greed and worship of Mammon.

May New York and London retain their unchallenged crowns as the cities which bred, fed, and bed the crooks. And glorified them.
Please leave us, in starving India, to be content with a dispassionately boring economic life. For we have real work to do: building a nation.

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10 Responses to "Glorifying the speculator"

Shirish Joglekar

May 9, 2009

Simply Brilliant. The western world is really jealous of India for not suffering as much as them in the current economic crisis. They won't leave any stone unturned in unleashing a slander campaign against India. Indian politicians are their able partners as long as they are not able to rise above petty selfish politics. Today India is among the top five economies in the world inspite of these GFN (good for nothing) politicians. Just imagine what would India become if we can somehow get better politicians. The question is HOW? brRegard s,
Shirish J


Prejish Nair

May 7, 2009

India has a tailor-made democracy. The tailors who stitched this dress is no more. However, with the passage of time, the body shape (requirements & conditions) of my country has changed. But still we try to fit in the same old tailor-made dress. As stated, if tough regulations are required, Indian Democracy needs to be revised. We are not asking to change everything but change is essential in certain areas which has become irrelevant now. Eg: Reservations to be removed from metros, The no. of Political parties in our country needs to be limited regularized,etc. We cannot allow any Tom, Dick & Harry to create a seperate political party at their own choice & thereby hang the sword of a coalition govt all the time on us. b r
This article 'Gloriying the speculat or' is really good & written with good Indian s pirit. Keep up the good work


Jehangir Irani

May 6, 2009

What a nice article. It should be sent to the editorial of New York Times, Wall Street Journalthe leading newspapers in Switzerland. Most important of all it should be posted on desk of every new member of parliament reminding them that unless they do something about this with the Swiss banking authorites they will have to pay a dear price when their term is up.


RN Ganesh

May 6, 2009

Good stuff - keep it coming! brBut why bundle an upwardly mobile yuppie an
unscrupulous landgrabber? They're both g reedy,I admire neither but one is a fo olthe other is a crook,there's a diffe



May 6, 2009

I can only wish more people had courage like you to challenge established, but unacceptable, norms and practices.


Johnson Mathew

May 6, 2009

An excellent articlevery daring! Your articles should reach all people of India it should appear in all national news papers and visual media too! brWondering howwhen we get Freedom fr om theses crooked Politiciansits Parties w ho in majority are gunslingerst he gunrunners


Bhalender Nayyar

May 6, 2009

The greed of these gunslingers is mainly responsible for the global financial crisis. They set the virus into the companiesthen it spreads to the retail investors. It is unfortunate that speculative enrepreneurs fan the fires of this greed. We are better off with 7% growthneed not look for double digit growth. The growth also has to be all inclusive instead of sheer window dressing.


Sameer Singhvi

May 6, 2009

Sir, I am overwhelmed. The article has hard statements, may be the best way one can analyze real estate industry. There is so much of black money there. Either some great power will have to emerge to hit this industry from left right and centertake out this black money or these great owners of land banks will have to understand meaning of word righteousness. I believe later is distant dream, so as u rightly mentioned tough regulations are essential.


Sudesh P

May 6, 2009

Excellent article. Very well wriiten. Should be printed in the headlines of Times of India


Achyutha H

May 6, 2009

If only the hoarded money in foreign banks can be got back to India,we will be having sufficient "foreign" money. The coming government should give amnesty to those bring back the growth. Is this possible? Who will dare to bell the cats? God only can.

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