Death By Debt

‘Tax terror’ is hurting India Inc, but policymakers call it therapeutic. So, are rising liabilities of businesses a balm too?

- Alam Srinivas, Jyotika Sood & Lola Nayar

Death and taxes. It almost goes off like a giant medieval gong, that piece of wisdom about what’s permanent in life. But they could just as well have said ‘debt’ instead of ‘death’. It’s not just that they sound alike: there often seems to be a deeper kinship between the two. Scan the Indian scenario. Debt, itself a kind of pre-death, is the new dreaded word within the Indian business community. It’s the name of the desperation that grips the minds and hearts of industry— from which flows a kind of generalised paralysis, one that appears to have stilled the economic life of the country. In thousands of cases, debt has been the harbinger of death for sprawling corporate empires, assiduously built over decades, over generations. It hangs like a sword of Damocles over the heads of people who fear they will lose all they have built. Owners and bosses hold on to their reins of control, but looking over their shoulder nervously, as if for some approaching nemesis.

Is this the necessary labour pain for a kind of rebirth? Could this be the sign of India striving to cleanse India Inc? A tough path to renewal, as policymakers tussle to root out the nexus between politicians, bureaucrats, bankers and businessmen—the accumulated mass of past distortions? Anyway you see it, Indian entrepreneurs are extremely frightened. No one is safe anymore—neither the largest, mightiest and most powerful, nor the smallest and weakest. Thanks to the new bankruptcy and insolvency code, every company that defaults on loan repayment can be immediately put on the auction block, and sold. The litmus test for every rule may lie in the exceptions. But seen in a snapshot, there are no commas in this process, only full stops, especially for castles made of sand.