India Inc. In Distress

A fear psychosis has pervaded India Inc. unleashed by a mountain of bad corporate loans and a dictatorial insolvency law. Alam Srinivas explores how financial terror has gripped the country.

- Alam Srinivas

THIS is the age of terror – physical (blasts, shootings, and crashes), cyber-warfare (Russia’s alleged influence on elections in the US, Latin America, Africa, Europe and Asia), and financial (attacks on currencies, stocks, and businesses). India is clearly affected by the first two, which is evident from events in Kashmir and the North East, and the extensive misuse of social media for political and electoral reasons. However, a sacking and a death in the past few weeks indicate that financial terror too has gripped the country.

Last month, the body of the 60-year old VG Siddhartha was recovered from a river in Mangalore (Karnataka). A mysterious letter purported that he was troubled by the debt in his businesses and the aggressive attitude of the income-tax authorities. The letter, whose authenticity will be investigated by Ernst & Young, talked about “pressure from one of the private equity partners forcing me to buy back shares”, “tremendous pressure from other lenders”, and “a lot of harassment from the previous DG, Income Tax”.

In early August, Finance Secretary Subhash Garg was sacked; officially, he was shifted to the power ministry and he then opted for voluntary retirement. The allegation against him was that he had deliberately forced Finance Minister Nirmala Sitharaman to include a new policy to raise foreign money through sovereign bonds designated in foreign currency. This was done without proper thought and without understanding its implications.