More on the asymmetry that rules India’s business insolvency process

Since October last year, Scroll has been (intermittently) reporting on how India’s insolvency proceedings are coming along. Cumulatively, these reports flag a couple of peculiar patterns.

A lot of companies are up for sale — In a country with 7500 companies with a topline over Rs 250 crore, 2511 companies are slated for insolvency proceedings. There are very few buyers. Ergo, companies are changing hands at very low rates, creating in effect a giant fire-sale of Indian companies. This asymmetry between buyers and sellers is interesting. Even as most debt-saddled companies find themselves in insolvency courts, others (a very small set) continue on an acquisition spree.

An example here is Adani Enterprises. One of the most debt-saddled companies in the country, it continues to acquire companies and announce new projects with gusto. One answer why lies in today’s report.

Do please take a look.

Five reasons why claims by forest dwellers for their land are low – and rejections are high

On February 13, the Supreme Court ordered the eviction of more than 10 lakh families of Adivasis and other forest-dwellers from forestlands across 16 states. The order came while the court was hearing petitions challenging the constitutional validity of the Forest Rights Act, 2006. The petitioners had demanded that state governments evict those forest dwellers whose claims over traditional forestlands under the landmark law had been rejected.

…In the days since the ruling, tribal activists have denounced the order while some conservationists and bureaucrats in the forest service have welcomed it. A key part of their defence? According to the judgement, a total of 18.8 lakh titles have been granted under the Forest Rights Act, while 19 lakh claims have been rejected. In a statement released on Thursday, Wildlife First said all 19 lakh rejected claims were bogus. It said: “The Supreme Court is focusing only on recovery of forest land from bogus claimants whose claims stand rejected.”

The answer to these contrasting perspectives lies in how the forest rights act is being implemented — how are claims submitted and how are they processed? This report, a followup to what I filed shortly after the judgement was posted online, takes a closer look at those processes. The answer, in short, is that all rejected claims do not indicate bogus claimants. Do read.

Interview: ‘We have underestimated the extent of India’s jobs crisis. It is far more serious’

and gosh. one more frikking q&a.

On Thursday, a political storm boiled over after Business Standard reported that, between 2017-’18, unemployment numbers in India reached a 45-year high. The newspaper based its report on a survey, conducted by the National Sample Survey Organisation, called the Periodic Labour Force Survey that the government had not made public. 

According to the report, the country’s unemployment rate climbed from 2.2% in 2011-’12 to 6.1% in 2018-’18. Once disaggregated, these numbers look even worse. Joblessness is higher in urban areas than rural areas – 7.8% versus 5.3%. For instance, unemployment among rural men in the age group of 15-29 years rose from 5% in 2011-’12 to 17.4%. 

The report corroborated what the government’s critics have been saying – that demonetisation and the ham-handed rollout of the Goods and Services Tax have resulted in large job losses. In a press conference called on Thursday evening, the government hit back. It claimed other datasets – like that of Employees’ Provident Fund Organisation – show employment in the economy is rising. At the event, Amitabh Kant, the chief executive officer of Niti Aayog, also suggested results of the Periodic Labour Force Survey, based on a new methodology which conducts quarterly surveys, is not comparable with older NSSO surveys.

Do these various reasons offered as defence hold up to scrutiny? Scroll.in asked Himanshu, an associate professor at Jawaharlal Nehru University.

Excerpts from an interview.

Reviving the Ganga #3. Three ways in which the Modi government is adding fresh stresses to the river

A century ago, the gharial could be found all the way from the Indus to the Irrawady. The thin-snouted, fish-eating member of the crocodile family was spread out over 20,000 sq km at the time, studies estimate, and numbered between 5,000 and 10,000. Now, no more than 200 breeding adults survive in the wild.

The gharial is not the only Gangetic species at risk of extinction. The Gangetic dolphin is endangered as well. Catches of fish from rivers of the Ganga basin have declined 90% in the last 40 years, while otter numbers have dropped by a third over the last 30 years.

The well-being of these species, as also the lives of 400 million people inhabiting the Indo-Gangetic plain, depends on the revival of the polluted, erratically flowing Ganga and its tributaries. That’s what the Bharatiya Janata Party government promised to do when it announced the Rs 20,000-crore Namami Gange shortly after coming to power in 2014. The programme aimed to ensure nirmalta (purity) and aviralta (continuous flow) of the river.

Yet, four-and-a-half years later, the Ganga’s future appears more dire than ever. As the first two parts of this series reported, the efforts to control pollution in the river hinge on a public private partnership model that is untested. At the same time, rampant construction of environmentally suspect hydroelectric power projects in Uttarakhand’s Ganga basin is hampering the flow of the river.

Adding to the problems are three infrastructure projects being rolled out by the government. The Char Dham Pariyojana, a 10-metre wide all-weather road, will connect the four pilgrimage centres of Yamunotri, Gangotri, Kedarnath and Badrinath. The Inland Waterways project intends to use 106 rivers and creeks for moving cargo, while the Ken-Betwa river linking project in the Ganga basin will divert water from the Ken, a tributary of the Yamuna that feeds the Ganga, to the Betwa for irrigation and drinking water. All three projects come with heavy environmental costs.

Two of these projects – the Char Dham road and the Inland Waterways – have escaped any environmental scrutiny. The Ken-Betwa link is coming up despite warnings about environmental damage. Between these projects, falling river flows due to climate change and, as the first two reports in this series described, Namami Gange focusing much more on nirmalta than aviralta, the river’s future looks more uncertain than before.

Out today, the third — and concluding — part of our series on how the Ganga is faring. Some parts of this reporting was relatively easy — like seeing the river as an integrated whole and mulling about the cumulative impacts of all these projects on it. What is harder is this: how does one understand the curious paradox of a hindu majoritarian government which comes to power promising to revive the river but leaves it worse off than before?

Is it ecological ignorance, which leaves them unable to see the river as an integrated whole? In which case, how did they arrive at this view of nature which is so shorn of any ecological understanding? Is it cynical politics where they just rode on the issue (as they seem to have done on the Ram mandir)? In which case, what are the compulsions contributing to that cynicism? This is a question we try to answer, especially in the Uttarakhand report, where we look at why the party is pushing dams despite knowing they are harmful for the river.

But there is something else here — and you see my thoughts turning more and more inchoate with each passing word — about a politics which seems to be so unmindful of the gap between promises and actions. I find it hard to understand that too. This gap makes me think of a book I just finished reading — and need to re-read. This is Lewis Lapham’s ‘Age Of Folly‘, where he talks about how democracy in America lost its vitality.

In his analysis, a large part of the answer lies in a society which turns cynical and stops discussing these matters.

For the better part of 200 years it was the particular genius of the American democracy to compromise its differences within the context of an open debate. For the most part (i.e., with the tragic exception of the Civil War), the society managed to assimilate and smooth out the edges of its antagonisms and by so doing to check the violence bent on its destruction. The success of the enterprise derived from the rancor of the nation’s loudmouthed politics — on the willingness of its citizens and their elected representatives to defend their interests, argue their case, and say what they meant. But if the politicians keep silent, and if the citizenry no longer cares to engage in what it regards as the distasteful business of debate, then the American dialectic cannot attain a synthesis or resolution. The democratic initiative passes to the demogogues in the streets, and society falls prey to the ravening minorities in league with the extremists of all denominations who claim alliance with the higher consciousness and the absolute truth.

Easier, he writes later in the book, for politicians to sway masses by claiming virtue than by engaging on a range of questions to which they often won’t have all the answers.

But that is an impulse which is always around. Bigotry, for instance, is always around and so too the impulse to ride on it. And so perhaps the question is: how do democracies come to this sorry pass?

Reviving the Ganga #2 Modi said he would revive Ganga but his government is doing the opposite by reviving dams

The focus of their anger lay 400 kilometres to the north. Since 2002, Uttarakhand, where the Ganga originates, has been on a drive to build hydel power projects. The state, which currently produces 4,000 MW of hydel power from 98-odd projects, has since 2009 signed agreements to build another 350 dams.

Most of these are diversion dams, which block the river and divert its water through tunnels to turbines that generate electricity. The river rejoins its original course only after passing over the turbines, leaving riverbeds dry between the dam wall and the tunnel’s outlet. For instance, the Bhagirathi, one of the sources of the Ganga, runs through tunnels for half its 220-km length.

One result has been a spike in anti-dam movements in Uttarakhand, including the one by the sadhus. Maintaining that the Ganga is holy, they want it to flow without interruptions. In 2014, the BJP’s election manifesto took note of this and promised to ensure “the cleanliness, purity and uninterrupted flow of the Ganga on priority”.

Shortly after the party won the 2014 election, it announced a Rs 20,000-crore project to revive the river. Namami Gange was intended to ensure nirmalta (purity) and aviralta (continuous flow) of the river.

In Uttarakhand, ensuring aviralta was the priority. As the state’s rivers, which feed the Ganga, ran through tunnels for hydel power projects, both the rivers and the aquifers they recharged had dried up. Blasting to build dams and tunnels created new fissures into which mountain aquifers disappeared. Communities living by the river found local water sources drying up and had to walk longer distances to fetch their supplies. As dams fragmented rivers, fish such as the golden mahseer began dying out.

In addition, the new hydroelectric power projects run the risk of cataclysm. The Himalayas see both earthquakes and cloudbursts, like the one in 2013 at Kedarnath which killed over 5,000 people and damaged 4,500 villages. After the cloudburst, several hydel projects failed to hold their surging reservoirs. As they gave way, downstream valleys saw walls of water bearing down on them.

On November 1, 2010, heeding some of these concerns, the Congress-led United Progressive Alliance cancelled three hydel projects in Uttarakhand. It also declared a 100-km stretch of the Bhagirathi – from Gaumukh to Uttarkashi – an eco-sensitive zone. Two years later, environmental studies ordered by the Uttarakhand High Court proposed a minimum distance between hydel projects and suggested that each dam be required to release enough water for a river to perform its ecological functions. This is called “environmental flow”, or e-flow. One of these studies, by the Wildlife Institute of India, recommended that 24 proposed projects on the Alaknanda and the Bhagirathi be scrapped….

Oddly, after coming to power in 2014, the BJP-led NDA government rolled back all these protections. The second part of our series looks at the reasons why.

Reviving the Ganga #1. Modi’s clean Ganga plan hinges on private companies tackling sewage. Will it work?

In September 2014, shortly after coming to power, Prime Minister Narendra Modi held his first meeting on the Ganga. The river had featured prominently in the Bharatiya Janata Party’s election manifesto. The Ganga was both jeevan dayini, the giver of life, and mukti dayini, which sets the soul free, the document said.

But all was not well. “Even after decades of independence, the Ganga continues to be polluted and is drying,” said the manifesto. It went on to assert that the BJP was committed to ensuring “the cleanliness, purity and uninterrupted flow of the Ganga on priority”.

The Indo-Gangetic plain is home to a little over 5% of the world’s population. The Ganga and its tributaries bring in fresh water, recharge groundwater aquifers and drain wastewater. The survival of an estimated 400 million people – and the biodiversity amidst them – hinges on the health of the Ganga.

Modi’s meeting in September 2014 was one of the first signs the BJP intended to make good its election promise… Four-and-a-half years later, however, contradictory decisions by the government have pushed the Ganga into deeper trouble than before. On one hand, the government has moved to reduce river pollution, mainly by privatising sewage collection and treatment in 97 cities and towns along the river…

At the same time, the government has launched a set of other projects that further erode the river’s ecological foundations. Environmentalists have already expressed doubts about the Char Dham Pariyojana, a 10-metre-wide road between the temple towns of Badrinath, Kedarnath, Yamunotri and Gangotri, which is being built in the landslide-prone Garhwal Himalayas.

They have also criticised the large-scale dredging for the Inland Waterways project to ferry cargo on the river. Besides, environmentalists say, flows in the river will be hurt by the Ken Betwa river-linking initiative and the 450 hydel power projects being built on the river in Uttarakhand.

Last November, I reported on this three-part series on how our Hindu majoritarian government’s promise to revive the Ganga are coming along. Part one looked at the government’s work on pollution abatement.

Biggest winner of Modi’s loan-in-59-minutes plan for small companies is an Ahmedabad fintech startup

On November 2, Prime Minister Narendra Modi made a slew of announcements aimed at reviving India’s faltering micro, small and medium enterprises. One of these was about a dedicated digital platform – www.psbloansin59minutes.com – to enable them to access loans of upto Rs 1 crore in just 59 minutes.

Unlike their larger counterparts, India’s smaller companies have long faced difficulty in accessing bank loans. The psbloansin59minutes website was presented as the solution. Once a firm uploads key information such as tax returns and ownership details, proprietary algorithms on the website appraise the application, determine the loan amount that can be given and then connect the applicant to a bank branch – all in under 59 minutes.

As it turns out, the website mirrors the aims outlined in a tender issued by the state-owned Small Industries Development Bank of India on January 22, seeking to hire a consultant to set up a new legal entity that would facilitate contactless lending.

“The solution will use algorithms and techniques to read complex balance sheets, IT returns and bank statements in a very short time,” said the tender. “These solutions can easily capture the basic details of the applicant from present documents. Smart analytics will enable the proposed solution to find discrepancies and automatically pull information from credit bureaus. More importantly the decision-making process for a loan officer can become simpler as the solution provides a summary of credit, valuation and verification on a user-friendly dashboard.”

The tender went on to define eligibility requirements. To qualify, consultants needed to have earned a fee of at least Rs 50 crore from management consulting during the three preceding years. “The consultant should have been in existence in India since April 01, 2012,” it stipulated.

Once a consultant was shortlisted, said the tender, a new legal entity would be formed, in the form of a company with SIDBI and other banks as shareholders.

However, a closer look at psbloansin59minutes shows that the company behind it does not quite meet the tender stipualtions. The website is not run by a new legal entity as envisioned by the SIDBI tender. Instead, it is run by a Ahmedabad-headquartered fintech company called CapitaWorld Platform, which was set up in 2015.