Crony capitalists  feel orphaned

Vijay Mallya’s goose is cooked. And nobody need feel sorry for him. He deserves every bit of the tough treatment lenders of over Rs.7,800 crore have, at last, begun to mete out to him. In fact, the lenders can be blamed for taking a very, very long time before launching recovery proceedings. The consortium of banks, led by the SBI, which alone advanced 1,600 crore, last week moved an interlocutory application before the Debt Recovery Tribunal, seeking Mallya’s arrest. The flashy liquor baron had borrowed the money for the now defunct Kingfisher Airlines. He knocked at the door of the higher judiciary, opposing, aside from other actions, the SBI decision to declare him a willful defaulter. But, happily, even the courts have now realised that providing relief to such willful defaulters can only aggravate further the huge problem of non-performing assets of the banking industry. Mallya’s plea that being a member of Parliament, his arrest will prevent him from discharging his duties as a law-maker too have found no takers. In any case, being a member  of the Rajya Sabha helps in networking with ministers and MPs. Admittedly, he is not the only industrialist- member,  several more can be found on  the Rajya Sabha benches thanks to their ability to ‘manage’ regional parties. Last time, it was Deve Gowda’s Janata Dal (Secular) which had provided him the crucial first preference votes in Karnataka while the second preference votes were given by the BJP. Yet, his being an MP became immaterial to the recovery proceedings once the Modi Government refused to come to his or other such defaulters’ rescue. Indeed, if the lenders have now shown some zeal in recovering their dues it is only because of the prodding of the government.

Someone like Mallya might feel that he was being singled out for rough treatment while others who owed the banks far bigger sums were being allowed to get away lightly. This argument is fallacious on two counts. One, a thief cannot protest that others like him had got away scot free. Two, screws are being tightened against all others as well, a fact revealed every other day in reports by the pink papers insofar as a host of borrowers are being forced to sell assets to repay their creditors. A major reason behind the spree of mergers and acquisitions in the corporate world in recent months lies in the fact that promoters deep in debt to various banks are forced to sell out to escape the very-same treatment which is now being meted out to Mallya. Maybe Mallya is right when he complains that he is being made the poster boy of non-performing assets of the banks. If it is so, he has no one but himself to blame. Those who owe the banks over Rs. one lakh crore or more — and there are quite a few —  are sensible enough not to be seen playing the celebrity-playboy, as Mallya does. And are not associated with an in-your-eye- IPL brand. Nor do their companies din into the ears of Indians their catchy brand  jingle, ‘king of good times’, when, of late, it has got associated with the failed aviation venture rather than with the beer brand over which, anyway, he has had to shed control due to money hassles with a foreign liquor maker. Indeed, the lenders seemed to have been alerted to take urgent action against Mallya after he sold off his remaining stake in a UK-registered liquor manufacturing company for Rs. 515 crore and said that he was headed for England to spend time with his family. He owes considerable assets outside India. Whether he can be made to sell them to pay back the banks remains to be examined by the debt recovery authorities.

Meanwhile, Mallya needs to be given the benefit of the doubt insofar as his airline venture did incur huge losses due to the unusually high aviation fuel prices prevailing globally at the time. Indeed, the entire aviation sector was under great financial stress during that period, a number of Indian and foreign airlines suffered losses, with some even shutting down operations. Yet, if his airline had done well, Mallya would not have shared profits with the lenders, would he have? No entrepreneur does. Risk-taking is an inalienable right of entrepreneurs the world over. But it is only in India, thanks to the crony capitalism practiced by a long series of socialist rulers, that private promoters pocket the profits while leaving the tax-payers to bear the losses. In an earlier era, textile magnates vanished after filling their pockets with licit and illicit gains and left the government to take over their ‘sick’ mills. At its peak, the State-owned National Textile Corporation had nearly 150 textile mills, virtually abandoned by their owners after they had stripped off their assets. Following economic liberalisation, NCT was made to recover part of the monies through the sale of land, some of which was now in the heart of metros like Delhi, Mumbai, etc.  But, to the eternal credit of the Modi Government, crony capitalists now feel orphaned, though the media, especially the so-called liberal-secularist sections, refuse to take note. No longer do you see crony capitalists doing deals in the corridors of power. The Modi Sarkar shuns them like the plague.

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