The Hypocrisy of Celebrating Air India Bailout by ‘Anti-National’ Tatas

The Tatas, who were called “anti-national” by Goyal just recently, are now being lauded by the right-wing ecosystem.

The irony is all but lost in the applause. The Tatas were being called “anti-national” by a Cabinet Minister just a few weeks back because they presumably opposed changes to e-commerce companies that would have favoured local businesses, limited flash sales and put additional compliance burden on foreign companies (including some partners of the Tata group). In August, The Hindu quoted Commerce Minister Piyush Goyal as saying to an industry gathering, “Me, Myself, My company — We all need to go beyond this approach…Kya aapke jaisi company, ek do aapne shaayad koi videshi company kharid li… Uska importance zyada ho gaya, desh-hith kam ho gaya? (A company like yours, maybe you bought one or two foreign companies, now their importance is greater than the national interest?)”

Goyal also said he had conveyed the same message to “Chandra”, Tata Sons’ chairman N Chandrasekaran.

Challenges for Big Businesses Are Mounting

So, what has changed in just these few weeks that the same Tata group is now being feted by the right-wing ecosystem? Well, it has agreed to buy the perennial loss-maker Air India and thereby prevented further government funding of tens of thousands of crores into an airline that was mismanaged by successive governments for decades. Last week, the government announced that the Tata group had won the bid for Air India. The Tatas have agreed to pay just ₹2,700 crore in cash and will take on ₹15,300 crore more of debt, but thousands of crores of more debt will get transferred to a government entity.

On the other hand, the challenges being faced by the Tatas, Infosys and myriad other large, medium and small businesses have been mounting. Take the case of the framework this government launched with much fanfare for bankrupt companies. The Insolvency & Bankruptcy Code (IBC) has completed five years with sub-optimal results according to the government’s own data.

Modi's 'Suit Boot ki Sarkaar' & Attacks on Businesses

The hype around the Tatas riding in like a knight to save Air India seems both ironic and hypocritical. The same apoplectic reaction was evident when the income tax portal built by Infosys faced glitches earlier this year. A right-wing mouthpiece had again dubbed Infosys as “anti-national”, the worst insult for anyone trying to do business in India.

So, what defines a nationalist business in India today? The ability to toe the government line, pick up the pieces of companies that successive governments have ransacked over the years, or a staunch belief in the Swadeshi mantra to the exclusion of every other tenet of doing business? All of the above, probably.

There is little doubt that the relationship between the NDA government and India Inc has been fraught with challenges. On the one hand, this government has not been able to shake off the label of being in cohorts with ‘Big Business’, or, more specifically, being arm-in-arm with two big business houses from the Prime Minister’s home state. This has often led to Opposition charges of ‘suit boot ki sarkar’, and more recently, public ire against the corporatisation of farming. Try as it might, the government has been unable to shake off the perception of being benign to these business houses.

Not a Level Playing Field

On the other hand, the challenges being faced by the Tatas, Infosys and myriad other large, medium and small businesses have been mounting. Take the case of the framework this government launched with much fanfare for bankrupt companies. The Insolvency & Bankruptcy Code (IBC) has completed five years with sub-optimal results according to the government’s own data.

Since its inception in 2016, the IBC process has not been able to stick to mandated timelines. As per data from the sector regulator, an average IBC case now takes 460 days, or nearly 15 months, for resolution.

This is an improvement over the average time taken in 2017 at nearly 1,600 days or over four years. But even this improved resolution pace is a far cry from what the IBC initially envisaged — 180 days — for the resolution of stressed companies, and later stretched to 270 days, with 330 days being the “outer limit” for completing a resolution.

As the Forum of Companies Under Resolution Process (FCRP) has pointed out recently, all stakeholders lose when the IBC process is stretched. And even buyers of such stressed assets suffer, since they have no reassurance about getting what they are willing to pay for and inordinate delays in the sale process strip further value from the stressed asset.

Additionally, there are numerous instances of promoters being hounded after they have submitted to the resolution process under the IBC. More often than not, the harassment stems from creditors — representatives of state-owned banks — who shout ‘fraud’ and lead to a lengthy probe by investigative agencies. This not only derails the entire resolution process, but it also naturally deepens haircuts for lenders and stigmatises promoters. In any case, since only every fifth case has been resolved since 2016, only about 40% of the admitted claims have been realised and almost every third company which came under IBC has been liquidated.

The attitude of the stakeholders involved in the IBC process seems to be one where promoters and buyers of stressed assets are being penalised for daring to start a business in this country while those who owe mega bucks to banks and financial institutions manage to flee the system.

Empty Euphoria?

Coming back to Air India and the euphoria over the Tatas buying this loss-laden airline, it may be a short-lived endorsement of the over 150-year-old business house with interests in automobiles and aviation, defence and retail. Any trigger — small traders demanding more protection from MNCs, another defunct PSU needing a corporate bailout — could again lead to a government diatribe against the Tatas. It has never been easy to do business in India.

It is unlikely that one successful — even if the most high-profile — disinvestment is going to erase the stigma businessmen face or remove hurdles their businesses encounter.

(The author is a senior journalist. She tweets @sinjain. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)