Issue 56 Vol III, January 31, 2008

E D I T O R I A L

How wealthy are Indians?

Capitalism has arrived. And, we can see this happening in a variety of ways. Mainstream newspapers and television networks daily tell us that there are ten Indians among the world’s richest people. They are naturally men from the world of industry and business. We are told that the number of rich people is also expanding in India.

Let us look at just one instance. How much money Rs 7, 45,676 crore or 190 billion dollars is? Is this not mind boggling for a country where at least 40 crore families live on less than Rs 100 per day? And, another 20 crore earn has around Rs 5,000 a month. But this was the money which 50 lakh applicants for the Reliance Power IPO [initial public offer] pledged during just one week of January 2008. This IPO proved be the largest in size across the globe including the rich counties like America and made Anil Ambani the richest tycoon of the world? Experts declared: “It is the largest ever subscription in an IPO in the history of the global capital markets.”

The company has also received $100 billion from foreign investors. The Anil Dhirubhai Ambani Group collected a neat Rs 1, 12, 063 crore as application money from institutional bidders, high net worth individuals and retail investors, 19.5 lakh applications. Anil declared that his corporation is now the second largest corporate house in the country with group’s market capitalisation now at Rs 3, 94,409 crore ($100 billion) from Rs 16,000 crore ($4 billion) in June 2005.

Tata Group remained third with market cap of Rs 2, 86,488 crore. Anil Ambani has whiz past his elder brother Mukesh and NRI tycoon Lakshmi Mittal at the top of India's richie-rich club. It is as per a list of richest Indians by the Forbes magazine late last year.

The share was oversubscribed nearly 73 times and saw the total subscription come in the very first hour of the opening. Reliance Power will have the largest number of shareholders in the world. Anil holds 45 per cent equity in the company.

These should be indeed glad tidings for a new emerging capitalist India. Yet the policy planners who had worked hard to bring this new capitalist order are worried. Otherwise, how would we explain the blood bath at the stock market in the past one week? The investors lost 5,251 points in seven trading sessions including January 22   and the  investors' wealth, measured in terms of cumulative market capitalisation of all the listed companies stood at Rs 59,53,525 crore at the end of January 22 against Rs 71,38,810 crore before slide started on January 14. According to one estimate the loss of Rs 6, 54,887 crore was over and above of Rs 11 trillion suffered by investors during earlier six days. There was only marginal correction on January 23.

How much is this money? At least 90 per cent of Indians can not fathom this figure. Indian stock markets where easy money rules through sheer speculation are now linked to the American and other stock markets in the rich countries. And, if America sneezes, Indian catches cold.

The stock markets are being pumped up to ridiculous heights by cheap dollars. These markets around the world are wobbling and crashing. In a traumatised global economy, one bad day follows hot on the heels of another. America has been forced to slash interest rates in a last-ditch effort to avert recession in the world's largest economy and help world's battered stock markets. The iterest cut, by three quarters of a percentage point, was the largest in more than 25 years and was intended to signal to investors and corporations the world over that america’s main bank, the Federal Reserve would do everything  to reduce the cost of business and reignite the economy. Yet it had a marginal impact.

If one were to imagine the unimaginable then it is clear that America is broke. Recession which the American government denies has set in. President Bush has jawboned the Congress to spend $150 billion to "stimulate”. No one wants big food fight in an election year-but everyone knows that this is unlikely to stimulate the economy. The dark tunnel of the American economy looks more like a black hole, sucking fortunes.

Let us for a moment leave aside this crisis in the stock markets worldwide including India. One fact emerges out clearly that India has been able to create a lot of wealth over the past decades. A section, say the top five per cent has gone filthily rich. The emerging middle class also another 15 per cent and increasing is also comfortable. We can look around Punjab and notice this. Ostentatious living style: huge spending on cars and other luxuries including marriages is normal for this new rich class. Tragically the government too is working for this class. Otherwise how could one explain Punjab government’s plans to have six lane express highways, cricket academies and encouragement to the malls? Look around the unlivable dirty cities, broken potholed roads and streets. The filth around all towns and cities is nauseating. Schools without buildings and teachers; hospitals sans doctors and medicines is upsetting. Poverty and unemployment stare at us. Punjab is fast becoming a state of drug addicts, daughter killers and illiterates.

At the national level this wealth in the hands of a few people is leading to social tensions, crime and disturbance. We were told when the reforms began and Jawaharlal Nehru’s model was discarded in 1991 that wealth would tickle down to the poorest of the poor. There would be more equitable distribution of wealth. That was the dream sold to the people of India. We have more deprived sections of the people, suffering from extreme poverty. Imagine in India 5700 infants die every day because of malnutrition and lack of care. Out of 97 lakh deaths of children in all the counties of the world, 21 lakh are from India. 40 per cent of our children are malnourished. We are worst than the most poor countries of Africa and Asia. Is the government not ashamed of this?

And, this huge wealth in the hands of small minority is corrupting the politics of the country. We are told that a particularly a big business house has 200 members of parliament in its pocket and no government can ignore its wishes. Ask any politician or a seasoned journalist and find the truth. The wealthy are too powerful at all levels of social and political life. Perhaps, it is time to take away those words in the preamble of the constitution that declare India as a socialist republic. It is now a capitalist oligarchy.

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