Twenty years ago in July, 1991,India was practically bankrupt. For the first time in its history it was about to default on its sovereign debt obligations. Its foreign exchange reserves had depleted to a level where it would not have been able pay its import bill for more than three weeks.
The country’s foreign exchange reserves stood at Rs. 4,388 crores which at the 1991 exchange rate of about 18 rupees to a dollar amounted to less than $250 million. I was told it was about $100 million. These days the ten richest Indians carry more foreign exchange in their pockets than that in case they feel a sudden urge to buy jets for their wives. (Obvious literary exaggeration.)
Its gold had been mortgaged as a collateral and its banks had seen an unprecedented run on their deposits by non-resident Indians who cleaned out their accounts amid fears that the country was going under. The Gulf War of August, 1990- February, 1991 had ensured that the oil prices were out of control and India’s oil import bill had increased by 50 percent to about $6 billion.
As if all of this was not enough, India had to evacuate 112,000 Indians working in the Gulf because of the war waged by the US-led and UN-mandated coalition forces. Remittances from the Middle East, which had been one of the most important sources of foreign exchange, had dried up.
In short, India was fucked. (Pardon the scientific expression that we economists use.) From that situation to now, when The New York Times today carries a largely flattering profile of the Ahmedabad-based Gautam Adani, it has been an undeniable turn around. Adani, who is the sixth richest Indian, has a fortune of $10 billion, which is 40 times more than the country’s foreign exchange reserves in 1991. If someone had told the 29-year-old Adani then that he would be where he is today, he would have fallen off his chair laughing.
As the Times’ Jim Yardley and Vikas Bajaj report, the country has 55 billionaires who between them are worth $250 billion.
However, as it always happens in India, as much as one has a reason to feel good about the progress made over the last 20 years, one has a thousand times more compelling reason to feel depressed. There are more than 500 million people in the country for whom life forever remains mortgaged. Yesterday, while listening to the car radio, it was strange to hear Prime Minister Manmohan Singh saying something to the effect that “if a friendly country” was offering help (meaning Britain giving India $1.5 billion dollars in aid) he had no problem accepting it. Obviously, Dr. Singh is not the one to stand on false prestige.
While a lot has changed, what may not have changed all that much is the business-politician dynamic. On the question of the political patronage that he enjoys from Gujarat Chief Minister the Times quotes Adani as saying, “You cannot put up infrastructure or a larger project without the blessing and active support of the state government. You have to work along with the government, whoever the chief minister is, from whichever party he is.”
That reminds me of what Dhirubhai Ambani once told me, unusually in Hindi, “Hum to kisi ko bhi salaam marega business ke vaaste. (I will humor anyone for the sake of business.)”
