"India's Enron" After "India's 9/11"

India's passionate supporters of its "strategic partnership" with the US - forged and furthered during the term of President George W. Bush - are ever on the lookout for encouraging parallels between events in both countries. They have found yet another now and, boy, are they flaunting it.

    As reported in these columns before, 11/26 figures as India's 9/11 on their calendar. The idea is to draw the same conclusion from the Mumbai terrorist strike of the former date as Bush drew from the Twin Towers tragedy - and to call for a war in South Asia like the "pre-emptive" one in the Middle East.

    Now, they are talking of "India's Enron." The allusion is to Satyam Computer Services. One of India's outsourcing and information technology (IT) giants, the company headed for a rapid collapse after the exposure of an accounting fraud of the kind that led to the fall of the American energy corporation.

    The company of the ironic appellation ("Satyam" means "Truth") crashed after its founder-chairman, Ramalinga Raju, wrote to his board, confessing to his billion-dollar crime and to his lies designed to cover it up. The fraud also made 54-year-old Raju "India's Bernard Madoff."

    Allegedly involved in the case, as Arthur Anderson LLP was in the Enron scandal, is the auditing firm PricewaterhouseCoopers (PwC), billed as the third-largest privately held business organization in the US. As the Satyam stocks plummeted, fears mounted about the fate of its 53,000 employees as against the Enron's 30,000.

    The beleaguered company was expected to get governmental assistance of $4 billion, but public protests reported in the media blocked what was beginning to be called "India's bailout" over and above the massive funds pumped into various sectors of the economy over the past few months.

The facts of this individual case or the fortunes of this individual company, however, do not represent the most important facet of the whole affair. Satyam is important, above all, because it has been a symbol. The fourth-largest among India's IT firms, it has been hailed as an iconic symbol of the country's euphorically lauded, exemplary growth in this sector, which in turn serves as the engine for its advance to the status of an economic power. This hype makes the fall of Satyam sound like the collapse of a house of cards.

    Satyam's fall is more than merely financial. Raju has betrayed the section of Indians brought up on a basket of illusions by more than cooking up books. He has done so by demolishing myths about the work ethic and business morality behind his and Satyam's meteoric success.

    Raju has been the recipient of perhaps a record number of awards, holding him up as a role model for other industrialists. ....

It is, however, not only the left, the foe of the "free market," that sees in Satyam a symptom of a larger malaise. Many others, too, think it time to look for other signs of rottenness in the state of the most exalted sector of India's economy.

    To the large Indian masses, for whom the computer giants may only have contempt, the story comes with a lesson that is quite contrary to the mantra of utterly unregulated corporate capitalism that India's self-appointed economic mentors have tried to teach them for nearly a decade now.

    The story comes after grim tales of the impact of the worldwide financial crisis of American origin on a glorified Indian product of globalization. The media come out with daily stories of the devastation the meltdown is causing in a sector of job market that was the joy and hope of India's middle class not long ago. A large number of youth, who thought they had made a break with the country's past and ended their education prematurely for employment in the business process outsourcing (BPO) offices, have been laid off.

    The slowdown has also affected several traditional sectors - real estate, banking, insurance, textiles and the auto ancillaries - though no official figures are available on the numbers involved.

    All this is in addition to the large-scale immiseration growing in vast areas of India's dominantly agricultural and rural economy during the decade of globalization. Suicides by tens of thousands of debt-ridden farmers during these years constituted a tragedy that made the claims of superfast development a farce to people outside the boards of blue-chip companies.

    The same period has also seen other grave and glaring distortions of development - such as displacement of people for the sake of prestigious projects and destruction of environment for exploitation of resources meant only for elite consumption and export markets. Some agitations against such distortions may have been carried to a counter-development extreme. To the defenders of corporate cupidity and callousness, however, any complaints of such distortion deserve to be dismissed as disdainfully as the denizens of society's marginal strata.

All this should have become a primary political issue in a country like India, but the main political parties have refused to make it one. It accidentally became an election issue in 2004, when the then-government of a National Democratic Alliance headed by the far-right Bharatiya Janata Party put out media advertisements boasting of a "shining India." The then-opposition Congress Party attacked the ads as only an improper waste of the tax payer's money. The slogan, however, produced a strong revulsion among the voters, who threw out the BJP and its band.

    India is currently preparing for the next parliamentary election due by May 2009. The BJP plans to seek votes on its main planks of minority-bashing and "anti-terrorism" interpreted in anti-Islam and anti-Pakistan terms. The Congress Party, for its part, is plotting to counter the campaign by adopting a more-anti-Pakistan-than-BJP stance. Neither of the parties seems worried about the development policy debate that Satyam has revived.

    Maybe the people of India will have to wait for yet another general election to vote for a "change" they can believe in, and not one that divides them but ignores basic issues of development.

    Whether in the land of Enron or Satyam, however, the peoples' battle for a new economic deal is not going to end with an election alone.