Beyond Cycles

We curb economic freedom at our own loss

At a point when indian business and the Indian economy are moving forward to a future bright, who has the time to look at the rear view mirror? To take a relatively recent, five-year-old example, that8217;s what tech entrepreneurs thought between 1996 and 2000 when currency and capital morphed from money to equity. Investors, institutional and retail, pumped in money as if cyberspace was going to disappear yesterday.

They funded ideas without looking at execution capacity. Instead of evaluating dull and boring things like profits potential and market size that could sustain companies in the long run, they invested in 8220;cutting edge8221; revenues. If only they had seen what had happened to the hundreds of railway companies in the US that had chugged their way to investors8217; purses, emptied them, and disappeared. The airlines, automobiles, and the list is only beginning.

We forget history.

Liberalised India is no different. During 1992, we saw how the highest level of equity analysis was to get hold of Harshad Mehta8217;s buy list, as he thundered his way with 8220;research8221; and came up with something called the replacement value of companies. What he with a handful of foreign banks did under that garb, however, is a different story, well chronicled. As if history has been confined to library shelves, today we see huge investments from entrepreneurs, companies and investors moving into infrastructure, airlines, construction.

But we forget history.

It is for reasons as mundane as these that Tripathi8217;s treatise is not only essential reading but something that has to be made accessible to every CEO worth his enterprise. To understand how the Thapars, for instance, were hit by coal nationalisation in 1973. Or how business groups in the Nehru era acquired licences without any intention of using them.

Call it an enterprise of a different sort, under different constraints. How many old groups are even in the reckoning today? Apart from the Tatas and the Birlas Aditya Birla group, where are the groups of yore8212;the Modis, the Goenkas, the Khataus? Those who don8217;t transform with the times are confined to libraries, is an unwritten conclusion this book throws out.

Today, as corporate India grapples with new challenges8212;globalisation, expansion, scale, new businesses, talent8212;and moves towards new opportunities, a realignment of business groups is under way. Could Sunil Mittal, N Narayana Murthy and Tulsi R Tanti have turned their ideas into enterprises worth thousands of crores? What is the strategic route that the Tatas and Birlas have walked on to ensure they remain among India8217;s most influential groups even after a hundred years?

It is to derive insights like these that Tripathi8217;s 8220;concise8221; version of his 2000 work8212; the last unnecessary chapter 8216;Aftermath of Liberalisation8217; notwithstanding8212;needs to be studied. Lest we forget that the economic freedom we now take for granted has been earned with a lot of sweat. That no matter what, it must be preserved. That entrepreneurs across time and geographies have the same behavioural patterns8212;and make the same mistakes, over and over.

They forget history.