Tuesday, May 29, 2012

Market Dynamics or Disproportionate Assets

Vasu Reddy from Chicago

Last night’s arrest of Jagan was expected by everyone who was watching his political life especially since the death of his father in 2009.  He was behind the scenes and worked away from the spotlight building his businesses and enterprise, and never a public figure until his father’s untimely death.  His troubles started when his defiant stand against the congress in Delhi, and formation of an independent party to challenge the incumbent congress in the state.  To begin an analysis of his meteoric rise in business and politics, and what lead to his arrest on disproportionate assets is the making of a blockbuster.

His continued insistence that market dynamics and not favors doled out by his father to help build his businesses has merits if other high flying Indian enterprises can be compared to his own business expansion.  There are dozens of cases similar to Jagan’s business enterprises, raising extraordinary amount of private capital from investors, and naming them will not serve any purpose for this column, but just about every Indian who follows the economics and politics of India can easily name a few in every state.  Every one of them requires help from the private markets as well as the government in the state and the country.  Private enterprises cannot flourish without government favors and benefits that are otherwise unavailable to normal citizens.  Who you are and who you know is of 100% value to developing an enterprise.

Signaling out this one man for disproportionate assets after e rebelled against the ruling party is a signal for anyone who is a businessman with inordinate growth in the business enterprise, who is against the wishes of a ruling government.  They can dole out sops and as easily send the CBI after you.  The case of Jagan is that his father is dead and the son doesn’t want to tow the ruling congress party’s line.

The interesting case here is that they are also after industrialist’s who prospered in the congress regime under YSR, and they certainly were well connected in congress to receive favors and also invest in companies owned by YSR’s son.  They did not lose money by investing with Jagan; rather they have received fantastic returns on their investments, while making great progress on their own enterprises which were put in place during the time of YSR.  Now they are targeted as paying for favors received during a dead man’s regime, and further questioning the investments they made in Jagan’s companies, from which each of them have benefitted.

When YSR was alive and well and in the chair, no one questioned him on the decisions he made along with other politicians and bureaucrats.  He was given high praise for the schemes he introduced and programs he undertook, and every one of the congress politicians were at his call.  His death has caused not only his son to walk away from the ruling party, but pose a threat to the government, and within the next month there is a show of strength which the ruling party is bound to be defeated with wide margins.  There is a threat to the party’s position in the state and the outlook is not so great for it countrywide.

The precedent being set for the case of Jagan is really unprecedented.  Here is a young man who rose in business and politics quickly, and his influential father helped him to get into the business and get the basics in place quickly.  Jagan developed his network quickly and was successful in doing whatever he did, along with throwing his hat into politics.  No crime committed here, but using influence as does everyone else in the place of power and influence.  His ambitious political play is what is stressing the government which had to find ways to stop him from power.  For now it doesn’t seem to be working and with his arrest the public sympathy to his family and his father’s continued popularity will only further dent the ruling party’s chances in the next month’s elections, and eventually the case/s against Jagan will get their fair hearing.  In the mean time the congress would have lost their seat of power in the state, and have created a vast emptiness for investors who are looking for politicians t help with businesses, and investing in high flying ventures.  Nothing is won by the ruling party or the state for the drama being played out, and everyone one is a loser here: congress, state, people, investors and general public who are witnessing the drama.

No comments:

Past Perfect

Vasu Reddy from Chicago vasureddy@aol.com It has already happened. Past is already on the books, recorded, and can’t be changed.   It ...