Taming ‘grey rhinos’ in India – a tough but necessary task

THE Chinese have coined the expression “grey rhinos” for a clutch of Chinese tycoons who have used a combination of political connections and cheap credit from state-run banks to build their foreign empires.

Initially, with state support and subsequently by themselves, the grey rhinos acquired a host of businesses outside Chinese shores.

They are now so big, so complex, so indebted and so enmeshed in the economy that the Chinese government finds it difficult to control them and has declared them a threat to economic stability.

Herds of grey rhinos abound in India but the government refuses to acknowledge their presence.

The closest it has come to recognise their menace was in the Economic Surveys of 2015-16 and 2016-17 which labelled their depredations as the Twin Balance Sheet (TBS) problem and identified it as the biggest drag on the Indian economy.

The TBS problem arises when businesses borrow beyond their repaying capacity, leading to un- repayable loans and irrecoverable debts of the lending banks.

The Economic Survey diplomatically stated that the TBS problem arose due to a combination of historical and psychological factors, omitting to mention the real reason for the TBS problem – reckless borrowing by businesses and reckless lending by banks.

It is obvious that TBS or its offshoot, grey rhinos, have their origin in the lack of integrity which imbues the Indian psyche.

If businessmen were really honest they would never have borrowed beyond what they could repay.

On the other hand, if bankers had a modicum of integrity, they would not have lent to sinking ventures. Bankers have tried to justify such loans as errors of judgement but considering the volume and number of such loans, this explanation rings hollow.

Everyone who has taken a loan from a bank knows how difficult it is to make the bank loosen its purse strings even for a few lakh rupees but businesses which were obviously floundering could manage loans of thousands of crores rupees – just like you and me quake before the passport officer but any gangster worth his salt has at least 10 passports under his belt.

It is a mixed blessing that the exploits of Indian grey rhinos are mostly local. This makes them more amenable to government control but at the same time endangers Indian jobs should the rhinos be forced to shut shop.

This dilemma has forced the government to direct banks to take action only against some select defaulters.

Even today, after the Indian grey rhinos have been named and shamed, papa and mama rhinos are often found in European watering holes while baby rhinos zip around in high-end cars.

A certain grey rhino is busy working the London social scene and thumbing his nose at the Indian authorities. Such crass display of borrowed wealth shakes the trust of the common man.

The lack of a healthy work ethic amongst Indians is responsible for the imbroglio. Somehow, the average Indian is convinced that he is the most intelligent person around and it would be a shame if he had to work for his bread and butter.

The peon in the office would play truant, the clerk would misplace the file and whenever you visit a government office you would invariably be informed that the concerned officer was in a meeting.

Unfortunately, the private sector is equally plagued by this malaise. Perhaps, the government being the largest employer has passed on its work culture to the private sector.

Except for a better dress sense amongst employees and a snazzier office building, there is little to differentiate between a government office from a private office.

The productivity of any private sector enterprise in India is much less than that of a similar enterprise located abroad. This is the reason why after the opening up of the economy, many of the businesses folded up.

The businessmen concerned kept their businesses running – not with the hope of revival but to enjoy cheap credit and the tag of big businessman.

It is futile to blame the government or its policies because as Julius Caesar had said: “The fault, dear Brutus, is not in our stars, but in ourselves.”

The immediate solution to the problem of grey rhinos is likely to be writing off their loans, restructuring their enterprises and banning them from future business enterprises.

But it is doubtful if the government can ever reach the hidden treasures of the grey rhinos. Similarly, looking to the numbers involved the delinquent bankers would also be let off lightly.

Much more has to be done to prevent another generation of grey rhinos to come up. We would have to drill in the concept of a healthy work ethic, which would mean inculcating the virtues of integrity, responsibility, quality consciousness, discipline and teamwork in the workforce. No doubt, a tough task but a necessary one. — The Statesman/Asia News Network