Sucheta Dalal :Wide-eyed optimism?
Sucheta Dalal

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Wide-eyed optimism?  

Nov 6, 2005

Morgan Stanley’s high-profile Chief Economist Stephen Roach is as bullish about India today as he was about China in the 1990s. And, he is bearish about the US. This should considerably cheer Indian investors, but for the niggling worry that Roach’s recent whistle-top visit is a tad over-optimistic. We liked it when Roach, after his last visit, declared that our show-piece Mumbai-Pune Expressway was no big deal if we couldn’t get the access roads to Mumbai and Pune right. But this time, Roach found positives in Mumbai after torrential rains and the July 26 deluge had shaken the confidence even of usually unflappable Mumbaikars. ‘‘The roads and airports are still terrible in India — the traffic jam and driving conditions going to the Mumbai airport the other night were unbelievable. But compared with conditions I saw 9 to 18 months ago, there is a palpable sense of improvement. Signs of road construction are evident everywhere’’, says Roach. He was also happy at the renovated airport terminal and the new budget airlines. Isn’t that strange? Road repairs are a sore issue with Mumbaikars and the subject of PILs. As for the airport, it took 72 hours to clear an aircraft stuck off a runway and nobody has been held accountable for the massive losses due to delays, disrupted schedules and the use of a dangerous second runway. Airports resemble crowded railway terminals due to regular flight delays. Yet, Roach thinks that ‘‘there is risk of going too far in condemning the recent backsliding on reforms’’, especially with respect to infrastructure. If only we could share his optimism.


Open to Retail


The high point of Roach’s India visit was a tete-a-tete with Prime Minister Manmohan Singh. Again, Roach is correctly positive about Dr Singh’s erudition and sincerity, but he ignores the messy political situation and Singh’s lack of powers. Roach’s meeting with the PM apparently led to a newsbreak. He is confident that India’s retail sector will be opened up to foreign players in ‘‘just 18 months.’’ And, that domestic players such as Pantaloon and Reliance are ‘‘scaling up’’ to meet the Wal-Mart challenge head-on. Indian entrepreneurs, he says, are waiting to compete. This is interesting. For starters, there is no sign of the Left Front relenting on retail and this decision is already languishing for several years. Does Roach have special information, or is he just overly optimistic? His bullishness about Reliance’s five year initiative for developing a nationwide chain of hyper-stores and super-markets is also curious. Shouldn’t his assessment be tempered by the Reliance Infocomm experience? The group pumped money into telecom infrastructure but failed to understand the consumer. It failed to deliver on most of its initial promises, messed up its billing and angered subscribers.


Overture rebuffed?


Did the Anil Ambani group really seek a strategic stake in the Bombay Stock Exchange? The bourse has strongly denied a report by a prominent daily following the market regulator’s intervention. After calling the report ‘inaccurate’ and ‘highly speculative’ the BSE merely says that it has still to work out a future road map. Exchange officials told the regulator that Anil Ambani’s top aides, Amitabh Jhunjhunwala and Madhu Kela, came up with several proposals for cooperation and strategic alliances. These included an offer to light up the Jeejeebhoy Towers during Diwali, to teaming up with the bourse to conduct investor awareness programmes. Both were politely turned down. The exchange runs a well-funded investor awareness programme. The BSE’s version of the meeting reported to the regulator was that Reliance was told that it was premature to have a discussion since the bourse was still to firm up its plans. With a stake in the commodity bourse MCDEX already under its blt, the Anil Ambani group clearly believes that exchanges are an influential investment.


Spooks need directory


Newspaper reports say that security and intelligence agencies want the government to mandate publication of directories by cellphone companies similar to government-owned fixed line phone companies. This makes no sense. If intelligence agencies have to thumb through bulky directories for numbers, it is no wonder that investigations drag on for years. Also, public sector companies don’t update directors regularly, since increased tele-density has made printing costs prohibitive. While government firms at least have Internet directories and help-lines, fixed-line operators in the private sector have neither, especially for callers from another service provider. As for mobiles, even ordinary people know how easy it is to track the precise location of cellphone calls and to eavesdrop on conversations. The demand for directories only shows how government agencies are clueless about technology. A mobile phone is a personal instrument and the government cannot mandate the publication of numbers without the explicit subscriber consent. Otherwise it will only increase crank calls and harassment


-- Sucheta Dalal