Nothing seems to be going well for the Indian economy these days. The economy has been hit hard by a slew of scams in the last few years. And it looks like it will be a long time before the dust starts settling. Yet another skeleton has come out of the closet in the coal scam case. As per an article in Indian Express, the Central Bureau of Investigation (CBI)while probing the coal blocks allotment scam has recovered a diary from the offices of the Aditya Birla Group that could be a cause of embarrassment for many. The diary lists around 1000 payments made to politicians across parties over a period of 10 years by a Birla company. While this sounds shady enough, what makes it murkier is that the payments coincided with Lok Sabha and several state assembly elections. Further, the CBI has claimed to have found unaccounted cash worth Rs 25 crore at Hindalco office. Ironically, the events that could taint the reputation of Aditya Birla Group Chairman Mr. Kumar Mangalam Birla have come around the same time when he has been chosen as the Business Leader for the year 2013 by a reputed financial daily.
The only positive we can look at in the whole matter is that the issue is being now probed and brought to public knowledge. While it is yet to be established whether the management has been involved in the wrong doing, this is just another reminder of the shady nexus between big corporate houses and politicians. Such endemic crony capitalism has caused immense harm to the economy and investment climate in the country. The corrupt politicians and corporates have found out a win-win way to feed their respective ambitions. The large corporate houses shell out huge money to fund elections. In return, they seek high return on investment in the form of preferential treatment while carrying out business activities, irrespective of their competence in the latter. It's a win-win deal for both with the least regard for the critical resources in the country and the interests of the Indian economy. This is indeed no way to run either a business or the Government.
The unrestrained greed of corporates and politicians has led to a breeding ground for corruption in the country. Already the country is out of favour as far as macro economic environment is concerned. On top of that, such events strike fresh blows to investor sentiments. No wonder that overall trust level on Indian corporate is declining.
We believe that investors have an important lesson to learn from such incidents. That is, not to get carried away by big names but choose the companies with robust fundamentals, management integrity and sound corporate governance practices.
Do you think the shady nexus between large Indian corporate and the Government is a huge threat to the Indian economy? Let me know yourcomments
The only positive we can look at in the whole matter is that the issue is being now probed and brought to public knowledge. While it is yet to be established whether the management has been involved in the wrong doing, this is just another reminder of the shady nexus between big corporate houses and politicians. Such endemic crony capitalism has caused immense harm to the economy and investment climate in the country. The corrupt politicians and corporates have found out a win-win way to feed their respective ambitions. The large corporate houses shell out huge money to fund elections. In return, they seek high return on investment in the form of preferential treatment while carrying out business activities, irrespective of their competence in the latter. It's a win-win deal for both with the least regard for the critical resources in the country and the interests of the Indian economy. This is indeed no way to run either a business or the Government.
The unrestrained greed of corporates and politicians has led to a breeding ground for corruption in the country. Already the country is out of favour as far as macro economic environment is concerned. On top of that, such events strike fresh blows to investor sentiments. No wonder that overall trust level on Indian corporate is declining.
We believe that investors have an important lesson to learn from such incidents. That is, not to get carried away by big names but choose the companies with robust fundamentals, management integrity and sound corporate governance practices.
Do you think the shady nexus between large Indian corporate and the Government is a huge threat to the Indian economy? Let me know yourcomments
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