Thread by @shyamsek

In 1997, after hearing the dream budget, I had this long discussion running very late into the night with a discussion partner. His words "We don't deserve zero tax on capital gains & dividends".

It was an extreme move by Govt. Nobody complained. Now, we're at the other extreme.

I was into both manufacturing and investing. It was clear to me that doing manufacturing was never going to be as lucrative as investing. Until then, I had this idealism that one should do more economically productive activity. But, 1997 dream budget clearly told me otherwise.

Interestingly the industries which became darlings of the stock markets also grew profits faster because they paid little or no taxes. The tech boom was seeded in the 1997 budget. So was the KP scam. Fraud mgmts saw easy ways of showing false export led growth in sales & profits.

The seed of rampant crony capitalism was sown in 1997. Everybody thought the music will never stop. Ironically, it stopped under same conductor's baton in 2013. What they thought was manageable simply went out of control. So, taxes became the only way of reclaiming lost capital.

The fact that fraudulent accounting in a tech firm lasted even when the same promoter went headlong into infra, for over a decade, only shows how our govt & system played ball with crony capitalism. Satyam and Maytas turned it topsy turvy. Yet, govt didn't treat the symptom.

When Vajpayee sarkar's soft crony capitalism was defeated by a smart "Aam aadmi to kya mila?" it only seeded more crony capitalism of newer Lutyens. Stakes grew bigger. Spoils even bigger. Nobody cared who paid. It was banks who were footing crony capitalist's political bills.

Controlling resources became de jure crony capitalism. Land, licences & loans began triangulating dangerously. Strangely, political system saw no risk. In fact, they quickly joined the party going all in. Banks showed speedy credit growth as new loans paid interest of old ones.

Everybody knew what was going on. There were no cash flows in any balance sheet. New loans and fresh equity were believed to be the fuel for future growth. But promoters had more plans. They wanted lifestyle. Vice. Pomp. Bank monies started funding IPL teams thro loan diversion.

Nobody wanted to put up a project. They just wanted to control land & mining resources. They didn't even do it with their money. They did it with bank money. The stockmarket actually celebrated this circus in 2008. Emperors paraded merrily to our applauding din. Contest was on.

There were two major mistake the crony capitalists did. They thought global forex markets were as easy to manage as Indian banks and politicians. They also took our judiciary for granted. The banks too thought the promoters will be able to manage payments. Both judgements failed.

If only we had one leader who saw through the impending economic dangers, or one top ranking investigating officer to blow the whistle, the crisis would not have been created in the first place. Every scam was evident at birth and avoidable with political & bureaucratic will.

When it started raining bad news, initially nobody had answers. Post 2014, when licences were cancelled, Everybody knew the ALM on big loan books. We had the best possible governor at the Central bank. Yet, we were crawling, crowing & cuddling. Nobody worried enough. Or acted.

Finally, the absconding of a high profile bizman did it. The muck was thrown at the wrong place. All hell broke loose for others. Actually, the denouement of this crisis was a series of political accidents. But, economic outcomes began there. Laws got made. Prosecution began.

Today, the heat has become unbearable for Indian business. Few are able to take it. We are now crying hoarse that a sense of fear pervades. Taxes seem unreasonable. Why did we land here? We are here because we were silent on crony capitalism. We were happy as long as we gained.

If we did not allow the monster of crony capitalism, we would not be paying for its bills. We have a lesson to learn. And, simply protesting when it hurts us won't win any sympathy with anyone. Even our maid will say "saab ko kya complaint? 20 saal Pehle, kaise the.. Ab dekh.".