The Silent Recession

Tuesday, 26 January 2021



The Silent Recession

Swapnil Bharali | August 03, 2019 15:28 hrs

VG Siddhartha Hegde, rest in peace! While public figures dying do bring about a sense of moroseness to the mind, an entrepreneur, wealth and job creator being pushed to commit suicide leaving a last note behind thereby giving the nation to understand that it was not a step taken on the spur of a dejected moment but rather a well-thought out plan where no other escape route seemed to be an option, is a sure sign of something being wrong with the business environment of the country today. 

In the years gone by we had heard of farmers committing suicide. They were mainly unable to meet their debts and a poor season of crops was enough to drive them to the ultimate step. They were as much entrepreneurs in their own right, being producers after all with their fate and subsistence depending on their own work. And yet, these entrepreneurs – the farmers - who were instrumental in the production of food which formed the meals that the rest of the country has always taken for granted, had no other recourse than to embrace death. While there is so much akin to the suicides of the farmers with that of VG Siddhartha, they represent the two extreme ends of the spectrum and are clear indicators that entrepreneurship in India is fraught with pitfalls at every step and which are so deep that climbing out after falling into one is next to impossible.

The financial figures for the year 2019-20 show Coffee Day Enterprises as a profitable entity; the holding company had revenues of Rs 4,264 crores, with profit of Rs 128 crores. Siddhartha’s other businesses included Coffee Day Global (net revenue Rs 2,043 crores), The Serai (net revenue Rs 32 crores) and others besides a host of additional value of businesses and assets worth approximately Rs 4,200 crores. His entire business stock was profitable and yet, in his parting shot, Siddhartha described his business model as a failure. He just could not take the pressure of running his businesses anymore and chose death as the better alternative. And the good soul was thankfully no runaway like a Vijay Mallya.

Various news reports over the last two months clearly indicate an economic slowdown in India currently. But what is being reported is quite at variance with the actual situation on the ground which is immensely worse. A survey report from 2018 found that, 11% of adult population in India is engaged in “early-stage entrepreneurial activities,” and only 5% of the country’s people go on to establish their own business. This is among the lowest rates in the world.

At the micro-level of say the city of Guwahati, there are days that many retailers/traders go home without effecting a single sale. Footfalls have decreased and costs have increased. Every business establishment comes with its own liabilities of paying salaries, rent, taxes, electricity bills, interests on loans etc. I personally know and have interacted with a few modest entrepreneurs who are looking at an exit option or are willing to give up their enterprises. 

And yet, what makes entrepreneurship and profitability so profane in India is beyond me. Truly! The current socialistic and populist trends in the social and political mindset with a profound sympathy towards the marginalised section seem to render doing business and profiting thereof a virtually sacrilegious and illegitimate exercise. Anyone doing reasonably well in business catches the unwanted attention of the government, the tax men, the donation-seekers and all the undesirable elements who take it as a birthright to harass the businessman. In the process, the harassed entrepreneur does not even have a decent bankruptcy law to fall back on. There is no immunity provided by the government to such situations.

In the current times, when the business eco-system has virtually collapsed - whether we admit it or not - it is mandatory that the air is cleaned up. We need to understand that it is only money that would bring food to the table, not religion and certainly not a holier-than-thou attitude that seeks to vilify a businessman. So far I can see, the coming festive season of Diwali and Puja will be defining and be the greatest indicator of whether recession is here to affect all of us badly. If trading during the season is not brisk, we are likely to have plenty more Siddharthas in which case, the government would do better to introspect on its own role and change its agendum accordingly. Unless it does so, the recession is not likely to remain silent.

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