Dr CNR Rao, the world’s foremost solid state and materials chemist, airs his views on where Indian science is headed
He is known in India as “Mr Science” and has been conferred an astounding 40 honorary doctorates from all over the world. Dr CNR Rao, the world’s foremost solid state and materials chemist, is currently the Linus Pauling Research Professor at the Jawaharlal Nehru Centre for Advanced Scientific Research, Bengaluru and chairman of the Science Advisory Committee to the prime minister. At 73, his passion is nanotechnology, especially the nanomaterials comprising carbon nanotubes. He has authored over 1,400 research papers and edited or written 41 books in materials chemistry. There is hardly any academy that has not made him a fellow, including The Royal Society of London, National Academy of Sciences, USA, Russian Academy of Sciences, Pontifical Academy of Sciences, French Academy of Sciences and Japan Academy. There is a wide consensus that he would have easily won a Nobel Prize by now if he were working in a Western country. His views on where Indian science is headed, given the way bright science students are sucked in by the software sector are extremely forthright
ML: Would you tell us a little about your background? What got you interested in science? You also said somewhere that you were taught by your mother in your early years.
CNRR: I was born in Bangalore. I did not go to a primary school. I began formal schooling only in the middle school. My mother was a very spiritual person. She used to spend long hours in her puja and was a follower of the Madhawa philosophy of doing the right deeds. She herself did not finish high school but was very well-read through self-study. She used to read English newspapers and was aware of what was happening in the world. She taught me until I was six years old with a special emphasis on mythology and mathematics. My father was an inspector of schools. I was the only child. I had a lot of freedom.
A visit by CV Raman to our school in 1946 was probably the earliest factor influencing my interest in science. I decided to become a scientist when I was doing my intermediate course at Sahyadri Science College in Shimoga and later BSc with physics, chemistry and mathematics at Central College Bangalore. I had actually scored more marks in physics than in chemistry. I did not want to join the civil service or medicine or whatever; so I went to the Benaras Hindu University (BHU) to do my Masters degree.
ML: Why Benaras?
CNRR: Because it was one of the few places where you could take additional courses rather than merely work on a thesis. At other places, like Bombay University, you had to mainly do a thesis. I wanted to study a lot of other subjects. It was the early 1950s and BHU was a great centre of learning. It had many top visiting professors including Nobel Laureates. One day, I came across a book called the Nature of the Chemical Bond by Linus Pauling. I was fascinated. What he wrote was totally new at that time. He got a Nobel Prize for it; he also got another Nobel for peace later. I felt I must work with him. After completing my MSc in 1953, I came back to Bangalore, spent a few weeks at Indian Institute of Science (IISc) and then left for Indian Institute of Technology (IIT) at Kharagpur (West Bengal) which had just come up. After a year, I realised this was not a place where I could do the kind of chemistry I wanted to (molecules and structures).
I wrote to Pauling wanting to do doctorate under him. He said, “Why don’t you work with two of my very good students?” and he gave me their names. When I wrote to them, one of them immediately gave me a fellowship. I had fellowships from MIT, Penn State and Columbia also but I went to Purdue to be able to work with Pauling’s student. He was a very fine person; unfortunately, when I went there, he became an administrator and was always very busy; he hardly ever came to the lab. I was doing my own stuff. And he said, ‘you are good at what you do, why don’t you help others in their work’? I helped a lot of PhD students. In fact, I am a common author of every paper that was written at that time.
I was about 23 at that time and I had already worked on the structure of an important molecule when Pauling had come to the university to inaugurate a new chemistry building. I had shown him how I had worked on two important structures on which he had a theory. He acknowledged my work in the third edition of his book Nature of the Chemical Bond. More important, my PhD was only a small part of the work I did at Purdue. I got my PhD in two years and nine months, but I used to take all kinds of courses and also published some independent work on spectroscopy and physical organic chemistry. In fact, I did not get a degree in chemistry; I got it in chemical physics.
While I was taking these other courses, I used to come across various problems that others were trying to solve. I got interested in them and I ended up writing a large number of papers. By the time I left the university, I had published at least 28 papers, while for my PhD I had published only five papers. In fact, based on those 28 papers, I got a DSc in India. Somebody told me DSc was very hard to get. But I soon got a DSc degree from Mysore University based on a thesis that I had submitted there.
After my PhD, I went to Berkley. Berkley was really fantastic. The chemistry department was founded by GN Lewis who is considered the father of modern chemistry. I worked with Prof KS Pitzer who was once an undergraduate student of Linus Pauling and a noted physical chemist in his own right. Then, in 1959, I decided to return to Indian Institute of Science where I got a job as a reader.
ML: Why did you come back?
CNR: I always wanted to come back, especially because of my mother. She would have been heartbroken if I had not come back. She had not asked me to return. In fact, she would never have said anything if I had decided to stay on in the US. But I don’t know what she would have done if I had not come back. She was so quiet and such a selfless person. She has never asked me for anything in my life and I have not given her anything either. I feel terrible now. In fact, when she died, we discovered that she had nothing with her. She had given away everything that she had. My wife was closer to her than I was. I was too immersed in my work. I got married to Indumati after I came back when I was about 26. I have been married for exactly 45 years.
ML: In the ‘50s, most people did come back to work in India…
CNRR: Of course, nobody believed in America at that time. India was the automatic choice. Berkeley wanted me to work there. I don’t know what would have happened if I had stayed on. After I came back, I was offered a readership at Punjab University. I thought why should I go there? It was not such a great place. In three months, I got an offer from IISc. If that had not happened, I would probably not have returned. Do you know that Dr Manmohan Singh would have been my colleague, if I had joined Punjab University? He had joined as a lecturer of economics at that time. He is just a year older than I am.
ML: When was this?
CNR: It was 1959. So it is 48 years since I came back. It was quite an experience. IISc was supposed to be a good institution; in fact, it was terrible. I was doing spectroscopy without a spectrometer! But however lousy the facilities, I did certain things well. The impact of your academic work is judged by the number of times you are cited. An article that I wrote at that time is one of my most cited works. I have about 35,000 citations. Most Indians do not have more than 5,000 citations and many people who are cited more than 2,000 times mention it in their bio-data. A monograph on ultraviolet and visible spectroscopy using molecular orbital notations was published by Butterworths of London in 1960 and went into several editions and languages. I was still very unhappy at IISc. I had a long discussion with my wife and told her that in India I cannot do the kind of cutting-edge research that I want to do. For the first time in my life, I thought that maybe India is not the place to be. She did not want to leave India, but then I was so unhappy as well.
I went to Purdue and Chicago for a short stint, came back and quit IISc.I accepted an offer from IIT Kanpur in 1963. It was started with American aid and help from MIT, Purdue and Berkeley. It was a new IIT and I was asked to build and head the chemistry department. I was just 29 years old then. I thought: how many times in life can one get an opportunity like this? That department I can proudly claim was the best chemistry department that I have ever seen anywhere. Indeed, there has probably never been a department like that anywhere in India. Every member of the team - Goverdhan Mehta, D Balasurbamanian, Animesh Chakravorty, S Ranganathan, PK Ghosh, D Devaprabhakara and JC Ahluwalia - was a member of the Academy (Indian Academy of Sciences). The chemistry department also produced hundreds of superb students. While this was happening, I also began to get a lot of awards. Sir CV Raman wrote to me a personal letter inviting me to be a Fellow of the Indian Academy of Sciences in July 1964.
I got an international award called the Marlow Medal by the Faraday Society of England; it was my first international award and Michael Faraday was my boyhood hero. I got the SS Bhatnagar prize at 34.
I remained at IIT Kanpur from 1963 to 1976. It was a busy time during which I got involved in several other activities at Council for Scientific and Industrial Research, the National Chemical Laboratory, National Committee on Science & Technology, etc. Vikram Sarabhai also asked me to chair the committee on chemistry at the Department of Atomic Energy. Towards the end of my time, IIT Kanpur was plagued by some administrative problems.
Then, in 1974, I was invited to be the Commonwealth Visiting Professor at Oxford. I went there and, my God, it was a fantastic experience! I got to do research and publish papers with JS Anderson, a pioneer in solid state chemistry. Brian Smith, a friend from Berkeley, was there too. I made some life-long friendships at Oxford.
After Oxford, I returned to Kanpur, but realised that I would have to move on to fulfil my dream of setting up a modern chemical research facility in India. Then, I went to America again to receive a medal given by the American Chemical Society from Glen Seaborg, a Nobel Laureate at Berkeley. I gave a talk after the function and there were these two deans of two universities keen to offer me positions. And I almost agreed.
When I was at IISc, I used to talk a lot with the space scientist Satish Dhawan. Satish, Shivraj Ramaseshan and I were good friends. We used to meet every day and go to the restaurant to have dosa together. While I was wondering what to do, Satish Dhawan said, “I am told that you want to leave”. I explained to him my thoughts. He said, “What is it that we can do that will keep you here”? People were like that then. Vikram Sarabhai was also like that.
I told him that I want to work and teach young people and I want to build a completely new kind of laboratory which would be so good that I can compete with the best in the world. Also, I insist that I must have complete freedom to do it. There should be no interference. That means a new department has to be created, which I will create.
I then built a new department called the Solid State and Structural Chemistry Unit at IISc. I also got involved in setting up the Materials Research Laboratory. It was a tough period and the shift from Kanpur to Bangalore was a difficult period of adjustment both professionally and for my family.
ML: What did you do next, after the IISc stint?
CNRR: Well, in 1982, I was elected a Fellow of the Royal Society, London, and soon after, in 1983, I went to King’s College, Cambridge as the first Nehru Professor. A year later, I returned to IISc and was offered the post of the Director. This was another tough period as I realised the difficulties in addressing infrastructural problems. Soon after, Indira Gandhi was assassinated and Rajiv Gandhi became the Prime Minister. I had an excellent rapport with Rajiv Gandhi and a lot of good work was done during his time.
ML: Isn’t that the time that you received your Padma Vibhushan?
CNRR: Well, there were many awards and honours but I really cherish only two. One of them is the Doctorate from Oxford - only three Indians of the modern era have got it -- Indira Gandhi, Manmohan Singh and I. Before that, Rabindranath Tagore had got it (laughs). After a point, it is not at all important; I have 40 honorary doctorates from around the world - and I am a member of all the academies of the world - with no exception - except maybe some of the smaller ones.
ML: Everybody says that you should have got the Nobel long ago and people have got it for less work than you have done.
CNR: I don’t know (laughs). But as a dark-skinned person, you have to be 10 times better than the whites to achieve the same level of recognition. GN Ramachandran, the world-class biophysicist, became Fellow of the Royal Society in 1977, when he was 55. He had published his paper on triple helix DNA structure in 1954! I should have got most of my international recognitions 5-10 years earlier. I became a member of Fellow of the Royal Society only in 1982.
ML: At a recent address to the Amrita Vishwa Vidyapeetham, your speech expressed worries about the future of scientific research in India.
CNR: Well, yes. Today, the focus is only information technology (IT) and software. Everybody wants to join the software industry to the exclusion of everything else. India has done well in software and people are, indeed, making a lot of money; but, as far as science in concerned, they are not the best of influences.
ML: Why do you say that?
CNRR: Well, the government is being persuaded to ignore higher education. SM Krishna, the former Chief Minister of Karnataka, is a very good friend of mine. Krishna was all praise for these software czars who were very close to him. I told Krishna: “why are you listening to these people”? They have been arguing that there is no need to spend money on higher education. Higher education can take care of itself. This is a perverse argument. The Indian software industry is the biggest beneficiary of highly subsidised higher education and, today, they say that there is no need for the government to fund higher education! Higher education is not merely engineering and management which land well-paying jobs. What about pure sciences? Everywhere in the world - Oxford, Cambridge or the US, the best work is done by government-funded institutions, especially in pure sciences. But as long as Krishna was the CM, he didn’t do a thing for higher education, thanks mainly to the advice of one particular software businessman.
ML: A lot of people are complaining that the software boom is sucking away many bright people.
CNRR: The value system has become lopsided. India’s basic strength has been generosity. You have to be generous to others - to colleagues and young people. Today, everybody is so materialistic. They want a house, a car, a wife and then they want a second car and a second house. I don’t know if they want a second wife (laughs). I never cared about material things only about operational freedom, etc. We must think of how to get young people interested in science.
ML: You have held a large number of administrative positions as well; didn’t that hamper your research?
CNRR: I never failed to produce papers even when I held administrative positions. But yes, the quality went down while I was dealing with petty complaints and procedures. Fortunately, my citations in the last 10 years have gone up tremendously. By my own standards, the last two years have been the most productive period. In the last one year, I have worked on many new things, new phenomena and new materials.
ML: To what do you attribute this increase in productivity?
CNNR: You have to work at things consistently, every single day. Indians are not used to that kind of schedule. They work hard for a few days and then relax. You cannot develop a career like that. I work around 10 hours everyday. Also, if I am working on papers, I am with students all the time. I also travel extensively. I am going to Rio de Janeiro for a lecture, after that to Durham University for a lecture and then a lecture at Oxford. I just came back from Madrid.
ML: As the advisor to the PM, you have expressed concern that India’s contribution to research is meagre.
CNR: If you calculate, we contribute just 2.7% to world research. It is very little. China’s contribution has now shot up to 15%. Then there is the issue of quality. If you consider that, our contribution is just 0.5%. India is hardly represented in the top journals. You can say I have done well for myself. But that was not the objective. If that was all I was looking for, I could well have been in the US. I would have done even better. In all the enthusiasm of using bright students to sell soaps and credit cards, this is where we have landed. Plus there is too much of emphasis on IT. Look at Bombay University or Madras University. I don’t know even one good scientist working in these places which produced luminaries at one time.
ML: What needs to be done?
CNRR: University upgradation is important and that is going on. The MM Sharma Committee has been made an empowered committee so that it can take decisions. The government has approved a plan for strengthening teaching and research in basic sciences and has provided an additional Rs600 crore of annual budget allocation for this. Prof Sharma is the right person to oversee this. But we cannot wait for old universities to improve. So, we are setting up new institutions - in Kolkata, Chandigarh, Thiruvanathapuram, etc.
ML: What is the future of Indian science?
CNNR: Money is a major issue. The kind of money our IT coolies are making is amazing. Their goals are clear. They want to work for a few years and then retire. After all, Indians are very thrifty. Young people with a PhD with a few years of experience are making Rs2 lakh a month with foreign companies sitting in India, while salary levels for scientists are very low - maybe Rs2 lakh a year.
The problem of globalisation is affecting us badly. You cannot globalise only salaries. What about the other aspects? Businessmen are feeling good about the economic boom but what about civic services? If we cannot fix our drainage, what science will we do? Even the 2.7% of our contribution to global science will come down to 1%. That too is by a few individuals.
To succeed in India, you need tremendous determination, courage, single-mindedness and doggedness. You have noticed I never mentioned intelligence (laughs aloud). In India, if you are not dogged, you have no chance. Everybody will pull you down, until you achieve some international standing - then they can’t do much any more.
ML: Why do you say that?
CNRR: Well, when I came back from the US in 1959, I wrote a book titled Ultraviolet and Visible Spectroscopy published in London and translated in six languages. There was a lot of jealousy. I was only 25. I heard people say: who is this fool writing books at 25, which is published from London? It was unheard of and there was so much of criticism. Then, I wrote another book, which was published in New York. Then they had an even bigger problem with me and said, this guy doesn’t give up.
Tommy Thomson, a very famous scientist, used to tell me, “You know Ram, to succeed in India, you should be partly deaf - you should not hear everything and you should be partly blind - don’t see everything”. In fact, you cannot be too sensitive in India; otherwise, you will be negative, sarcastic and cynical. That’s why I try to help young people. I know what I went through; I used to be miserable about the criticism and how people would treat me.
For instance, when I started a new subject called Solid State Chemistry a lot of people were extremely critical; ‘what is this humbug, what is solid state chemistry? Is there something called liquid state chemistry’? There were very few people working on it those days. Now, I am considered the grandfather of solid state chemistry; it is a mainstream subject and people say it is all because of me. Now, of course, I don’t care any more. But, for a long time, it was very difficult to be a forward-looking person in a backward-looking country. Strangely enough, people treat you very well abroad - if not like a God, something close. Of course, things are changing even here.
ML: You don’t seem to have any patents to your name. Why is that?
CNRR: I have not taken any patents. I don’t know why (long pause). I didn’t have the money. It takes about $15,000-$20,000 for each patent. No institute has the money for it. I can’t put my own money. The Centre doesn’t have the money. I would have probably taken 4-5 patents a year. That would be about $100,000, around Rs41 lakh.
ML: But don’t people walk away with your ideas and get a patent for it?
CNRR: Yes, that happens quite often and they do use it in industry. Besides, I was not too keen, I was more interested in the research. That is why I have only displayed just two or three of my honours on the wall. One of them is my membership of the Japan Academy. I am the only Asian in it among 30 honorary members. That is the highest award Japan gives to a foreigner.
ML: Which are the other two?
CNRR: One is the Dan Davis Prize, which is a $1 million award. They give three of those every year. The other is the Indian Science Award. That is the highest Indian award, so I put it up. Besides, it is made of glass. I didn’t want to drop it somewhere and break it. That is why I have framed it and kept it on the wall. Those are the only three I have displayed.
ML: On the patents issue, hasn’t the National Chemical Laboratories taken some patents which have helped?
CNRR: Yea, some of them have done well, but there is a lot of hype too. Dr Mashelkar did a lot of things. But there is no doubt that there has been a decline in the standard of scientists. At one time, CSIR had some wonderful scientists, where are they today? The same is the situation in Atomic Energy Commission. Kakodkar (Anil) is a wonderful man. He is the best chairman AEC has ever had. We keep extending his term so that we continue to have a good chairman. But, one of these days, he has to leave. Who will replace him? Where are the people? This manpower crunch will hit us very badly soon.
ML: Does the PM know this?
CNRR: Of course, he does. He has done more than other prime ministers. More has happened in science in the last two years than before in terms of investment and so on. But maybe it is the wrong time. There is no one to utilise it.
ML: Like the Rs100 crore given to select institutions like IISc.
CNRR: That was stupidly handled. IISc was sanctioned the amount more than two and a half years ago, but the money came only in May. That is the problem.
ML: Can the PM do anything more?
CNRR: Well, like I said, Manmohan Singh is a decent man and very intelligent. I have worked closely with several prime ministers, including Rajiv Gandhi and IK Gujral. Gujral was a wonderful man, but had such a short term. He would have been an outstanding PM if he had continued. PV Narasimha Rao was a big disaster, though he was in the Congress. I don’t want to say anything about AB Vajpayee because I had nothing in common with his government. They threw me out of everything. I owe a lot to them because my science improved due to them.
ML: Why did they throw you out?
CNRR: They thought I had sympathies for Congress. It was Murli Manohar Joshi who was responsible. They wrote a new science policy and I was not involved in it. I have been involved in government policies for decades, starting with the National Commission on Science & Technology when I was only 30. Then I was the advisor to Rajiv Gandhi, to Chandra Shekhar and so on. But I had nothing to do with government policies during the five years of BJP. And all the scientist friends of mine did nothing. There was also a lot of vindictiveness, you have no idea how bad it was. I don’t want to talk about it, except to say, that when others are in trouble, I try to help. Anyway, that is life.
ML: Your current passion is nanomaterials. Can you tell us about its future in India?
CNRR: Yes, I want India to be at the forefront of nanosciences. Although we may not see the fruit of research in nanomaterials in our time, young scientists in India must get involved in it and the country must not hesitate to fund the research. I am especially interested in carbon nanotubes (these are thinner than human hair and promise to revolutionise several aspects of human life from health to defence). Unfortunately, we missed the bus on the semi-conductor technology and are much too focused on Information Technology. I want to do my best to lay the foundation of this research.
Prof CNR Rao - “Mr Science”
Number of Honorary Doctorates: 40
Number of Scholarly Citations: 35,000
Top Indian Positions Held
Chairman, Scientific Advisory Committee to the Union Cabinet
Chairman, Science Advisory Council to the PM
Member of Atomic Energy Commission
President, Indian National Science Academy
President, Indian Academy of Sciences
Member, Planning Commission
Chairman, Advisory Board, Council of Scientific & Industrial Research
Top Indian Awards
Bhatnagar prize (1968)
CV Raman award for research in Physical Sciences (1975)
PC Ray medal in Chemistry (1975)
SN Bose medal for Physical Sciences (1980)
Padma Vibhushan (1985)
Meghnad Saha Medal (1990)
India Science Prize (2004)
Top Foreign Awards
MARLOW medal from Faraday Society, England (1967)
Centennial Foreign Fellowship of American Chemical Society (1976)
The Royal Society of Chemistry (London) Medal (1981)
Hevrovsky Gold Medal, Czechoslovak Academy of Sciences (1989)
Honorary Fellowship, The Royal Society of Chemistry, London (1989)
Honorary Member, Materials Research Society of Japan (1990)
Honorary Member, Materials Research Society of South Korea (1991)
Blackett Lectureship, The Royal Society, London (1991)
Albert Einstein Gold Medal, UNESCO, Paris (1996)
Linnett Visiting Professorship, University of Cambridge (1998)
Centenary Lecturership & medal, Royal Society of Chemistry (2000)
Hughes medal for Physical Sciences, The Royal Society (2000)
Officier de l’ordre des Palmes Academiques, France (2002)
Order of Scientific Merit, Grand-Cross, President of Brazil (2002)
Commander of the Order of Rio Branco, Brazil (2002)
Gauss Professorship, the Academy of Sciences, Germany (2003)
The Dan David Prize (2005)
Chemical Pioneer, American Institute of Chemists, USA (2005)
Chevalier de la Legion D'honneur, France (2005)
Honorary Fellowship, Institute of Physics, London (2006)
Fellow, The Royal Society, London
Foreign Associate, National Academy of Sciences, USA
Honorary Foreign Member, American Academy of Arts and Sciences
Member, Pontifical Academy of Sciences
Foreign Member, American Philosophical Society
Founding Fellow, Third World Academy of Sciences
Foreign Member, Russian Academy of Sciences
Foreign Member, Academia Europea
Honorary Member, Japan Academy
Foreign Member, French Academy of Sciences
Foreign Fellow, The Royal Society of Canada
We don’t know of too many who have achieved so much, so quietly as Grandhi Mallikarjuna Rao of the GMR Group
Some 30 years ago, Grandhi Mallikarjuna Rao used to cycle 25km-30km a day in rural Andhra Pradesh collecting money for the rice, spices, jute or grains that he had supplied. Rao was a mechanical engineer, the first graduate in his family living in a village not far from Vishakapatnam. Today, Rao oversees assets worth Rs15,000 crore in power, roads and airports. Though Rao is extremely low profile, when you think of private initiative in Indian infrastructure, you have to think of GMR. Rao entered infrastructure by accident. Before that, he became a banker by accident. Once Rao enters a sector, he is methodical, focused and has global benchmarks. This has enabled him to be an unparalleled serial entrepreneur – trading, jute mills, ferro-alloys, banking, power, breweries, ear-buds, roads, airports... We don’t know of too many who have achieved so much, so quietly. Here are the excerpts from a conversation about his enterprise, vision and values
ML: Could you tell us something about your family and your childhood.
GMR: My family came from a small village called Rajam, 100km from Vishakapatnam (Vizag). We were in a trading family buying jute and grain from the farmers and selling it to the mills. We are four brothers and three sisters and nobody was really educated. I was the third son. I had failed in my SSLC (secondary school leaving certificate) exam. I used to roam around with my friends, sometimes cycling 50km to the nearest town called Vizianagaram to see movies. Nobody really bothered about what we did, unlike today, where my daughters-in-law are completely focused on their children’s activities. Anyway, I wanted to reappear for my SSLC but there wasn’t much encouragement. The examination fee used to be Rs50. It was only after much persuasion that I could appear again. From that day, my life took a turn. I began to study and, eventually, stood first in the school.
ML: What is it that brought about this change in you?
GMR: Well, one reason was that I used to be completely influenced by my friends. Since all of them failed and I was appearing alone, I began to study and put in a serious effort. I not only stood first in my SSLC, but even when I went to college for my PUC (Pre-University Certificate) at Bobbili, I stood first in college. Then I got into engineering college. Those days, there were only four or five engineering colleges in Andhra Pradesh (AP). I went to study mechanical engineering at Vishakapatanam. I used to be a student leader in the college which had around 2,000 students.
I was the first graduate in the family, passing out in 1972. Within one month of my graduation, my father divided the family assets - each of us got Rs3 lakh and a house. My father wanted me to look for a job, but my mother wanted us to do business - I wasn’t sure what business we could do with Rs3 lakh. Eventually, we four brothers got together and got back into trading.
Even then, my father wanted me to take up a job, so I joined AP Paper Mills at Rajahmundhry as a shift engineer. I soon left that and joined the Public Works Department as a junior engineer for a few months. My mother kept insisting that I must do business. I finally left the job and joined the trading business with my brothers. We used to buy gingelly seeds and black gram and sell it at Chennai, Nagpur and other places. That gave me a rich experience -- collecting money and dealing with bad debts used to be a challenge. I used to travel and stay in small hotels. Sometimes, I travelled 25-30km a day by cycle to collect money. Earlier, we used to supply to really small traders, but I made contact with bigger brokers in Chennai and began to supply to them.
After a while, my brothers said why don’t we start some small industry? Those were the days of the licence raj and it was very difficult to get a licence. I got to know that someone was selling a jute mill licence in Chennai and the factory was closed. I purchased the licence and machinery and shifted the plant. This was a tremendous job. We didn’t have any contacts. I struggled for six-eight months to get all the permissions from the state government and also the Jute Commissioner at Kolkata. Finally, we got all the permissions and set up the factory as a small-scale industry for around Rs40 lakh.
ML: Why did you shift the jute mill to the village, which was in the interiors?
GMR: Raw material was easily available. There was also a good demand for twine and people were willing to pay in advance for it. We didn’t know bankers and it took over a year to get finance. Getting cement and steel for construction was also a long-drawn process because everything was in short-supply and we needed many permissions. Eventually, we started production in 1978. I used to be very active in the village and that threatened the local politicians. They began to create problems between the workers and us.
ML: How many workers did you have?
GMR: There were 500 workers. One of the senior leaders was my junior in college. I never compromised. I used to look after my workers financially and didn’t give the union a chance to complain. However, I was strict about discipline. There was a strike but I refused to compromise and eventually resolved the problem. It taught me how to deal with politicians.
ML: What was the division of responsibility between you four brothers?
GMR: I used to look after the jute mill. We also had a transport business which one brother looked after. The eldest one was in trading and the last brother was in charge of a rice mill and an oil mill. After the trading business, we first started an oil mill, then the jute mill and, later, a steel rolling mill, then ferro-alloys. In the early 1980s, the government nationalised the transport business and we lost the three buses that we used to run. By then, we had acquired another jute mill and my second brother switched from the bus business to looking after the other jute mill. The ferro-alloys business was 50km away at Tekali. It was managed by a friend of mine who resigned his bank job and came to look after it.
I then started making cotton ear-buds. I wanted to do something that was suited to our region. In fact, I wanted to start an export-oriented integrated textile mill. We tied up with BYC of Korea to make hosiery products. We had signed an MoU and the chairman had even visited our village. It was the first deal that they were planning with India. Mitsubishi was part of it and was in charge of supplying machinery and marketing. This was in 1990. India was on the verge of a foreign exchange crisis and even opening a letter of credit (LC) had to be approved by a foreign bank. So the project didn’t take off. But on my repeated trips to Korea, I hit upon the idea of a cotton ear-buds project. Johnson & Johnson was the only player in this business. I set up an export project in Chennai and we exported the ear-buds to various countries. I later sold the business. It was always my dream to start a sugar factory and a brewery. In fact, I used to apply for every licence available. I got the brewery and sugar licences at the same time. As it happened, just before I could start the brewery, the NT Rama Rao government came to power and introduced prohibition. I will come to that story later.
ML: Was this together with your brothers?
GMR: No. In 1987-88, we separated our businesses. My brothers felt that the cash accrued from other businesses should be divided and distributed rather than redeployed into newer businesses. However, my view was that it would be better to start new industries. By then, we had grown into several industries. My elder brother had started two more jute mills; we were also into plastic pipes, cycle rims and other small industries. We took just three or four days to separate our businesses. We shared a good relationship and that helped.
ML: How did you get into Vysya Bank?
GMR: In 1985-86, the Reserve Bank of India (RBI) brought in a policy that bank directors could have a maximum tenure of eight years. Vysya Bank, a small private bank in AP, had Rs60 lakh capital. Its previous directors had resigned under the RBI rule and new ones were being inducted. Ramesh Gelli was the Chairman and the bank operated mainly in Tamil Nadu, Andhra Pradesh and Karnataka. They were looking to expand in the costal belt of AP and Tamil Nadu. Andhra Bank was my banker in those days and Vysya Bank was looking for good people from the vysya community (trader community) with good connections in the costal area, which I had. At that time, they requested me to join the board. I accepted the directorship. It was a profitable bank, had 200 branches, paid a good dividend and was a listed entity.
In 1987-88, Vysya Bank made a 1:1 rights issue to meet RBI’s capital adequacy norms. Gelli requested all the directors to support the issue, but the Bank managed only a 50% subscription. I invested Rs5-6 lakh and requested all my friends to invest - my brothers and friends in my village and other family member invested Rs5,000 to Rs10,000 each. Other directors put in about Rs1 lakh each and, with great difficulty, the issue was fully subscribed. I even pledged my wife’s jewellery to support the issue. A year later, Vysya Bank made another rights issue. It was the same story again. I invested again and my shareholding went up to 12% and I became a major shareholder. I was still living in the village and only came to Bangalore for board meetings. But I took an active interest in the running of the Bank and was on various committees. When Ramesh moved to start Global Trust Bank (GTB) in 1994, there was a big vacuum at Vysya. There was a major management bandwidth problem and I was the biggest shareholder.
ML: What was your stake at that time?
GMR: My holding was 18%-20%; in fact, a major part of my wealth was in the Bank by then. There was also a lot of outside interest in acquiring private banks. Some directors wanted us to sell out. With great difficulty, I convinced my wife and we shifted to Bangalore. It is difficult to relocate after the age of 40, but I did it only for the Bank. Vysya Bank had started many associate companies and subsidiaries for leasing, housing, a travel agency and even a portfolio management club. They consumed a lot of management time and, worse, attracted negative publicity. Closing down each of these businesses was very difficult, especially the portfolio scheme. We discovered that there was no back-up software for many services and many investors had filed cases against the Bank.
We finally decided to focus on core banking. It was a big learning experience for me. I had to recruit nearly 200 people overnight, mainly from the public sector banks. I didn’t know anyone at RBI, since I came from a village. It used to take me two or three days even to get an appointment. People thought the Bank would collapse, but gradually I began to figure out how to create trust and credibility. I gave a 5% stake to Banque Brussels Lambert (BBL) -- a Belgian bank. This was to create confidence in Vysya Bank. I not only gave them a place on the board, but also a representation on every board committee. That helped us learn a lot.
ML: What about your other existing businesses?
GMR: I continued the other businesses with the help of my friends. I had planned to be with Vysya Bank only for a year and go back after the problems were resolved. But I realised that only half the problem was resolved. My son-in-law and one of my classmates joined me and we also began to explore other business opportunities in Bangalore. That is the time we made a public issue for the brewery, but prohibition was announced just as we were set to deploy the funds. I met Chandrababu Naidu on a flight just before the elections and he told me that when we come to power, we intend to introduce prohibition. We had to immediately change our plans. Just around then, the power sector opened up for private investment. We got the licence for an independent power project (IPP) at Chennai. I was trying to run the Bank and also the power project. It was a lot of hard work and even affected my health.
Then KR Ramamurthy joined us from Corporation Bank (as chairman & CEO) and after that my workload reduced. We introduced technology. There were a lot of other legacy issues as well, because of an asset-liability mismatch and a lack of systems and processes. There were some leasing deals and aggressive lending to builders during the scam of 1992, which began to show up only later. As India’s economy went into a slump, our non-performing assets (NPAs) touched a high 15.6%. I created a separate committee and a team that was focused only on recovery headed by an executive director. I did nothing but recovery. We met every Saturday with the team to assess issues. If the borrower faced a genuine problem, we supported him, but we did not show mercy to wilful defaulters. Over two years, we reduced the NPAs to 4.5%. Most industrialists I knew were sitting on the other side of the table. That was another rich experience and I learnt how banks are willing to support businesses in times of genuine difficulties, if the borrower is honest.
The next big development was that we got a licence to enter the life insurance business and BBL increased its stake from 5% to 10%. Then ING purchased BBL internationally. ING wanted to raise its stake in Vysya to 20% in that business and we agreed. We started the life insurance business but not mutual funds.
Let me complete the banking story. We had brought in several top bankers such as K Balasubramaniam, former country head of American Express in India. He and others helped us make a lot of changes. Then ING offered a very good price for our stake and I decided to sell out. I continued as non-executive chairman for a while but I resigned eight months ago because even the non-executive position has a lot of time commitments. ING, however, wanted me to continue as chairman emeritus. We sold the life insurance business to Rajan Raheja.
That is when we began a process of consolidation. On the infrastructure side, the power project was successfully implemented at Chennai. My eldest son had returned and the younger one had gone to Singapore. Meanwhile, we bagged a licence for a barge-mounted project in Mangalore (the Tannir Bavi project), Karnataka. Thirty-six licences were given out. A Malaysian company and a Chicago-based company had got four barge-boat licences but were not able to implement them, because the Malaysian economy was in trouble. We purchased the licences from them and implemented the project. Building the floating power project was another learning experience. We faced a lot of litigation and learnt to deal with it while ensuring successful implementation. We commisioned the project in exactly nine months.
ML: But you had a power project in Chennai as well.
GMR: At Chennai, I had an American partner, CMS Energy, who had a 49% stake. In Tannir Bavi (Mangalore), I had a 26% stake and the rest was owned by our American partner PSEG (Public Service Enterprises Group), because I didn’t have much funds. Around that time, we set up a BPO. Within seven or eight months, we got a very good price and sold our stake to I-Gate. Somehow information technology (IT) is a different game and difficult to understand.
ML: You have set up businesses from jute mills to power projects. What is the common strategy or approach in all your diverse businesses?
GMR: I trust my people. Also, in my whole life, every time we entered a field, we have tried to set a new benchmark. Due to my banking experience, I used to meet a lot of people. One of them was SV Venkatesan of the Essar group who I had given a ‘white knight’ shareholding of 5%-6%, which I subsequently bought back. When I was getting into the power sector, he gave me some good advice. He said, “Don’t get into construction. Focus on completing the project on schedule and always pay your bankers one day before it is due. If you do that, bankers will give you a lot of support”. That is the principle I have followed. So I gave the complete EPC (engineering, procurement and construction) contract to Hyundai Heavy Industries. Simultaneously, we supported them because they were new here. The project was completed a month ahead of schedule.
We used to avoid fights with the state government, so we created a team that was completely focused on resolving issues. For instance, in Chennai, which has water shortage, we invested in a water purification plant using German technology that cleaned the sewage water to the level of drinking water and used this for cooling the plant. We also used a two-stroke diesel engine, when most of the engines used in India are four-stroke (which are cheaper but have higher maintenance cost and fuel consumption). Although the state government did not specify this, I decided that the project is a national asset. The engine should last and we must have the best technology. Bankers didn’t know about the technology, so I brought a whole team from Germany to make a presentation to establish its efficacy. Today, our plant is in the eighth year of operation and is working efficiently. We had the same approach to the Tannir Bavi power project, which is naphtha-based.
It is not as though there are no challenges. But we try and work around them to arrive at compatible solutions with the state government. We created a focused team and worked together with the state government and the power board, so that we create a win-win situation for all.
ML: Infrastructure projects are messy and you were doing several projects simultaneously. How did you hire people to handle all the problems skilfully?
GMR: We are always looking for people who have good leadership qualities and fit into our values, systems and culture. I have also been keen on setting up good systems. For example, we have divided each business into operational assets and business development. That helps us to stay focused. On the issue of people and leadership, we entered the power project in an interesting way. One of my classmates was a marine engineer who was working in the power sector. He had set up a 50MW power plant for Ferro Alloys Corporation.
At that time, we had raised Rs18 crore to start a brewery but prohibition in AP had stalled our plans. We were looking for a new options and hit upon the idea of starting a power project and I got my friend to join me. In that sense, our move into the infrastructure sector was accidental. But within a short time, we set up three power plants in a very focused manner.
ML: Why did you sell your Vysya Bank stake after all the hard work to revive and clean up the Bank? Most Indian businessmen do not sell what they have built.
GMR: It was an emotional decision and a lot of debate went into it. Even today, I am emotionally attached to it. At times, it was even more so; if anyone criticised Vysya Bank, I took it personally. But my son said that banking is a difficult business because to grow you have to constantly bring in more capital. Where would I bring so much capital from and what would be the return on it? My sons also pointed out that globally banking is not a family-run business. So after a lot of debate and discussion within the family, we made a decision.
Another factor also helped. By then the Enron problem had surfaced and IPPs were all in trouble. CMS Energy closed down their Singapore operations and PSEG closed their Asia operations. Both offered me their stakes at an attractive price. So the two things happened simultaneously. The two foreign partners in the power project were persuading me to buy them out and I had the option of raising good money by selling my Vysya Bank stake. But it wasn’t easy. My wife didn’t want me to sell but Ramamurthy and Balasubramaniam (Bala) also explained why it made sense to sell. We only decided after eight months of considerable debate. ING also convinced me that I would remain non-executive chairman.
ML: So the next big leap was airport infrastructure?
GMR: No, it was roads. That was the time that the roads annuity scheme had started. For the first time, National Highway Authority of India (NHAI) had identified six roads which would have to be built and financed by the private sector. In the first phase, three roads were offered and we bid for all three. It was a BOT (build, operate, transfer) annuity model. NHAI would pay an annuity for 15 years. We went into it very aggressively. Our group emerged as the lowest bidder for all three and the difference between us and the next was huge.
ML: What was your advantage?
GMR: We focused on financial returns. Maybe the others wanted to earn returns on project cost and construction. I don’t know their calculations. Now, NHAI was faced with a huge dilemma about the difference in rentals that we quoted. They did not want a miscalculation anywhere that could derail the privatisation initiative, since this was the first such experiment. Many people started a whisper campaign against us and our ‘lower’ bid, since we were doing it for the first time. NHAI took months to decide. I went and explained to NHAI that we had built two power plants with an outlay of Rs2,000 crore. The barge-mounted one was particularly difficult. I said: “I am investing my money in the road projects; I am offering a bank guarantee and, in any case, you can always throw me out if you want to”. NHAI agreed. For four new projects, they called for fresh tenders. Everyone quoted 5% below our bid! We had created a benchmark. I completed both the projects before time, visiting the site every week, went for securitisation and also availed of early completion bonus and made good money. Almost Rs400 crore has come and it was a very good beginning. After that, we won four road projects -- one annuity-based and three on rental basis.
ML: For your power project, your friend had helped you with initial knowledge of implementation. Who piloted the road project for you?
GVR: We have a group executive council, which consists of all sector heads. Bala, my two sons (Kiran Kumar and GBS Raju), my son-in-law (Srinivas Bommidala) and my classmate BVN Rao. We meet every Saturday at Bangalore (whoever is not in the city participates through a videoconference) and decide our course of action.
ML: What was the next move in infrastructure?
GMR: I always felt that I had not set up anything in my own state and wanted to do something there. I had sugar factories and other businesses, but I wanted a large project of over Rs1,000 crore. Then, in 1999, the AP Government called for a global tender to set up a greenfield international airport. We decided to bid for it and tied up with the Malaysian Airport Authority for that bid. The criterion of selection was based on which bidder sought the least grant. The airport would have to cater to five million passengers. While 26 entities showed interest, there were only three final bids. Our bid was the most competitive and we got the project. I knew that Chandrababu Naidu had a passion for international quality. But here again, there was a long delay after we won the bid and I got to know that government had apprehensions about whether we could deliver international quality. But they wouldn’t say so openly. I went and explained that I had built two world-class power plants and suggested that they could send a team to see them. The Principal Secretary himself saw the projects and the team was convinced. But they put in another condition that the Malaysian Airport Authority must bring in some equity; that was not part of the original condition. At that time, Malaysia had gone through an unhappy experience in India and was against the investment. Again, we went to Malaysia and convinced them that we are different. We had built other projects and would make a success of this one too. Then they agreed to invest US$10 million. There were further negotiations and, finally, in 2003, we signed the shareholders’ agreement.
Once we decide to do something, we get into it with complete focus and start on the assumption that we don’t know anything. Everybody in the project team, including me, goes through a learning process. Since airports were new to us, we got the best people in the world to talk to us. We went to the International School of Business, Hyderabad. We also had a two-day seminar by Prof Rigas Doganis from Cranfield University -- an international expert to explain all the details of airport infrastructure and their role in the country’s economy. We visited all the major airports in the world. We wanted to build a world-class airport; after all, it is a national asset and creates the first impression about the country. We appointed Bruce Benjamin, who built the Hong Kong airport as a project head, COWI of Denmark and Aviaplan of Norway for engineering and master plan preparations. We have given out construction contracts to the best people in the world. The runway was given to L&T and the terminal building to China State, which built the Hong Kong airport.
Around that time, the government started deliberating on the modernisation of Delhi and Mumbai airports. The process began in 2003. We put together a team that began to study airports right then. We used 15 international consultants to bid for the Delhi and Mumbai airports. We spent over Rs34 crore on the bidding process itself. We knew that it is a lifetime opportunity and we wanted to do our best. That gave us an advantage when the current government revived the modernisation plan. That is why we were the only one among the six bidders who qualified for both the airports. The selection norms were very stringent. There were 100 marks for management capability and development capability; and one needed more than 80 marks to qualify. These marks were again broken up over specific capabilities. We used to follow this very carefully and worked on strengthening all areas where we were weak.
In 1995-96, we started the process of consolidation. I sold off my brewery and got a very good price for it. I always believe that if you build something world-class, you don’t need to worry about it. I sold the brewery to Vijay Mallya. He is very proud of it and is implementing some of my systems in other breweries. We managed the brewery for one year but later had given it to Shaw Wallace on lease. Later, we decided to get out of liquor and IT. We have decided to give out the jute business on long-term lease; we sold the cotton ear-buds business. We were also into timber exports. We sold that as well.
ML: Did the council take all these decisions?
GMR: Yes, it was part of our consolidation exercise. We have decided to stick to agriculture and infrastructure, since these sectors are important for the country’s economy. The agri-business is still small but it is close to my heart, since I come from a village. We are in sugar with 5,000 tonnes of crushing capacity. We want to go for 25,000 tonnes. We are building one plant near Hubli and have identified two or three locations in Karnataka. In infrastructure, we will be in power, roads and airports.
In the power sector, we will be in hydro, pithead thermal projects, nuclear and transmission infrastructure. In hydel power, we already have on hand a 140MW plant at Badrinath in Uttaranchal and a 160MW project at Arunachal. We have also bid for two hydel projects in Nepal and a decision is expected any time.
We have a 1,050MW thermal project in Orissa. We have a good team for transmission and have already created a team to pitch for nuclear projects whenever it opens up.
We will also bid for viable global projects.
In roads, we have 453km under management, of which 140km are already operating and, by next year, all the projects will be in operation. In airports, we are looking at related business. We are setting up an MRO (maintenance, repair and operations) facility with LufthansaTech for aircraft checks. Today, most airlines go abroad for their advance aviation checks. We have 5,400 acres around Hyderabad airport, with a 26km boundary. Within this, we want to develop an aerotropolis by building a city within. This will include business centres, exhibition centres, convention centres, residential complexes, a 300-room hotel and a golf course and a 250-acre SEZ.
In every business, we want to emulate international models. For instance, at the Hyderabad airport, we have an open access fuel system that will allow all airlines to choose their fuel supplier. Similarly, for the airport hotel, we have brought in Novotel of the Accor Group of hotels who are among the best in the world. Even cargo, baggage and ground handling will be mechanised and handled by an international company. This will fetch better efficiency and will also be cost effective for the airlines.
ML: We understand that, like your father, you have also decided succession in detail.
GMR: Actually, like my father, I too was planning to divide all the assets among my children by creating three units. Fortunately, I attended a conference and listened to MV Subbaiah of the Murugappa group on family succession. It was an eye opener for me and I discovered that there were family businesses that have existed for over 300 years. When I heard that, I put together a team, which included senior bankers, HR consultants, etc., to write a family constitution. We have a separate family office as well. Subbaiah told me, “Don’t be in a hurry to write it -- it is not as easy as writing a Memorandum of Understanding -- everybody has to agree and be committed to it”. It took us nearly 570 hours to work on it over a four-year period. Then Bala suggested the name of Peter Leach of UK. His firm has been working with leading business families for the last 130 years. Leach has been working with us for two years now.
ML: What are the key elements of the constitution?
GMR: The constitution lays down the selection of my successor. I don’t nominate my successor. He will be selected by the next generation. It also spells out a system of good family governance, conflict resolution and valuation of the business. The process of inducting new family members into the business, including their level of induction and qualifications required is addressed; if some members do not want to enter the business, the required provisions are dealt with. It also articulates the family values. All the ladies in my family -- my wife, daughters and daughters-in-law -- are experts on what is on each page of the constitution. That is important because otherwise they will not own and commit themselves to the constitution.
ML: All your skills - entrepreneurship, judgement about people and drive - how will that be carried forward to the next generation?
GMR: Four years ago, we had a conference in Goa, where we debated the future of the family. We identified seven business values that are important to us and also a set of family values. The challenge was how to infuse them into the way we do business. It includes entrepreneurship, humility, delivering on promises, teamwork and relationships, social responsibility, respect for individuals and learning. It is a big challenge for me as well as our group to imbibe and internalise these values. Even in our corporate performance appraisals, weightage is given to values. I believe that once the values are intact, the same entrepreneurship will continue and sustain the group.
ML: What is the next challenge in your life. After all, you have even decided on succession.
GMR: (Laughs) I have been told that if the founder decides the succession, then things have a better chance of working out. Living within a constitution is not easy -- after all, we are human beings and I am bound to differ even with my sons; each one thinks differently. So every two months, we sit down and discuss things. We have a family business board, a non-business board for the ladies, a separate spiritual counsellor and an independent family office. A small difference can fester and blow up into a bigger issue. It is better to sit down and clarify matters in time. We take the same salary and perks. We have even decided what car each one can have. So, if someone wants a better car, he cuts back somewhere else. For me personally, the big challenge is to create a good institution. We acknowledge that there are differences but we want to learn how to manage them. We have grown in assets but compared to other large groups, we are only beginning. It is important for us to have good systems and processes. We are putting in place a good IT infrastructure and have started several HR initiatives. I don’t want to be the biggest in the world, but I want to set up a good organisation.
ML: You set up a Foundation for social initiatives before CSR became fashinable. How is that working?
GMR: About 10 years ago, we set up a Foundation called the GMR Varalakshmi Foundation. Fifteen years ago, when I started my jute mill, I used to do a little bit for the people around, but 10 years ago, we set up an engineering college for the rural folks. Between 3%-5% of the group’s profit goes to the Foundation, which is a Section 25 company (not-for-profit). It focuses on only four areas -- education, health & hygiene, empowerment and community development. Its aim is to reach out to the poorest people around the location of our factories.
In education, we have set up primary schools, identifying bright people and sending them to vocational courses. We have balwadis, pre-primary schools and primary schools. We are even supporting government schools and and have schemes for school dropouts and another for gifted children. We take care of these children like our own and give them all the facilities to study anything they like.
We have mobile health care units & ambulances and we also conduct health camps. We have built toilets in our village, which are like five-star toilets. It is easy to build toilets, but difficult to maintain them. We are doing the same at Hyderabad as well. Our empowerment focus is to train people in a variety of vocational courses for men and women -- this includes spiritual training. Our community development effort is headed by V Raghunathan, who was a professor at IIM Ahmedabad and later president at ING Vysya Bank. He is working with passion at rehabilitating people from backward communities, offering them the right education and vocational training and create self-help groups to help them earn a livelihood.
Market may gain momentum from strong corporate earnings, benign interest rate outlook
The market was up last week, buoyed by the lower-than-estimated tightening of monetary policy by the Reserve Bank of India. Shrugging off the weak start at the beginning of the week on negative sentiment following the news of Goldman Sachs facing civil fraud charges in the US, the market gathered steam during the latter half of the week. The Sensex gained 120 points on Friday and is up 1% over the week. The correction was short lived. This week we may see the Sensex comfortably cross 18,000.
The RBI announced its monetary policy on 20th April. The central bank increased the CRR, repo rate and reverse repo rate by 25 basis points, in line with market expectations. It said it will calibrate the monetary policy in the coming days to bring stability to the economy which is on the path to recovery. While absorbing excess liquidity from the system, the RBI said it will also ensure that the borrowing programme is not hampered.
GDP growth has been projected at 8% in FY10-11, while inflation has been projected at 5.5% by March 2011. The RBI expressed its concerns over the impact of a (possible) poor monsoon, higher crude oil prices and higher inflation. The central bank wants to return to the monetary policy that existed before the financial crisis. It does not want to use the statutory liquidity ratio (SLR) as a monetary policy tool, calling any increase in this measure “retrogressive”, as it is a safety pool of money and not a policy instrument.
On de-regulating bank saving rates—currently fixed at 3.5%—the RBI said it has yet to take a decision on this; but it expressed concerns that de-regulating rates would destabilise the system.
The prime minister said the economy is expected to grow at 8.25% in the current fiscal. The food inflation rose 17.65% in the year ending 10 April, 2010 and the primary articles’ index rose 14.14% in the year to 10 April 2010.
The government is likely to issue new benchmark 10-year bonds by end-May or early-June.
Iron-ore exports declined in February following the government’s ban on illegal mining. Exports were down 2.3% in February from the year-ago period. The government action taken on July last year has closed down 60 mines in Orissa, causing prices to shoot up.
The US treasury secretary expressed confidence that the financial reforms will bolster the derivatives market and protect taxpayers from paying for any future bailouts.
The IMF said that the global economy is recovering faster than expected. However, it said public finances had been put under pressure to shore up the economic recovery. It has projected India’s growth at 8.75% for calendar year 2010 and 8.5% in 2011. It expects demand in India to pick up with the improvement in the labour market and investment.
The RBI has suggested increasing the holding period for loan securitization by banks to nine months. However, bankers are of the opinion that the holding period for securitization of corporate and retail loans should be three and six months, respectively. The government has approved the infusion of Rs15,000 crore into State-run banks in the current fiscal year to help meet the growing requirement of credit. This will enable the banks to augment their credit disbursement by Rs1.85 lakh crore.