What the excision of those reportedly corrupt hides is more troubling: A value code spreading through the interstices of society as the dominant discourse, a world outlook by which an increasing number of Indians are beginning to live, and which threatens (by its very exclusiveness) to divide civil society even more, if not unravel it.
That value code rests on the belief in markets and capital as the defining lights of growth, itself narrowly contained in the idea of volumes where quantity matters more than quality, where the urgency to increase the size of the pie focuses attention, and not just of policymakers, on a set of indicators.
That faith in numbers — manifest in the attention articulate Indians have begun to invest on the GDP, the Sensex, automobiles, the demographic dividend and the growing club of Indian billionaires — flows from a slow but steady acceptance, now increasingly accelerated, of a faith in money as the agent of inversion.
Policymakers never tire of shooting off the size of India's capital needs for infrastructure, both as an indication of the immense opportunity to make more money and as the only obstacle to connecting India's villages or lighting them up.
Nothing seems to showcase India's growing strength more than the millions of dollars spent by domestic firms to acquire global brands , or the volumes raised by the IPOs of private and, increasingly, publicly-owned firms.
POWER OF MONEY
The preoccupation with capital, or more precisely, its size, as the answer to India's poverty represents a touching belief in its capacity to turn India into a Cinderella-type persona for all time, a faith shared by GDP growth-obsessed policymakers and “social” capitalists like Mr Vikram Akula of SKS Microfinance who assume commercial or share capital to be the most potent agent of transformation for this “country of goat-keepers”, as he put it at the recent World Economic Forum in New Delhi.
In a debate organised by the Clinton Global Initiative in September this year on microfinance, the audience heard two perspectives on how the poor could be financed in their effort to beat their poverty. Mr Akula, flush with the hugely popular IPO that could have turned his firm, SKS Microfinance, into the world's largest microfinance organisations, insisted that markets were the most optimal and efficient weapon against poverty.
His nonplussed opponent, Nobel Peace Prize Winner and father of micro-credit Mr Mohammad Yunus, disagreed, stressing a credo of self-generating capital resting on common ownership; micro-finance, he sniffed, was “not about exciting people to make money off the poor.”
CAPITAL MARKET AND MFIs
At the core, the debate was about two world views, one postulated by Mr Yunus, the “modernist” one in which the business model of microcredit is built on a communitarian ideology of self-help, common ownership and profit-sharing, where the size of the capital or profit is less important than their possession by those it is meant to serve.
Mr Akula's view was post-modernist “corporatist”, stripped of existential anxiety by high technology and the capacity of individuals to raise huge sums of capital on the basis of an idea and aggressive image marketing.
The key drivers for him, as for the small number of MFIs that account for more than 70 per cent of the total microfinance in this country, are “profitability” and shareholder value, both measured by their size.
When MFIs finance the poor with capital from the market or from private investors, they have to serve two masters with diametrically opposite interests; the beneficiary/borrower wants affordable interest rates and the shareholder expects attractive rates of return on investment.
The MFI's choice is already made by the act of market access; now its cost of funds is measured by rates of return that are from the shareholder's point of view infinite; returns on their shares have to keep escalating and that is possible by increasing profitability which, in turn, requires the MFI to pitch interest rates high or load on “charges” so as to boost profits.
Mr Akula was being disingenuous when he said that his firm's interest rates were the lowest and that his staff was “incentivised” not to recover loans as much to increase the loan portfolio, to get the borrower to accept multiple loans. His shareholders do not appear to have seen it that way.
Soon after the mud hit the ceiling in Andhra Pradesh, the SKS stock began to tank repeatedly, dropping to half its peak value within two months on fears that regulation was forcing the firm to drop interest rates.
The microfinance sector offers vivid proof against the idea of someone else's money as the “agent of inversion”.
But the credo has worked for that small sliver of India whose epicentre, Mumbai, with its scabrous filth, acquires the patina of a global city simply because it has outrageously expensive real estate.
That value code rests on the belief in markets and capital as the defining lights of growth, itself narrowly contained in the idea of volumes where quantity matters more than quality, where the urgency to increase the size of the pie focuses attention, and not just of policymakers, on a set of indicators.
That faith in numbers — manifest in the attention articulate Indians have begun to invest on the GDP, the Sensex, automobiles, the demographic dividend and the growing club of Indian billionaires — flows from a slow but steady acceptance, now increasingly accelerated, of a faith in money as the agent of inversion.
Policymakers never tire of shooting off the size of India's capital needs for infrastructure, both as an indication of the immense opportunity to make more money and as the only obstacle to connecting India's villages or lighting them up.
Nothing seems to showcase India's growing strength more than the millions of dollars spent by domestic firms to acquire global brands , or the volumes raised by the IPOs of private and, increasingly, publicly-owned firms.
POWER OF MONEY
The preoccupation with capital, or more precisely, its size, as the answer to India's poverty represents a touching belief in its capacity to turn India into a Cinderella-type persona for all time, a faith shared by GDP growth-obsessed policymakers and “social” capitalists like Mr Vikram Akula of SKS Microfinance who assume commercial or share capital to be the most potent agent of transformation for this “country of goat-keepers”, as he put it at the recent World Economic Forum in New Delhi.
In a debate organised by the Clinton Global Initiative in September this year on microfinance, the audience heard two perspectives on how the poor could be financed in their effort to beat their poverty. Mr Akula, flush with the hugely popular IPO that could have turned his firm, SKS Microfinance, into the world's largest microfinance organisations, insisted that markets were the most optimal and efficient weapon against poverty.
His nonplussed opponent, Nobel Peace Prize Winner and father of micro-credit Mr Mohammad Yunus, disagreed, stressing a credo of self-generating capital resting on common ownership; micro-finance, he sniffed, was “not about exciting people to make money off the poor.”
CAPITAL MARKET AND MFIs
At the core, the debate was about two world views, one postulated by Mr Yunus, the “modernist” one in which the business model of microcredit is built on a communitarian ideology of self-help, common ownership and profit-sharing, where the size of the capital or profit is less important than their possession by those it is meant to serve.
Mr Akula's view was post-modernist “corporatist”, stripped of existential anxiety by high technology and the capacity of individuals to raise huge sums of capital on the basis of an idea and aggressive image marketing.
The key drivers for him, as for the small number of MFIs that account for more than 70 per cent of the total microfinance in this country, are “profitability” and shareholder value, both measured by their size.
When MFIs finance the poor with capital from the market or from private investors, they have to serve two masters with diametrically opposite interests; the beneficiary/borrower wants affordable interest rates and the shareholder expects attractive rates of return on investment.
The MFI's choice is already made by the act of market access; now its cost of funds is measured by rates of return that are from the shareholder's point of view infinite; returns on their shares have to keep escalating and that is possible by increasing profitability which, in turn, requires the MFI to pitch interest rates high or load on “charges” so as to boost profits.
Mr Akula was being disingenuous when he said that his firm's interest rates were the lowest and that his staff was “incentivised” not to recover loans as much to increase the loan portfolio, to get the borrower to accept multiple loans. His shareholders do not appear to have seen it that way.
Soon after the mud hit the ceiling in Andhra Pradesh, the SKS stock began to tank repeatedly, dropping to half its peak value within two months on fears that regulation was forcing the firm to drop interest rates.
The microfinance sector offers vivid proof against the idea of someone else's money as the “agent of inversion”.
But the credo has worked for that small sliver of India whose epicentre, Mumbai, with its scabrous filth, acquires the patina of a global city simply because it has outrageously expensive real estate.
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