Land of Jungle Raj

India is a land of contrasts. The north and the south are poles apart. North Indians are typically materialistic while the southerners are spiritual. Languages of the two regions have distinct origins, hence are entirely uncorrelated. If north Indian food is rich and spicy, south Indian food is simple and mild. Similarly, the east and the west have individual identities. The west is more industrialized than the east. While the east is mountainous and lush green, the west is a desert. The typical soft demeanour of east Indians is an antithesis to the more prevalent aggression in west India. With such disparity, I could not find one word or phrase that described modern India. That was until my current trip to the homeland.

Total chaos in Indian politics over the Indo US nuclear deal, the rampant “fix and settle it” attitude of corporate India and the complete ignorance of urban India towards civic responsibilities, highlighted the national attitude and description of India - “survival of the fittest” in a thriving “jungle Raj”.

Nuclear energy can be a part solution to India’s energy crisis. The communists supporting the coalition government, however, object to the Indo US nuclear deal on pretext of “perceived threat to national security”. Instead of devising counter proposals like mature adults, or forming an expert committee to weigh the pros and cons, the left decided to withdraw support and put the country at risk of early elections in the current difficult times. The entire melodrama was a lame means to gain much needed political mileage. Presumably the communists have realized their limitations and dying influence. If the nuclear deal is implemented and successful, the left would not only lose further ground but also a historic election propaganda suggesting all that is foreign is bad. The ensuing horse trading prior to the parliamentary vote of confidence was bewildering. Money was distributed like candy; imprisoned parliamentarians were called to support their factions and blatant opportunistic defection transpired. All in an attempt to retain power and survive! This crude “power hungry" attitude has made us the laughing stock of the world. But do we care?

As long as there is economic advancement at individual level there is little concern for the image of the country, inclusive growth or even working with foresight. We are content in being a reactive society rather than being proactive people. India is predominantly an agricultural economy, however, little has been done to empower farmers, while IT sector for example gets unessential support. Finally, a huge “compassionate” effort was made in the form of the farm loan waiver program in the last budget. More of an attempt to win votes keeping in mind next years’ elections! There is an upcoming sector, however, which could make a difference – the retail sector. At a recent conference, I asked a panel comprising of senior executives of leading Indian retail chains, on how they could help farmers and improve their lives. The answer was crisp and clear. While cooperation between the corporate and the farmer could prove productive, since it does not make sense for the bottom line yet, there is no point in making the effort. Simple analysis shows that a little time, effort and money invested today would help the retailers going forward – reduce dependence on imports, increase sourcing mix, ensuring quality etc. At the same time it will spread prosperity to the grass root level. However, with just the short term in mind there is little that is deemed fit to be done.

When the crunch time comes and there is realisation that something should have been done in the past, Indians have a convenient trick at hand to use – “settle” the issue and fix the problem ostensibly. That is why reliable “relationships” with bureaucracy and judiciary are paramount to succeed in corporate India. If required environmental clearances have not been obtained and the concerned entity is pulled up, it is only a matter of time and a few bank rolls that the enquiry is withdrawn. When an ostentatious amount of money is raised via a ridiculously priced IPO; bankers, regulators and lawyers all keep mum despite glaring absence of any bankable asset to lend value to the project. The clout of the promoter prohibits anyone from speaking their mind and the fee earned is another reason to stifle speech. When post IPO the share price crashes, in a grand (“face saving”) gesture the promoter “dilutes” his own holding by a meagre 3% and conducts a bonus issue. If the investors were purely institutional accounts I would have said well too bad they knew the risk they were undertaking. With substantial retail participation, there needs to be some more prudence adopted. Or will we protect investors only once another stock market scandal surfaces?

There is an absence of independent regulators and think tanks in India. Media and journalists are neither incentivised nor encouraged to build awareness and rouse public discussions. In fact even the educated population enjoys reading Bollywood gossip more than grasping the fundamentals about national economics, policy, politics and security. We seem to be content being a nation that works in hindsight and not with foresight. How then do we propose to grow and become a world leader? Or is it just more talk without substance in the typical Indian fashion?

It happens only in India

India is in dire need of bridging its power deficit gap which could potentially undo all the progress the nation has made to-date. Collaborating with foreign partners on nuclear technology transfer can be a big boon. The left in India, however, disagrees. It is strange but true. The people’s welfare party of India, the left, is not thinking for the people. It is not thinking of the long run. With the government deciding to go ahead with the US nuclear treaty, the left has pulled its support provided to the current coalition government. Result – a vote of confidence in the Lok Sabha tomorrow.

Scenario one: UPA wins and the staus quo remains. However, needing 272 votes, it is unlikely that the UPA government will survive.

Scenario two: UPA loses and there are early elections. In addition to UPA, India loses as in these difficult times attention is shifted from policy making and decision taking matters. There is a drain on the exchequer which only widens the already increasing deficit.

The elections could get the Congress led government comes back to power. Great, once again status quo can be reinstated and the tax payer’s money was only wasted as it is not worth more than water down the drains. However, another unlikely outcome given the current environment of increasing food and oil prices and the lack of support currently being extended to the United Party Alliance (what spectacular unity indeed).

A more probable outcome is another hung parliament with a more fractured coalition. Most likely candidate to lead the new coalition government for India – Mayawati, the erstwhile leader of the “downtrodden”. Does her gang of warlords comprise the new generation think tank that the country needs to leap into another era of growth? Not by any stretch of imagination. If she continues in power then Indians need to brace themselves and prepare for what could be a roller coaster ride. However, once again, in the game of Indian politics, a high likelihood exists of Mayawati government being derailed 6 – 8 months in their seats of power. Having been the Prime Minister, Mayawati would not be able to reclaim her position as the chief minister of her home state Uttar Pradesh (the most populated state in India and hence one with the highest representation in the Parliament). Eliminating a long standing opponent would be a great tactical move by the Congress. However, this would call for another round of general elections and more water down the drain!

While politicians win and lose, the convicted vote for the no confidence motion from their prison cells, the lay man; the most affected person can only wait and watch. So what if she lives in the world’s largest democracy. She, the “proud and educated” Indian citizen has to learn that electoral politics win over electoral welfare any and every day. Such is the state of a shining nation! Some things can happen only in India!

Has India Really Arrived?

The July 9th edition of the Economist carried an article with the title “Overconfident India”, claiming that “Indians are complacent about the perils of multi-lateral diplomacy, and much else”. The article which had a very condescending tone evoked a variety of responses from the Indian diaspora in London. There were some who felt that recently the Economist has taken a holier than thou approach towards emerging markets (recently the publication carried a similar article on Russia) which should soften. A few opined that the general judgemental nature of the bi-weekly magazine is on a rise and creating a bad taste in their mouths. Strangely some people I met were indifferent to this article as in their view it made no difference what the Economist had to say, India had arrived. And then there was a bunch, admittedly a minority, which did think the article was based on strong arguments and stating only the obvious albeit a little too abrasively.

After having read and re-read the article and having discussed it with a number of people, I have been trying to figure out where is it that I stand. I am not sure that the tone of the article is acceptable but then the truth of the content cannot be ignored either. As difficult as it is for me to admit, I have to be truthful and say that I do believe that we Indians have let the bull markets drive our confidence to a point where it is now bordering on arrogance. Like the group of indifferent Indians we would like to believe that India has arrived on the global map and we can demand the moon and the stars and the world should deliver.

However, is it really true that we can still tempt global investors to pump their money into our country which desperately needs foreign investment? Is FDI in India still as viable an opportunity? Will FII money get the same returns in India as opposed to say the Middle East? Has India Inc generated sufficient confidence with investors to back them in difficult times? Have our regulators worked with a larger view in mind? Is our legal framework strong enough to handout timely judicious decisions? These are questions that need some honest answers in order for us to be able to really review as to how truly India has arrived.

In the last few years, it is a fact; India has received a record amount of foreign investment. While lower than some other emerging markets, the capital inflow into India had been rising until the credit crunch started. However, if one inspects more closely, most of that investment came as all global investors wanted a piece of the action. The numbers also justify this. From April 2007 – March 2008, while the FDI in the country was c. USD 29.89bn, net FII into the country was also similar at c. USD 29.40bn. In fact this FII figure would have been higher had the market not tanked in 2008 when foreign investors were net sellers of c. USD 10.64bn in the months of February and March. Hence my conclusion that investors came into India to gain from an upward momentum in the stock market not with an intention to invest from a long term basis. This in itself should indicate that we as a country have not arrived. People are not buying into our long term strategy yet.

An infrastructure deficit country, representing a USD 500bn opportunity in the next four years, India should be able to attract a lot more FDI. What is rather interesting is that the highest FDI has come into the services sector (financial and non-financial) which is almost 2.5x that of infrastructure inflow. In fact the cumulative FDI figures from April 2000 – March 2008 indicate that the most attractive investment proposition has been the services sector with 22.64% (financial and non-financial) share of the entire pool, with infrastructure accounting only for 9.35%. There has to be a reason for foreign investors not putting money into Indian infrastructure. Yes, initially infrastructure was a closed sector; however, even with 100% ownership being permitted the sector is not attracting investors. Is it the absence of independent regulators? Is it the fear of governments not being able to fund annuities? Is it the absence of quality strategic partners? There needs to be a reason for this slow moving inflow. And we need to address this. In the absence of a domestic corporate debt market and limited availability of bank funding currently (both domestically and internationally) are we planning to fund the entire spend via equity markets, PE funds and sovereign reserves?

Well it can be proposed that infrastructure and FDI represent areas where interest is just beginning to develop and so over the coming years there is tremendous potential. I will buy that for a while. Let us turn our attention to India Inc in that case and see if we as a country have given the world enough confidence to invest in our propositions because that is the key to unlocking the dollar inflow. Indians are well known for their entrepreneurship and that has never been of any concern. However, corporate governance in India has questionable for quite some time now. To quote our premier Dr Singh from his recent (July 01, 2008) speech at the Jubilee year celebration of the Institute of Chartered Accountants of India, “….I do not find adequate attention being given to corporate governance. Unless Indian firms come to be recognized world wide for good corporate governance they will not be able to compete globally in an increasingly interdependent integrated world. In the era of protectionism few bothered about corporate governance and transparency in accounting and management. Such laxity, however, is no longer possible.” For the head of the nation to say this is publicly indicates that corporate governance is indeed an issue which needs to be addressed. The question is how are we addressing this.

Corporate governance depends on the commitment of managements towards integrity and transparency in business. The legal support provided by the judiciary also goes a long way in determining corporate governance standards in a county. Most of our businesses are promoter backed businesses with decision centres being at the helm of the family. While professionals are employed, in a number of cases, these individuals do not have the authority to make judgement calls. Why talk only about the corporates. Even Indian banks (public and private sector) which have offshore branches have a system where by all decisions are made by the same central committee in India. This decision making process behind closed doors does not suggest sufficient transparency. With a lack of autonomy and accountability it is difficult to retain talent which impairs management quality. With families owning majority of the voting rights in corporate India, sometimes via cross holdings, achieving an impartial vote is difficult. Concentrated shareholding also greys the area between generating shareholder value and creating personal wealth. It becomes even more critical, in countries like India, for the law of the land to protect rights of the shareholders. The English common law legal system, which India follows, could come to our rescue here. India in fact ranks highest in the shareholders’ rights index with a score of 5. However, the rule of law index which measures the implementation of written law shows a different picture. India ranks 41st out of 49 countries ahead only of Nigeria, Sri Lanka, Pakistan, Zimbabwe, Colombia, Indonesia, Peru and Philippines. In fact our judiciary has limited capacity to deal with securities cases. While High Courts of Delhi, Mumbai, Kolkatta and Chennai are equipped to deal with such cases, they can only deal with the cases that belong within their territorial jurisdiction and only if the claim is above a certain threshold.

India’s ranking in the global corruption perception index is not spectacular either. As a nation we rank 74th, down four positions from 2006. That does not sound like progress. In fact Transparency international reports that Indians below the poverty level cough up almost INR 9bn annually to pay for basic necessities such as electricity. In addition, recently the attitude of the Indian government toward the German government offering free information on un-accounted money belonging to Indians, lying in Liechtenstein, has raised eyebrows. While other nations have taken the information provided, Indian government has taken no action and only maintained silence. This does not speak well about our attitude towards transparency and curbing corruption.

Corruption can be cleansed with time and corporate governance can be developed with time. These arguments could be put forth. Well then let us see how our regulators stack up. As opposed to dealing with one or two regulators, Indian corporates need to deal with the government of India, the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI). While the government formulates big picture policies, the RBI and SEBI are responsible for implementation and execution. There is a clear lack of co-operation and co-ordination between the government and the regulatory bodies. Take for example the 2007 budget speech of the finance minister. He announced that post the February 2007 budget, short selling for institutional investors would be permitted. There was no action taken by SEBI until late 2007 when it was announced that short selling would come in effect on 21 February, 2008, however, there is still no sign of this being put into operation anytime soon. Similarly, the same budget spoke about exchangeable bond issuance being permitted. The RBI published the guidelines only in early 2008 and even then the execution framework has not been detailed. For a country that is looking to invite investors these delays just seems too long and irresponsible. And while these are just two instances, many more such examples exist. Investors do not wait for anyone but the right opportunity and if when the cash is available our policies are not, the country will lose out as it has in the past. In fact with multiple bodies governing inflows into India, it is already tedious to set up vehicles investing in the country.

When investigated closely, there is not a single stakeholder of the Indian economy totally developed and ready to take on responsibilities and accountabilities full on. There is still a long way to go for each party involved. How can we then claim that India has arrived?

India is indeed on a growth path, a path that will lead us towards prosperity. However, it is naïve to assume that we have arrived simply because we have been seeing witnessing inflows of capital. It is presumptuous and pretentious. Since the economy has only opened 16 years ago we have only started seeing the colour of money in the recent times. This does not illustrate our supremacy in any way. If we want to continue on the growth path then as a country we need to come out of the current very difficult environment. The global financial markets are in turmoil. Domestic inflation is increasing rapidly caused by the rally in oil prices. A net importer of oil, with subsidies on oil, Indian deficit is only widening. To curb the inflation we need to increase domestic rates which in turn will slow the growth. And a net import economy we have a weak rupee (the rupee depreciated c.9% since Jan 2008) which does not bode well again does it? Let us not forget that we also need to fund the rising food costs and an upcoming election which will eat into the exchequer’s reserves. These are difficult times. Times which call for prudence and perseverance. Times which call for collective measures to be taken. It is high time for India to wake up and smell the coffee!

The Sound of Music

Music has an uncanny ability to simultaneously enthrall and empower the listener. Then be it imagery or be it prose, the thought process becomes crystal clear. Most of us have experienced this at some point or the other. This evening while talking to a Romanian friend I had this realization all over again. He has been listening a lot to Indian classical music these days. In his words it helps him “structure his thoughts” and focus on his thesis. Strangely enough as I write this piece I am listening to a recording of Pandit Vishwa Mohan Bhatt on the MohanVeena (an adaptation of the Hawaiian guitar). If I were to think back, I have always listened to music while studying, working with spreadsheets or doing anything that requires concentration and focus.

Music in Indian mythology has been granted divine status and it is said that the laws and forms of music were first revealed to sage Narad. Maybe this is why it is so closely related to meditation and relaxation? The early recorded origins of Indian classical music can be traced back to the Samveda (one of the four most ancient holy Hindu scriptures). Today, Indian classical music has two different and very distinct forms – Hindustani which is a North Indian style and Carnatic which is the South Indian technique. Both forms of the art have their roots in the Natyashastra, a music treatise written in the Gupta period of Indian history (circa 320 – 550 AD). The main principle of these art forms is the raga or the melody formula. Each raga has a distinct set of five or more notes to be used in a distinct order. While there is quite an emphasis on vocal music in both styles, in Hindustani music each raga has a prescribed time or season. Carnatic ragas do not carry along any such prescription. Over the course of history, Hindustani music has been substantially influenced by Persian culture whereas Carnatic music has retained most of its original form.

Along with the Persian influence in the art form, Hindustani classical has also inherited some musical instruments from Northwestern Asia. Two key Hindustani classic instruments with their origins in Persian art form are the sitar and sarod. They are also among the most popular string instruments in Hindustani music (while the violin and veena are more popular in Carnatic music). I must admit that I am quite partial to both the instruments and in particular to the sitar. London being such a global city offers a number of opportunities to listen to great maestros playing live. One such rare and unique occasion was a fusion performance by Ustaad Nishat Khan on the sitar and the world renowned Paco Pena on the guitar. The soft and soothing sitar with the impassioned and strong guitar seemed to intrigue not just me but a whole host of Londoners from varied cultures and myriad walks of life. The event saw an almost packed house at the Royal Festival Hall.

Ustaad Khan played the sitar in the Hindustani style accompanied by the tabla (Indian percussion instrument) and Paco Pena played the guitar in flamenco style along with the bongo and a vocalist. Each expert retained the sanctity of his own style and played individually to begin with, introducing the instruments. After having provided an initial flavor of the two forms and the characters of the instruments, the two maestros took off together to create blended music which seemed to be an independent art form in its own. The two percussionists seemed to be in perfect synch with one another as was the vocalist with the other four musicians on stage. There was not one person in the audience who wanted the performance to end and when it did there was a huge applause for an encore. The artists gratified the audience and what ensued is unforgettable. The sounds of the sitar brought to life the image of a stealthily flowing waterfall and the accompanying guitar brought the warm rays of the sun. The percussion instruments filled in for the blowing breeze and the vocalist stepped in for the chirping birds. It was a gripping and unique experience. The fact that I remember the sensation in the auditorium after all these months should indicate how thrilling the experience was.

I have yet to encounter another art form with such an ability to transcend all barriers and touch the inner chords of millions of hearts. Nothing can bring a smile on the face of a Londoner like the street busker plucking away at his guitar in the middle of the night. There is no alternative to jazz by the canal on a warm summer evening. There is no substituting Beethoven by fire on a cold winter day. And nothing can take place of Ustaad Zakir Hussain playing the tabla with Shivmani on the drums while the clouds thunder in the dense Mumbai monsoon. Music is universal and without boundaries. It needs no language, cast, color or race; it is simply the sound of music and is happy to be so.

PS: This has to be a coincidence. Just yeaterday I wrote this post and today I was introduced to one of the newest inventions in the world of music. It is a Swiss instrument called the Hang, invented in 2006. While modelled after percussion instruments it also has melody. The lower notes sound like as if the Sarod is being palyed and there is an element of the South Indian ghatam as well

In Vitro Financing

There was a news article this morning, which I read (courtesy Mr. Cold Caller) with much amusement. Apparently a seventy year old woman in Uttar Pradesh (a Northern state in India) gave birth to twins. The new mother and her husband (a poor farming couple) have two married daughters and grandchildren. However, they were so desperate for a male heir that they took a bank loan for IVF treatment and surprisingly they found a bank ready to grant them such a loan! And here we are racking our brains because of sub-prime! I would really like to know which bank at what terms dished this loan. Will never ever invest my money in that bank at least!

Anyway, coming back to the point. So the IVF treatment has resulted in the couple being blessed with twins (“bhagwan jab deta hai to chappar phad kar deta hai” i.e. when it rains it pours!), a boy and a girl. The couple’s happiness knows no boundaries as their life long wish of having a son has been granted. Now they have someone to look after their property after they die; someone to carry on the family name. But pray I ask who will look after this precious son if the parents were to leave planet earth before the kid turns a teenager? More importantly who will repay the IVF treatment loan? The son? How? By selling the precious property he was born to protect?

It does take all kind of incidents to make life so interesting and spicy! Cheers!

Mama Mia Here I go Again.....

Ever so often friends visiting London want to know which musical they should go for. If it is their first musical experience I instantly recommend Mama Mia. It is a musical based on the music of the Swedish pop group of the seventies, ABBA. Mama Mia is one of the few musicals which makes everyone smile and come out of the theater dancing. Meryl Streep in a recent interview mentioned how she had taken a bunch of children to see the show two days post the 9/11 twin tower attacks. In her words the musical had such an impact that everyone felt elated post the show and more than the performance it was the music that had touched people.

I have always been partial to ABBA music as I grew up listening to the songs. Even today I remember the lyrics of most ABBA songs. My first stage performance was a rendition of the very soft ABBA song “I have a dream”. Initially I liked the songs for their cheerfulness. As I grew older I began to appreciate the melody of some and later the lyrics of still others. Every ABBA song has something unique about it. “I have a dream” is a song about hope and following your dreams. It has beautiful lyrics. “Dancing Queen” has beats that wants everyone to put on their dancing shoes at that very moment. It is contagious. “Chiquitita” is a song about friendship and understanding. It lends support. “Lay all you love on me” is an ABBA song that talks about unashamed love. It is a great humming tune. And finally one cannot forget “Thank you for the music” which I think is a great homage to music. I can safely say that whatever the mood there is an appropriate ABBA song to pep you up or broaden your smiles.

Mama Mia, the movie, released in the US yesterday and for some reason I was under the impression that it had released in the UK too. I wanted to catch the first show of the second day. When I realized that the movie releases in the UK only next week I was quite disappointed and in order to make up for my disappointment put on my ABBA Golden Hits CD. I was listening to ABBA after ages and it made me realize how powerful this music is.

ABBA is probably one of the few pop groups to have gained universal praise and acceptance. Even 25 years after they split, the group is popular from the US to Australia and with all age groups. There are at least two movies made inspired by the group’s music and now the musical has been made into a Hollywood film starring Meryl Streep and Pierce Brosnan. The number of documentaries (on the group) telecast is innumerable. The musical is also amongst the most popular ones running to packed houses daily, forget getting discounted tickets. ABBA is a rare phenomena and one I am very thankful for. If you have not had the chance to experience it, watch the movie. I am certain you will not be disappointed.

PS: Some my personal favourite musicals (other than Mama Mia)
1. Phantom of the Opera (an absolute classic)
2. Lion King (very different and a unique experience)
3. Blood Brothers (absolutely fabulous music and performances)
4. Les Miserables (grand sets and production value)
5. We Will Rock You (based on the music of the legendary Queen)
6. Mary Poppins (no longer playing in London)
7. Footloose (no longer playing in London)

The Indian Infrastructre Dream or Nightmare!

Back on the 18th of May, 2008 I had written a short piece on the issues facing Indian infrastructure (see the post on India, Infrastructure, Inflation – Impending Doom). Since then the situation has only worsened and could be quite grim from here on. As of today the inflation in India stands at 11.4% (almost triple of that in January). Oil prices have gone up from USD 128 per barrel in May to USD 145 per barrel today (and India has oil subsidies still in place). Sensex is down 24% since then and 36% since January 2008 (with a lot of retail investors having lost most of their savings).

As if this not gloomy enough, the global financial markets are in a turmoil with equity indices witnessing a carnage almost weekly, credit markets seeing spreads at three year highs and housing markets in the US and UK fast heading southwards. Central governments are increasing interest rates to fight inflation which is the first enemy that needs to be defeated. However, in the bargain borrowing has become very expensive in an environment of scarce liquidity, increased risk aversion and exacerbated flight to quality.

In this challenging financial environment there still is some hope for Indian infrastructure companies that have bankable projects. What defines bankable projects though? Acquisition of land, having government approvals in place and securing oftake agreements or annuities does not guarantee project completion. There is a shortage of manpower and EPC contractors. Domestic capital goods industry is running to full capacity and there is queue outside foreign equipment suppliers as well. Thus for a project to be really viable the developer must have an established track record, some amount of in-house EPC capability and a process to get the equipment shipped and received in time. In addition the project budgeting must now account for cost over runs and overshooting completion deadlines. This implies close scrutiny of each and every single project before financial commitment can be made. This in turn also means that there could be a number of projects which have started but will never see the light of day.

Thus while we say that India needs USD 500bn over the next 5 years in infrastructure spend, I am not sure if that number holds any significance any more. The opportunity exists. However, it needs to be reassessed for quality and quantity. This new study will then define what the infrastructure opportunity is truly in India. I only wish and hope that in the beginning when India opened up its economy it would have been foresighted to have a less regulated infrastructure sector. I wish we could have encouraged foreign participation and foreign direct investment into developing our rails, roads, ports and airports. In the absence of having done so, we now have to acknowledge that the development we think should take five years can now actually take seven to ten years. This acknowledgment should be accompanied with the acceptance that there is a cost of raising capital and despite being a family owned business economy we need to part with some of the wealth closely held to our chests. Otherwise the gloom and doom will only deepen and the infrastructure deficit will be ours forever.

Women at Work

It is true that women in the City / Wall Street (read finance industry) are typically underpaid compared to their male peers. It is also true that there are a number of sexual harassment incidents that occur in the banking industry. And furthermore it is also a fact that post motherhood most women in front office jobs find it tough to progress on their desired career path. However, I do not agree with a recently published article in the Financial Times (online version) stating that “when the going gets tough on Wall Street, women are the first to go”.

This article cited the recent examples of Erin Callan (ex-Lehman Brothers CFO who was recently demoted to a “senior position” in the investment bank) and Zoe Cruz (ex- President of Morgan Stanley who “resigned” in November 2007) as having been made scapegoats by the men in their organizations to cool the atmosphere in these tumultuous times. The evidence does not support the claim that these women suffered their fates because of their genders. A lot more than just that contributed to the final outcomes.

Zoe Cruz was with Morgan Stanley for 24 years before her departure. She survived more than a couple of market downturns, a merger with Dean Witter and a testosterone driven trading floor. The woman was a meritocratic and principled employee. She was fiercely loyal to her employer and refused to accompany her mentor and boss, John Mack, to Credit Suisse in 2001 when he went to the Swiss house as the CEO. Post Mack, Vikram Pandit (the current CEO of Citigroup) was made her boss and they did not have the camaraderie that Cruz shared with Mack. Cruz’s position was weakened because of internal politics. When Mack returned to Morgan Stanley he once again took Cruz under his wings. She was the most likely successor to Mack. But then came the sub prime crisis and along with that a gang of displeased executives who looked at Mack to be pacified. This was essentially the pro Pandit and anti Zoe crowd. Mack had two problems, one he needed to save his job and two he needed to calm down his fired warlords. He could appease the raging crowd and save his job. So Zoe got canned. It was politics and not gender that took Zoe down. What is very interesting (as a side note) is Pandit’s proclamation to be conservative (while at Morgan Stanley) while touting Cruz be an excessive risk taker. Well seems ironic, the excessive risk taker stuck with the safer bet of Morgan Stanley rather than moving to Credit Suisse and the more conservative punter started his own hedge fund which in its first year of being taken over by Citigroup caused the institution to take a write down of USD 202m.

Erin Callan is slightly a different story. When the tax lawyer and investment banker was promoted to being the CFO in late 2007, there were doubts voiced by analysts and insiders on her abilities to navigate the fixed income house through the choppy seas of the sub prime crisis. While she had the industry knowledge she needed some more time to understand the balance sheet of the mega machine she was now responsible for. The current market did not give her luxury of time to come to grips with the situation. Thus she made some mistakes which the market held against the organization. For example, a few weeks after stating that the bank did not need additional capital, Lehman announced a USD 6bn capital raising exercise. That was a blow to the CFO’s office as well. It was this lack of investor buy in and experience which led Erin Callan back to the ranks of senior management. However, one cannot forget that she was not alone in her fate. Joeseph Gregory, a man, a male, also was demoted along with Callan. And well the sub -prime has had its share of male casualties as well. Can we forget Chuck Prince, Stan O’Neal, Huw Jenkins and Martin Sullivan? It is not about male or female it is about internal politics, shareholders and survival of the fittest.

So does that mean that women find it difficult to survive in this male dominated environment? I am not sure that as a generalization the statement holds true. There are women and very successful women in the banking world. Having said that, yes the number of senior women in financial institutions in the west is still very small. However, look at India. A number of global and local financial institutions are headed by women. In fact the deputy governor of the Reserve Bank of India (Indian central bank) is a lady of many talents, Mrs. Usha Thorat. Some of the women bankers in India are pioneers in their field and forces to reckon with. Below is a short list of some of the top performers (in no order) over the last few years.

Chanda Kocchar (Fortune’s list of 50 most powerful women in business)
Current Job: Joint MD ICICI Bank
Past Employers: ICICI Bank
Education: MBA from Jamnalal Bajaj Institute, Mumbai

Naina Lal Kidwai (Recipient of the second highest civilian award in India – Padma Shri)
Current Job: CEO of HSBC India
Past Employers: ANZ, JM Morgan Stanley
Education: MBA from Harvard, Boston

Lalita Gupte
Current Job: Joint MD ICICI Bank
Past Employers: ICICI Bank
Education: MBA from Jamnalal Bajaj Institute, Mumbai & INSEAD, Fontainebleau

Renuka Ramnath
Current Job: MD & CEO ICICI Venture
Past Employers: ICICI Bank
Education: Engineering, MBA

Kalpana Morparia
Current Job: Joint MD ICICI Bank
Past Employers: ICICI Bank
Education: Law

Meera Sanyal
Current Job: Chairperson & Country Executive ABN Amro (now RBS) India
Past Employers: ABN Amro
Education: MBA from INSEAD, Fontainebleau

Vedika Bhandarkar
Current Job: MD and Head of Investment Banking at JP Morgan India
Past Employers: JP Morgan
Education: MBA from IIM (Indian Institute of Management)

Manisha Girotra
Current Job: Head of UBS India
Past Employers: ANZ, BZW
Education: Masters in Economics from Delhi School of Economics

Ashu Suyash
Current Job: MD & Country Head of Fidelity Fund Management
Past Employers: Citigroup
Education: Chartered Accountant

Falguni Nayyar
Current Job: MD Kotak Investment bank
Past Employers: AF Ferguson, Kotak Mahindra Bank
Education: MBA from IIM

Deepti Neelkantan
Current Job: COO JM Morgan Stanley
Past Employers: JM Morgan Stanley
Education: Chartered Accountant

There are others who I have not mentioned because I am just attempting to give a snapshot of the evidence. In addition to the core banking functions, the ancillary industries in India have also seen some powerful women rise to the top. This includes credit rating agencies (e.g. Roopa Kudva CEO of CRISIL), stock exchanges (e.g. Deena Mehta President of Bombay Stock Exchange), regulatory bodies (e.g. Usha Narayanan ED at Securities and Exchange Board of India), accounting firms (e.g. Bharti Gupta Ramola Partenr at PwC) and housing finance companies (e.g. Renu Karnad Director at HDFC).

Most of the women who have attained these heights in India have done so on their own merit. Few of them have been brought up in blue blooded families. This makes their achievements even more commendable and inspiring. One key reason, in my opinion, for Indian women being able to succeed in the career ambitions is the family support they have post motherhood. Unlike the west where children need to be left at a crèche, with a child minder or a baby sitter; in India grandparents step in. This lends a huge support to the mother allowing her to pursuit her professional goals. At the same time in India women anyway need to struggle to stand on their two feet be it in any industry or any walk of life. Thus the determination for them to prove their ability in the professional male dominated scenario is probably higher than that of their western peers. Whatever the reasons are, the fact is that Indian financial industry has a number of role models for young women and that is a great achievement for an emerging market. It is also is an outstanding example of female perseverance, diligence and intelligence for the entire world. Women rock!