And the award goes to…

Business Standard - December 18, 2010

We certainly have been a chaotic, noisy democracy this last year, with lots of societal churning. As mythology tells us, any churning done jointly by the good guys and the bad guys, yields both poison and nectar, and so we have had good, bad, ugly and funny incidents. This year's award for constructive disruption goes to the insurance regulator, who issued a fiat that insurance companies must diversify into insurance. It was a "shock and awe" regulation, as a foreign analyst dubbed it, but it ensured that the insurance industry applied its mind to moving beyond the comfortable value space of wealth management and mutual fund-like offerings with a garnish of insurance sprinkled on top. Of course, parts of India Inc shook their heads disapprovingly, as business models fell apart, at the "value destructive" behaviour of the regulator. The "who pulled the trigger" root cause award for this goes to the mutual fund regulator, who had the courage to stand up and declare that the insurance emperor had no clothes of his own, and was shining in borrowed feathers, which were not being subject to the same rules as other wearers of such feathers. "Turf war", screamed the newspapers; turf war, sighed India Inc, and the real issues were temporarily eclipsed. The insurance regulator also gets the "bizarre advertisements" award for a series of funny advertisements it ran - if you weren't an insurance company. It showed customers being pushed out of airplanes by a "villain" insurance company's representatives who, after the "hero" regulator intervenes, sit at the feet of the customers and offer them cold drinks inside the aircraft. The mutual fund regulator gets the "lack of customer understanding" award for sticking to its guns that customers must henceforth negotiate directly with agents. The fact is that small, unsophisticated buyers get the worst rates and big, sophisticated buyers the best - many of us have no idea what rate to ask for, and the regulator didn't publish any guidelines. The banking regulator doesn't get the "facilitate by charm and reasonableness" award of the year but gets the "no nonsense, just get it done" award for making everyone toe the line and come together to think seriously about financial inclusion, base rates and teasing customers.

The Commonwealth Games (CWG) story has taught us a lot about how we collectively manage during a crisis. Lower expectations, surrender the outcome to chance, and then do your damnedest - the saat pheras of the Indian wedding will happen, and the bad parts will be blanked out of the photo album of national memory. The worry about permanent impairment of the Indian "can do" jugaadu spirit, if the Games were an organisational disaster, was misplaced, since our powers of rationalisation revealed themselves. The last word on this goes to the Delhiite who said, "Forget the Games yaar, just think of it as the means that gave the city a huge makeover." Now we Mumbaikars also want our own CWG, scams or no scams. The telecom scam has also deprived Mumbaikars of our favourite line to dismiss Delhi - a city where all connections work except phone connections.

The telecom tapes saga wins the award for the most gripping, intellectually demanding reality show of the year, and has spawned a new parlour game called "who is the bad guy and why". It is like a law college entrance-exam question: A contracted B to deliver some goods for him. B contracted a horse-drawn carriage to deliver them. The carriage driver stopped on the way to have tea and some urchins threw stones at the horse which, then, bolted and knocked down a policeman. Who is at fault? A, B, driver, urchins or the horse? Radia, Raja, the person who ordered the tapping, the one who leaked the tapes, prime minister, journalists, media channels or the opposition, which stalled proceedings in Parliament? The answer depends on which window you are looking through. The common man says the truth is out thanks to our heroic media. Professional lobbyists say lack of lobbying regulation is the fault - so here's to one more regulator. India Inc has turned Sherlock Holmes, and is constructing "elementary, my dear Watson" theories on the "who", "why" and "how" of the leaks. There is little doubt that Ms Radia will be a sought-after corporate lobbyist once her troubles are behind her, because she is being admired for how she managed to do business with all sides of warring corporate groups, and how she managed to penetrate all parts of the ecosystem so thoroughly. What happens to 2G is off everyone's radar at the moment; as is the fact that two of the ministries that are so critical to India and have so much work to be done at this moment - telecom and human resources development - have the same minister working part-time.

It is entirely likely that in early 2011 we will be celebrating a wonderful GDP growth number and the stains on the fabric of governance will fade away - unless, of course, the Sensex falls owing to governance issues. Maybe our new year prayer should be: "Lord, help us to truly believe that a surplus of economic performance does not make up for a deficit in good governance."

The writer is an independent market strategy consultant