I am a master in India

Chapter 419 Gilding

The financial crisis did not affect India's overall economy, but some individuals or regions still felt the aftershocks.

Goa is somewhat unique among India's twenty-odd states, as it was ruled by the Portuguese during the colonial period.

After independence, many Portuguese manor buildings remained in the area, which later gradually evolved into resorts and tourist attractions.

Goa's outstanding beaches, seascapes, and resorts have attracted a large number of domestic and international tourists to vacation here in recent years.

Today, tourism has become a pillar industry in Goa, contributing 60% of the state's GDP.

As a result, the financial crisis hit, directly extinguishing the tourism boom that lasted for more than half a year, and the domestic economy was in a state of depression.

When Ron came out of the airport, he could clearly feel that the atmosphere here had changed drastically, and it was nowhere near as lively as it was when he got married last year.

Only customs officers continued to cheerfully conduct immigration checks, sometimes even deliberately making things difficult for passengers in order to imply that they should offer bribes.

“They’re perfectly fine,” Urmira said.

"You know how Indian civil servants are; as long as the executive branch exists, they don't care whether Delhi exists or not."

Ron came by private jet, and took Urmila with him; he treated it as a vacation.

“Before I entered Bollywood, my parents’ biggest dream was for me to become a civil servant in the tax department,” she said.

“That’s a lucrative job,” Ron laughed.

"Yes, it's as difficult to know whether tax officials are corrupt as it is to know whether fish in the water are drinking water."

The metaphor was brilliant, and Ron was overjoyed.

However, for ordinary people, being a civil servant is indeed the highest level of achievement.

Ironically, India, despite having a smaller territory and population than the University of Tokyo, has three times the number of civil servants.

For example, the Delhi Water Supply Board has more than 30 employees of various kinds per kilometer of water pipe, which is 15 times that of ordinary industrialized countries.

The Executive Council of India (ECA) is the apex of the Indian civil service system, with a total of fewer than 5,000 members. Most of the key officials in the New Delhi government and state governments are ECA members.

However, most of the elite civil servants in the administrative bureau work outside of New Delhi, serving as regional tax collectors. These are local officials with absolute authority over districts, often managing areas equivalent to the combined area of ​​several small countries.

During the British colonial period, India's hundreds of millions of people were managed by fewer than 1000 British officials. Over the years, the powerful executive bureaus have undergone very little structural adjustment.

Despite being affectionately addressed as "Mr.", the officials of the Executive Council are seen by the public as aloof, incompetent, and corrupt.

When people think of them, they often picture high-ranking officials in white uniforms, riding in elegant Ambassador classic cars on the streets of New Delhi, with the rear windows drawn like curtains and blue lights flashing on the roof.

But what the public hates is not corrupt civil servants, but rather that they don't see themselves sitting in those positions.

India's civil service exam is considered one of the most competitive selection processes in the world, with only about a thousand people recruited each year, while tens of millions apply.

After eliminating those with connections, the administrative bureau ultimately selected individuals with exceptional intelligence and outstanding resumes.

Over time, this has become a powerful political force capable of exercising and changing the rules, and many business leaders are also afraid of them.

However, times have changed. With the advent of oligopolistic economies, many family conglomerates are no longer afraid of most officials in New Delhi.

For example, Ron, by himself, can influence the formulation of certain policies at the national level.

Of course, for ordinary people, being a civil servant is still a highly sought-after position.

India has no shortage of young people, and even the most basic jobs are highly sought after.

In Uttar Pradesh, a postman was needed with a monthly salary of 6,000 rupees, and the number of applicants exceeded two million.

The main attraction of leadership positions lies not in the prestige of the position itself, but in the power to receive more kickbacks.

Back in Tamil Nadu, Kavia's brothers had explained the ins and outs of agricultural irrigation to Ron.

During the dry season, irrigation engineers are the most powerful people in rural areas; they can make many decisions.

For example, which town to send irrigation water to and which not to send it to, when to release water, and how much water to release are all matters of great importance.

Inevitably, in order to ensure a good harvest, farmers would try every means to bribe irrigation engineers.

The most ingenious part is that these engineers don't have to hand over the bribes to higher-level leaders or politicians; this operating model is both simple and clever.

Everyone who initially becomes an irrigation engineer spends money to bribe officials, with the amount directly proportional to the money that can be earned in this position.

The usual rate is that it costs 10 rupees to get a basic "operations and maintenance" position. Once you get to that position, the kickbacks you receive later are about three times that amount.

From a business perspective, this investment yields very considerable returns.

This tradition in India is long-standing and has gradually developed into a black market for buying and selling public sector jobs.

India's black market is amazing; it has everything that will leave you speechless.

At the same time, for Indians, becoming an official or a civil servant is a shortcut to making money.

Mumbai police are willing to spend money to transfer themselves to high-crime areas because this gives them more opportunities to extort bribes from criminal suspects and victims.

Tax officials are also willing to spend money to transfer themselves to major ports or to positions in large companies and high-profit industries.

The more funds flow through a position, the more money can be made by those who profit from it.

In the past two years, tax officials for Ron's businesses have been flocking in like fish out of a river, all eager to get in.

Administrative officials have no choice but to either turn a blind eye to this phenomenon or join in its corruption. This is not systemic corruption, but a culture and a system—there is no solution.

Ron also owns a villa in Goa, which he bought on a whim last year while vacationing there.

Now that I'm here, I have a place to stay, and I can just move in with my bags.

He and Urmila spent two days on the beach before meeting the Reddy family.

Mining is another major pillar industry in Goa, following tourism.

However, the minerals here are neither coal nor limestone, but laterite, which is iron.

The iron ore mines in Goa are mostly controlled by local families. They mine the laterite soil in the state and then transport the extracted iron ore to local steel mills.

The Reddy family is in this kind of business; they reportedly hold mining rights to several mines.

These family businesses, rooted in the local community, are rarely troubled. Most can operate steadily for decades, gradually accumulating strength.

Unfortunately, the Reddy family was unlucky; in order to expand their business, they spent a lot of money bribing officials to acquire several iron mines.

He then borrowed a large sum of money from the bank to prepare for his ambitious "large steel mill plan".

Then came the financial crisis, which hampered export trade and led banks to recall loans ahead of schedule.

The Reddy family protested, but to no avail.

The bank judged that the steel trade would continue to be in a slump, and that the Reddy family's steel mill had almost no hope of making a profit in the future.

Since it's a money-losing business, why bother lending money? Just stop collecting payments.

If that's all there is to it, then so be it; the Reddy family will just lose some money.

Unfortunately, most of the funds they borrowed from the bank were invested in the financial market.

This is also a unique Indian practice, known in trade as "gilding".

For example, a company takes out a bank loan to build a steel plant. The total cost of production is $20 billion. The company can pay $5 million itself, and the rest can be financed by the bank.

But in reality, the boss knew very well that the project could be built with $10 billion, and the extra loan would become his profit, which he could put into his pocket to invest in other projects.

The Reddy family was playing this trick; they budgeted for the steel mill far beyond what was actually needed.

More than half of the loan funds were diverted and invested in the increasingly heated financial market.

If there was one impact the Asian financial crisis had on India, it was the continued slump and relentless decline of the Mumbai stock market.

The Reddy family has lost a fortune; their initial investment has shrunk by more than half. Where are they going to get the money to pay the bank?

The loan collection notices were sent again and again until the bank threatened to auction off their family property, at which point the Reddy family panicked.

However, the economic climate was unfavorable at the time, making it impossible to raise that much money.

After much deliberation, the only option left was to sell the iron mines they owned to recoup some of their funds.

They asked the families and companies they were on good terms with, but no one was interested.

The steel business is sluggish, and those people are already worried about it. Taking over at this time would be pure foolishness.

The Reddy family had to look for other buyers, and then they settled on Ron.

The grand wedding held in Goa last year was quite an eye-opener for these local tycoons.

If we're talking about who has the most funds, it's definitely Mr. Sue.

Spending a hundred million US dollars on a wedding shows just how extravagant they are.

I just heard that he also owns Suer Mining, which is a perfect match for his expertise.

To be honest, Ron was a little hesitant when he first received the invitation.

It's true that he owns Suer Mining, but he's in the energy business of coal or his familiar old business of cement plants.

Iron ore mining is a heavy industry business that most people can't handle.

It cannot be exported directly as energy like coal. It's not that it can't be sold, but its added value is too low, making it unprofitable.

It's not as flexible an investment as a cement plant, which can be done for a few hundred million rupees.

Building a steel plant also requires hundreds of millions of dollars, but the unit is US dollars.

Ron hesitated and couldn't make up his mind, so he decided to take a look first.

He also coveted giant corporations like Tata Steel, and heavy industry, though seemingly low-key, was highly valued by the country.

If Ron wants to go further, heavy industry is a good direction.

Although Suer Mining also has coal and cement businesses, it is still much smaller than "industrial grains".

That's an industry that truly concerns national strength, and New Delhi attaches particular importance to it.

After settling Urmira in, Ron led his men straight to the mining area to check out the scale of the mining industry.

(End of this chapter)