Chapter 419 Gilded

The financial crisis did not affect India's overall economy, but some individuals or places still felt the aftermath of the shock.

Goa is somewhat special among the more than 20 states in India. It was ruled by the Portuguese during the colonial period.

After independence, a large number of Portuguese manor buildings were left in the area, which later gradually evolved into resorts and tourist attractions.

Goa's excellent beaches, sea views and resorts have attracted a large number of tourists from home and abroad to vacation here in recent years.

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

As a result, the financial crisis hit and directly extinguished the tourism boom that had lasted for more than half a year, and the domestic economy fell into a depression.

When Ron came out of the airport, he clearly felt that the popularity of this place had dropped significantly, and it was far less lively than when he got married last year.

Only customs officers are still happily conducting entry and exit inspections, and sometimes they deliberately make things difficult for passengers in order to imply that they should pay bribes.

“Nothing happened to them,” Urmila stabbed.

“You know the Indian civil servants. As long as the Administrative Service is there, they don’t care whether Delhi exists or not.”

Ron came by private jet and took Urmila with him. He treated this 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 good job," Ron laughed.

"Yes, trying to know if civil servants at the tax bureau are corrupt is like trying to know if a fish is drinking water."

What a wonderful metaphor, Ron was overjoyed.

However, for ordinary people, civil servants are indeed the ceiling.

What’s funny is that India cannot compare to the University of Tokyo in terms of territory or population, but it has three times as many civil servants as the University of Tokyo.

For example, the Delhi Water Supply Board has more than 30 employees of various types for every kilometer of water pipes, which is 15 times that of ordinary industrial countries.

The Indian Civil Service is the top of the pyramid of the Indian civil service system, with a total number of less than 5,000 people. Most of the important officials of the New Delhi government and state governments are members of the Civil Service.

However, the elite civil servants of the Administrative Bureau mostly work outside New Delhi, serving as district collectors, the final say governors of districts, often managing an area the size of several small countries combined.

During the British colonial period, India's population of over 100 million was governed by fewer than 1,000 British officials. Over the years, the powerful executive branch has undergone very few structural adjustments.

Although affectionately addressed as "Sir," Executive Bureau officials are seen by the public as arrogant, incompetent, and corrupt.

Mention them and many people will think of high-ranking officials in white uniforms, sitting in the elegant Indian Ambassador classic car, driving on the streets of New Delhi, with the rear windows drawn like curtains and blue lights flashing on the roof.

But what the people hate is not the corrupt civil servants, but the fact that the people sitting in the seats are not themselves.

India's civil service examination is considered the most competitive selection in the world. Only about a thousand people are recruited each year, but there are tens of millions of applicants.

After excluding those with connections, the administrative bureau finally selected people with outstanding intelligence and excellent resumes.

Over time, this is a powerful political force that can exercise and change the rules, and many business leaders are afraid of them.

But times have changed. With the advent of oligarchic economy, many family tycoons are no longer afraid of most officials in New Delhi.

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

Of course, for ordinary people, civil servants are still popular.

What India lacks the least is young people, and even the most basic positions are well-qualified.

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

The main attraction of a leadership position is not the halo itself, but the power to take more kickbacks.

When they were in Tamil Nadu, Kavya's brothers had taught Ron the ins and outs of agricultural irrigation.

During the dry season, irrigation engineers are the most powerful people in rural areas and can decide many things.

For example, which town should irrigation water go to and which should not go to, when to release water, and how much water to release are all very important.

Inevitably, farmers try their best to bribe irrigation engineers in order to ensure a good harvest.

The best part is that these engineers don’t have to hand over the bribes to higher-level leaders or politicians. This operating model is simple and ingenious.

Everyone who first becomes an irrigation engineer spends money on bribes, and the amount is proportional to the money that can be made from the position.

The general market situation is that it costs 100,000 rupees to get an "operation and maintenance" position at the grassroots level. Once you sit in this position, the benefits collected later will be about three times this amount.

From a business perspective, the return on investment is very substantial.

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

The magical Indian black market has everything that will leave you dumbfounded.

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

Mumbai police are willing to pay to be transferred to high-crime areas because this gives them more opportunities to extort bribes from suspects and victims.

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

The more money that flows through a job, the more money there will be to make.

In the past two years, tax officials from Ron's industries have flocked to him, all trying to get in.

Administrative Bureau officials have no choice but to turn a blind eye or go along with it.

This is not systemic corruption, but a culture and system that has no solution.

Ron also has a villa in Goa, which he bought while on vacation here last year.

Now that I have a place to stay, I can move in directly with my luggage.

He and Urmila spent two days on the beach before going to meet the Reddy family.

Mining is another major industry in Goa, following tourism.

However, the mining industry here is not coal or limestone, but red soil, which is iron.

Goa's iron ore mines are mostly controlled by local families, who dig up the red soil in the state and then transport the mined iron ore to local steel mills.

The Reddy family is engaged in this kind of business. It is said that they hold the mining rights of several mines.

Usually, such family businesses are rooted in the local area and rarely encounter any turmoil. Most of them can operate steadily for decades and slowly accumulate strength.

It's just that the Reddy family was unlucky. In order to expand their business, they spent a lot of money to bribe officials and took over several iron mines.

He then borrowed a large sum of money from the bank and prepared to launch his ambitious "big steel plant plan."

Then we encountered the financial crisis, export trade suffered setbacks, and banks called in loans early.

The Reddy family protested, but to no avail.

The bank believes that the steel trade will continue to be in a downturn and the Reddy family's steel mills will have little hope of making a profit in the future.

Since it is a money-losing product, why should we lend money to it? We will just stop collecting the debt.

If that were all, it would be fine. The Reddy family would just lose some money.

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

This is also an Indian characteristic, which is called "gilding" in jargon.

For example, a company seeks a bank loan to build a steel plant. The total production cost is US$2 billion. The company can pay US$500 million itself, and the rest will be financed by the bank loan.

But in fact, the boss knew very well that the project could be built with $1 billion, and the extra loan would become his profit, which he could put in his pocket to invest in other projects.

This is the kind of trick that the Reddy family played, as they made a budget for the steel plant that was much more than the actual requirement.

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

If the only impact of the Asian financial crisis on India was the continued slump in the Bombay stock market, it was that it continued to fall.

The Reddy family suffered heavy losses. The capital they invested was reduced by more than half. Where would they get the money to give to the bank?

The loan collection notices were sent again and again until the bank threatened to auction off their family business, and the Reddy family became anxious.

But the overall environment was not good at that time, and it was impossible to raise so much money.

After much deliberation, the only option was to sell the iron mines in hand to recover some of the 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 is a complete sucker.

The Reddy family had no choice but to look for other buyers, and then they locked on Ron.

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

As for who has the most funds, it is of course Mr. Suer.

Spending $100 million on a wedding shows how extravagant he is.

I just happened to hear that he also owns Sur Mining, which is a perfect match for his profession.

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

It is true that he owns Sur Mining, but what he does is energy business like coal, or cement factory, which he is familiar with.

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

It cannot be directly exported as energy like coal. It’s not that it cannot be sold, but the added value is too low and it is not cost-effective.

It is also not as flexible as the investment in a cement plant, which can be completed with just a few hundred million rupees.

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

Ron was a little hesitant and couldn't make up his mind, so he just came and took a look.

He also envied giant enterprises like Tata Steel. Although heavy industry seems low-key, it is highly valued by the country.

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

Although Sur Mining also has coal and cement businesses, they are still far inferior to "industrial grain".

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

After Ron settled Urmila, he took his men straight to the mining area, ready to take a look at the scale of the mining industry there.

(End of this chapter)