The Hindu Business Line : Amid buoyancy, tsunami strikes sober note

THE corporate sector soared to new profit levels, the stock indices touched record highs and the rupee surged against the dollar in a year that also drove home-grown companies to look beyond the country's shores for growth.

The year 2004 will be remembered as the one in which Dr Manmohan Singh, the original architect of reforms, became Prime Minister. Ironically, the delay in forming his Government saw a historic meltdown by the BSE Sensex.

For months, business sentiment remained range-bound as the coalition at the Centre struggled with its in-house politics while formulating policies. Over time, companies began to slowly understand the Government's pace. This understanding was perhaps the easier half in a confusing world.

Skewed global consumption patterns, driven by huge capacities in China, stretched commodity prices, freight rates and supply lines. To top it, high oil prices resulted in inflation. In 2004, businesses had to do the balancing act. Cost cutting, kicked off in 2002-2003, was complemented by capacity enhancement. It was the dominant theme across sectors, absorbing MNCs as well. India became a significant low-cost manufacturing pad for those seeking a presence in this part of the world.

Companies did well despite cost pressure. Focussed business also cast old-world stories in a new light.

A cornerstone of the country's equity culture came lose as the Ambani brothers clashed over ownership of Reliance Industries, the country's biggest private company. This and other similar developments, such as the split in the Bajaj family, cautioned that family ties could suffer friction too. There was compulsive curiosity to know the machinations of the rich. Questions abounded as the Ambanis traded charges across newspaper pages.

The markets' concern lasted for a brief while. Thereafter, like much else in the country, gossip gave way to the compulsions of work and stock indices resumed their upward movement, testing new highs. This was the gift and bane of new India - the Mumbai grind on a bigger scale and tired souls hurtling towards unsure prosperity.

The year's stock market buoyancy opened up prospects for corporate India to raise funds through equity offerings. Large equity issues from ONGC, TCS and NTPC hit the market.

If in 2003 a few companies aimed to de-list, in 2004 many of them chose the reverse path and adopted market listing to raise funds. Listing also gave companies the strength to go in for acquisitions or allow investors aboard.

The corporate sector raised funds through the debt route as well. Interest rates were at a comfortable level for most part of 2004 and have just about started to edge up. There was a rush to raise funds either through foreign currency convertible bonds or foreign currency convertible notes.

What was possibly amiss in 2004 was the grace to temper success. Obvious imbalances in development were being glossed over to celebrate and deify the specific. Forgotten people from the country's interiors were appearing on urban streets, still losing their voice to the celebrities at the multiplex next door.

But the tsunamis had the last word this year. They reiterated the larger insecurity in which the country's emerging economy is placed, riches and all. Everyone knew the invasions in Indian history, but who would have thought of a life encircled by earthquakes?

It brought back pictures of suffering after a year spent worshipping the middle-class and their compacts, the rich and their sedans and the `generation next' and its high-tech gadgets.

At one stroke, the tsunamis raised a hundred relevant questions on development, conveniently ignored by merchant bankers painting the India 2020 or 2050 image.

For a year of record indices and preening before the world, this was a swift, sober end.

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