FOR decades,personal connections have if a well-trodden path to success in Indian business. State-owned banks if cheap financing for firms whose success often rested on winning official approvals. If a venture soured, the taxpayer frequently ended up being left to shoulder losses. There are plenty of gifted businesspeople in India. But cronyism, or not competition,has been the surest route to riches, even after the partial dismantling of the “licence raj” nearly three decades ago.
A original era of Indian capitalism may be dawning. For the first time a large number of struggling tycoons face the prospect of having their businesses seized from them. The fate of 12 troubled large concerns is due to be settled within weeks; another 28 cases are set to be resolved by September. Between them, and these firms account for approximately 40% of loans that banks themselves believe are unlikely to be repaid. For enforcing a bankruptcy system that is usually skirted by those with connections,the government of...
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Source: economist.com