Opinion

Let’s get a few things straight about the Vijay Mallya saga

In the entire hullabaloo over the baron's flight, we are forgetting the coop that nurtured him.

Let’s get something straight about Vijay Mallya. The popular narrative is that he milked the banks for Rs 9,000 crore to support his hedonistic lifestyle in India and abroad, and took off when the debt burden became excessive or no more money was forthcoming to evergreen his dues. But we seem to forget that he enjoyed a hedonistic lifestyle and had much money to spread around even before Kingfisher Airlines.

Much before his airline came into being, he reportedly lavished money on the Janata Dals of Ramakrishna Hegde and HD Deve Gowda, the Bharatiya Janata Party of Atal Behari Vajpayee and LK Advani. The allegations of large amounts of money being paid to the legislators of the BJP and and the Deve Gowda rump of the Janata Dal have long done the rounds for his two Rajya Sabha terms. The Congress may not have allotted him votes, surplus or otherwise, but it does not mean that the Congress and other parties did not benefit from Mallya. The Rs 9,000 crore Mallya is now found owing to the public sector banks and others is the money he lost on Kingfisher Airlines.

I understand the loan money is around Rs 4,000 crore and the rest is interest and the interest on interest. The banks just kept lending him money to evergreen its loans. This was not possible without political and bureaucratic support. Even if one little joint secretary or one little Member of Parliament or one little bank manager red-flagged the growing stain of red on Kingfisher Airlines’ debts, the bleeding would have been stopped. Mallya just did not milk the banks to keep Kingfisher Airlines afloat; he allegedly milked his own companies such as United Breweries and United Spirits to support its flight into the deep red.

More troubling questions

When a business makes a loss, it doesn’t mean the money was stolen. It just means that it has spent more money than it has earned. This means employees got paid for all the years – except the last year – most of the time when the airline did not fly, the oil companies got paid for aviation turbine fuel supplied, the leasing companies got paid for the planes hired, the caterers got paid for the meals supplied on board, the airports got paid their landing and parking fees, and the taxes and cesses due for the most part were paid. All during this period, Kingfisher Airlines did not sell enough seats to cover the costs, or just spent more money than it earned.

The question then is why Mallya was lent money when quite clearly Kingfisher Airlines increasingly showed it had a business model that precluded it from earning money. Let us not forget that during this period, Air India and Indian Airlines together lost Rs 43,000 crore. The money lost under Mallya’s stewardship was a measly Rs 4,000 crore. But we are not putting out any of the aviation ministers like Ananth Kumar, Sharad Yadav, Praful Patel and Ajit Singh out to dry for the losses of the public sector airlines. Why? We do not even want to find out how much money was made by the politicians and bureaucrats during the last decade on account of the two public sector airlines.

In the entire hullabaloo over Mallya’s last flight to the cooler and more salubrious climes of Herefordshire (remember in Hartford, Hereford and Hampshire, hurricanes hardly happen!) we are forgetting the bankers who lent Kingfisher Airlines for something quite as spurious as its brand name. We are forgetting the officials of the Banking Services department of the Finance Ministry, many of whom served on the boards of the banks that lent Kingfisher Airlines money, and the many board directors who sanctioned the loans. Such loans are sanctioned when everybody gets to drink a little at the trough. Now Mallya has flown the coop that nurtured him, and it seems that all others stand absolved.

Shifting focus

Forget Mallya – he won’t be coming back soon. The banks can attach his cars and homes in India, but he is clearly out of reach of the “authorities” that don’t really want him back. They probably don’t even want him to live for too long and long for him to take his secrets to his grave. He just turned 60, but his corpulence looks unhealthy. Mallya being a betting man would probably not bet on his own longevity.

But in his going, Mallya is serving one useful purpose. It takes away the focus on how other “industrialists” fund their lavish lifestyles and have created empires overseas. Our “industrialists” all use their company assets for personal pleasure. Company jets and lavish company homes are meant only for personal use and for the pleasure of others. Money is routinely extracted from corporate coffers for those they want to oblige, be it for personal relationships or those in government and politics.

Money flows from our business houses to political groups like Naxalites in Bastar and the United Liberation Front of Asom, in addition to all the mainstream political parties. The not-too-industrious industrialists, most of whom make most of their money from the public sector banks, also fund the hedonistic political lifestyle of our elite. Why is the Reserve Bank of India not blowing its whistle to stop this? Why is the Department of Company Affairs so silent? One can understand an Arun Jaitley acquiescing to this, but what keeps a Raghuram Rajan from reading the riot act to the banks?

In too deep

The problem is that we are far too invested in this system. If the banks tighten up, as many as six of our top ten business houses will fold up or will have to be dismantled – in other words, really restructured. Except for a select few, most other major business houses are over leveraged and mortally indebted. If we rock the boats now, many will capsize. The economy will further slowdown. Mallya is relatively small fish. The big sharks are still circling the banks.

Will the prime minster please stand up in Parliament and assure the nation that all the moneys lent to them are as per norms and prudential banking practices, and that the loans are not being evergreened? Will Rahul Gandhi demand that the prime minister give the nation an assurance on this? I don’t think so. Both are betting on short public memory. We love gladiatorial sports and the Roman emperors best understood mass psychology. We have plenty of pilgrims to feed the lions and the public’s frenzy.

We welcome your comments at letters@scroll.in.
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The incredible engineering that can save your life in a car crash

Indian roads are among the world’s most dangerous. We take a look at the essential car safety features for our road conditions.

Over 200,000 people die on India’s roads every year. While many of these accidents can be prevented by following road safety rules, car manufacturers are also devising innovative new technology to make vehicles safer than ever before. To understand how crucial this technology is to your safety, it’s important to understand the anatomy of a car accident.

Source: Global report on road safety, 2015 by WHO.
Source: Global report on road safety, 2015 by WHO.

A car crash typically has three stages. The first stage is where the car collides with an object. At the point of collision, the velocity with which the car is travelling gets absorbed within the car, which brings it to a halt. Car manufacturers have incorporated many advanced features in their cars to prevent their occupants from ever encountering this stage.

Sixth sense on wheels

To begin with, some state-of-the-art vehicles have fatigue detection systems that evaluate steering wheel movements along with other signals in the vehicle to indicate possible driver fatigue–one of the biggest causes of accidents. The Electronic Stability Program (ESP) is the other big innovation that can prevent collisions. ESP typically encompasses two safety systems–ABS (anti-lock braking system), and TCS (traction control system). Both work in tandem to help the driver control the car on tricky surfaces and in near-collision situations. ABS prevents wheels from locking during an emergency stop or on a slippery surface, and TCS prevents the wheels from spinning when accelerating by constantly monitoring the speed of the wheels.

Smarter bodies, safer passengers

In the event of an actual car crash, manufacturers have been redesigning the car body to offer optimal protection to passengers. A key element of newer car designs includes better crumple zones. These are regions which deform and absorb the impact of the crash before it reaches the occupants. Crumple zones are located in the front and rear of vehicles and some car manufacturers have also incorporated side impact bars that increase the stiffness of the doors and provide tougher resistance to crashes.

CRUMPLE ZONES: Invented in the 1950s, crumple zones are softer vehicle sections that surround a safety cell that houses passengers. In a crash, these zones deform and crumple to absorb the shock of the impact. In the visual, the safety cell is depicted in red, while the crumple zones of the car surround the safety cell.
CRUMPLE ZONES: Invented in the 1950s, crumple zones are softer vehicle sections that surround a safety cell that houses passengers. In a crash, these zones deform and crumple to absorb the shock of the impact. In the visual, the safety cell is depicted in red, while the crumple zones of the car surround the safety cell.

Post-collision technology

While engineers try to mitigate the effects of a crash in the first stage itself, there are also safe guards for the second stage, when after a collision the passengers are in danger of hitting the interiors of the car as it rapidly comes to a halt. The most effective of these post-crash safety engineering solutions is the seat belt that can reduce the risk of death by 50%.

In the third stage of an actual crash, the rapid deceleration and shock caused by the colliding vehicle can cause internal organ damage. Manufacturers have created airbags to reduce this risk. Airbags are installed in the front of the car and have crash sensors that activate and inflate it within 40 milliseconds. Many cars also have airbags integrated in the sides of the vehicles to protect from side impacts.

SEATBELTS: Wearing seatbelts first became mandatory in Victoria, Australia in 1970, and is now common across the world. Modern seatbelts absorb impact more efficiently, and are equipped with ‘pre-tensioners’ that pull the belt tight to prevent the passenger from jerking forward in a crash.
SEATBELTS: Wearing seatbelts first became mandatory in Victoria, Australia in 1970, and is now common across the world. Modern seatbelts absorb impact more efficiently, and are equipped with ‘pre-tensioners’ that pull the belt tight to prevent the passenger from jerking forward in a crash.

Safety first

In the West as well as in emerging markets like China, car accident related fatalities are much lower than in India. Following traffic rules and driving while fully alert remain the biggest insurance against mishaps, however it is also worthwhile to fully understand the new technologies that afford additional safety.

So the next time you’re out looking for a car, it may be a wise choice to pick an extra airbag over custom leather seats or a swanky music system. It may just save your life.

Equipped with state-of-the-art passenger protection systems like ESP and fatigue detection systems, along with high-quality airbags and seatbelts, all Volkswagen cars have the safety of passengers at the heart of their design. Watch Volkswagen customer stories and driver experiences that testify its superior German engineering, here.

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This article was produced on behalf of Volkswagen by the Scroll.in marketing team and not by the Scroll.in editorial staff.

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