Book Review: The Polyester Prince

While poring over books at a street shop, I noticed Hamish MacDonald's The Polyester Prince. Knowing  that the book would not be available at any book stores in India, due to pressure from the Ambanis, I immediately snapped it up. Having read it, I can say that its not only the Ambanis but a lot of other people who wouldn't want the book to be widely read. The Polyester Prince is an unofficial biography of Dhirubhai Ambani, chronicling his and Reliance's rise to the high table of the Indian industry. The books specifically focuses on the some of the inconvenient facts about Ambani's super rapid growth. Though a biography, it almost feels like reading a thriller as events move fast, there is always a conspiracy in the air and the years roll on quickly. The book is well researched and presents as balanced a point of view as possible, given that the Ambanis refused to answer any of the author's questions in the course of writing the book. It is a mixture of facts, suspicions, strong rumours, hearsay and legends around Reliance. The book is one of the very few bold accounts of contemporary Indian history. The book is almost surely an inspiration for Mani Rathnam's movie - 'Guru'. 

The book tracks the growth of Ambani from his humble origins in a Bania family in Gujarat. Given the region and the community that he came from, it should be no surprise that he ended up in business. The trader community and Gujaratis are particularly well known for their trading and business skills, having perfected the skills over hundreds of years and have contributed in no small measure to make the Indian sub-continent the economic power it was. Ambani learnt the tricks of the trade during his stint in Aden and starting understanding how to manage money and finance. From then there was no stopping him, as he understood the importance of raising capital. He must have been the most innovative financier India has had and it is this skill that has taken Reliance where it is. Reliance isn't a polyester or petrochemical or telecom (or whatever sector it is investing in today). It is basically a financing company that knows how to raise capital with all kinds of schemes and then put it to use and showcase it to raise more capital. 

That's not the case with Reliance alone. Every major Indian industrial conglomerate today - the Tatas, Birlas, the Ambanis, etc. come from a trading background and it looks like this is the standard operating procedure of most of these family firms. So, my hypothesis is that India's industrial growth is not oriented towards building and innovating solutions geared towards the country's problems but rather importing and retrofitting someone else's solution to some similar problem - a trader's solution. Since the Indian economy opened up, the Indian conglomerates have adapted and been hugely successful at their core competency - trading, and they can stand up to any challenge in the world on this front. 

Ambani was not only a master financier but a great manipulator of the license-raj system that Indira Gandhi converted the Indian state to. The Govt. Of India controlled a lot of economic activity like - what industries to allow, who gets to run it, what manufacturing capacity, what items to import and in what quantity and basically everything under the sun. The Govt basically ran a huge patronage network, where favored people would get their needs met; all rules and regulations being malleable and subject to convenient interpretation. The book illustrates how bad the license-raj was and how Ambani exploited it to the hilt with the help of his cohorts in the Government, some of whom still hold the highest posts in the country.

And the government was ruthless too. It could make life miserable for anybody who would not do their bidding. The way the governments cracked down on the Indian Express group for their expose of Reliance and on Ambani's rival Nusli Wadia (and Dhirubhai too, when his enemies were in power) shows all that is wrong with our arbitrary system of government where those in power have a lot of discretionary power. This system is best expressed in S. Gurumurthy's first salvo of his now legendary Reliance expose:

If the mail rule prohibits something, get a sub-rule added which permits it. The main rule will no doubt exist in the book but the book alone.  ...  Rule of law at once becomes sub-rule of law and the sub-rule eventually becomes subversive rule.

Dhirubhai was a product of his times, and the book is an indictment of that bad system which created a person like him and allowed his tactics to flourish. The moral of the story is that Government should have minimal discretionary powers, and create a level playing field for competition. Some liberalization has happened in the last 20 years, but real reform of the Government is yet to happen. Afterall, A. Raja of 2G scam fame seems to have referred to Pranab Mukherjee's coaching manual of the 80's when he was the Finance Minister and had Ambani's backing.

Post script: It is downright hypocritical of the large banias (all our big conglomerates) to plead for the interest of the Indian consumer and demonise their own brethen (the small banias who run the kiranas) in the FDI-in-retail debate. The big fish is now are just waiting for an opportunity to eat the small fish. Don't be taken in by the propaganda.