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You might call it a case of corporate tit-for-tat. In December, India's sprawling Tata Group made its audacious (though still undecided) $10 billion bid for Anglo-Dutch steelmaker Corus.
Now it's Britain's turn to return the compliment, with an even more gigantic offer to buy a stake in Indian telco Hutch Telecom India. The ardent suitor is Vodafone, which is desperately seeking to muscle its way into new growth markets. The bill for Vodafone, if the deal goes through, could be anywhere between $17 billion and $20 billion for a 67 per cent stake in Hutch, which is the country's fourth-largest telecom service provider.
The seller is Hong Kong tycoon Li Ka-shing, who hasn't had altogether happy experiences in India. Also hovering on the sidelines and waiting to swoop are international private equity giants such as Blackstone and Carlyle that are looking to get a share of the action by partnering the eventual buyer.
Remember, this is just a 12-year-old company which is fetching such awesome prices.
Once again the melee for Hutch underscores how the stakes have changed in the Indian marketplace. Nobody seems to talk in millions any more. It's only billions nowadays, says one senior economist, only half in jest.
That quip was reinforced by reports recently that India's Reliance Group is making a $10 billion bid for GE Plastics, which would suddenly catapult the Indian oil to petrochemicals company into the international league in a bigger way than ever before. And, earlier in the month came the news that Emaar, a property giant from the United Arab Emirates, is planning a billion-dollar IPO to lay the foundation for its ambitious building plans in this country.
Whatever the critics and doomsayers predict, the economic action in India is showing no signs of even slowing down momentarily. Twelve months ago the Bombay Sensitive Index (Sensex) stood at around 9397 after a year when it had risen steeply. Last week it closed at 14,282.
If anybody was getting nervous about a slowdown, they should also have been comforted by the November industrial production figures of 14.4 per cent released last week. That's the fastest in 11 years and obviously indicates that the industry is bounding along at a spectacular rate. Growth momentum has picked up. And after a long time the industry is actually investing in fresh capacity, says Marut Sengupta, chief economist, Confederation of Indian Industry.
And many analysts expect that strong growth to continue. Credit Suisse, for instance, reckons that the outlook for the future is even more positive and has hiked its growth forecast to a blistering 10 per cent for this year from an 8.5 per cent estimate earlier. At the revised rate, India is forecast to surpass China to become the top growth performer in the region.
There are large investment proposals. Our exports are doing fairly well and our IT sector and services are fine. We have crossed the critical mass where the economy takes speed on its own, says, D.H. Pai Panandikar, director-general of the RPG Foundation, an economic think tank.
But as the economy keeps climbing higher, the fear of heights is growing.
Also, it's becoming increasingly evident that the poor haven't yet got tickets for the high-flying ride. The glaring inequalities and the rural-urban divide came glaringly into the spotlight when Tata Motors zeroed in on Singur in West Bengal as the site for its new auto plant. West Bengal's communist Government has swallowed its fears about capitalism and is desperately eager for new industrial growth so it quickly earmarked land for the project. But then it ran into recalcitrant villagers who didn't want to be shifted from their homes.
A few days later the West Bengal Government found itself in a second confrontation with angry villagers when it tried to acquire land for a housing project. The Korean steel giant Posco has already faced similar problems in Orissa a few months ago and actually cut back its land requirements.
But land acquisition is not the only hot issue in India's rural regions. The lopsided growth is evident in the countryside. The agriculture sector has stalled in the past decade and wheat production has been stagnant for the past three years.
Agricultural production is crucial in more ways than one. A bumper crop would help to keep inflation, currently running at 5.5 per cent, under check and head off more monetary tightening. Also since a large percentage of the Indian population lives in the countryside and depends on agriculture, their buying power is essential to keep the economy chugging along.
Says one economist: "Education, health, agriculture and infrastructure. You take care of these and you will move to the next level of growth. Any one of them has the power to stop the economy."
Amidst all this growth, the political classes are getting nervous. They are reading signs that the voters aren't going to wait for the trickledown theory to take effect. Satellite TV and mobile telephony have made the rural masses increasingly aware of the world beyond. They know that prosperity is growing and they won't be waiting with begging bowls for their share.
