Page 47 - Bloomberg Businessweek July 2018

◼ ECONOMICS Bloomberg Businessweek July 2, 2018

childbirth risks, the regional government started slowly, she says. They made their jour-
started a program in which local midwives are ney with the midwife following in her own car.
assigned to shadow parents from the first ultra- Hedman gave birth at the hospital and returned
sound to delivery. Three mothers have given birth home the same day. “It’s frightening that child-
in their own cars since last year, while 16 others birth isn’t more prioritized,” she says. “It feels like
have delivered in ambulances. the whole system is deteriorating.” �Amanda
Ellen Hedman, an engineer in Solleftea who Billner, Rafaela Lindeberg, and Niklas Magnusson
was expecting her third child last August, thought
about packing a tent for her 130km journey to the THE BOTTOM LINE Despite high taxation and budget surpluses,
Sweden’s welfare system is under pressure from an aging
town of Sundsvall, just in case. The contractions population and hundreds of thousands of refugees.

India’s Push to Fast-Track Bankruptcies

● Under a new code, cases must be resolved in nine months instead of the typical four years or more

On the third floor of a government complex in a dozen large debtors that were ordered into bank-
New Delhi, the National Company Law Tribunal’s ruptcy court after India’s central bank received
appeals court is crammed with lawyers wearing additional powers to speed the process of wind-
formal black suits and white neckbands that hark ing down troubled companies. More than 2,500
back to the British Raj. Two judges have just been bankruptcy cases are wending their way through ● Creditors’ recovery
rate in a bankruptcy, in
30 seated by ushers in white-and-gold turbans. The India’s notoriously slow legal system. cents owed on the dollar
lawyers start arguing. “Everyone knows who his Until the special courts were established by the
real client is!” one yells, as the crush of surrounding 2016 Insolvency and Bankruptcy Code, a bankruptcy Japan
advocates lean in to hear what’s going on. could drag on for years. World Bank data show cred- 92.4¢
It might not be immediately apparent, but here itors in India recover just 26.4¢ on the dollar after U.S.
in this courtroom, billions of dollars—and the 4.3 years; in the U.S. it’s 82.1¢ on the dollar in just 82.1
reform record of Prime Minister Narendra Modi— one year. Under the revised bankruptcy code, a Germany
are at stake. Before the court on this sweltering case must be resolved within 270 days—otherwise 80.6
afternoon are assets belonging to one of many the company is pushed into liquidation. Mexico
overextended Indian corporations, the bankrupt Some founders whose companies failed simply 67.6
giant Essar Steel. One bidder is industry leader fled India. The most famous of these was Vijay China
ArcelorMittal, which explains the presence here Mallya, the flamboyant “King of Good Times” 36.9
of Aditya Mittal, son of billionaire steel mag- whose Kingfisher Airlines collapsed in 2012, leaving India
nate Lakshmi Mittal. The other is a consortium $1.4 billion in unpaid debts. The Modi administra- 26.4
backed by Russian investment bank VTB Capital, tion is seeking his extradition from the U.K.
which has offered $5.4 billion. (The amount of The backlog is a symptom of a much deeper
ArcelorMittal’s bid hasn’t been disclosed.) problem. India’s banking system is staggering under
Essar, which owes creditors $7.6 billion, is one of the weight of $210 billion in bad loans, 90 percent
of them held by state-owned lenders, which has
stoked fears the country could succumb to a full-
blown financial crisis.
Raghbendra Jha, an economics professor at the
Australian National University, says the pile of bad
loans is a manifestation of India’s crony capital-
ism. “You lend to a firm not because it has a high
rate of return but because it has the right con-
tacts,” Jha says. “And these things are now being
challenged and addressed.”
The Reserve Bank of India has been waging
a multiyear campaign to get state lenders to ◀ An Essar iron plant
in Hazira, Gujarat