Sucheta Dalal and Debashis Basu, over the past few decades, have created a formidable reputation for themselves in financial reporting with their exposé of the Harshad Mehta scam in the 1990s being their crowning glory. All through their reporting, they have been tenacious in building evidence, have built a strong network of contacts and most importantly, they have been fearless in taking on influential personalities, regulators and powerful politicians. They have approached “Absolute Power” in the same vein, making the book a compelling read.
The book traces the history of the National Stock Exchange (NSE) of India, from its uncertain beginnings when it took on the cartels of the corrupt Bombay Stock Exchange, its rapid rise to becoming the largest exchange of India aided by some visionary policies, a nationwide presence and the use of technology, to the utter lawlessness in the Exchange under the leadership of Ravi Narain followed by Chitra Ramakrishnan. Dalal and Basu track the key issues in the latter stage of the NSE including tax evasions by brokers, the lack of sufficient risk mitigation steps, the blatant suppression of competition, the capture of regulators and finally, the illegal co-location facilities given to some investors for high frequency trading. The book builds on their regular reporting on these issues over the past several years.
In the process, they do not shy from naming the key perpetrators, whether they be senior NSE employees, the top brass at SEBI (India’s stock market regulator) or even the finance minister during that time. I can imagine the immense pressure that they may have been under during this reporting, especially when the NSE sued them for Rs1 bn (about $15 million at 2015 exchange rates). While Dalal and Basu had built formidable reputations for themselves by that time, this lawsuit would have ended their professional lives and significantly damaged their personal ones if it had been decided by the courts in favour of NSE. To me, this aspect of fearlessness exhibited by them is the most impressive.
While I was familiar with many of these issues due to my involvement in Indian equity markets over many years, the blatant disregard for external and internal rules as depicted in this book is shocking. And the lack of will to protect all investors and players depressing. Unfortunately, this seems the case all over the world, including in the US, even now. For example, Robinhood’s strategy of “gamifying” trading will surely bring grief to thousands of small investors who are not even fully aware of what they trade during any significant market downturn, whenever that happens. Robinhood customer suicide is one such example.
I had two issues with the book. Dalal and Basu paint the various characters as either completely black or completely white. The bulk of their criticism is directed against Narain and Ramakrishnan with nary a good word to say about them. Surely, there must be something right that they did to ensure that NSE became highly profitable and had features more advanced than those in international exchanges during their tenures? The second issue was the bland style of narration. Dalal and Basu are financial journalists and they use their usual writing style for this book. But we have seen how the writing can make a world of difference to a book as in the case of “Bad Blood” – it’s a book about the scam at Theranos but reads like a thriller. Nevertheless, I would strongly recommend “Absolute Power” to anyone with an interest in Indian equity markets.
Pros: Fearless reporting, painstakingly researched, compelling read
Cons: Bland writing style
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