Restoring the old glory of the IAS

I have a co-written oped with Dr D Subbarao in Indian Express which calls on reinventing the IAS - transform itself so as to be able to lead the social transformation, lead the movement to discard the chalta hai attitude and embrace a badal sakta hai attitude. 

Thoughts on NCLT and GST

The two biggest economic reform events in India in 2017 have been the roll-out of the Goods and Services Tax (GST) and the operationalisation of the Insolvency and Bankruptcy Code (IBC) through the National Company Law Tribunal (NCLT). A few observations on both. 

On GST, the government faced two challenges. One, achieve consensus among States through protracted negotiations involving give-and-take so as to get the Parliamentary approval. Two, operationalise GST among millions of enterprises through a very intrusive IT solution, the vast majority of whom had never used such systems.  

Both these meant that the best GST policy design and implementation plan was off the table. The challenge was to negotiate and ensure the most satisfactory second-best solution. 

In a raucous democracy with high-stakes negotiations conducted in full public glare, that too in real-time and at frenetic pace to meet an imminent deadline, and given the confrontational collective attitudes and behaviours of all parties concerned, the government cannot be faulted for prioritising the achievement of consensus to get legislative nod over the purity of the GST design. After all, nothing about the design is set in stone. 

The implementation plan, while largely a bureaucratic exercise, is critically dependent on the design. When the design features were subject to negotiations till the last minute, the challenge of incorporating the changes, and testing and validating them in very aggressive timelines becomes formidable. In any case, as countless examples of such massive project roll-outs show (recollect the chaotic roll-out of the Affordable Health Care Act insurance exchanges in the US), the challenge is not so much to get the best solution out, but to respond swiftly to emergent challenges and rectify them at the earliest. The initial few months of adoption chaos is par for the course. 

A very active GST Council has been consistently refining the GST design elements since its roll-out. Given that these changes have to be incorporated into the IT system, almost in real-time, the implementation challenge looks even more daunting. 

I am not well-placed to comment on the basic software design features (not related to emergent GST design changes), including ease of use for the largely IT illiterate users, of the GST solution or on the implementation processes. On the former, given that one of India's leading software companies has been in charge of its development for a long-enough time, I would be inclined to hold them responsible for such technical failings. On the latter, we need to examine the robustness of decision-making and process protocols, within the implementation Secretariat, as well as engagement with State Commercial Taxes departments. Was the commitments made for incorporation of GST Council decisions into the IT solution based on judgements that accounted for technical considerations? The bureaucracy cannot absolve itself off the blame on failings in these areas. 

It would be very useful to study, compare, and learn from the decision-making protocols and processes associated with Aadhaar and GST, the two big IT solution roll-outs in the country's history.

More changes on the GST design features are on the anvil. In any case, a year-long iterative process and an implementation stabilisation period of 12 months is not at all unreasonable for such roll-outs. The verdict on the whether GST roll-out was done well or not will have to wait till then. 

My initial reaction after the disastrous first case resolved under the IBC was one of dismay. But the government reacted swiftly to make changes to limit promoters gaming the resolution process and gaining control through the backdoor, including prohibiting promoters with non-performing loans for more than a year from bidding with resolution plans. One can argue that those changes could have been easily anticipated while framing the original regulation and that the response in terms of completely shutting out promoters, and not just "wilful defaulters", from even placing proposals before creditors is too restrictive. 

On the former, I am sympathetic. But on the latter, I am not sure whether India's corporate eco-system is mature enough to responsibly engage with such flexibility and not abuse it. Any regulation is a trade-off involving flexibility that can be embraced or abused. A consistent feature of India's business landscape, across sectors, has been the egregious gaming of regulations, not so much at the margins but by large and responsible sections of corporate sector. In the circumstances, the standard bureaucratic response has been to err on the side of caution with restrictive regulations. The universal voucher reconciliation requirement or the Anti-Profiteering Agency in case of GST are examples. I feel that while reasonable people can agree or disagree on the specific set of restrictions in each case, it is important to appreciate the bureaucratic line of thinking in such cases. 

As Livemint reports, the IBC appears to have already triggered some changes in the behaviours of errant promoters. That is welcome news. And I feel this deterrence taking root and shaping debtor attitudes, could become the biggest achievement of this reform. But on the substantive part of resolution, I foresee challenges ahead with the capacity of the system to execute the resolution process with fidelity and that of the market to absorb these transactions. I foresee challenges and struggles. 

China facts of the day

The Economist has these figures on the Chinese appetite for lifts,

In 2000 some 40,000 new lifts were installed in the country. By 2016 the number was 600,000—almost three quarters of the 825,000 sold worldwide. China not only wanted more skyscrapers; it wanted taller ones. More than 100 buildings round the world are over 300 metres; almost all of them were built this century, and nearly half of them in China. The country is home to two-thirds of the 128 buildings over 200 metres completed in 2016. Other countries may content themselves with a few show-off pinnacles. China buys them by the dozen.

This is a fascinating (and disturbing) account of how Chinese digital companies are using personal data to score a person's social credit and offer the full spectrum of services covering the daily lives of Chinese. Sample this,

Alipay knows that at 1 pm on the afternoon of August 26, I rented an Ofo brand bike outside Shanghai’s former French Concession and rode north, parking it across from Jing’an Temple. It knows that at 1:24 pm I bought a snack in the mall next to the temple. It knows that afterward I got in a Didi car bound for a neighborhood to the northwest. It knows that at 3:11 pm I disembarked and entered a supermarket, and it knows (because Alibaba owns the supermarket, which accepts only Alipay at checkout) that at 3:36 pm I bought bananas, cheese, and crackers. It knows that I then got in a taxi, and that I arrived at my destination at 4:01 pm. It knows the identification number of the taxi that drove me there. It knows that at 4:19 pm I paid $8 for an Amazon delivery. For three sweet hours—one of which I spent in the swimming pool—it does not know my whereabouts. Then it knows that I rented another Ofo bike outside a hotel in central Shanghai, cycled 10 minutes, and at 7:11 pm parked it outside a popular restaurant. Because Ant Financial is a strategic investor in Ofo, Alipay might know the route I took.

The costs and benefits of transport aggregators

The beneficial effects of transport aggregators like Uber stand out, especially given the experience of consumers with business as usual taxi operators. They are much more convenient (lower wait times, ease of hailing, doorstep access etc) and far cheaper, which in turn induces more people to use such services.

Peter Cohen et al used granular surge pricing data to estimate that the overall consumer surplus generated by UberX service in the US in 2015 was $ 6.8 bn, and that each dollar of consumer spending generates about $1.6 in consumer surplus. Chungsang Tom Lam and Meng Liu used Uber and Lyft data for New York City to show that platform users gain 72 cents per dollar spent on these platforms, with 64% of the welfare gains coming from dynamic pricing.

But these studies are confined to the consumer side. How about the externalities - the impact on the urban transport eco-system? In particular, the costs of congestion are well documented, and how much does the addition of aggregators worsen it?

CityLab points to a just released report by Bruce Schaller who found that during 2013-17 the number of taxi/aggregator vehicles in the Manhattan Central Business District (CBD) rose 59% on weekdays, and the number of such vehicles in the same area in late afternoon doubled to over 10,000 vehicles, and though taxi trips declined, total passenger trips rose 15%. He shows that aggregators contributed to a 36% increase in the amount of miles traveled by for-hire vehicles in the CBD, with lengthier trips and more "deadheading" (cars traveling without passengers). The result of all this was an 18-19% reduction in average traffic speeds.

Another study of Regina Clewlow and Gouri Shankar Mishra of University of California, Davis used data from comprehensive surveys in seven US cities in the 2014-16 period and came to similar conclusions. They found that ride-hailing services led to an average 6% reduction in use of bus services, and that 49% to 61% of ride -hailing trips would not have been made at all, or by walking, or biking or transit. 

There is an even more damaging dynamic at play. Ridership of the New York mass transit system has been declining in recent years, on the back of poor service quality and safety concerns. Schaller's research suggests that aggregators are amplifying the decline, especially by drawing the more affluent passengers off trains into cars. As City Lab points out, this can trigger a death spiral - "fewer transit riders means less revenue and demand for improved transit" and a poor quality mass transit system used by the less well-off. This dynamic applies to cities in any developing or developed country.

In simple terms, the assessment of such innovations are about whether the private benefits from them are commensurate with their social costs. The former are amenable to being quantified and often rigorously too. In contrast, the latter are very difficult to capture and have long-drawn general equilibrium effects. The resultant propensity to under-estimate the latter causes an exaggeration of the benefits of such innovations.

More fundamentally, the biggest urban transportation challenge is to achieve the modal shift away from private vehicles to mass transit systems - increase the share of public transport and decrease the share of private vehicles. Therefore, any innovation or disruption that improves the efficiency and thereby increases the use of private vehicles, as transport aggregators like Uber appears to be doing, fails the first-order test of social benefit.

Progress on tax base erosion

One of the big distortions in corporate finance, with increasing relevance in recent years, has been the tax deduction allowed on interest expenses. This has allowed companies in developed economies to lower their tax liabilities (and thereby boost profits) by leveraging the low interest rate regime and load up debt, even to the extent of using them to finance share buy-backs. 

Fundamentally, the favourable treatment give to debt has not only led to erosion of the corporate tax base but has also encouraged corporate indebtedness. Most worryingly, it has encouraged resource misallocation towards speculative financial market activities that have in turn furthered the trend towards excessive financialization. 

In this context, the G-20 and OECD's Base Erosion and Profit Shifting (BEPS) project to modernise international tax rules had in 2015 recommended that interest expense deductions be capped at a net interest/EBITDA ratio in the range of 10-30%, at the discretion of national governments. However, it allows for actual deductions in cases where the entire group’s ratio is higher than the fixed ratio, thereby acknowledging the supremacy of the principle of tax deduction on interest expenses.

Accordingly, the UK Government led the way by promulgating a Fixed Ratio Rule as part of its tax rules. 

The Fixed Ratio Rule will limit the amount of net interest expense that a worldwide group can deduct against its taxable profits to 30% of its taxable earnings before interest, taxes, depreciation, and amortisation (EBITDA). A modified debt cap within the new rules will ensure the net interest deduction does not exceed the total net interest expense of the worldwide group. The Group Ratio Rule allows a ‘group ratio’ to be substituted for the 30% figure. The group ratio is based on the net interest expense to EBITDA ratio for the worldwide group based on its consolidated accounts.

One of the less discussed, maybe even partially redeeming, feature of the Trump administration's tax reform plan is the introduction of limit on the tax deduction on interest expense. The rules state that the deduction shall not exceed the sum of the tax payer's business interest income and 30% of the adjusted EBITDA. The provision becomes tighter by 2021 by making it 30% of EBIT. However, it allows for "carry forward of disallowed interest" which allows corporates to deduct the remaining interest expense in the following years, upto the fifth year after the expense is incurred. 

Whatever the qualifications, these are undoubtedly positive developments to correct a serious distortion to corporate financing. 

It is expected to hurt private equity firms which have specialised on leveraged buyouts to generate returns. It is estimated that in the US, nearly 70% of companies with debt more than five times EBITDA would be negatively affected.

Jonathan Haidt on the liberal outpouring

City Journal has a fascinating abstract of Jonathan Haidt's recent lecture at the Manhattan Institute. He talks about the wonder called a "fine-tuned liberal democracy", 

When we look back at the ways our ancestors lived, there’s no getting around it: we are tribal primates. We are exquisitely designed and adapted by evolution for life in small societies with intense, animistic religion and violent intergroup conflict over territory. We love tribal living so much that we invented sports, fraternities, street gangs, fan clubs, and tattoos. Tribalism is in our hearts and minds... Here is the fine-tuned liberal democracy hypothesis: as tribal primates, human beings are unsuited for life in large, diverse secular democracies, unless you get certain settings finely adjusted to make possible the development of stable political life. This seems to be what the Founding Fathers believed. Jefferson, Madison, and the rest of those eighteenth-century deists clearly did think that designing a constitution was like designing a giant clock, a clock that might run forever if they chose the right springs and gears... They built in safeguards against runaway factionalism, such as the division of powers among the three branches, and an elaborate series of checks and balances. But they also knew that they had to train future generations of clock mechanics. They were creating a new kind of republic, which would demand far more maturity from its citizens than was needed in nations ruled by a king or other Leviathan.

He points to the rise of centrifugal forces and weakening of centripetal forces that hold together the social fabric. In particular, he points to the absence of a unifying enemy, divisive social media, growing immigration and attendant diversity, radicalisation of the Republican Party (fuelled by the likes of Fox TV), and the new identify politics of the Left. 

On the last, he quotes Jonathan Rauch to define identity politics - a “political mobilization organized around group characteristics such as race, gender, and sexuality, as opposed to party, ideology, or pecuniary interest.” He gives the example of Martin Luther King's speech as an example of good kind of identity politics "because it framed our greatest moral failing as an opportunity for centripetal redemption". He contrasts this with a new version of identity politics taught in universities since the last five years - intersectionality. 

The term and concept were presented in a 1989 essay by Kimberlé Crenshaw, a law professor at UCLA, who made the very reasonable point that a black woman’s experience in America is not captured by the summation of the black experience and the female experience. She analyzed a legal case in which black women were victims of discrimination at General Motors, even when the company could show that it hired plenty of blacks (in factory jobs dominated by men), and it hired plenty of women (in clerical jobs dominated by whites). So even though GM was found not guilty of discriminating against blacks or women, it ended up hiring hardly any black women. This is an excellent argument. What academic could oppose the claim that when analyzing a complex system, we must look at interaction effects, not just main effects?

He describes its consequences, 

But what happens when young people study intersectionality? In some majors, it’s woven into many courses. Students memorize diagrams showing matrices of privilege and oppression. It’s not just white privilege causing black oppression, and male privilege causing female oppression; its heterosexual vs. LGBTQ, able-bodied vs. disabled; young vs. old, attractive vs. unattractive, even fertile vs. infertile. Anything that a group has that is good or valued is seen as a kind of privilege, which causes a kind of oppression in those who don’t have it. A funny thing happens when you take young human beings, whose minds evolved for tribal warfare and us/them thinking, and you fill those minds full of binary dimensions. You tell them that one side of each binary is good and the other is bad. You turn on their ancient tribal circuits, preparing them for battle. Many students find it thrilling; it floods them with a sense of meaning and purpose.

And here’s the strategically brilliant move made by intersectionality: all of the binary dimensions of oppression are said to be interlocking and overlapping. America is said to be one giant matrix of oppression, and its victims cannot fight their battles separately. They must all come together to fight their common enemy, the group that sits at the top of the pyramid of oppression: the straight, white, cis-gendered, able-bodied Christian or Jewish or possibly atheist male. This is why a perceived slight against one victim group calls forth protest from all victim groups. This is why so many campus groups now align against Israel. Intersectionality is like NATO for social-justice activists.

This means that on any campus where intersectionality thrives, conflict will be eternal, because no campus can eliminate all offense, all microaggressions, and all misunderstandings. This is why the use of shout-downs, intimidation, and even violence in response to words and ideas is most common at our most progressive universities, in the most progressive regions of the country. It’s schools such as Yale, Brown, and Middlebury in New England, and U.C. Berkeley, Evergreen, and Reed on the West Coast. Are those the places where oppression is worst, or are they the places where this new way of thinking is most widespread?

Let me remind you of the educational vision of the Founders, by way of E.D. Hirsch: “The American experiment . . . is a thoroughly artificial device designed to counterbalance the natural impulses of group suspicions and hatreds . . . This vast, artificial, trans-tribal construct is what our Founders aimed to achieve.” Intersectionality aims for the exact opposite: an inflaming of tribal suspicions and hatreds, in order to stimulate anger and activism in students, in order to recruit them as fighters for the political mission of the professor. The identity politics taught on campus today is entirely different from that of Martin Luther King. It rejects America and American values. It does not speak of forgiveness or reconciliation. It is a massive centrifugal force, which is now seeping down into high schools, especially progressive private schools.

It is this dynamics of intersectionality that has made the liberal opinion leaders advocate simplistic positions in favour of free-trade, globalisation, deregulation, immigration, excessive individualism and individual rights, and so on. The backlash is for everyone to see.

The challenge with job creation in India

India's labour market problem is not one of literal unemployment, but of productive employment. Alternatively, we have a problem of disguised employment - employee claims education and skills beyond the requirements of their job. In more practical terms, it is one of sorely deficient well-paying  formal sector jobs. 

Let us be clear. In a large economy like India, where the vast majority of workforce is rural and informal, some form or other of bare subsistence employment is always likely to be available. The real problem is availability of (formal sector) jobs appropriate for a skilled workforce, much less the ones that meet their aspirations. 

So, for example, R Gopalan and MC Singhi are barking up the wrong tree. They quote Labour Bureau data from 200910 to 2015-16 to claim that "India's jobless growth is a myth". But they do nothing to refute the central problem. In fact, unwittingly, they end up substantiating it,

The Labour Bureau survey (2015-16) has categorized workers according to their monthly income levels. Most of the workers, 84% of all, whether self-employed, regular wage earners, contract workers or casual workers, were getting an income of less than Rs10,000 per month (Figure 1). Regular wage earners or salaried-class workers were better off, with 57% having a monthly income of Rs10,000 or less. Finally, 96.3% of casual workers, including those who were employed for public works, and 85% of self-employed persons had a monthly income of Rs10,000 or less. Enough work was also not available for nearly 40% of the workers; they were being employed for only a part of the year. In terms of decent, productive and well-paid jobs, considerable gaps continued to persist.

Given that nearly 90% of the workforce is employed in the informal sector, predominantly with less than regular wage incomes and more likely as casual workers, it is fair to say that the overwhelming majority of new entrants get an income less than Rs 10000. In fact, the vast majority would have monthly incomes far less than Rs 10000. Now, how much can Rs 10000 get you if you are a migrant, even if single though with a commitment to save something to send back home, in a big city? Not to speak of the deductions that come along with formality. Manish Sabharwal has been a constant chronicler of all these. So clearly we have a problem of inadequate supply of productive, and therefore well-paying, jobs.

Gopalan and Singhi end up with suggestions that are unlikely to be relevant or actionable, much less effective,

It is necessary, then, to evolve strategies to create supplementary opportunities for the self-employed, improve the female labour force participation rate, increase the ratio of female to male job seekers, and reduce interstate differences.

No quibbles with the need to improve female labour force participation rate, but this is a second order challenge to more fundamental structural failings. But the suggestion to create supplementary opportunities for self-employed may be exactly the wrong path to follow as a job creation strategy (though maybe appropriate as a poverty alleviation strategy). 

As I have blogged earlier, India's problem is not too little entrepreneurship, but too much and mostly of the wrong kind. India's labour market is characterised by unproductive, informal, self-employment based subsistence entrepreneurship. Instead there should be a much greater share of workers employed in productive, formal sector jobs. 

In fact, India needs more of the dynamic entrepreneurs, of the type that creates productive jobs. As Ejaz Ghani and Co have shown, the only two reliable predictors of such entrepreneurship are infrastructure and human resource quality. In simple terms, they show that dynamic entrepreneurship require educated entrepreneurs who start formal enterprises. In contrast, the vast majority of the MUDRA entrepreneurs are more likely inadequately (or poorly) educated, creating more of informal subsistence entrepreneurship. 

The quality of human resource development goes beyond entrepreneurs and has relevance for the workers themselves. For example, while the new worker may claim education and skills appropriate for productive jobs, those skills may be of a quality inadequate to meet the requirements for productive employers. All this takes us to the issue of poor quality of education, at all levels, and the resultant supply of "unemployable" graduates and post-graduates, who make both poor workers and poor entrepreneurs. 

On the demand-side of the labour market, there is the problem associated with the the larger existing formal sector enterprises, where job creation is constrained by the continuing weakness in capex spending. 

In conclusion, we really do have a jobs problem. More specifically very limited supply of formal and productive jobs. Most worryingly, the mainstream debates confuse poverty alleviation strategies with job creation strategies.

Update 1 (14.01.2018)
Mahesh Vyas refutes Messers Gopalan and Singhi here.

Eco-system as a constraint on outcomes-based policies

I have blogged earlier here about the under-appreciated difficulties with targeting outcomes. Apart from the three challenges raised in that post, there is another equally important challenge. This concerns ecosystem constraints.

It is commonly assumed that the existing ecosystem can be disciplined to achieve the desired outcomes through efficiency improvements, by getting human and physical capital to work more and better. What if this is not at all true?

This post gives three examples of how outputs or outcomes-focused technology or process interventions disrupted entrenched equilibriums and raised difficult administrative challenges. 

Consider school education. We have no clear idea of how much of learning outcomes realisation is a function of early childhood education, classroom instruction, remedial support in classroom, peer-engagement, off-school hours engagement at home, and the grade-appropriate competency levels themselves. What are their relative weights? How do those vary across socio-cultural contexts?  What if the competency standards are too ambitious? Or what if home engagement is critical?

Consider primary health care. This study found that doctors spend limited time and asked very few questions (as against what the medical protocol dictates) when treating patients. And it is pervasive across developing world, though nowhere as bad as in India. While unambiguously accepting the larger point about apathy and incompetence, it is also important to highlight the plumbing reality - the Out Patient load, when doctor is available, in PHCs can be far higher than what any systems can deal. Once this becomes the norm, a newly recruited doctor, over a few years, deeply internalise the challenge and forms a response that instead of treating the patient only tries to get done with the long-que of patients before lunch! Just imagine a GP in UK dealing with 30 patients turning up over a two-hour window with just one nurse for assistance. 

Nowhere is this more relevant than with state capacity. It is unrealistic to expect public systems as they exist now to deliver sectoral outcomes in scale and anywhere close to the defined benchmarks. Right now, these systems are entrapped in a low-level equilibrium of low human and physical resource allocations, unfavourable socio-economic conditions, and tolerance for and expectations of sub-par outcomes. Even the most incentive compatible financing strategy cannot be expected to have anything other than marginal effect on the system.  

Fundamentally, this should have been simple. Development is hard. The resolution of complex problems demand multi-dimensional policies that directly and proactively address deep structural failings, and persistent effort in their implementation. So to expect outcomes-targeting to magically deliver the result is plain naive.

But that we still fall prey to the lure of such apparently neat and simple solutions can be blamed on our psychological urges. We want to do something quickly about these complex problems. We find the logic of outcomes-based policies irresistible. So we seek refuge in them.

But they will not work!

The alternative assets universe and India

The latest quarterly update of infrastructure funds from Preqin shows that the total dry powder held by unlisted infrastructure funds has reached a record high of $154bn as at September 2017. Most of this is routed to N America and Europe, with just $20 bn earmarked for all of Asia, including China and Japan. 

As regards India, the total dry powder currently available aimed at investing in India is just $3 bn. The vast majority of this comes from overseas funds, rather than domestic fund raising. In fact, India forms just 7% of the $65 bn unlisted infrastructure assets in the Asia-Pacific region. 

As to the entire alternative investment funds industry - private equity, venture capital, real estate, infrastructure, private debt etc - the total assets under management (AUM) as of December 2016 was $598 bn. India's share was $42 bn, of which $13.5 bn was the dry powder.

The major share of the AUM in India went into PE/VC funds. The PE sector has been boosted by the pick-up in exits, $10 bn in each of 2015 and 2016, and $7 bn to date this year.

While $7 bn of the $23.6 bn in the PE/VC sector is dry-powder available for deployment, a very small proportion of this is currently earmarked for buyouts. This allocation is contrast to elsewhere, including in Asia, where buyouts form the dominant share. 

Two observations

1. The government has planned infrastructure investments in the range of $700-1000 bn over the coming five years. It is estimated that a significant share of the investments will come from foreign investors. But, as these numbers show, we would be happy if even 10% of these investments come from abroad. Therefore, expectations of the National Infrastructure Investment Fund (NIIF) being able to leverage its $3bn corpus ten-fold etc are simply unrealistic.

One approach to attracting more infrastructure funds is by selling commissioned assets where revenue streams are predictable. Entities like NTPC and NHAI should consider divesting certain existing assets both attract infrastructure funds as well as mobilise resources to finance newer projects.

2. The new Bankruptcy Code and the resultant wave of distressed assets sales promises to flood the Indian market with massive buyout opportunities. The domestic market may not be deep enough to absorb anything beyond the first few sales. Foreign buyout funds would be essential for the fair price discovery required to make these sales sustainable, both commercially (for banks) and politically. 

While the currently earmarked amounts India-focused buyout funds is negligible, this distressed asset sales present a great opportunity to attract a big volume of such funds and deepen India's alternative assets market. This may require more strategic approaches to some of these sales, including bundling assets into groups so as to make it large enough to be commercially attractive.

As to the distressed assets sales themselves, two articles in Mint point to the challenges that are likely to be faced going ahead. One concerns the 26 GW of thermal power assets without any power purchase agreements, which makes them risky even after write-downs and restructuring. In these cases, as I have argued earlier, it may have to fall on NTPC to become a buyer of last resort.

The other one relates to steel sector, where the problems are worse still and massive haircuts may be necessary. And, unlike with power assets, it may be very bad idea of have an inefficient SAIL buy them up. In this case, strategic sales by bundling assets assume relevance.