KEY POINTS:
We are very disappointed in India. It hasn't lived up to our expectations," said a glum investment banker in the late 1990s after years of futile efforts to drum up business in the subcontinent.
The young investment banker had genuine reason for his grumbling. In the early 1990s, as India began to open up its economy, hordes of bankers descended on the country confident they would reap untold riches. By 1997, when the government-run telephone company MTNL called for bankers to make presentations before a GDR (global depository receipt) issue in London, about 26 banks turned up.
A few years later, at the turn of the century, most had packed up and gone home.
In those days I watched many Indian ministers turn up in London to sell the "India Story" to an ever dwindling audience of stockbrokers and investment bankers.
The tale they told was always the same: India had a billion people and, because of its sheer size, couldn't be ignored.
Its middle class, they constantly emphasised, was growing in leaps and bounds - estimates about middle-class buyers varied wildly and swung between 50 million and 150 million. India, they admitted, was a tough and idiosyncratic market but highly lucrative once you cracked it.
Besides, as they never failed to point out, we had democracy. And, if that wasn't enough, we also spoke English.
What went wrong in those distant days?
The answer lay in a combination of factors. For starters, the Reserve Bank of India had stamped hard on the monetary brakes and the government tightened its purse-strings (Prime Minister Manmohan Singh was the finance minister at the time ) as the elections loomed.
The result of these moves was a fierce economic slowdown that took several years to shake off.
But that wasn't all. In those days of high interest rates, many growth-hungry companies borrowed heavily and embarked on ambitious expansion sprees that were fuelled by excessive optimism. Developers, for instance, figured that backward integration would be a smart move and put up cement plants. Others moved into steel, waiting for the economic boom they believed was sure to come. When the economy came skidding to a halt, they were all caught unprepared and left with heavy debts.
Some economists believe those were the lost years for the Indian economy, the "might-have-been" era when the Chinese blazed into the fast-growth racetrack and India was stagnant, mired, it seemed, in its own inconsistencies and the inefficiency of the democratic system.
So, what has changed?
Most importantly, there's the Indian middle class, which really has grown both in sheer size and financial muscle. In the 1990s, most Indians were genuinely poor by international standards. They could afford to stay that way as long as they didn't leave India, where most goods and services were also cheap. But going abroad was a nightmare for travellers from the subcontinent - a day pass on the London Underground used to cost about Rs 200 ($6.20) compared to about Rs 5 for a city bus ride in India.
Today that has changed beyond recognition. Earnings are climbing and jobs are more plentiful than they've ever been. Across the spectrum, companies are handing out generous annual increments and some are considering mid-year 'loyalty bonuses' to halt job-hopping and mass exoduses.
The new affluence has had several important results. Indians, a decade ago, couldn't afford to take out mortgages or buy cars and televisions on hire purchase. Their salaries simply weren't big enough to make repayments.
Today, they've collectively gone on a spending spree triggered by cheaper, affordable credit. The result is that the property market is red hot, as are other industries such as automobiles and consumer electronics. In urban India, for instance, sales of flat-screen TVs have more than doubled in the last year. Similarly, sales of residential, commercial and office space are booming at an unprecedented rate.
In other ways, too, the India of this first decade of the new millennium has altered beyond recognition. In the mid-1990s, India's software companies were still midgets in the international arena, selling "bodyshopping" services to customers who probably had never heard of Bangalore, where many firms had their headquarters.
For the software companies a key growth trigger was Y2K fever. Nobody will ever know if the world was saved from cyber-meltdown at the stroke of midnight on January 1, 2000.
But India's software firms have good reason to be thankful that they were handed the task of altering millions of lines of codes.
Suddenly, they became bigger and known for their ability to handle tough tasks. They entered the new millennium considerably stronger as a result and laid the ground for their spectacular emergence on the global scene.
The Dog Years of the late 1990s were like an ice-cold bath for many Indian companies. Most had grown to maturity during the "Licence Raj" era when one or two companies would be given licences in each industry and production was strictly controlled by the Government. Licences in those days were tough to get but once in hand they were almost permits to print money.
So, when the economy began to grow swiftly in the early 1990s, most firms figured they needed only to go on-stream for the money to start rolling in. They were wrong.
The hard times forced most Indian conglomerates to trim costs. Today they are leaner and meaner and ready to take on the world.
And since they've become slim, low-cost producers they can afford to scan the globe for attractive buys.
Perhaps India's moment in the economic sun has finally arrived.
