Typical scenery in Bihar
A few weeks ago, I traveled to Patna to visit Husk Power, an Acumen Fund investee, with Acumen Fund’s Energy Portfolio Manager Karthik Chandrasekar. Husk Power is in the business of setting up mini power plants in Bihar, one of the poorer and more populous states along the Indian rice belt. I’d been spending the summer working on the energy portfolio and was excited to meet the Husk entrepreneurs. These were the guys who figured out how to roll out mini electric utilities in a state where close to 85% of the population lived in rural villages. It was a good trip, and in retrospect, I think I learned a few new (and useful) things.
One day, we were riding in a car with Gyanesh Pandey, CEO of Husk Power, when a very bored-looking policeman pulled us over and asked us to show him our vehicle registration papers. Our driver gave him our papers, which were photocopies, because in India, nobody keeps originals in their cars. The officer wasn’t satisfied. He didn’t want photocopies. He wanted money: 9,000 rupees in cash. If we paid him, he’d let us go, and if we didn’t, well, we just never asked. Unsure of what to do, we sat and waited in the stifling heat of the car. Then, for the next half hour, we watched Gyanesh and the policeman, in between long, drawn-out pauses, have a go. From what I could piece together (given my limited understanding of Hindi and the general confusion I was feeling at the time), the dialog went something like this (I think):
- Policeman: I want my money.
- Gyanesh: I got no money, but I’m happy to drive to an ATM with you and get you some money, but you need to write me an official receipt.
- Policeman: I’m not driving anywhere. But I like you, so I’ll give you a discount. I want some money.
- Gyanesh: On any other day, I’d pay you. But today, I’m with my Chinese business associate [then he points at me!] and it would be very shameful if he saw me paying you money. Think about how bad this would look!
- Policeman: Oh snap. [long pause] Fine, just go.
In the aftermath, I asked Gyanesh and Karthik to explain their police strategies to me. They agreed that when dealing with corrupt law enforcement officers in India, one should never give in, but must be prepared to spend a lot of time hanging around. If one simply hangs around long enough, then sooner or later, the policeman will realize that his time would be better spent extracting income elsewhere. He was, after all, a businessman, and businessmen have their own businesses to run.
At Acumen Fund, there is a tradition where team members are sometimes asked to share ‘Aha!’ moments, brief stories about the things that stood out or inspired us over the past week. So when we returned to Hyderabad, I told my policeman story during one of our weekly staff meetings. It was good to hear the reactions of the team. One person commented on how Gyanesh seemed completely prepared in advance to be patient in such a difficult situation. He was street smart, but more importantly, made it a point never to cave in to the corrupt demands of the police officer. Another person pointed out that ‘hanging around’ is what so many of our entrepreneurs have to do in order to avoid paying bribes. As a result, investors needed to be patient and expect results over the longer term. At least one other person swore that ‘hanging around’ also worked on policemen in Tamil Nadu.
For me, the experience highlighted the unexpected challenges of operating in rural parts of India.
Ken Lee is a student at Columbia University’s School of International and Public Affairs pursuing his Master’s in International Affairs. This summer, he was working on the energy portfolio in Acumen Fund’s India office.
The Summer Spotlight series features posts by Acumen Fund Summer Associates from around the world.
