How the reforms changed Bollywood

Indian films are going though a revolution. Ram Gopal Varma ki Aag , billed as blockbuster of the year, flopped. So did earlier big-budget films such as Jhoom Barabar Jhoom and Salaam-e-Ishq .

But high-quality small-budget movies have done well. A single big-budget song sequence costs Rs 2 crore, but Bheja Fry was made for under one crore, and grossed Rs 17 crore. Life in a Metro cost Rs 7 crore and grossed Rs 25 crore. Twenty new small-budget films are due for release before Diwali. The film revolution is one of quality and innovation no less than of budgets. In the 1970s and 1980s a few big producers and stars monopolised the industry, and talented newcomers could not break in. Producers made ‘formula\’ films to reach the largest possible audience. They avoided films without stars, or with offbeat themes, as financially risky. Rare exceptions were films by people like Shyam Benegal and Sooraj Barjatya.

Worse, the neta-babu raj did not regard films as an industry, and so nationalised banks would not lend to this ‘non-industry\’. Finance came mainly from the underworld, which alone had surplus black money. In that era, income tax rates touched 97.75% and wealth tax added another 3%, making white wealth impossible. Actors, music directors and all other participants demanded payment in black cash. This was available mainly from Dawood Ibrahim and Co.

Nobody should be surprised that Sanjay Dutt agreed to keep the firearms of mobsters who staged the Mumbai bomb blasts of 1993. The mobsters were part and parcel of the film scene. Sanjay Dutt saw them as colleagues, not terrorists.

Today, financial liberalisation has transformed the industry. Filmmakers, small and large, can get bank finance, mostly easily from the new private sector banks. Some filmmakers have floated new companies on stock markets, and rewarded investors with good profits and high share prices. Some who started small are getting big. UTV, for instance, has tied up with Will Smith for two Hollywood films, and has sold an equity stake to Walt Disney. Big business houses (Tata, Zee) are also entering the industry.

Another key factor in the film revolution was the explosion of private sector TV channels after Doordarshan\’s monopoly ended in the 1990s. The new channels competed in soap operas and other programmes for a fast-growing audience. This launched a thousand actors, directors, costume designers, scriptwriters and others. Many graduated into films.

Today, talent matters more than contacts. Earlier, big stars changed film scripts at will to suit their egos. But small-budget films focus on good scripts and new ideas. Quality is all-important since these films aim for select audiences. Their success has encouraged innovation and offbeat themes in big-budget films too, such as Lagaan .

The final form of liberalisation that facilitated the film revolution was cinema hall deregulation. During the licence-permit raj, most states and cities placed stringent curbs on new cinema halls, which were assigned zero priority by central planners, who lavished funds on Doordarshan instead. Large bribes were required to get new licences. A typical licensed theatre had up to 1,000 seats. So, large audiences were needed to fill the halls, buttressing the search for big-budget, formula films.

Worse, most states imposed price control on tickets. This was supposed to benefit the poor, yet subsidised mainly the urban middle-class. Price control made it imperative for theatres to try and fill all seats. Hence, they avoided off-beat films.

The end of the licence-permit era has led to an explosion of new theatres in every city. Even more crucial, price control has largely disappeared. This has made possible the multiplex, the corner-stone of the new film revolution. A multiplex can have five different halls with 150 seats each. The abolition of price control means multiplexes can charge Rs 150 per seat. Hence, modest audiences can generate enough revenue to ensure the profitability of small-budget films.

The new audiences include linguistic minorities. Columnist Arvind Kala says, “No longer does it matter that Karnataka\’s Hindi-speaking population is just three lakh and Tamil Nadu\’s 1.37 lakh. It\’s large enough to fill a 150-seater multiplex hall showing, say, Khosla Ka Ghosla . In the same way, a multiplex helps The Bong Connection connect with the 1.21 lakh Bengalis living in Delhi.”

The Financial Times , London, says that India has suddenly emerged as the multiplex capital of the world, building 10-15 multiplexes every month. But what matters more than sheer numbers is the quality, diversity, innovation, and opening up to newcomers that the film revolution has generated.

The industry has long been one of India\’s biggest and most internationally well-known. Yet, for decades it was crippled by a series of moronic regulations and controls. And it remained in the grip of black money and a small monopolistic bunch of producers and stars. Today, it is increasingly financed legally, it accommodates talented newcomers in droves, and quality flourishes as never before.

Few people think of the revolution in the film industry as a success of economic liberalisation. Yet, it was made possible only by the deregulation of a great many sectors – filmmaking, banking, capital markets, TV, theatre-building – plus the lifting of price control on tickets.

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