Wednesday, July 11, 2018

Corruption and the new oligarchy in India

Journalist James Crabtree’s new book, The Billionaire Raj, promises to be interesting.

His article in the Guardian is incisive. He writes about how economic growth in India has been characterised by the ballooning of the total number of (declared) billionaires and oligarchs, and, concurrently, the impoverishment of those at the lower rungs of the economy.

It also talks about the explosive potential of growing inequality.

However, if you ask people (particularly Indian expatriates) about what ails the Indian economy, people are likely to identify corruption as a bigger problem than inequality.

Anger about corruption runs deep in India. Corruption is rampant and endemic. Not a sector of the economy and state can be said to be free of corruption.

Indian expats are wont to wax lyrical about the sheer magnitude and inescapable tragedy of corruption in India. Let me not be an exception: Corruption suffuses the air and water in India; it infiltrates the very capillaries of life in India.

And people have been angry about it for a long time, even more so since 2010 and thereabouts, when a series of staggering exposes of scams, and the spectacular protests that these exposes precipitated, roiled the country.

But corruption and the existence of an oligarchy are closely inter-related. In spite of the enormous challenges that attend any investigation of the problem, Indian journalism has been particularly good at exposing the links between crony capitalism and corruption. Now, this book, written by a journalist, brings into sharper focus how crony capitalism, corruption and oligarchic economic growth really define India’s economic story.  

What does the existence of an oligarchy say about corruption in India? Well, everything. Most of the major scams that have rocked the country have been instances of corporate perfidy and state complicity in that perfidy.

Crabtree’s book, going by his essay, promises to present some insights into this very nexus and investigate how crony capitalism has led to the ballooning of both corporate and state corruption.

Fundamentally, though, he seems to focus on the ‘big picture’, which is that India is rapidly going down the Latin American path – development and middle-income status will bring about staggering inequality, and the country as a whole will remain pegged very low on the human development index.

This path is likely to lead to a situation where most of the wealth that is generated in the country will remain concentrated in the hands of the 0.001%. ‘Jobless growth’ will continue to be entrenched.

Also – and this is something that is relevant to expat readers – it will further exacerbate the current situation of economic ‘tickle out’. Oligarchs earning their wealth in India transfer large portions of it to overseas ‘safe havens’, leading to reduced ‘trickle down’ domestically.

While some may think that this is not concerning in and of itself (well, it actually is), the problem takes on a sinister hue when you throw corruption and global mobility into the mix.

By all accounts, most corrupt oligarchs – even the average rich politician – in India siphon off wealth overseas, whether through expenditures, investments or plain old Cayman Islands-style post-boxing.

If the issue of the state banks accumulating bad assets because of bad loans (including corruptly procured loans) to corporates is concerning, how much more concerning is the prospect of never recovering wealth that has been appropriated from public banks through structurally unsound means (Crabtree’s article provides the two prime examples of this, ones that have hogged the headlines in recent years). 

The fundamental reality is that most rich Indians spend and will continue to spend a fair chunk of their disposable wealth (of whatever hue this might be) overseas.

But, as I said, for oligarchs and the corruptly rich, the scales are quite out of whack.

Crabtree is right that Prime Minister Modi’s efforts to address the problem of ‘big picture’ corruption have not yielded the ‘big picture’ solutions that many Indians had hoped for and have been hoping for since the Jan Lokpal days.

And, while many oligarchs are out there in the limelight, corruptly rich politicians are well and truly safely ensconced in their fiefdoms.

Anyone who understands what the price of corruption in India is (in terms of lost human and infrastructure development), and perhaps has also had the misfortune of witnessing how corrupt Indian politicians spend overseas, will balk at the injustice of it. 

The oligarchic economic growth that the IMF and others like Crabtree are talking about is going to entrench the extractive element of India's economy.

Unfortunately, in India, the state tends to obsess about getting the small fish. Individual tax-payers, with modest incomes, will be hounded to hell and back, but politicians, oligarchs and even the average rich person with ‘connections’ will remain free to steal, swindle and bribe with impunity.

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