Implosion: India’s Tryst with Reality
Page 27
16. http://ridingtheelephant.wordpress.com/2013/01/20/rahul-gandhis-inevitable-and-incredible-appointment-as-congress-no-2/
17. ‘The fifth monarch – Will Rahul sit on his great-grandfather’s (and grandmother’s and father’s) throne?’, http://www.economist.com/node/4494143
18. Rahul Gandhi speaks with Tehelka magazine, 24 September 2005 – later claimed not ‘an interview’, http://www.tehelka.com/story_ main14.asp? filename=Ne092405_I_could_CS.asp
19. Ritam Sengupta, ‘323 ads, nearly 160 pages to mark 5 anniversaries’, Sans Serif, 14 November 2011, http://wearethebest.wordpress.com/2011/11/14/323-ads-nearly-160-pages-to-mark-5-anniversaries/
20. http://ridingtheelephant.wordpress.com/2010/02/08/rahul-gandhi-shows-the-nehru-gandhi-dynasty-is-firmly-embedded%E2%80%A6%E2%80%A6%E2%80%A6/
21. http://ridingtheelephant.wordpress.com/2009/01/27/india-raised-ulster-when-rebuking-miliband-on-kashmir/
22. Parliamentary Performance, research by PRS –http://www.prsindia. org/mptrack/rahulgandhi and http://www.prsindia.org/mptrack/SoniaGandhi
23. ‘As a brand, Rahul Gandhi hasn’t taken off ’, The Times of India, 20 November 2011, http://articles.timesofindia.indiatimes.com/2011-11-20/special-report/30421925_1_rahul-gandhi-brand-prahlad-kakkar
24. http://ridingtheelephant.wordpress.com/2013/01/20/rahul-gandhis-inevitable-and-incredible-appointment-as-congress-no-2/
25. ‘Rahul Gandhi emerges as Manmohan Singh declines’, http://ridingtheelephant.wordpress.com/2012/02/06/government-in-blundering-retreat-on-corruption-crisis/
26. http://ridingtheelephant.wordpress.com/2012/03/06/crony-capitalists-line-up-changes-in-up-as-rahul-gandhi-stumbles/
27. http://ridingtheelephant.wordpress.com/2013/01/20/rahul-gandhis-inevitable-and-incredible-appointment-as-congress-no-2/
28. Transcript of Rahul Gandhi’s speech at AICC Session, Jaipur, http://www.sify.com/news/full-text-of-rahul-s-first-speech-as-congress-vp-news-national-nbvk60ffaei.html and video http://www.ndtv.com/video/player/news/congress-will-support-every-indian-says-rahul-gandhi/262506
29. http://ridingtheelephant.wordpress.com/2013/03/13/would-rahul-gandhi-like-to-close-his-family-dynasty/
30. ‘Rahul Gandhi says no to marriage and prime ministership’, Indian Express, 6 March 2013, http://www.indianexpress.com/news/rahul-wrong-to-ask-me-if-i-want-to-be-pm/1083780/0
31. http://ridingtheelephant.wordpress.com/2013/04/04/rahul-gandhi-dreams-with-a-beehive-of-buzzing-thoughts/
32. http://ridingtheelephant.wordpress.com/2012/10/23/corruption-tamashas-and-gossip-flood-india-but-change-will-be-very-slow/
33. Dipankar Gupta, ‘Our political parties are throttling democracy by declaring certain issues and debates out of bounds’, The Times of India, 13 October 2012, http://articles.timesofindia.indiatimes.com/2012-10-13/edit-page/34414269_1_taboos-caste-system-scandals-pile
34. http://ridingtheelephant.wordpress.com/2013/08/28/sonia-gandhis-2bn-bid-for-political-security/
35. ‘Sonia’s ambitious food bill wins LS vote; UPA gets its “game-changer”‘, Hindustan Times, 26 August 2013, http://www.hindustantimes.com/india-news/newdelhi/sonia-s-ambitious-food-bill-wins-ls-vote-upa-gets-its-game-changer/article1-1113348.aspx
36. ‘Cabinet overrules Supreme Court, clears ordinance to protect convicted MPs’, PTI, 25 September 2013, http://www.indianexpress.com/news/cabinet-overrules-supreme-court-clears-ordinance-to-protect-convicted-mps/1173585/
37. http://ridingtheelephant.wordpress.com/2013/10/03/rahul-gandhi-stops-a-small-compromise-on-lalu-yadav-but-does-he-have-the-stamina-to-be-a-leader/
V
GOVERNANCE
16
Illicit India
Corruption is ruining India. It pervades Indian society and government at all levels, undermining the authority of those responsible for running the country, crippling institutions, and frequently leading to bad decisions. The individual whims and wishes of politicians and bureaucrats, often corrupt and maybe also vindictive or vengeful, override laws and regulations. Distrust in public life has developed to such an extent that officials are often assumed to be guilty until proved innocent, which now impedes decision-making and ultimately, slows economic growth. The international image of India is suffering because what used to be regarded as relatively harmless ‘baksheesh’ is now seen as criminal fraud, deception and extortion, fed by personal greed and a lack of respect for the law.
Bribes, fraud and deception have become accepted as a way of public life, with the rewards far exceeding the minimal risk of detection and even rarer risk of punishment. People at all levels of society feel they have to fall in with much of it, whether or not they are actually motivated to do so. But it leads to bad decisions, increased costs, poor-quality work, project delays, and plundering of national assets. It is practised at all levels of society, particularly among politicians who, once their caste or social group moves into the mainstream of the country’s political and economic life, begin to emulate those who arrived earlier. For them, corruption has become a get-rich-quick option that suddenly generates enormous and irresistible wealth while they are in power and the going is good. This is demonstrated by the massive unaccountable wealth declared at election time by established politicians, though there must be much that remains hidden.
‘Corruption rules over the country with its stranglehold in every aspect of the state and consequently in all aspects of the life of citizens,’ says Bibek Debroy, an economist, in the best recent book on the subject. With co-author Laveesh Bhandari, he points out that corruption and bribery have become ‘a universally recognised medium of interaction and transaction between the citizens and the government’.1 It happened across all areas and levels of politics and bureaucracy, the judiciary, and publicly owned enterprises. ‘The parasite has eaten into the edifice of the state. Lower level bureaucracy and police thrive on bribes and baksheesh, higher level on grease money and scams.’ Such criticism, of course, also extends to financial services, where India has had major stock market and other scandals, the corporate world and sport.
Debroy and Bhandari stress the role of administrative problems that are caused by ‘improper allocation of discretion not backed up by adequate monitoring, poor enforcement of laws, and lack of punishments’. This ‘creates an environment where corrupt behaviour has become more a norm rather than an exception’. Discretion, they say, is ‘the power to judge what is to receive priority’, which can involve the power to veto or delay, or to approve and sanction, or maybe both.2
‘On big ticket corruption, the problem is that whatever you do, you will never be able to eliminate discretion and discretion opens up avenues for abuse,’ says Debroy.3 He differentiates ‘big ticket’ corruption with large-scale bribes and projects from ‘small ticket’, which is due to shortages in many services that include health, education and electricity and water supplies and even banking services and access to aid schemes, especially for the poor.
Corruption stories fill the headlines of newspapers almost every day, tumbling out one after another, with each story edging earlier ones out of the public gaze. In the few weeks that I wrote the first draft of this chapter, the news was dominated by a surge of scandals that illustrated the range and frequency of scams. The minister for railways resigned over bribe allegations. There were long-running stories on coal mining and telecommunication scams that stretched to the prime minister’s desk. There were more developments in a dramatic cricket match-fixing scandal in the glitzy IPL with political, business and other links that included a leading family-controlled company based in Tamil Nadu. A $500m penalty was levied by US authorities on a top pharmaceutical business for falsifying drug research results and other malpractices. The Bharatiya Janata Party’s state government in Karnataka was voted out of power after five corruption-riddled years, and a former Uttar Pradesh state government was accused of large-scale draining of funds allocated for construction of a chief minister’s egotistical monuments. The son of a former chief minister i
n Andhra Pradesh was refused bail after a year in jail during investigations of massive graft and extortion led by him and his late father.
The coal and telecom scandals involved a nexus of politicians and companies that fixed and fiddled contracts and licences, and were especially shocking because the government tolerated them, even when they were being widely talked about. The cricket and pharmaceutical scandals were significant because they pulled down icons of what were unwisely dubbed the ‘India Shining’ years of the 2000s when the country was riding high on strong economic growth. Corruption in the states of Karnataka and Andhra Pradesh had dragged down the international reputation of their capital cities, Bengaluru and Hyderabad, which led India’s information technology boom in the 2000s. All the unfolding sagas illustrated the malpractices that lay behind much of that growth in the mining, communications and manufacturing industries, showing how weak the foundations of modern India were.
Corruption happens in all types of societies; India is not alone in this. Its impact varies according to market forces and political systems. In some countries – China, for example – it has eaten into the structure of government, but it does boost economic development because bribes paid to a minister or a city mayor usually generate official approvals and economic activity such as construction of infrastructure projects. In India, it slows growth because of the pushes and pulls of a hyperactive democracy, and the greed of politicians and other vested interests. Extensive and complex government rules and regulations within an overdeveloped state apparatus provide politicians and officials with endless opportunities for exercising discretionary powers, and businessmen with consequential opportunities to gain illicit advantages over competitors. This is corruption at its most destructive. In India, it is damaging the heart of the society, pushing dishonesty down to the lowest levels so that even members of tribal communities and other poor suffer when they take their first steps into India’s mainstream economy.
Permissive Religion
One of India’s many curious contradictions is the way widely publicized acquisition of obviously illicit wealth is not only practised but is tolerated in an open society when two-thirds of the population struggle to make a living. ‘The only surprising fact about most corruption stories is that anyone in authority gets surprised. Everyone in charge knew that the Commonwealth Games Organising Committee was buying toilet paper at art paper prices, and turf at the rate of platinum. This was not considered unusual, let alone criminal, because the price of cream is built into public expenditure,’ says M.J. Akbar, a newspaper editor and author,4 in a colourful reference to problems that dogged preparations for the Commonwealth Games in Delhi in 2010.
‘The biggest culprit is society itself,’ says Nitte Santosh Hegde,5 a leading anti-corruption campaigner who was the Lokayukta (state corruption ombudsman) for the state of Karnataka from 2006 to 2011, having earlier been India’s solicitor general and a Supreme Court judge. ‘Wealth is regarded as a sign of success – you are felicitated. Society has lost the sense of differentiating between legitimacy and illegitimacy. When I was young, people didn’t respect the corrupt – you never invited people perceived to be corrupt to a function,’ adds Hegde, who was born in 1940. ‘Now hordes of people welcome them when they are let out of jail.’
That this should happen and be tolerated leads to the suggestion that India’s religious and cultural base encourages, or at least tolerates, such crimes and bending of rules. In the Bhagavadgita, Lord Krishna advocates doing one’s duty detachedly without caring about personal consequences, but he breaks the rules of warfare – one could say cheats – to win a battle in the larger epic of the Mahabharata. ‘In Hinduism, there is no binding or universal code of conduct that gives unequivocal primacy to the moral dimension,’ says Pavan Varma, a diplomat-turned-politician and a prolific author. Ethics do ‘not have an absolute or unalterable definition,’ he suggests in his book, Chanakya’s New Manifesto.6
‘Our understanding of right and wrong appears to be related far more to achieving whatever result is desired than to absolute notions of morality. To pay something to an official to lubricate the movement of a file is right if it smoothens the way to the desired goal. The payment of bribe is routinely looked upon as a matter of judicious investment, not morality. No invocation to Lakshmi, the goddess of wealth, emphasises the importance of making money only by conventional legitimate ways. The goddess represents wealth and prosperity; she is worshipped for these, not for how that prosperity is arrived at … In fact, for all the condemnation that corruption publicly provokes, Indians are ambivalent about the practice. They consider it bad when they have to bribe when they don’t want to; they consider it good if a bribe gets them what they want. In this sense, corruption is like litmus paper; it takes on the colour of the specific experience.’
This is echoed by Namita Gokhale,7 who says that the Hindu concept of an ‘individual view of destiny’ leads to a disregard of the greater common good. ‘A society segmented by caste and community is often narrowly focused on the advancement of the immediate family and kin. Although there may be enormous public outrage about corruption, moral ambiguity sets in and justifications come into play when it becomes convenient to do so. Presented with a choice of transforming their family’s prospects, by bending the rules or taking a bribe, large or small as the situation may merit, they will rationalize it into an ethical or pragmatic framework.’ Although Gokhale is talking here about Hindu culture, it applies across India and in other developing countries where improving the lot of oneself and family is a primary aim, especially at a time of economic expansion and rapidly rising expectations.
Fifteen years ago, I wrote:8 ‘Politicians have little alternative but to take bribes because there is no other way that they can finance their political party activities, while officials’ salaries are so low that they are easily tempted. Even the most honest officials say they will take bribes, or at least not object to others doing so, providing decision-making is not upset.’ At the most petty level, officials have always charged the public for doing ordinary work like issuing government forms, keeping telephones working or even delivering post. In rural areas, local officials persuade members of remote tribal and other communities to accept cash in place of subsidized goods, such as seeds or fertiliser, but then pay them only a fraction of what the goods are worth. Road builders bribe officials to award them contracts and to ignore inferior materials and poor workmanship, making extra profits for the builder and guaranteeing him more work (and the official more bribes) when the road breaks up.
‘At a higher level, in the pre-1991 days of India’s investment controls, companies bribed officials to obtain business licences and block competitors. Go even higher, and government ministers and officials took and still take multi-million-dollar bribes on large projects and contracts, frequently leading to shoddy work – often paid through consultants or partners so that the companies (especially American, because of US laws) can deny they paid anything. Such bribery and extortion is not confined to the public sector: executives in private sector corporations take bribes for giving business to suppliers and contractors.’
Since I wrote that, the scale and extent of corruption has escalated dramatically. Economists often argue that it should decline a few years after a country liberalizes its economy and removes restrictive regulations that had previously created openings for graft. That has not happened in India, as it theoretically should have done from the mid-1990s, partly because the government still wields extensive basic powers that give politicians and bureaucrats in the central and state governments the freedom to interpret laws and regulations as they wish and to generate massive riches for themselves and their cronies.
Large-scale illicit wealth now comes largely from manipulating the allocation and regulation of licences for natural resources such as the development of land, mining rights, oil exploration, mobile telecommunications, airlines and aircraft landing and maintenance slots at airports, and permissions to import
new aircraft. Illegal mining is widespread across the country, ranging from sand in river beds to marble, coal and other minerals, often carried out in defiance of Supreme Court orders and closely protected by well-rewarded state-level politicians. There are associated environmental and other approvals that govern when and where such resources can be used, plus approvals for construction and completion of buildings and other items. Then there are large-scale contracts for building and operating highways, ports, and airports that are fixed. As Raghuram Rajan said in 2010, ‘the predominant sources of mega wealth in India today [are] the guys who have access to natural resources or to land or to particular infrastructure permits or licences. In other words, proximity to the government seems to be a big source of wealth.’
Most of India’s fastest-growing companies, aside from those in information technology, operate in these sorts of areas – the Ambani brothers’ two Reliance businesses (oil and gas exploration, telecommunications and infrastructure), Naresh Goyal’s Jet Airways, the Adani group of Gujarat (coal imports and trading, ports and energy), K.P. Singh’s DLF (Delhi land and real estate), and the GMR, GVK and Lanco infrastructure companies from Hyderabad and Bengaluru. The families and their executives in charge of such companies are closely connected to central and state-level politicians and bureaucrats. Politicians also invest in companies that they are helping. Often (without pointing specifically at any of these names), a company’s unusually rapid expansion raises suspicions that financial investment is coming from politicians’ bribe money, maybe through proxy names. The funds are often kept abroad and are funnelled back through private equity and other investment companies located in the African island nation of Mauritius, India’s officially recognized tax haven, or elsewhere.