Paradoxically, the steps Gandhi took to bolster her own position in the short term helped to weaken and destroy whatever vestiges of party structure and internal democracy Congress still clung to.76 While Gandhi’s tactics had long alienated many within the party, her machinations now manufactured considerable resentment among the populace. Indeed, within a few years, anti-Congress sentiment was once again raging, thanks to the unfulfilled promises of the Indira myth, economic travails, and the rise of a confrontational political movement led by opposition leader Jayprakash Narayan, who called for “total revolution.”
Deepening electoral strife, coupled with rising social demands and the decline of Congress and, more generally, political parties, set the stage for a more active role for criminals in politics. Two additional pull factors also contributed to the evolving relationship between crime and politics: the continuing breakdown of law and order and the collapse of the election finance regime.
Centralized Powerlessness
Since the late 1960s in particular, the Indian state’s capacity to effectively deliver services, adjudicate disputes, and protect its citizens had badly eroded. For starters, the institutional base that India had inherited from the British, upon which it had further built under Nehru’s leadership, could not keep up with India’s growing population and social mobilization in the absence of adequate investment or proper care and nurturing from India’s political leaders. To make matters worse, in seeking to establish a direct link with the masses, Indira Gandhi sought to stir up mass political mobilization without investing in the “requisite institutional mechanisms to satisfy their demands.”77 The result was a combination of centralization and powerlessness.78
Within Congress, ideology and party service were replaced by personal loyalty as the most important selection criteria. Gandhi imported many of the same strategies in dealing with the institutions of governance. Rather than reaffirming the autonomy of the Indian state, she pushed for the civil administration, the police, and the judiciary to be directly answerable to her. As Lloyd and Susanne Rudolph noted, “The independence, professional standards and procedural norms of the Parliament, courts, police, civil service and federal system gave way to centralization based on personal loyalty.”79 The advent of a “committed bureaucracy”—where political neutrality was dismissed in favor of partisan loyalty—greatly weakened the “steel frame” India’s rulers inherited from the British.80
The deinstitutionalization of the police was of particular relevance to the growing criminalization of politics. The political class’s growing reliance on criminals, gangs, and assorted toughs posed a complex quandary for the politicians because they had to find ways of awarding protection to such nefarious characters in exchange for their cooperation. This meant, above all, that the police had to be neutralized. The chosen solution was to ramp up political control of the police and remove any semblance of a firewall between the people making the laws and those actually implementing them. As with other aspects of the state apparatus, India’s political leaders decided to prioritize partisanship over professionalism in making appointments.
To be fair, the police had been under great stress even before Indira’s time. But the decades of the 1960s and 1970s pushed the force to new lows. Under Indira, one scholar wrote, the police became “deeply involved in partisan politics: they are preoccupied with it, penetrated by it, and now participate individually and collectively in it.”81
Not all blame should be placed at the door of the central government, however. Under the Indian Constitution, law and order is a state subject so there is considerable scope for regional governments to shape and influence the police. Sadly, state politicians adopted a largely similar stance to the police as the center; many state chief ministers held onto the home ministry portfolio precisely because that ministry has oversight of the police.82 Across all levels of government, the “substitution of party control of the police for the rule of law became a matter of high policy.”83
“Mastanocracy”
The breakdown in law and order, and the corresponding politicization of the state apparatus, blurred the line between violence and legitimate democratic tactics. What transpired was nothing less than the partial privatization of the coercive functions of the state.84 The growth of the Shiv Sena of Bal Thackeray, for instance, took place in this context. In its original incarnation, the Sena was expressly nonpolitical in that it did not participate in elections; it was a nativist social movement premised on the belief that Maharashtra belonged to native Maharashtrians, not migrants from other states.85 Over time, it morphed into a political organization with statewide appeal. The Sena perfected the art of simultaneously engaging in “institutionalized politics, violent street-level agitation, and informal networking and local brokerage.”86 Earning “respect” through violence was an essential part of the Sena’s repertoire; as one MLA told the scholar Thomas Blom Hansen, “Thackeray has told us that you should be polite and talk to the person, but if he does not talk and shows you the law, there is also nature’s law and I can use it—that is to hammer the person.”87
In other parts of the country, like rural north India, caste-based gangs exploited the breakdown in law and order to leverage their ability to serve as effective public goods providers to gain electoral traction.88 Many of these groups arose in opposition to violent left-wing extremist groups, such as the Naxalites, which the state was unable or unwilling to combat. The Naxalites too had their allied political formations that were highly active in electoral politics.
In West Bengal, growing violence and lawlessness created a situation of “Mastanocracy,” or rule of the mastans (gangs), which were one part of a larger nexus between thugs, politicians, and the police.89 Even in the south, which is commonly perceived to be less prone to such thuggery, the decline of India’s framework of public institutions led to a discernible rise in the use (and abuse) of “ruffians” in everyday politics.90 In Kerala, which is an outlier in India on account of its remarkable human development indicators (which are on par with many advanced industrial democracies), violence between Left parties and forces aligned with Congress was openly practiced hand in hand with routine electoral tactics.91
In these (and in many other) instances, the police operated in close coordination with criminal groups. Because politicians were deeply involved with both sides, the result was a nexus between the police, politicians, and criminals.
THE DAWN OF “BLACK MONEY”
As the maintenance of law and order began to fray, another pernicious development was also gathering steam: the influx of “black money” into politics. Indeed, the collapse of India’s election finance regime, which has to date been somewhat underemphasized, constitutes a fourth pull factor responsible for the entry of criminals in politics.92
Rise of Corporate Financing
In its pre-independence incarnation, the Congress Party was primarily financed by membership contributions with supplemental assistance from some of India’s big business houses that supported the nationalist struggle. In fact, the close relationships between business titans like G. D. Birla and Mahatma Gandhi have been amply documented. Birla was widely considered to be the “foremost financier of the Congress party [sic] for over two decades before Independence.”93 Notwithstanding such close ties, by most accounts business was responsible for a relatively small segment of the party’s overall coffers before 1947.94
After independence, Congress—and its competitors—required additional funds to finance costly election campaigns. Under law, there were limits on how much candidates could spend in any given election, although these restrictions were of questionable effectiveness given the limited monitoring capacity of the ECI and ambiguities in the law. Following India’s second general election, the commission itself noted that legal loopholes essentially vitiated the de jure campaign finance regime, as “a candidate can easily evade the objectives of the law if he is so inclined.”95
While membership dues remained the bedrock
of party finances in the early post-1947 era, over time they covered a shrinking share of parties’ overall outlays, which grew in concert with rising democratic mobilization and political competition. In light of this democratic expansion, “elections could not simply be held, they had to be fought.”96 One scholar estimated that election expenses may have grown as much as tenfold between 1957 and 1962.97 Politicians, in turn, turned to business with increasing frequency to cover their financial shortfall.98
Under the Representation of the People Act, which codified India’s election finance regime, corporations could contribute to parties (with a few caveats) as long as they declared their donations. The Congress, befitting its dominance in the early post-1947 period, collected the lion’s share of the donations. According to one source, in 1966–67 Congress received more than thirty times as much in corporate contributions as the second largest recipient, the market-friendly Swatantra Party.99
The situation came to a head in the late 1960s as Parliament, the courts, and many intellectuals expressed concern that cozy ties between business and politics were unduly influencing the policymaking process. As early as 1964, the government-appointed Santhanam Committee warned of collusion between businessmen and politicians and the resulting adverse implications for India’s system of election finance.100 This, in turn, produced calls to ban corporate donations to parties altogether. Congress, which had been the prime beneficiary of such largesse, stood to lose from such stringent regulation, but Indira Gandhi had several ulterior motives for supporting such a move.
For starters, Indira was deeply suspicious of the power the Syndicate continued to wield in organizing and collecting funds for the party from business. Cutting off the flow of funds would also cut the Syndicate bosses down to size. Second, in the wake of the Congress split in 1969 and Gandhi’s move to the ideological left, Indira worried that big business was slowly but surely gravitating toward the conservative faction of Congress as well as to the opposition Jana Sangh and Swatantra Parties.101 Finally, as a public relations ploy, what better way to blunt calls for cracking down on corruption than to—superficially, at least—appear tough on cronyism in politics?
Ban on Corporate Donations
In 1969, with Indira’s blessing, Parliament amended the Companies Act to impose a total ban on corporate giving to political parties. The move was part of a larger attempt to put business in its place and reassert the primacy of the state. In quick succession, Gandhi nationalized India’s banks and its domestic coal industry and imposed sweeping new restrictions, such as the Monopolies and Restrictive Trade Practices Act and the Foreign Exchange Regulation Act, on business.102 In spite of the ban on donations, Indira calculated that big business would still be compelled to donate to Congress even after the ban, albeit covertly, given Congress’s ability to discipline businesses that refused to play ball. The aim of the ban, as one author put it, was not to ensure the Congress a “secure and above-board source of funds in the future, but to cut off the flow of funds to its rivals.”103
By making corporate donations illegal, Indira essentially eliminated the most important legal source of funds for elections. Without providing an alternative campaign finance mechanism (such as state funding), Gandhi’s decision—far from abolishing the link between business and politics—effectively pushed campaign finance underground.
The ban, combined with new restrictions on business, led to the proliferation of black money in the political system. Indeed, the period after 1969 came to be known—in the memorable words of Stanley Kochanek—as the era of “briefcase politics.”104 The intensified License Raj policies that placed strict controls on private business activity helped spur the creation of a parallel economy, in which undocumented money sloshed around with the hope of evading detection, as firms sought to avoid high taxes and circumvent overregulation.105 They also provided a new and useful lever for government to trade permissions, licenses, and clearances in exchange for under-the-table campaign donations.106 One of Indira Gandhi’s biographers later noted that “donation” was actually a euphemism for extortion; there was a clear quid pro quo in which businesses were threatened with stiff penalties if they failed to comply with the demands of Congress bagmen.107 The situation had deteriorated to such an extent that “ministers deliberately talked publicly about nonexistent government plans to nationalize or regulate a particular industry or trade with the intention of creating nervousness” among the private firms concerned.108 To avert such a possibility, firms reluctantly opened up their wallets.
The long-term consequence of Gandhi’s short-sighted decision to ban corporate donations was to set parties off on a competitive search for underground financing, which further drove them into the embrace of individuals and organizations of “dubious character, including a very large number of extortionists and racketeers.”109 In one fell swoop, the move greatly empowered criminal networks and entrepreneurs who were major players in the growing black economy and had the means to readily aggregate and distribute cash without detection.110 “The bigger the criminal, the more black money he had, the more he gave to the party, the greater his influence,” wrote one observer.111 In short order, “lawbreakers of all sorts entered into a special relationship with the political leaders of Congress and progressively all other political parties.”112 The push toward black financing was further given a boost by a 1975 legislative change that formally excluded third party spending from the limits placed on candidates (although in practical terms, this had been going on for many years).113
Relegalization: Too Little, Too Late
Many years later, recognizing the folly of Indira Gandhi’s decision to ban corporate contributions, the Congress government of Rajiv Gandhi amended the Companies Act in 1985 to once again legalize corporate giving. Unfortunately, the damage had already been done. In the intervening years, corporations had grown accustomed to providing donations “in the black” and even came to value the benefit of such contributions since incumbents could easily use the state’s discretionary authority to punish a firm that had donated to a political rival. Keeping donations secret allowed firms to play their cards close to their chest, protecting themselves from possible political retribution. The intricate system of black money contributions “had become so entrenched that there was no incentive for business groups to come above board.”114
There is evidence to suggest that Rajiv Gandhi was genuine in his desire to reform India’s corrupt political system. In a famous speech delivered at an event commemorating the centenary of the Congress Party, he lambasted the state of the party and the cronyism it both initiated and helped to perpetuate. “We talk of the high principles and lofty ideals needed to build a strong and prosperous India. But we obey no discipline, no rule, follow no principle of public weal. Corruption is not only tolerated but even regarded as the hallmark of leadership. Flagrant contradiction between what we say and what we do has become our way of life.”115
Unfortunately, there was a large gap between Rajiv Gandhi’s rhetoric and reality. Under his leadership, Congress operatives further innovated in their attempts to obtain new sources of political finance that could supplement whatever funds could be gathered by shaking down domestic businesses. The opening of the Indian economy in the 1980s and 1990s not only had salutary effects on the domestic growth rate but also brought renewed interest in the Indian market from foreign multinational firms as the number of contracts eligible for foreign bidding grew. Foreign interests, eager to gain a foothold in India’s vast market, became a much sought after source for “donations.” In fact, one report suggests that domestic business titans were initially quite perplexed as to why the demand for political contributions appeared to be in decline. The answer, it seemed, was that parties were rushing to take advantage of new opportunities to raise money from abroad.116 Foreign side payments had the added benefit of circumventing the Indian financial system entirely and thus rendering detection much more difficult.
CHANGING OF THE GUARD
Existing narratives about why this switch took place do not fully explain why. The pull factors identified in the previous sections were clearly important pieces of the overall story, as was the politically traumatic nearly two-year period of emergency rule between 1975 and 1977. But an important push factor—which I call “vertical integration”—has not been adequately explored.
The Black Box of Existing Explanations
A typical example of the vague narrative summarizing the shifting power dynamics between criminals and politicians comes from a commission established by the government of India to review the functioning of the country’s political system. The commission’s report, issued in 2001, states: “A stage has now [been] reached when the politicians openly boast of their criminal connections. . . . Earlier in the 1960s, the criminal was only content to play . . . second fiddle to the politician to enable him [to] win the election and in turn to get protection from him. The roles have now reversed. It is the politician now, who seeks protection from the criminals. The latter seek direct access to power and become legislators and ministers.”118
When Crime Pays Page 12
