The title may be irreverent but it is not irrelevant. If you have doubts about its relevance, please do read on. It may not be as far-fetched as you think.
Let us begin with the opening remarks Bernie Sanders made in the last Democratic Debate for the Democratic Party nomination for the US Presidential election with Hillary Clinton, held by CNN in Brooklyn in New York on 14 April. An excerpt from the “full transcript” put out by CNN says the following:
“And the truth is that this country is not going to move forward in a significant way for working people unless we overturn this disastrous Citizens United Supreme Court decision...
... and unless we have real campaign reform so that billionaires and super PACs cannot buy elections.”
Wikipedia describes the “disastrous Citizens United Supreme Court decision” as follows:
“Citizens United v. Federal Election Commission, No.08-205, 558 U.S. 310 (2010), is a U.S. constitutional law case dealing with the regulation of campaign spending by organizations. The United States Supreme Court held (5–4) that the First Amendment prohibited the government from restricting independent political expenditures by a nonprofit corporation. The principles articulated by the Supreme Court in the case have also been extended to for-profit corporations, labor unions and other associations. By allowing unlimited election spending by individuals and corporations, the decision has re-shaped the political landscape of the United States.”
The essence of the Citizens United judgment is to allow “unlimited election spending by individuals and corporations". While there has been a lot of critical comment on the decision and several influential people, including President Obama, have called for its review and removal, the US Supreme Court has not moved and the law stands.
Staying with Sanders’ opening remarks in the last debate, he also said, “Over the last year, we have received almost 7 million individual campaign contributions, averaging — guess what — $27 apiece, more individual campaign contributions than any candidate in American history at this point in a campaign.”
Sanders cited the figure of “$27 apiece”, presumably, to distinguish himself from Hillary Clinton who is supposed to be backed by big money. One example of this is reported to be a fundraiser hosted by actor, George Clooney, and his wife for Hillary Clinton in California “charging $33,400 to 353,400 for tickets". George Clooney himself is reported to have said, “Yes, I think it’s an obscene amount of money…The Sanders campaign when they talk about it is absolutely right. It’s ridiculous that we should have this kind of money in politics. I agree, completely.”
Where does Vijay Mallya come into all this? The answer is simple: At the other end of the spectrum. If Sanders is one end of the ‘money in politics’ continuum, Mallya epitomises the other end, a blatant example of the use and, sadly, effectiveness of big money in politics. Mallya was elected to Rajya Sabha from Karnataka twice, in 2002 and in 2010, as an independent candidate. It does not need to be said that no one can get elected to the Rajya Sabha without the active support of political parties in the state who have significant representation in the state assembly.
“Why did political parties support the candidature of Vijay Mallya for Rajya Sabha?” is a no-brainer.
This is exactly what Bernie Sanders was referring to when he talked of “billionaires…buying elections”. There has been, and continues to be, hue and cry over Mallya having left the country owing thousands of crores of rupees to several banks. There are vociferous demands for Mallya’s deportation, arrest, and prosecution. When it dawns on people that Mallya is not alone and the non-performing assets (NPAs) of banks run into many times multiples of what Mallya owes and that almost all other defaulters are still in the country, then come the slightly less strident demands for “reforming” the banking sector.
Even the Supreme Court is moved to ask the “government to ‘reform’ the banking system to prevent huge write-offs of bad loans and also to ensure people are not allowed to run away after default in repaying the loans". A bench headed by none other than the Chief Justice of India himself is reported to have said that “a ‘sensible and sensitive’ approach is required to overhaul the entire system, which today has scores of people and entities with outstanding to the tunes of crore of rupees.
It is a strange situation that the highest court in the land is required to tell the government that “people should not be allowed to run away after default in repaying the loans". The hue and cry led to the Public Accounts Committee (PAC) of the Parliament to take suo motu cognizance of the issue and to examine the non-performing assets of the public sector banks, which touched Rs.3.61 lakh crore at the end of December 2015. The state-owned companies had first refused to appear before PAC, but agreed later and made their submission. The PAC also asked the Reserve Bank of India (RBI) Governor Raghuram Rajan to explain the “real causes” of ballooning bad loans at public sector banks. The RBI Governor is reported to have put the blame on ‘overall economic downturn,’ among other reasons, in his submission to the key Parliamentary panel”.
The RBI Governor is reported to have listed six primary reasons for the increase in bad loans: domestic and global economic slowdown, delays in statutory and other approvals especially for projects under implementation, aggressive lending practices during upturn as evidenced from high corporate leverage, laxity in credit risk appraisal and loan monitoring in banks, and lack of appraising skills for projects that need specialised skills resulting in acceptance of inflated cost and aggressive projections, and wilful default, loan frauds and corruption in some cases. He is also reported to have added, “However, based on responses, it was not possible to specifically derive how much of the NPA (quantum) were attributable to which specific reason.”
It is worth recalling that the same Governor of RBI said on 11 August, 2014, while delivering the Twentieth Lalit Doshi Memorial Lecture in Mumbai, said: “The crooked politician needs the businessman to provide the funds that allow him to supply patronage to the poor and fight elections. The corrupt businessman needs the crooked politician to get public resources and contracts cheaply. And the politician needs the votes of the poor and the underprivileged.”
It is intriguing why the RBI Governor stops at what can at best be called ‘technical’ reasons while explaining the increase in bad loans, and confines his analysis to only the borrower and the lender, and does not make the obvious extension from the borrower to the banker to the politician. It does not seem possible that he has already forgotten the views that he expressed in August 2014 or that he is suffering from what Peter Hamby, Snapchat’s head of news is reported to have referred to as "a lack of attention span in our politics”.
Be that as it may, unless we do what Bernie Sanders refers to as “real campaign reform so that billionaires…cannot buy elections,” which in other words means that the likes of Mallya cannot reach Parliament, “this country is not going to move forward in a significant way.”
Are we, in this country, willing to learn anything from the Vijay Mallya episode?
(The author is former professor, Dean, and Director In-charge of IIM, Ahmedabad. Views are personal.)
Published Date: May 03, 2016 08:24 am | Updated Date: May 03, 2016 08:33 am