The old India is dead. Wake up, netas and business babus

It’s now apparent that the real T-Rexes of India are our politicians and businessmen. They just don’t get it: India won’t take their nonsense any more.

Politicians may not all be “rapists and murderers”, as Arvind Kejriwal seemed to suggest the other day, nor may all our businessmen be “crony capitalists,” as everyone suspects they are, but the fact is India has changed dramatically over the last 10-20 years, and neither of them seems to have noticed.

Even as politicians try their old tricks to deflect criticism and blame for wrongdoing, businessmen are mouthing endless requests to politicians to get their act together so that we can resume the India Growth Story.

 The old India is dead. Wake up, netas and business babus


Both politicians and businessmen want to go back to the era when things were more predictable and could be fixed behind closed doors.

The other day, HDFC Chairman Deepak Parekh had this to say in an interview to The Economic Times on the proposed cancellation of coal blocks that were allotted non-transparently.

“It will be a blow to the country. The opposition parties may take joy in reversing the policies of the ruling party. But do we know that this is the ruination of India? What are we trying to do? You give licences, you cancel it. You give coal blocks, you cancel it. Tomorrow, a new party will come to power and will undo everything what the earlier government has done. Is this the democracy that India wants? Is this what we want to see in India?” he said.

An advertisement issued by industry chamber Assocham goes even further. “CAG reports sending wrong messages,” read the headline went one ad. As we noted in Firstpost, the ad criticises the CAG reports on the coal block allocations, the Delhi airport contract and the surplus coal sharing of Reliance Power in what can only be seen as a direct support to the government’s indefensible position.

Well, Mr Parekh, and dear members of Assocham, India won’t have any of it. Forces have been set in motion that are now demanding a full overhaul of the corrupt system we have created, and no amount of pleading in favour of tinkering with change will work any more.

This point is brought out very well in two coincidental editorials in Business Standard and The Indian Express today.

Writing in the Express, Pratap Bhanu Mehta notes that the Naroda Patiya judgment, the 2G and Coalgate scams, and the recent Supreme Court judgment on Sahara are all pointers to what has changed between the India of the 1980s and now. Many institutions – from the courts, to constitutional bodies like the Election Commission, the CAG and even the investigative agencies – have begun asserting their independence in ways that have changed the rules of the game.

He says: “Our political economy was founded on state complicity in communalism, a disregard of law and regulation by big companies, and the plunder of natural resources. But there is a distinct possibility that things may never be the same again.”

However, politicians aren’t still getting it. “The shocking thing about governments (Mehta is talking about both centre and states here) is not just that their deep complicity in corruption has been exposed. The shocking thing is that, when exposed, they are still trying the idiom of old politics to respond: use state power to silence critics, personalise the issue, avoid institutional regeneration, and hide behind a sense of injured virtue to defend the indefensible.”

A Business Standard editorial makes similar points. After noting that “several institutions have been visibly active in working towards bringing irregularities in the coal block allocations to light”, starting from the CAG report to the CVC’s decision to get the CBI involved, the editorial concludes: “In this sequence of events, a certain systemic strength is evident in India’s procedures of accountability that is a fairly recent development.”

Like Mehta, the pink newspaper says: “What is worth noting here is that India’s political class appears to be considerably behind the curve. Many political leaders appear to be slow in figuring out how India has changed.”

It is worth talking about things that India will not accept anymore – and why our political and business cronies are still in denial about it.

First, we need systemic reforms on electoral funding. The root of all big-ticket corruption lies in the politician’s need to raise money for electioneering. This need is financed by businessmen who would like sweet-heart deals in return. However, the tragedy is that once a corrupt practice is established, the looting of public funds and natural resources can continue regardless of electoral needs.

But there is also a more legally-sanctioned method of corruption in the Indian system: the MP Local Area Development Scheme, under which MPs get to spend Rs 5 crore of taxpayer money on their constituencies every year. This is actually a government-sponsored bribe that an MP is allowed to gift to his own constituency, and hence unfair to non-incumbents. Between the Lok Sabha and Rajya Sabha, thus, over Rs 4,000 crore is spent on featherbedding MPs in their constituencies. That’s Rs 20,000 crore over five years – enough to finance elections in states and Centre once in five years.

Clearly, any politician who is not wedded to the old system should be able to see this clearly. If they don’t, Mehta is right: politicians are blind to reality.

Second, the system of dividing executive power and political power is another source of corruption and irresponsibility. This system has been perfected in the UPA regime where Sonia Gandhi wields the real power and Manmohan Singh is the dummy. It has done enormous damage to the concept of accountability. And Manmohan Singh plays Nero while his treasury is being looted.  Sonia does not want to fix this for her own reasons, and Singh plays the fiddle to pass time till Rahul enters the picture.

But one should not be under any illusion that this malaise is restricted to the Congress alone. Almost every party now in coalition at the centre – the DMK or the TMC – has ministers in the cabinet who are not accountable to anyone except their party bosses. Thus, A Raja does the bidding of the DMK chief in telecom, and the railway minster has to dance to Mamata Banerjee’s tune.  Once again, power is exercised without responsibility. But if a scam surfaces, or if railway finances go down the tubes, suddenly you will find that the actual decision-makers, the DMK and TMC bosses, will have plausible deniability.

Other parties, too, are exhibiting this same tendency to separate power from accountability. In the BJP, power resides in the broader Sangh Parivar which is never a part of any government. In Atal Behari Vajpayee’s time, luckily, political power remained with the PM, but what if a future BJP government has a rootless Nitin Gadkari as PM, and he is accountable more to Nagpur than to the Constitution or the people of India?

Can a Sushma Swaraj or Arun Jaitley, both without a mass base, really expect to be PM without being able to counter this power imbalance in favour or people outside the executive? This is a problem we wouldn’t face with Narendra Modi or Shivraj Singh Chauhan or any of the other BJP powers who are rooted in state politics and thus have their own power base.

Parties like the CPI(M), and other regional parties – Samajwadi, BSP, AIADMK, etc – are also in the same boat. They may be part of a government, but their accountability is to the party or someone outside government. Can any Mayawati minister do what he thinks is right if his boss thinks not? Jyoti Basu was offered the prime  ministership in 1996, but his party declined the offer made to him. This kind of nonsense has to stop – but how are we going to ensure that power and responsibility go together?

Third, a part of the power imbalance comes from the fact that political power resides in the states. The problem is state leaders are powerful politically, but economic resources are controlled by the centre. No progress can really be made without a dramatic redistribution of resources and political and economic power between centre and states.

Consider the mess in coal. It is clear that the Centre allocated the blocks, but it is equally clear that some of the beneficiaries may have been selected by state parties ranging from the BJP to JMM, BJD and Left Front. So, in a sense, it is a scam perpetuated by a situation where neither state nor centre will take responsibility for it – since both Congress and the opposition can blame the other. Everybody has deniability.

This is the result of the unequal sharing or power between centre and states – which makes it tough to ensure accountability and fix the blame or the problem.

Fourth, crony capitalism thrives in this uneven distribution of power. This ensures lack of accountability, and arbitrary decision-making.

India Inc comprises state-level businessmen and industry leaders who are pan-India or even global in stature. The fight between regional capital and national and global capital is another reason for increasing corruption and irresponsibility in governance. When regional capitalists are trying to grow beyond their regional bases, they use the political support of their state politicians – to the detriment of the public and taxpayers.

Ask yourself:

*How did two Andhra companies (GMR and GVK) manage to bag the biggest airport contract under UPA-1? Did it have anything to do with the late YSR’s huge clout at the Centre? After all, he was the Congress' only real politician with independent clout beyond the Gandhi family.

*How did unknown companies bag so many coal blocks? Has anyone heard of Ujjal Upadhyay, who walked away with 14 coal blocks with a coal reserve of 1.7 billion tonnes? How did he manage to get sweetheart deals from the Left Front in Bengal? (Read the Economic Times story on Upadhyay here)

*How did Jet Airways, which 20 years ago was little more than a travel agency, become the owner of India’s largest airline? Is a travel agency enough to generate such huge funds to run an airline, when even a Vijay Mallya – with much larger resources - is struggling to run one today? And why is a floundering Mallya still in control of his overindebted and bankrupt airline?

*How is it that real estate companies like DB Realty and Unitech entered telecom, and media companies like the Lokmat group got into coal mining? What competence did they have in their new diversification that they often took precedence over established rivals?

Clearly, the nexus between politicians and businessmen is now very well established, and the unravelling of the telecom, coal, and other parts of the India story is testimony that the old order has to change. POlitical-business alliances at the state and centre are making corruption more likely.

This is what the Anna movement captured – a moment in time when several truths gathered traction simultaneously in the public’s mind. Even though the anti-corruption movement is now considered a has-been and Anna himself is unaware of what he was spearheading or where his former Team Anna is heading, the groundswell was real – and could surface again in some other way, in some other format.

The question is: do our politicians know that their old game is over? And our businessmen?

India’s future belongs to politicians and businessmen who can adapt to this new reality earlier than the rest. The rest will be cast out, or be spending a part of their lives in jail.

The India Story cannot be rewritten with T-Rexes in the lead roles.

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Updated Date: Sep 06, 2012 17:56:51 IST