THE NEXUS BETWEEN BUSINESS AND POLITICS.
This is one of the best explanations of what is happening in India today. No Indian journalist has written or dared to write like this. It is complete and through. Every Indian who cares must read this. For those with short attention spans I have flagged five takeaways. But nevertheless read the full article. Its easy to read and you can spare ten minutes for it. MG
1. The last three decades have seen an extraordinary explosion of wealth at the top of Indian society. In the mid-1990s, just two Indians featured in the annual Forbes billionaire list, racking up around $3bn between them. But against a backdrop of the gradual economic re-opening that began in 1991, this has quickly changed. By 2016, India had 84 entries on the Forbes billionaire list. Its economy was then worth around $2.3tn, according to the World Bank. China reached that level of GDP in 2006, but with just 10 billionaires to show for it. At the same stage of development, India had created eight times as many.
2. Nonetheless, India remains a poor country: in 2016, to be counted among its richest 1% required assets of just $32,892, according to research from Credit Suisse. Meanwhile, the top 10% of earners now take around 55% of all national income – the highest rate for any large country in the world.
3. The boom years brought benefits, most obviously by reintegrating India into the world economy. Yet this whirlwind growth also proved economically disruptive, socially bruising and environmentally destructive, leaving behind what the writer Rana Dasgupta describes as a sense of national trauma. India’s new wealth has been shared remarkably unevenly, too. Its richest 1% earned about 7% of national income in 1980; that figure rocketed to 22% by 2014, according to the World Inequality Report. Over the same period, the share held by the bottom 50% plunged from 23% to just 15%.
4. Many politicians also became astoundingly rich, and would have made the Forbes list had their holdings not been hidden carefully in shell companies and foreign banks. Rapid economic growth increased the value of political power, and what could be extracted from it. Political parties had to raise more money, to fight elections and fund the patronage that kept them in office. One estimate suggested that India’s 2014 election cost close to $5bn, a huge increase over the cheap and cheerful polls of the pre-liberalisation era. Election experts believe most of this money is brought in illegally from favoured tycoons, in exchange for unknown future favours.
5. Much the same is true of corruption. India’s old system of cronyism, with its political favours and risk-free bank loans, has came under intense scrutiny, but the battle against corruption is at best half-won. Kickbacks still dominate swathes of public life, from land purchase to municipal contracts. State and city governments are just as venal as ever. Surveys report that India remains Asia’s most bribe-ridden nation. “For any society to lift itself out of absolute poverty, it needs to build three critical state institutions: taxation, law and security,” according to the economist Paul Collier. All three in India – the revenue service, the lower levels of the judiciary and the police – still suffer endemic corruption. Perhaps most importantly, the country’s under-the-table political funding system remains largely untouched.
About the author.
Dr Mohan Guruswamy had his undergraduate education in Mathematics, Physics and Chemistry at Nizam College, Hyderabad, India. He has post-graduate qualifications in Public Policy, International Affairs and Management. He is an alumnus of the John F. Kennedy School of Government, Harvard University and the Graduate School of Business, Stanford University.
(Image coertsy india.com)