Mother of democracy or child of plutocracy?

For the rest of Indians, the poor and the unwashed, the aspiring and the middle class, the Adanis and Ambanis are the stuff of fairy tales, destined to grow richer and richer and amass fabulous wealth. They are the new sultans of corporate India, priests-in-chief of a god of riches able to turn dust into billions.

The rub is that the rise of a few billionaires is linked to a very stark wealth inequality in India. According to a recent report by Oxfam – ‘Survival of The Richest’ – released at the World Economic Forum in Davos in January, India’s top 1% owned more than 40.5% of its total wealth in 2021; and in 2022, the number of billionaires in the country increased to 166, from 102 in 2020. The richest have amassed a huge part of the wealth not due to their sheer ability and hard work, but through crony capitalism, enabled by their proximity to those in government. Meanwhile, the poor in India “are unable to afford even basic necessities to survive”, still struggling to earn a minimum wage and access quality education and healthcare, languishing under chronic under-investment by that same government. Surely, something is rotten in ‘Vishwaguru’ India.

Along with inequality, the talking point must turn to the deep roots that crony capitalism has struck in India. The 2010 Radia Tapes – audio tapes involving corporate lobbyist Niira Radia’s conversations with industrialists, journalists, government officers, and others that were tapped as part of a tax evasion investigation – shed incriminating light on how large corporates sought to influence -- and many a time succeeded – even the appointments of ministers, senior officials, regulators, etc., to control government decisions, including laws and policies.  

The book Gas Wars: Crony Capitalism and the Ambanis, by Paranjoy Guha Thakurta, Subir Ghosh and Jyotirmoy Chaudhuri, had detailed how a hydrocarbon production-sharing contract in the Krishna Godavari Basin was allegedly rigged to benefit Reliance Industries Ltd (RIL) at significant cost to the public exchequer. The book contended that high-ranking government officials, including ministers, aided and abetted the pillage of public resources.

After the Ambanis, Gautam Adani became a top-ranking billionaire, his fortunes rising sharply since Narendra Modi was elected Prime Minister in 2014. In 2022, Adani first overtook Ambani (and China’s Jack Ma) in Asia’s richest list and then went on to become the first Asian among the world’s top three billionaires. It was also the year in which the combined wealth of India’s 100 richest individuals touched $660 bn. Adani’s net worth alone rose from about $7 bn in 2014 to more than $100 bn -- until Hindenburg Research published its bombshell report accusing the Adani Group of engaging in “brazen stock manipulation and accounting fraud”.

In the time from 2014 to 2022, “All of India’s ports, airports, power, transmission, mining, green energy, gas distribution, edible oil — whatever happens in India, Adaniji is found everywhere,” as Rahul Gandhi put it in parliament.

If the talking point is crony capitalism, a leaked government audit from 2017 did allege that Adani Power received “preferential treatment” as it was allowed to charge higher prices for electricity from a coal power plant then being built in Jharkhand. Adani Power said it “strongly refute[s]” allegations about the project. One cannot really ignore what may be seen as “circumstantial evidence” in such cases. For instance, Anil Ambani’s company, Reliance Defence, registered barely 12 days before Modi entered into a deal with the French government, for Rafale fighters being given the offset contract arising out of the purchase. That Modi chose to use Adani’s aircraft when he flew into New Delhi to take oath as Prime Minister in 2014 was a pointer to, if nothing else, an abiding friendship beyond protocol.

What has been at play since 2014 as part of government policy is the promotion of a select coterie of businessmen for whom cronyism and not innovation is the key to success. Cronyism, an important by-product of neoliberalism in India, has come to denote the phenomenon of the corrupt relationship between political leadership and a select set of business groups.

The problem with crony capitalism is that it creates a legacy of criminality and entrenched privilege that renders any movement toward democracy difficult. To cite one example, the economic system Vladimir Putin has developed in Russia works to consolidate control over the country. By appointing his close associates as heads of State enterprises and by giving control of the FSB and the judiciary to his friends from the KGB, he has enriched his business friends from St Petersburg with preferential government deals. Thus, Putin has created a super wealthy and loyal plutocracy that owes its existence to authoritarianism.

In another authoritarian regime, upon meticulous gathering of over 200 corruption cases involving government and law enforcement officials, private businessmen, and organised crime members in China, one scholar showed how collusion among elites has spawned an illicit market for power inside the Party-State, in which bribes and official appointments are surreptitiously but routinely traded.

Cronyism has persisted in India through the much-maligned “licence-permit raj” of the 1960s and 1970s, or its partial dismantling in the 1980s, or under full-scale liberalisation and privatisation launched in 1991. Power, land, mining and telecoms, as well as oil and gas exploration (natural resources), coal mining and airline and airport operations are all subject to government decision-making, and thus crony capitalism and oligopoly since the early 1990s.

As most Indian businessmen operate in oligopolistic markets and in sectors where the government gives them special privileges, a nepotistic, collusive business-government relationship produces undeserved gains for corporations and the whole juggernaut of a nation’s process of industrialisation comes, in effect, to rest on a few large industrial houses. The ongoing Adani saga must make people think how dangerous this can be for the national economy, even as they wonder – even if they are afraid to ask aloud -- who made money from the system, and why they got so much.

(The writer is a Kolkata-based commentator on geopolitical affairs, development and cultural issues.)