In the heart of darkness

The anti-corruption protests of 2011, if not anything, were an outpouring of anger that people harbour against politicians. Probably, more against the regime that ruled India at the time. The agitation, that spawned the Aam Aadmi Party (AAP), was simplistic to the point of being infantile. The anti-politician hysteria that was whipped up by KB ‘Anna’ Hazare deftly dodged core issues: it did not delve into the very definition of corruption, it sidestepped the assertion that corruption is all-pervading, omnipresent. The agitation tapped into public anger, turned it into mass neurosis. Logic died, passion reigned supreme.

The tumult had come at a time when one skeleton after another was tumbling out of the Congress-led government’s closet. But the facile imagination of the man from Ralegan Siddhi failed to recognise and even explain the scams in context. That’s because the ‘Gandhian’ who talked about amputating corrupt politicians had little idea about crony capitalism. And this, when almost all these scandals were arguably outcomes of crony capitalism. 

It is clear why Hazare didn’t get it. He belongs to an era and an ilk that considers politicians to be sinners; all others are paragons of virtue. ‘Crony capitalism’, on the other hand, is a relatively new term. It gained currency only in the early years of this millennium as an explanation of the South-East Asian financial crisis. David C Kang in his Crony Capitalism: Corruption and Development in South Korea and the Philippines, wrote, “Focused only on explaining successful outcomes, the conventional model provided no analytic way to explain the 1997 crisis. Countries previously regarded as miracles now were nothing more than havens for crony capitalists.”

There are many forms and levels of corruption. You cannot tackle corruption of the highest order and largest scale unless you have an incisive understanding of crony capitalism. Wikipedia provides the simplest definition: “Crony capitalism is a term describing an economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favouritism in the distribution of legal permits, government grants, special tax breaks, or other forms of state interventionism.” Government officials would include both ministers and other politicians holding executive positions, besides bureaucrats.

Of course, business-friendliness and crony capitalism are not synonymous. This point was made by The Economist two months ago: “Banks benefit from an implicit state guarantee that lowers their cost of borrowing. When publicly owned coal mines, land and telecoms spectrum are handed to tycoons on favourable terms, the public suffers. But the boundary between legality and graft is complex. A billionaire in a rent-heavy industry need not be corrupt or have broken the law. Industries that are close to the state are still essential, and can be healthy and transparent.”

The comment came in an article accompanying the magazine’s 2014 crony capitalism index. India, as many failed to notice or later rant about, stood at a dubious ninth in the line-up. Not without reason. For, of all the allegations levelled against the Manmohan Singh dispensation, the charge that the Congress and its allies promoted crony capitalism is the biggest. From the Rs176,000 crore telecom scam to the Rs186,000 crore coal scam, each instance of either looting or deceiving the public exchequer was a fallout of crony capitalism. The ones who eventually got away were those who had benefited from liaisons with politicians in power, while Singh and his colleagues emerged as villains and paid the political price at the recent hustings.

The Economist rankings, as the publication conceded, had  flaws. Crony capitalism as a concept is neither easy to comprehend, nor simple to explain. It is still more difficult to quantify; econometricians are even now grappling with the idea. The ones who saw through the Indian scenario, given the backdrop of the India Against Corruption (IAC) demonstrations, were later-day AAP leaders Prashant Bhushan and Arvind Kejriwal. Both knew what was going on, but failed to convince either their electorate or the media. Yes, AAP had its own contradictions and hubris to blame for the electoral defeat. But just because they were rejected by voters cannot be used as an argument to discredit their contention that crony capitalism is one of the main manifestations of corruption and also one of the root causes of socio-economic imbalances and inequities. Moreover, the two were projected to be anti-business in disposition and ideology.

It is not easy to speak out against big business and remain unblemished or unheard. For instance, all through the Manmohan Singh rule, Left leaders Gurudas Dasgupta and Tapan Sen kept raising the issue of Reliance Industries Limited and Krishna-Godavari gas in Parliament. They were not paid heed to, and their letters to the Prime Minister and various Union ministers for petroleum and natural gas remained unanswered. The one who dared to speak out, S Jaipal Reddy, was unceremoniously shunted out from the Cabinet.

So, does this mean that the malaise of crony capitalism cannot be tackled? No, it can certainly be. That’s because crony capitalism is not about an entrepreneur making honest money; it is about greedy businessmen in collusion with unscrupulous government officials swindling the State’s coffers. It is about leaders doling out the nation’s resources on a platter to corporate interests. One would do well to remember what the Supreme Court had said while passing its judgment in the legal wrangle between industrialist-brothers Mukesh and Anil Ambani: that the natural resources of the country belong to the people, and the government must serve as a custodian.

This, and the apex court’s recent judgment that accounts of telcos should be examined by the Comptroller and Auditor-General (CAG) of India must be seen together. The highest court of the land has made it amply clear that the State’s natural resources cannot be plundered. The bogey of the telcos that audits will only create uncertainty in the markets and discourage investment is just that — a bogey. After all, honest businesses cannot have anything to fear. Weeding out crony capitalism is only about ensuring transparency and level-playing fields.

(The writer is News Editor, dna)