Corruption is damaging the value of Brand India

The staggering loot in this year’s headline scams benumbs us to the massive human tragedy that underlies them. As Stalin once said, “The death of one man is a tragedy. The death of millions is a statistic”. Still, there is a price to pay. One reason for tribal insurgencies in India today is lack of development. And then there are mercy killings and suicides. There is a direct correlation among these: people die, or live stunted lives, because of larceny by the rich and powerful.

The story of thalaikoothal in Virudhunagar was reported by Tehelka magazine (‘Mother, shall I put you to sleep?’, November 20). Apparently impoverished people in Tamil Nadu are ritually murdering their aged parents for a simple, rational reason: they cannot afford to support them.

This story reminds me of a powerful film, The Ballad of Narayama (1983), set in 19th-century Japan that deservedly won the Grand Prize at Cannes in 1983. Set in a poor mountainous area where the land has limited carrying capacity, it illustrates a ritual called ubatse. Every time a child is born, an old person has to die, for they cannot afford to feed that extra mouth.

In effect, it means that at the age of 70, every old person will be taken to the snowy peaks and left there to die of starvation and exposure. In the film, an iron-willed matriarch resolves that when her time comes, she will go of her own will, and not be dragged kicking and screaming. She methodically arranges her affairs, and then forces her grief-stricken, unwilling son to carry her to the mountaintop, where she will die.

It is an indictment of the failure of our leadership that something from pre-industrial Japan 200 years ago finds echoes in today’s India. But this is merely a particularly graphic illustration of the fact that the systematic siphoning off of funds from India is, literally, killing its people. In this, India is similar to some resource-rich countries, which have borne the ‘curse of oil’: the vast wealth from petroleum has often led to more, not less, misery for the people.

The Economist argues (‘The paradox of plenty’, December 2005) that the reasons are massive corruption, weakened institutions, and lack of competitiveness in other industries. And just plain disdain for the masses. In the oil-rich Niger delta, it appears there has been massive environmental damage and pollution, suffered by the locals who have got nothing to show for the billions dug up from under the ground.

India’s principal wealth is in agriculture and human resources.

These were enough in historic times to make India the wealthiest nation in the world, as per Angus Maddison (The World Economy: A Millennial Perspective, OECD, 2001). It was massive capital transfers by the British and the systematic dismantling of light industry that have caused enduring misery.

The underpinnings of corruption in India were also created by the British. Their buccaneer John Company types were given poor salaries, and were expected to make their fortunes through means fair or foul; most chose foul. Robert Clive, when impeached by the British Parliament in 1676, disclosed that his net worth was sterling £401,102. His annual salary had only been between sterling £1,000 and £5,000, according to PJ Marshall (East Indian Fortunes: The British in Bengal in the Eighteenth Century, Oxford, 1976).

Nevertheless, India is an economy that still generates large amounts of surplus, especially now that its GDP is growing rapidly. This has given an impetus to corruption and the disappearance of funds to offshore accounts and into things like religious conversion. Instead of enabling the poor to claw their way out of poverty, the surplus is skimmed off. Money that could have built roads, ports, schools, hospitals and world-class universities has been swallowed by private individuals.

A recent report from Global Financial Integrity program at the Center for International Policy, Washington DC (The Drivers and Dynamics of Illicit Financial Flows from India: 1948 to 2008, November 2010) estimates that $462 billion has been stolen in sixty years, and that this accelerated to $16 billion per year towards the end of the study period. Undoubtedly, with the scams that are now coming to light, this decade’s loot will be exponentially higher: the CWG and 2G scams alone add up to $60 billion in vanished wealth.

The nation is turning into a banana republic. Not only politicians, but also the media, the judiciary, the armed forces and even the Vigilance Commission, are being drawn into this web of kickbacks and payoffs. In addition to human misery, it has economic consequences. A recent Stanford study (Corruption and International Value: Does Virtue Pay?, November 2010) suggests that firms in corrupt countries suffer a loss in market value. Surely, those corrupt countries suffer the same: Brand India is being hurt.