No crony capitalism in India
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India's corporations have not become world class because of crony capitalism but because they were set free from crony socialism. This is the term that The Wall Street Journal recently used to describe India's economic confusion and it is an excellent description. India's corporations have grown huge from their own efforts. Not because high officials and mighty politicians handed out deals for crony capitalist objectives of sharing loot. This happened once upon a time in the Philippines when Marcos ruled and more recently when the Soviet Union broke up and officials colluded with their cronies to share the spoils.
In India, it is because of India's corporate sector that economic growth rates have broken the curse of the 'Hindu' rate of growth we saw in the four decades in which the economy was totally controlled by the state. In that time, we did indeed see some crony capitalism because only a small group of powerful business houses, with big strings to pull, got licenses. They shared the loot with their benefactors in government. Once the license raj ended in the early nineties, corporations no longer needed to. And, India's private sector has become something the world marvels at. We should be very proud of it in India as well, but because of having 'socialism' hammered into our heads for decades, are not.
Real corruption in India relates almost entirely to government and has had such a powerful trickle down effect that now the lowliest, rural officials and policemen expect their palms greased just to do their jobs. It should surprise us not at all that there is a huge scandal in Uttar Pradesh over government purchases for the rural health sector. Wherever there is too much official control in India, there is huge corruption. It is an evil empire we are dealing with.
To destroy it, what we need are not more laws and yet another anti-corruption bureaucracy but a clear and transparent regulatory framework. This does not exist. Officials do not want it to exist because it reduces their chances of earning great wealth. The officials we are dealing with are so immoral that they have no qualms about stealing even from the neediest and the most helpless as we have seen from the amount of money that leaks out of NREGA. As we saw last week, from the amount of money that officials, from the lowliest to the highest, appear to have made from the Uttar Pradesh government's health programme. This was such a lucrative enterprise that people were ready to kill to protect it.
Why have Hazare and his team of crusaders been so silent on the UP health scandal? A member of the team gave us last week a 5000 page (phew!) report on the mining sector in Karnataka detailing official collusion in creating a cartel. He would have done better (and cost taxpayers less) had he told us in a few simple sentences that had there been a clear and transparent mining policy, there would have been no scandal. If Indian businessmen are searching these days for greener pastures abroad, it is because of the arbitrary nature of the regulatory framework in India. If you talk to those who are investing these days in Western Europe and the United States, they tell you that what lures them to these distant shores is that there are clear rules and regulations. And, they cannot be changed by greasing official palms.
Corruption has eaten into India's soul and its future. It must be fought. But, the only way to fight it is by dismantling, bit by bit, the evil empire that has been created by decades of crony socialism. Whether it is in the matter of land acquisition, whether in mining and whether in massive, unwieldy government welfare programmes, wherever you see corruption, you will see that it comes from too many government controls not too few. Is it ideological blinkers that prevent Anna and his team from seeing this or plain stupidity?
Follow Tavleen Singh on Twitter @ tavleen_singh
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