Congress rule spawned crony socialism, began loot of country

Fundamental questions have failed to be asked so we have not noticed that most corruption in India is not because of crony capitalism but because of crony socialism.

By Tavleen Singh on May 12, 2013

Summer has come to Delhi this year with so much heat generated by charges of corruption against Ministers of the Government of India that the weather has taken a backseat to the political heat. Hardly a day seems to go by when some new scam does not fall out of the dusty cabinets of some Ministry. So we had barely stopped reeling from the shock of the Law Minister being charged with conspiring with his top law officers to fool the Supreme Court than news came of the Railway Minister’s nephew’s arrest for trying to sell high positions in his uncle’s Ministry at high prices. And, when this comes in addition to scandals that involved high officials in the air force accepting bribes to buy Italian helicopters and the soot that continues to fill the air from Coalgate it begins to seem as if the 2G scam was merely the tiniest tip on the tip of a mountain of rotten deals.

There has been much informed commentary in the newspapers and on television about why this is happening on such a ‘massive scale’. Political pundits in Delhi are traditionally Leftist and see the world only through a single, unchanging prism. In the years that I have covered politics and governance in this city, I have not seen this leftist worldview change even when the end of the cold war caused the collapse of the Soviet Union and brought a total turnaround in the economic policies of eastern Europe. Not even when China made dramatic economic changes and allowed foreign investment and free market economics did the political pundits of Delhi change.

And, ever since NGO’s gained a foothold in Delhi through the National Advisory Council and Anna Hazare’s movement brought more Leftist NGOs to the fore, the Leftist influence on policy-making has increased so much that all the voices that rise above the din of new scandals have a loud Leftist ring in them.

So the term ‘crony capitalism’ is tossed around a lot and there is much passionate denunciation of supposedly crooked businessmen who are ‘looting’ resources that belong to the people of India. This idea is based on the assumption that the resources of the people of India were safe as long as they were in the hands of officials and politicians so nobody has bothered to analyse why vast gas fields remained untapped for decades and why our vast coal reserves were so badly used that we import coal. Fundamental questions have failed to be asked so we have not noticed that most corruption in India is not because of crony capitalism but because of crony socialism.

Let me explain. In the days of the license raj politicians, bureaucrats and even lowly clerks made money by blocking projects from going ahead unless their palms were suitably greased. So if a businessman wanted to set up a scooter factory he first paid money to get a license, then he paid money to make enough scooters to make a profit and before getting to this stage he greased palms all the way down the line to keep files from getting stuck. I have personally seen famous industrialists waiting in smelly corridors outside some Ministerial office simply because they did not pay enough to the clerks in the Minister’s anteroom.

Once the license raj ended, the importance of officials in Delhi got reduced but only until they saw how much money was being generated in the private sector and how many new billionaires were created by the new liberalised policies. This is when they decided that they should also get a piece of the action and since the red tape and convoluted rules of socialist times remained mostly intact, it became quite easy for them to do this.

Clever Ministers have made their money cleverly and not so clever ones, like A Raja, got caught. But, as becomes increasingly clear with every new scam, what he was doing was really not very different to what other Ministers have always done. On account of decades of socialism, the discretionary powers that Ministers have are immense and so, for instance, it is entirely in the hands of the Railway Minister to hand out lucrative contracts to his family and friends and something of this kind happens across the board in Ministries in which large Government contracts are routinely handed out.

The money being made is beyond belief. My businessmen friends estimate that what they make after a lifetime of hard work can be made by a clever minister in a single year in high office. This is because crony socialism continues to leave in the hands of Ministers more powers to dispense favours and contracts than they would have if we had moved to a truly free market economy.

Not long ago, when the latest spate of corruption scandals hit the Government, I noticed a small news item in one of the Delhi newspapers that said Sonia Gandhi had asked Ministers to ‘voluntarily give up their discretionary powers’. Had she been more serious about this, she would have asked the Prime Minister to take charge of forcing them to do this.

Two examples. If A Raja did not have the power to hand out telecom licenses to his friends and if this was a decision that had to be scrutinised by a high-level Ministerial committee, there may not have been a 2G scandal. And, if when coal blocks were being allocated to private investors, the Coal Minister’s decisions had been properly scrutinised, there may not have been a Coalgate. It is actually a great shame that there was a scandal involving private sector investment in the mining of coal because private investment is badly needed.

Those who now condemn corruption involving the private sector should keep in mind that the real looting of the people’s resources has happened under state control of the economy. There are gas fields that remain unexploited so gas fires burn unstoppably and coal fields in which some of the finest coal is being destroyed by fires that the public sector does not have the technology to put out. One day we must hope that somebody analyses without prejudice the damage done to India by socialism and its new incarnation in the form of crony socialism. Crony capitalism is what happened in China and the former Soviet Union in which officials and their families became the new billionaires. So in India we could be lucky to have only crony socialism.


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