India

by Shashi Tharoor

  The evolution of the relationship between business and politics has also played a part. The Indian nationalist movement in the days of the British Raj openly sought support and financing from Indian business houses; Mahatma Gandhi was assassinated at the home of business tycoon G. D. Birla, a major financier of the Congress Party. Even the socialist Nehru encouraged contributions by businessmen and companies to his party, and indeed to other parties: the Birla industrial house made it a point to contribute to all political parties, including the Communists (though the votaries of Marx received only a token contribution). Such contributions were made publicly, by check, and the figures were accessible to anyone interested, and officially tabled in Parliament by the minister of commerce. Prime Minister Indira Gandhi, however, whether out of cynicism or idealism — with her the two were often indistinguishable — declared such practices to be morally unacceptable in a socialist country, since they placed political parties in thrall to big money. She accordingly banned political contributions by companies. She could hardly have been unaware that her partymen promptly sought such contributions anyway, but no longer officially: the certified check was replaced by the briefcase under the table.

  Businessmen had little choice but to play along with this arrant hypocrisy. For one thing, cultural attitudes were hostile to big business. Private gain was widely considered an ignoble motive, and capitalists seen as inherently selfish; the heated socialist rhetoric that dominated public political discourse put them further on the defensive. For them, it made sense to trade financial support in exchange for links with top government leaders. When Congress took a socialistic turn, businessmen preferred to stay in its good graces in quest of limited personal gains from the powers that be rather than to work to support a pro-business alternative like the opposition Swatantra Party (a pro-free enterprise grouping that flourished from 1959 to 1975, winning as many as forty-four seats in Parliament in 1967). This unctuous desire to curry favor with their sworn ideological enemies was hardly surprising. As Mrs. Gandhi noted cheerfully, “Our private enterprise is more private than enterprising.”

  The calculations were clearly short-term: the Congress was in power and therefore in a position to disburse licenses and other governmental favors in an increasingly controlled economy, whereas the party that pledged to eliminate all controls was too weak to offer the prospect of immediate returns. Swatantra general secretary Minoo Masani railed regularly against the “supine and cowardly attitude” of big businessmen, but they preferred to appease their critics rather than bankroll their supporters. Indeed, when the Congress leadership was contested between Mrs. Gandhi and the right-of-center Morarji Desai, businessmen financed the leftist prime minister in preference to the man whose views might have been more congenial to business. It was a relationship of breathtaking cynicism: businessmen supporting leaders who imposed state controls on business, knowing that their support would get the controls waived for them (but maintained on others). As the right-wing pro-RSS journal Organizer bitterly described big business’s relations with Mrs. Gandhi: “And so they showered donations on her; and she showered licenses on them.”

  So, when the government passed a law banning company donations to political parties, the contributions were merely driven underground. “Black” or unaccounted money flowed to party coffers — and increasingly (because politicians are human, and particularly fallible examples of the species) into their private bank accounts as well. Politics became the route to amassing great wealth; humble socialists built impressive houses in their wives’ names, acquired large farms, cars, and foreign bank accounts, and traveled abroad at the drop of a boarding pass. The government’s role in making major international purchases — of weapons, oil, sugar, fertilizer, any major commodity that was being acquired in the name of the nation as a whole for public distribution — became a particularly lucrative source of corruption. The Indian taxpayer routinely paid a premium over the world market price for such goods, the difference disappearing into the pockets of assorted political middlemen, and a portion, presumably, going to the ruling party, to finance its increasingly expensive election campaigns. Since much of the “big” money was now collected centrally, Mrs. Gandhi and the party leaders were able to control the use of party funds better, to reward and punish others within the party.

  The corruption endemic in the political system then pervaded Indian life, partially because the all-encompassing nature of the bureaucratic state obliged ordinary citizens to deal with government for so many of the essentials of their lives, from obtaining ration cards and gas connections to registering a deed of sale or buying a railway ticket. As the money-making of the politicians at the top came to be emulated by the functionaries below them, corruption became a way of life. Corruption, it is often argued, has existed in India at least since the days of the Mughal Empire, but today it has reached a level that leaves no citizen untouched. Even the wretched homeless in some cities have to pay for the right to sleep on the sidewalks.

  This was not always the case. When I left India to go to the United States as a graduate student in 1975, I could honestly say that I had never needed to bribe an official for anything, from getting a seat on a train to getting a seat in a college. Today both of those activities, and a host of lesser and greater ones (installing a phone, building a house) afford opportunities for illegal gratification. And most ordinary Indians accept with a shrug that that is simply the way things have become. Indians’ undeclared income has now reached such proportions that the “black” economy is estimated as being almost a third as large as the official one.

  Acceptance of corruption is widespread, nowhere more so than in relation to politics, where the public seems to expect conduct that in any other profession would be grounds for dismissal. It is assumed that every politician must be “taking money”; the few who reputedly do not are regarded as saints. This has been true for some years, but now we seem to have reached a point where corruption, far from eliciting outrage, is not even considered an issue. Throughout 1991 I was told by journalists, businessmen, and officials — many with firsthand anecdotal evidence — that a recent short-lived government was the most corrupt, in terms of money made per day in office, than any in the history of free India. But not one of the many media or scholarly analyses of its seven months in office even bothered to touch on this shameful reputation; it was simply considered to be of marginal relevance to any assessment of its record. (This was particularly saddening, because among the ministers in the cabinet were men who had previously enjoyed exceptional reputations for integrity and commitment to principle; the fact that even such men felt that they should make the most of their opportunities in office to gratify themselves illegally was a source of profound disillusionment.)

  When those who presume to lead the nation are not even held to such a basic standard of behavior, it is not just our public life that is degraded — it is all of us. Yet corruption does not even get punished by the electorate. Kalpnath Rai, a politician against whom the charges of malfeasance were plausible enough to oblige him to campaign from jail, won reelection to Parliament in 1996 from behind bars, a reward for his standing in the constituency that outweighed the accusations against him. And raising dishonesty as an issue is seen by most Indians, and the media itself, as terminally naive. “After all,” one politically savvy journalist told me, “everyone is on the take, and everyone knows it — corruption is now a dog-bites-man story, not a man-bites-dog headline.” What such widespread and pervasive cynicism does to the country’s social fabric is another story — this time of the man-bites-man variety.

  In Nehru’s day the slightest hint of financial impropriety resulted in the enforced resignation of the responsible minister, the most famous cases involving the departure of Finance Minister T. T. Krishnamachari in 1958 and of Mines and Fuels Minister K. D. Malaviya two years earlier. As with so much else, the rot set in under Indira Gandhi. In 1971 a bank clerk named Nagarwala obtained 6 million rupees from a nationalized ban
k by the simple expedient of imitating Mrs. Gandhi’s voice on the phone; though the man himself was arrested and jailed for the crime (he subsequently died in jail, an event that set the conspiracy theorists’ tongues wagging), the implication was that it had been done before, that the prime minister had obtained money from the State Bank of India in the past just by asking for it.

  But Mrs. Gandhi’s opponents and successors were no better. Prime Minister Morarji Desai’s son Kanti was widely considered an epitome of sleaze, though few specific charges were ever proven. In the 1980s, India suffered major defense-procurement-related scandals, involving the Bofors field artillery gun and the HDW submarine; many supporters of Rajiv Gandhi actually argued that the Bofors commission was actually a blow against corruption, because the ruling party was now making its electioneering money off one major deal rather than hundreds of little ones. The implication that these smaller deals would be corruption-free was, of course, completely bogus; if the big guns could make big money, petty politicians and bureaucrats argued, the smaller fry were entitled to their more modest shares, too.

  The heart of the problem is that corruption is now embedded in the nation’s economic, political, and bureaucratic system, since access to governmental decision-making has become a convenient source of moneymaking. Under our restrictive system of permits, licenses, and quotas designed to prevent the growth of monopoly capitalism, it was the offices of politicians and bureaucrats that became the new temples at which Indian entrepreneurs had to prostrate themselves to pray for favors and indulgences. The inevitable result has been not just the stagnation, inefficiency, bureaucratization, slow growth, and high unemployment we have already discussed — but also rampant corruption.

  Hardly a month goes by without a new scandal emerging: in recent years oil, sugar, and fertilizer have all been bought at prices above the world market price, with the difference going to politically connected Indian middlemen and no doubt to their political patrons. When the most recent sugar scandal burst into the news in 1994 (corrupt Indians, by asking for contracts at prices above the going price, drove up the world price of sugar and cost the Indian exchequer millions of dollars), I was reminded of an episode at the end of August 1989. I was visiting London and driving with an acquaintance, the wife of a prominent NRI businessman, when she called her broker from the car phone. She instructed him to take a rather large position on sugar futures on the London commodities market. “We’ve been tipped off from a source in the Commerce Ministry in Delhi that the government will be importing large quantities of sugar before Diwali,” she said, referring to the coming Hindu festival, at which vast quantities of sweetmeats are consumed. “It’s easy money, really. All it takes is a phone call. Do you want to invest too?” I declined the offer. Sure enough, within days India entered the sugar market, the price went up, and a number of people like my acquaintance made small fortunes on the backs of the Indian consumer. (She is now a prominent politician herself, in a party that likes to consider itself incorruptible.)

  On that occasion, no whiff of scandal reached the press, but journalists I consulted say that every government decision to make a large import order invariably enables someone to skim money off the top. (The industry minister of the new United Front government in 1996, Murasoli Maran, spoke publicly of the existence of a “kickback Raj” across the country, and in his home state of Tamil Nadu in particular, where “facilitation fees” of 10 to 15 percent were routinely charged by bureaucrats and politicians in return for government contracts.) There are, of course, other forms of corruption made possible by the statist economic system. In 1992 the Harshad Mehta scandal broke, involving the siphoning off of some 50 billion rupees (nearly one and a half billion dollars) from the financial system in a stock-market scam involving the collusion of banks, stockbrokers, senior executives of nationalized industry, and lurid stories of a suitcase full of large-denomination banknotes allegedly being handed over to the prime minister himself by the principal accused, Harshad Mehta. The case drags on in the Indian courts, but the losses are real and the damage to investor confidence in the financial system is palpable.

  The economic reforms have done little to remove the capacity for administrative-financial malfeasance; instead, some critics have argued that they have permitted the sale of governmental assets and privileges to a limited number of beneficiaries within the system who know how to manipulate it to their personal advantage. This perception must be ended quickly if the reforms are not to be occluded by the pervasive miasma of corruption. One aspect of the impact of corruption on the economy to which not enough attention tends to be paid is the demoralization it promotes among the population at large, which has no means of earning or generating “black money” but is expected to pay it. Yet the acquisition of business prominence through exploiting the system, bribing the right functionaries, and ensuring that the considerable regulatory authority of the state is misused in one’s favor is widely considered the Indian way to business success; at least one of the country’s largest (and certainly most visible) publicly traded companies is said to have risen from very humble origins through precisely such methods.

  Two corruption scandals in 1996 illustrated the point. In one, a British “pickle tycoon” of Indian origin, Lakhubhai Pathak, sued a controversial “godman,” the highly influential Chandra Swamy, for having accepted a bribe of $ 100,000 to get him a government permit that never came; the piquancy of the case came from Chandra Swamy’s VIP contacts, which included the Sultan of Brunei and the Saudi arms dealer Adnan Khashoggi, as well as former prime minister Narasimha Rao, and from Pathak’s allegation that Rao himself had met with Pathak on the same occasion and assured him that his “work would be done.” The second case was the “Jain hawala scandal,” in which the Central Bureau of Investigation was prodded by the Supreme Court into filing charges against an impressive list of politicians whose names figured in the diaries of an illegal foreign-currency trader (“hawala operator” in local parlance) as having received payoffs from him. Judicial activism in both cases offers the only encouraging sign that India might at last be tackling its endemic corruption; but while there is satisfaction that at last some big fish are being asked to account for their assets, most Indians see these as just a slice of the tip of the iceberg, and the extent of corruption in their daily lives continues unabated.

  These two were not the only corruption scandals to make the headlines in 1996. There was also the more classically political case of the alleged “JMM payoffs,” in which Prime Minister Rao was alleged to have paid three crores of rupees (a million U.S. dollars) to wavering MPs of the Jharkhand Mukti Morcha, an autonomist tribal party, in order to induce them to cast their votes in favor of the Congress government during a 1993 no-confidence debate in Parliament. And in another case, Rao’s son Prabhakar was charged with having received an unexplained sum of money from a Turkish company that had failed to deliver fertilizer for which it had, unusually, been paid up front by the government. Both cases went before the courts, and even the former Prime Minister had to face charges, though he was subsequently acquitted.

  The Indian judiciary, which at its upper reaches still enjoys a reputation for incorruptibility that has been underscored rather than besmirched by the 1992 scandal that defenestrated one of their number (V. Ramaswamy, former chief justice of the Punjab High Court), is taking on corruption by obliging the investigative agencies to do their duty without succumbing to political pressures. Individual bureaucrats have also used their official positions to take stands of principle that have required both courage and sacrifice. The mixed fortunes of Bombay municipal official G. R. Khairnar, who used the full force of the law to demolish illegal constructions that had been built (in some cases by underworld figures) with the connivance of prominent city and state politicians, lost his government job but succeeded in mobilizing a popular crusade against corruption; he is now a public figure of some repute and a symbol of integrity (as well as, some people would say, mule-headedness, giv
en his singleminded focus on implicating a specific political leader, former chief minister Sharad Pawar, rather than reforming the system as a whole). Other Indian administrators, notably H. S. Pirzada, who confronted the contractors illegally deforesting his district in Tamil Nadu in collusion with politicians and was transferred out of his job as a result, and K. J. Alphons, who challenged unauthorized constructions in Delhi and found himself suspended from the civil service, have demonstrated both the potential for those who try to buck the corruption built into the system, and the pitfalls of doing so.

  The outstanding example of a civil servant almost single-handedly taking on an entrenched system and proving that nothing is unreformable is, of course, that of Chief Election Commissioner T. N. Seshan. With courage, arrogance, an unshakable faith in himself, and a breathtaking disregard for the conventions of Indian political life, Seshan took on the corruption that had grown in the national electoral system and in 1996 gave the country the fairest, least expensive general elections it had ever known. Organizing the world’s largest exercise in electoral democracy — with 590 million eligible voters, more than five hundred registered political parties, nearly fifteen thousand candidates in 535 constituencies, and more than 800,000 polling stations requiring 44 million pounds of ballots — Seshan used the largely dormant powers of his office to the full, imposing a Model Code of Conduct that had been agreed upon nearly three decades earlier and disregarded ever since, assigning 1.6 million policemen and 1,650 observers to ensure that its provisions were strictly adhered to, demanding daily accounts of expenditure (which were com pared to the estimates of his own observers), and threatening convincingly to disqualify any candidate or party caught violating his stringent rules. (This struck terror into the hearts of the mendacious: a journalist from the Delhi Observer hilariously recounted how her paper’s name sent candidates and campaign workers scurrying for cover — since they had understood her to be an election observer!)