India

by Patrick French

  By 2009, Cadbury’s sales in India were growing by 30 percent a year, and they had ambitions for further growth, although annual revenue was still only around $300m. They were in the process of persuading south Indian coconut farmers to plant cocoa alongside coconut palms, with the intention of giving India 3 percent of world cocoa production by 2020 (presently, it was minuscule). In lower-middle-class street markets like the one by the metro station in Vishnu Garden in the west of Delhi, Cadbury was catching new customers. As many as fifty-five outlets in this little market sold their chocolates, and the luckier ones were given display cabinets or fridges in which to keep them. Each time the salesman on this beat, Rajesh Sharma, visited a shop he would check that the Cadbury products were out on display. One of his strategies was to persuade mithai sellers to stock chocolate alongside Indian sweets during a festival. If they agreed, Rajesh Sharma was able to give them an extra 2 percent profit margin. The combination of TV adverts and clever marketing made Cadbury attractive, but it also had an unexpected result—it encouraged the interest of another kind of purchaser, the giant U.S. food group, Kraft.

  In 2010, Kraft bought Cadbury for $18.5bn. A Cadbury’s factory in England was closed, with production being shifted to Poland. Since Cadbury sold 70 percent of India’s chocolates and Kraft had almost no presence in this vital emerging market, the United States was able to leapfrog over Britain to reach Asia. On a flying tour of Indian cities, an executive vice-president of Kraft International, Sanjay Khosla, said, “the energy is just phenomenal in this country” and that “the Cadbury acquisition was aimed primarily at getting a footprint in markets like India.” Khosla was himself an IIT Delhi graduate who had made his career in different parts of the world before moving to the United States.24

  Although many of the newer companies in India sought to separate themselves from an old image of graft and backhanders, in some cases by having firm and transparent rules on corporate ethics, the tentacles of bribery still snaked from the bureaucracy. The problem of corruption was closely linked to poverty and social imbalance. Often the poorest members of society, those with no protection, suffered disproportionately, paying out money to the police to be allowed to live in an illegal shack, or to someone with a keycard in order to use a locked water pump, or to a local thug for the chance to beg at a road junction. At the other end of the economic hierarchy, there were frequent cases of embezzlement: a civil servant in Chhattisgarh discovered with over $20m of unaccounted assets; or the former chief minister of Jharkhand, Madhu Koda, arrested with his associates because more than $500m appeared to have been diverted from public funds; or Shibu Soren, who accepted money to support Narasimha Rao in a crucial trust vote in Parliament and took it straight to the Punjab National Bank, where he opened an account and deposited the cash. Both Koda and Soren were Adivasis from poor backgrounds—Koda had been a labourer in a mine, and one of his associates had sold milk and sewing machines from door to door—who were caught because their laundering was amateurish; more sophisticated operators, including some at the very top of politics, used “bagmen,” people who looked after their worldly goods in return for a cut, and who sometimes kept the money.25

  One of the strongest weapons against corruption was transparency—or a fear of being caught. Taking bribes was now becoming annoyingly difficult for senior bureaucrats and politicians, such was the fear of spy cameras. The 2005 Right to Information Act, combined with the new media’s love of spying and bugging, appeared to be undermining certain types of graft. An investigation into arms sales by the website Tehelka in 2001 sparked this shift, catching and shaming people for the sort of behaviour that had always been rumoured but never so graphically demonstrated. The sting revealed that numerous politicians, military officers and bureaucrats were taking money on defence deals. The undercover footage was as shocking for its content as for the nonchalance and foul language with which the guardians of the nation’s defences sold their services for cash. Tehelka was then in its heyday, and two of its reporters, Mathew Samuel and Aniruddha Bahal, posed as representatives of a fictitious London-based arms manufacturer, West End International.

  They claimed to be selling “4th generation thermal imaging equipment” and military hardware. Bangaru Laxman, a token Dalit who was president of the BJP, was filmed taking Rs100,000 in cash as an initial sweetener and saying, “you can give dollars” next time. The Samata party’s treasurer, R. K. Jain, boasted he had made a fortune for his party and for himself in similar scams. Bangaru Laxman, the defence minister George Fernandes (who in his days as a firebrand had thrown out Coca-Cola from India) and his colleague Jaya Jaitly resigned, with Laxman claiming there was a conspiracy against him because of his lower-caste background, and Jaitly asserting that “dubious blackmailers” were trying to destroy the country.26

  The recorded dialogue between the journalists and their targets yielded material worthy of Joseph Heller’s Catch-22, as reworked by a subcontinental absurdist playwright. Aniruddha Bahal described how his fellow sleuth, Mathew Samuel, was a painfully inept conspirator. Asked by an army general who his firm’s bankers were, he answered: “Thomas Cook”; asked where he stayed in England, he said: “Manchester United.” His military knowledge was no better than his geography (Samuel was a Malayali who had never travelled outside India). When the potential purchasers of the latest thermal imaging cameras asked him what their range was, he replied: “Unlimited.” Noticing a baffled expression, he corrected himself: “No, no … after a long distance the vision gets blurred.”27 Everyone, from the director of ordnance and supply to the deputy secretary of the ministry of defence, took money. Using a broken mix of Hindi and English, senior army officers, middlemen and politicians chatted away to the fictitious arms dealers over drinks in New Delhi’s five-star hotels:

  LT. COL. SHARMA: We don’t involve ministry in our world. We do it directly.

  BRIG. SEHGAL: This bhenchod [sisterfucker], they’ve done a very smart thing. He has kept everything with him.

  LT. COL. SHARMA: Fuck it … We issue the tender, call the bloody parties, do the PNC [Price Negotiation Committee], give the supply order. Screw you.

  TEHELKA: We will get the tie-up done. With whoever you want, we will get a tie-knot …

  BRIG. SEHGAL: Bhenchod, see I have a counter offer and all these fuckers know about it. Either I give money bhenchod to all of them. Include all. This maderchod [motherfucker] is the way here … All these politicians are chutiyas [cunts]. They are all different behind your backs …

  BRIG. IQBAL SINGH: Cultivating MGO [Master General of Ordnance] is my problem … I will find out somebody from his country-cousin side, whether he is game or not otherwise.

  TEHELKA: Yeah, okay …

  MAT. GEN. AHLUWALIA: Now understand, if you are talking about a deal which is 20 crore [$4.5m] here, 60 crore there, make a profit of 5 crore, saala [brother-in-law, though implying worse], if you come to my house to meet me on Diwali, you can’t talk without bringing Blue Label … Isn’t it?

  TEHELKA: True fact, sir.

  MAJ. GEN. AHLUWALIA: So, if, when you are talking big, you got to also project big … Every other fucker knows bloody Putin. Everybody knows George Fernandes, everybody knows bloody Putin, everybody knows bloody Saddam … There are 25 buggers who are carrying a letter from exports. This is big. The carrot at the other end is one bloody deal. This Kaun Banega Crorepati [Who Wants to be a Millionaire?—or technically, who wants Rs10m] … People are happy …

  ADDITIONAL SECRETARY L. M. MEHTA: What is the product range?

  TEHELKA: Which one … Sir, we have a tank navigation system …

  ADDITIONAL SECRETARY L. M. MEHTA: Achha.

  TEHELKA: And that is smart ammunition, and some very typical type of bombs …

  ADDITIONAL SECRETARY L. M. MEHTA: I see.

  TEHELKA: So, a lot of products, we are supplying NATO countries also.

  (Pause)

  ADDITIONAL SECRETARY L. M. MEHTA: So you must remain on their payroll.

>   TEHELKA: Yeah …

  MAJ. S. J. SINGH: I am, basically, you can call me a fixer … There was a deal of Krasnopol [a laser-guided artillery projectile]. That was 50 crore deal … It was not being cleared and …

  TEHELKA: Due to what?

  MAJ. S. J. SINGH: Firstly, out of six tests, it was only one test which was successful. Five test failures. Then the bureaucracy was not at all in favour of it … but, ultimately, we were able to push it through … and now it is a repeat order.

  TEHELKA: This is called smart ammunition something?

  MAJ. S. J. SINGH: Yeah.

  TEHELKA: Same thing.

  MAJ. S. J. SINGH: Krasnopol is the name of the bomb.28

  The image of the Indian military communicated here was not reassuring; the following year, India and Pakistan came close to going to war, with India mobilizing half a million troops on the frontier. The most outrageous thing about this exposé was not the corruption, nor even the idea that a weapon might be bought after repeated test failures, but the state’s response to the dishonesty. The prosecution of those involved was half-hearted, and much more effort was devoted to persecuting Tehelka, which was nearly destroyed by repeated investigations and court cases (it has since revived as a weekly magazine for the socially concerned). The BJP was in power at the time, but even when Congress came back into office they showed no interest in quashing the various cases. Many of the people caught in the sting operation simply pretended that all the videos had been faked. This became something of a tradition in India whenever a prominent figure was caught on camera: the 86-year-old governor of Andhra Pradesh, N. D. Tiwari, said he was innocent of any scandal after he was photographed in bed with several unhappy young women: “They are using the electronic technology to combine photographs.”29

  Corruption and poverty were part of the same story in India. If the economic reforms were to mean something, they had to reach those who had never been privileged before, those who had previously lacked an opportunity to alter their position in society. If money only passed to the rich and corrupt, no sincere progress would have been made. Did the ambition of raising government revenues through the generation of wealth by the private sector succeed in undermining poverty? The figures were complicated, with the argument swinging back and forth depending on who was telling the story.

  The first thing you had to decide was what poverty meant. Tashi Norbu, the old man who saw Nehru’s plane land in Ladakh in 1948, would qualify as poor. He lived almost by subsistence in one of the most remote parts of India. His family farm had four hours’ supply of mountain water each day, by village agreement, designed to give them two harvests of barley a year before the snow fell and winter set in, with temperatures dropping to minus 30°C. Life depended on the efficient labour of every family member (which explained the higher status of women in the Himalayas; they were needed for survival). Yet Tashi Norbu had enough to eat, and although his existence was tough, it was culturally rich and did not seem like poverty. Similarly, when I visited the slum of Chetan Basti in Delhi during the 2009 election and spent time in some of the houses, it was noticeable how clean and airy they were, despite lacking running water. The risk of looking at poverty in this subjective way was to romanticize it; these places did not seem poor to me, while the houses or huts in Chandni Chowk and the blazing villages of Uttar Pradesh did.

  Analysis of poverty began in a serious way in India in the 1950s under the guidance of (who else but) P. C. Mahalanobis. He set up one of the world’s first household expenditure surveys. The thinking behind it was that people did not usually report their income accurately, and since payment at this time in India often came in the form of crops, it would be difficult to obtain useable data. So instead Mahalanobis used a method that recorded household consumption over a thirty-day period. By the 1970s a government task force had decided what level of income was necessary to secure a basic calorie intake. The all-India poverty line was the weighted sum of rural and urban poverty lines. After 1973–74 it could be updated using a price deflator to account for inflation, rather than recalculated each time. Every five years, the Indian government now did a “thick” or detailed consumer expenditure survey in order to estimate national levels of poverty. Exact comparison became possible over several decades.30

  What did these official estimates reveal? Starting in 1973–4, they showed that 56.4 percent of rural Indians and 49.0 percent of urban Indians lived in poverty, a national total of 54.9 percent. A decade later the national figure had fallen to 44.5 percent and by 1993–94 it had dropped to 36.0 percent. By 2010 (projecting forward from 2004–05 assuming an annual decline of 0.8 percent) the figure stood at 22.9 percent.31 The preliminary implication here was that extreme poverty had been falling steadily since the sampling system began, but did not decrease any faster after the economic reforms. In absolute terms, the number of poor people in India had not changed significantly between the 1970s and 1990s, because of the rise in population. When Manmohan Singh came to power in 2004, there were still 300 million Indians living in dire poverty.32

  A country’s estimate of its own poverty levels may not be the best source—the U.S. federal government has long been accused of setting its poverty line too low (and announced a change to the system in 2010). The World Bank uses global reference lines set at $1.25 and $2.00 per day at purchasing power parity, meaning they are weighted for the cost of staple goods in a given country. In 2008, Shaohua Chen and Martin Ravallion of the World Bank published a revealing research paper titled The Developing World Is Poorer Than We Thought, But No Less Successful in the Fight against Poverty, explaining an overhaul of methods of estimating poverty and deducing that although it was pervasive in developing countries, it was declining fast. The most noticeable change was in China, which since Mao’s death had managed a world-altering programme of poverty alleviation. Another World Bank publication estimated that, by 2015, only 84 million Chinese would be living on less than $1.25 per day.33

  How did India look when judged by these international standards? It looked even worse. The government’s all-India line, when matched to the World Bank’s method of calculation, turned out to be set at only $1.03 per day.34 The international poverty line was higher, at $1.25 or $2.00 per day, which allowed some latitude in deciding the relative extent of poverty. These shocking figures showed that at the time of Indira Gandhi’s assassination in 1984, 17 out of every 20 people in India lived on the equivalent of less than $2.00 per day, and more than half lived on less than $1.25 per day.35 The levels of poverty have been dropping steadily since then, although it was only in 2005 that the effects of earlier economic reforms started to make the numbers drop rapidly. If things continued at their present rate, India should reach a position in around 2025 where less than 10 percent of the population is caught in extreme poverty, when defined as an income of less than $1.25 per day.36

  Percentage of Indians living below the poverty line

  Another calculation was the “squared poverty gap” (the poverty gap index weighted by itself), which measured the severity of the problem by taking greater account of the very poor. It suggested the intensity of poverty in India had declined in recent decades. Under this analysis, Rajiv Gandhi’s time as prime minister emerged as a time of significant improvement. In 1981 the squared poverty gap stood at 8.5, in 1990 at 5.6 and in 2005 at 3.7.37 Certainly photographs or film footage taken of India during the 1950s or 1960s—or at the time of British rule, when famine was often rife—indicate a way of living that was substantially worse than anything seen today. Even in the poorest parts of India, where children die of disease, foul water and malnourishment, I have never come across the depths of human suffering that were visible on the streets of Calcutta when I first visited in the 1980s: an old man lying dying in the dust by Howrah station, and human figures who gave a sudden meaning to the previously empty phrase “skin and bone,” for that was all they had left.

  Whatever political view you take of India’s economic liberalization, two
things are clear: large numbers of people have been lifted out of extreme poverty, and around one quarter of the population have so far gained very little. People still die from poverty, finding that eating rats or ground mango kernels does not save them from starvation, migrant workers continue to break stones by hand and live in pipes or under plastic sheeting, and parents continue to sell their children into servitude.

  This was the central political and moral quandary of how the nation would develop. Would India go the same way as some Latin American countries, where the benefits of economic growth were restricted to a few? This was the standard criticism but looked unlikely: the new Indian middle class was visibly dynamic. Yet a wide gap remained. The growth of the economy would not eradicate poverty, but it could not happen without it. Judging by their unchanged position over previous centuries, the villagers of Uttar Pradesh would be no better off if Lakshmi Mittal had not held a lavish family wedding at Versailles.

  Kaushik Basu, chief economic adviser to the finance ministry, proposed in 2010 that the government implement its promise of “inclusive growth” by measuring progress through the rise in per capita income of the poorest 20 percent; unless their income rose at the same level as the rest of society, the government would be failing.38 Basu proposed various solutions, such as issuing food and fertilizer coupons rather than relying on subsidized products in the open market, which had previously had the effect of creating a shadow economy; government “ration shops” were a fount of corruption, with grain adulterated with grit and some of the stock sold illegally. If Basu’s method were to succeed and be effectively targeted, it would depend in part upon a scheme that was currently under way to give every Indian a unique biometric identity card, with online verification. The plan, perhaps the most ambitious IT project in history, was being organized by Nandan Nilekani, one of the founders of the Bangalore-based technology company Infosys. In the meantime, poverty declined while injustice remained—although some escaped their fate.