The Billionaire Raj

by James Crabtree

  Other poor northern Indian states—Madhya Pradesh on UP’s southern border, for instance, or Bihar to the east—fared little better on these measures. But UP’s size and symbolic importance attracted special attention. Here was the state that had produced eight of India’s fifteen prime ministers, and stood center stage during all three of Varshney’s “master narratives”: first a Congress bastion and bedrock of secular nationalism; then the backdrop for the BJP’s Hindu reawakening in the 1990s; and finally the cradle of a new lower-caste politics too, as both Yadav’s father and Mayawati, a charismatic Dalit leader, took power as chief minister. Yet through all this the state made little economic progress, in part because it was also in the vanguard of the fourth change that reshaped India’s democratic landscape—what Shahabuddin Quraishi, a former head of the Election Commission, dubbed the rise of “money power.”

  A Tainted Democracy

  If for no other reason, the recent influx of money into Indian politics matters because it has tainted one of history’s most remarkable constitutional experiments. Beginning in 1947, India began to assemble a full parliamentary democracy. The early omens did not look promising. Modern academic models suggest that democracies rarely succeed in poor countries. In one study, the Polish-American political scientist Adam Przeworski found that countries below a certain level of GDP—$6,055 per head, to be precise—almost never manage to sustain democratic government.7 At the time of its independence, India was nowhere close. It was also deeply hierarchical, almost entirely rural, and with four-fifths of its population unable to read. Textbook models strongly suggested it would slide quickly into autocracy, as happened in Pakistan, its post-Partition neighbor. “Most wealthy countries are democratic, and most democratic countries—India is the most dramatic exception—are wealthy,” as political scientist Samuel Huntington once argued.8

  Barring a brief hiccup during Indira Gandhi’s “Emergency” in the mid-1970s, this precarious constitutional experiment more or less worked. “The old certitudes of Indian politics had crumbled,” as academic Sunil Khilnani put it in his book The Idea of India in the late 1990s, referring to the declining power of secular nationalism in Indian politics. “Yet one powerful continuity stretched across this half-century of spectacular and often turbulent events: the presence of a democratic state.” Liberals like Khilnani often regretted this decline in India’s secular identity, and its eclipse by powerful religious, caste-based and linguistic political movements. Others blamed the complexities of democratic rule for India’s slow economic progress, and in particular its inability to build Chinese-style infrastructure. Yet India’s democracy also proved successful, binding together a subcontinent that was far more linguistically and ethnically diverse than China, and which could easily have ended up divided into as many nations as Europe.

  All the money that gushed into Indian politics has not corrupted the polls themselves. Despite extensive evidence of voter bribery, the country’s elections tend to be both free and fair, with little evidence of ballot tampering. Armed with its “model code of conduct,” the Election Commission of India acts as a fierce policeman. Boisterous street campaigning is banned, while balloting is run remarkably cheaply. The real problem is exorbitant and rapidly rising election costs for political parties, which has pushed them to raise huge quantities of illicit funds, mostly from larger businesses. In turn, political leaders have built political machines whose wealth and power comfortably exceed the likes of Tammany Hall in nineteenth-century New York.

  The pernicious influence of money on politics was clear enough to Vineet Victor, a man I met on a roadside in eastern UP, a few days after sitting down with Akhilesh Yadav. It was a warm Saturday morning in late February, with blue skies overhead, when I stopped in a small village close to a curve in the river Ganges, a two-hour drive west from the holy city of Varanasi, over bumpy roads that often degenerated into little more than dirt tracks. The town’s voters would head to the polls in a few days to elect a member to the state assembly in Lucknow. Two-wheelers buzzed by as we talked, standing on the roadside next to a shack selling snacks and tobacco, with two sticks holding up a tarpaulin awning for shade. Four green and white minarets rose up above the trees from a nearby mosque.

  Victor worked as a local schoolteacher, but dressed in jeans and a lime green polo shirt, set off with sharp rimless spectacles, he looked as if he could have been an accountant or IT consultant. Akhilesh Yadav seemed like a decent man, he told me, but his party, a powerful presence in the local area, was full of dacoits (bandits). Their rule had delivered little for his town, but the local council was led by a Samajwadi politician elected a few years before, who had enjoyed a rapid transformation in her own fortunes. Victor simply called her begum, a word that means “powerful woman.” “It all goes in their pocket,” he said of the politician and her family. “They had nothing, no proper house to live in, no proper vehicle to ride on. Now they have all sorts of facilities.”

  A crowd gathered around us, chipping in examples of other local politicians who spent generously to win power and used it to benefit themselves. Money from state schemes designed to help the poor was diverted for their personal use, they explained, while bribes were solicited to win construction contracts or government jobs. The police were dominated by Yadavs and paid little attention to complaints from other caste groups, let alone Muslims or Christians. There was a particular scam, one person told me, that involved stealing money from a new initiative—designed to fund new indoor toilets for those in the village who did not have one—in which conspiring politicians and builders used fake pictures of latrines to claim a generous government subsidy.

  “People like us, normal people, we try to work for our whole lives, and we are not able to get those kind of treasures,” Victor said ruefully. Still, he thought himself fortunate: he had a job as a school teacher; he owned a small home with running water, where he lived with his wife and two children. He wore a chunky watch, bearing an approximation of the Calvin Klein logo. Few of his neighbors were so fortunate, he said. Employment was scarce, forcing men to labor in farming or construction. At least half of the young people in the area would leave, seeking work in Lucknow or New Delhi, or Dubai if they were lucky. Ten years back he had also tried to leave to find a job in Europe, only to scrap his plans at the last minute, in order to care for his elderly parents.

  Victor lived in the heart of the UP’s crime belt, in an area often called the “wild east,” which often featured as a locale for Bollywood movies featuring dacoits and mafia dons. But when traveling through the area it was lethargy rather than lawlessness that stood out. Brick kilns were the only industry to speak of, their conical smoking towers dotting a picturesque landscape filled with mustard and wheat fields, but almost entirely empty of factories. The larger towns showed some signs of development: mobile phone masts rose up along the roadside and satellite dishes peeked out from walls. Most of these walls were at least made of brick, but it took only the slightest village detour, along roads that turned quickly to dirt, to see wonky old kutcha houses, fashioned uneasily from straw and mud.

  The region’s larger cities were generally teeming and squalid, with garbage piled on the sides of the street and smog thick in the air. Yet even here, roadside billboards hinted at a burning sense of aspiration, offering bags of cement, or branded Ayurvedic goods from a company run by a famous yoga guru. By far the most numerous were billboards for education—“DPS World School,” “St. Margaret’s College,” “Divine Public School”—dozens upon dozens of which whizzed by in every town. Each product in its own way held out the promise of escape from a part of the country which had failed to find even modest economic success: a new home, a modest consumer lifestyle, or the chance to educate your children, so they could leave and find work somewhere else.

  Back in Kachhawan, Vineet Victor blamed a mixture of caste politics and corruption for UP’s weak progress. Vote buying would be comm
on in the upcoming election, he said. The various parties went door to door in the village on the evenings before polling day, passing out alcohol and money. Thinking back to Akhilesh Yadav’s boast when we met in his office, I asked about the local power supply. Victor gestured up at the black wires that snaked through concrete pylons up above. Unlike some nearby villages, Kachhawan had been connected to the electricity grid not long back, he explained. Some roads, including the one on which we were standing, even had streetlights. “We have got good wires now, and these days we get a good supply,” he said, explaining that power had improved mysteriously in the months prior to the election. But once the polls were over, he predicted, the supply would worsen, returning to just six or eight hours a day during the scorching summer in a few months’ time. “Before elections we have good power, but after the parties win we will get nothing.”

  A Nice Day for a Fake Wedding

  Indian democracy did not come cheap. Over a generation the number of political parties contesting elections had shot up, from slightly more than a dozen in the years after Independence to nearly 500 in 2014.9 Only a tiny fraction of these were major national players, but their proliferation still meant that local contests were now much more likely to be fought out between three or four parties, making races both more competitive and more expensive. The number of registered voters had also shot up, reaching 814 million in 2014.10 Meanwhile India’s rapidly expanding economy had also increased the value of political power, in terms of what could be extracted from it, bumping up further the sums parties were willing to spend to hold on to it. In the absence of regulations to keep spending in check, and with plenty of businesses ready to give funds off the books, the question became: How much could you raise?

  Mass political rallies were the iceberg tip of election spending. One morning in UP, I pushed through the throng to watch Narendra Modi enthrall a packed field of supporters on the outskirts of Deoria, a dusty down-on-its-luck kind of town in the state’s eastern corner. Tens of thousands of mostly male, saffron-clad enthusiasts waved flags and chanted BJP slogans. Local villagers stood in small clusters on nearby rooftops, waiting for the entertainment to begin. Indian politicians often arrived at rural rallies by helicopter, mostly to avoid long journeys and road delays, but also partly for the theater of it all. Anticipation of their arrival—the speck on the horizon, the gradually rising thud of the rotors, the swirl of dust upon landing—added drama to the proceedings, and it was common to see attendees streaming towards the exit having watched nothing but the touchdown. The helicopter was generally parked next to the stage, as a visible symbol of the speaker’s power. And as if to make his own preeminence completely clear, Modi arrived that morning in not one military chopper, but three, with two decoys to foil possible assailants.

  The trio of vehicles idled to the left of the stage as Modi began, dressed in a bright yellow tunic, and with an orange and green scarf slung over one shoulder. Speaking in Hindi, his rhetoric held the crowd spellbound for the best part of an hour, as he castigated Akhilesh Yadav’s record and defended his own recent notebandi experiment. At one point, without naming them, he mocked “intellectuals from Harvard and Oxford,” a reference to Amartya Sen and former prime minister Manmohan Singh, both of whom had been vocally critical of demonetization. “On the one hand these are intellectuals from Harvard,” he said, his voice dripping with mockery, “and on the other, there is this son of a poor mother, trying to change the economy through hard work.”11 Modi worked the crowd with emphatic two-handed gestures and long theatrical pauses, often leaning in and resting on one elbow, as if beckoning the audience in to share a secret. To make a point he gripped both sides of his lectern, before slowing his delivery and looking across the audience from left to right. Only then did the pace quicken, as one arm swept around and the other thrust into the air, a finger wagged for emphasis. “I was born to serve the poor. So now they [the wealthy] are all attacking me. So when they come to attack me, who will protect me?” he asked towards the end. “We will!” the crowd roared back.

  As he spoke I glanced around and tried to tot up the cost. As well as the helicopters, there was staging, sound equipment, seating, and awnings for local bigwigs. Hundreds of guards armed with meter-long wooden sticks held back the crowd. Orange flags, caps, and bibs had been handed out to supporters, many of whom were bused in from nearby towns, and perhaps paid a few hundred rupees to attend. Some estimates have suggested that large public rallies of this type, especially in big cities, could cost well over $1 million apiece.12 Then there were all the other elements of a modern campaign: pollsters, political consultants, roadside posters, television adverts, and Facebook posts. The result fused electoral techniques from the nineteenth and twenty-first centuries, and bore the expense of both.

  Even these legitimate outlays made up just a small portion of what the political parties actually spent, as Shahabuddin Quraishi, the former election commissioner, explained to me about a week after Modi’s speech. A former IAS officer, Quraishi took the job as India’s election regulator in 2010. With pure white hair and outspoken views, he quickly became one of the post’s more recognizable holders. “From my first press conference, we said we’d go after all this money power, with a kind of new shock treatment,” he told me.

  Over the next few years Quraishi kept a list of the artful ways parties tried to buy votes. “They were all very crafty,” he said. “Some would hand out money, others held fake weddings to entertain villagers with food and liquor, or handed out mobile phones, or SUVs, or saris, or jobs, or almost anything you can think of.” His autobiography included a compendium of forty or so methods, from cash funneled through village headmen, to gifts of solar lamps, narcotics, cows, or manure. It was hard to tell, he said, which were effective. His sense was that the parties knew what they were doing, and handed out their goodies carefully, either to win over wavering voters or to ensure a good turnout among the already committed. Voters were free to take inducements and vote for whoever they liked. But at the very least, in contests where rivals were offering freebies, refusing to offer any of your own was a sure path to defeat.

  Election Commission rules say that parties can spend whatever they like in elections, so long as they submit accounts. The BJP admitted to spending Rs7.1 billion ($111 million) in 2014, although this was a fraction of what most experts think they actually spent.13 Local politicians had stringent limits, however: $43,000 per candidate during the 2017 state assembly poll in UP, or a little over $100,000 for an aspirant MP in the last national campaign.14 In private almost everyone admitted that these limits were widely flouted. In 2013, Gopinath Munde, a senior BJP politician, caused a furor by briefly admitting in public that he spent around Rs80 million ($1.2 million) to win his seat in the western state of Maharashtra.15 Munde rapidly retracted his remarks, but Quraishi told me similar spending figures were common elsewhere around India, with many politicians rumored to spend millions of dollars. “With all these business guys from mining or liquor or property, there is no dearth of money,” he said. “The attitude was that we have such a lot of money to give away. It might work, it might not work. But why not try?”

  Keeping track of this was all but impossible. The Election Commission sent officials to poke around at campaign events, trying to intercept physical cash as it moved around India, by road or private jet, in the run-up to poll time. It claimed to have seized $18 million in cash during the first few weeks of campaigning in UP alone, along with two million barrels of alcohol and 2,725 kilograms of drugs, all supposedly destined to win over wavering voters.16 But just as fast as Quraishi put a stop to one vote-buying method, the parties dreamed up another. Many of the problems that plagued the early days of India’s democracy, from logistical snarl-ups to violence at the polls, had been fixed, he argued. But the rising tide of illegal funding showed no signs of receding. “We haven’t been able to control this problem of money power,” he said at the end of our conversati
on. “Every party, every individual, is violating these rules. It is just a question of who gets caught.”

  He Has the Capacity

  These glimpses of India’s illegal election spending only invited a further question: Where did the money come from? Officially, large businesses could donate whatever they liked to political parties via special electoral “trusts,” although only a small number of big conglomerates actually set them up.17 Much larger quantities were donated by individuals, whose names had to be declared only if they gave more than Rs20,000 ($300).18 Below that level, donors could stay safely anonymous, while there were no rules stopping them giving multiple bundles of Rs19,999 to skirt the system. Even then, most election funding experts thought these official funding routes made up just a fraction of the total that the parties took in under the table. Of the $5 billion estimated to have been spent during 2014’s poll, around four-fifths could have been raised and spent illegally, according to one report.19

  Very few politicians were willing to speak openly about “black” political funding. Rajeev Gowda, a gregarious economist turned Congress MP, whom I had met about six months before my trip to UP, was an exception. In 2014, Gowda took a seat in the Rajya Sabha, India’s upper house of parliament, representing the southern state of Karnataka. Educated at Wharton and Berkeley, he spent much of his career in the US, churning out academic papers on behavioral economics and financial risk. I came across him via a more recent article on the malign influence of money on politics, written after he returned home to Bangalore. His interest in campaign finance flowed from frustration, he told me over email, as he initially tried and failed to stand for parliament himself.