Yet behind these personal intrigues Jayalalithaa posed a deeper conundrum, namely the unlikely success of Tamil Nadu itself. In northern states like Uttar Pradesh, cronyism tended to go hand in hand with poor economic development. For all of its corruption, Tamil Nadu by contrast made great progress under her rule. She took power just as liberalization began in 1991, and grew dominant over the 2000s at the height of India’s wider re-embrace of globalization. Her state became one of the country’s most internationally connected regions, propelled by its large diaspora, busy ports, and location close to the shipping lanes that connected east Asia to the West. Already one of the most industrialized states, it built up an enviable record of attracting foreign investment. In 1996 Jayalalithaa persuaded Ford to set up its first Indian factory in Chennai, tempting the US auto giant with free land and tax breaks.15 Hyundai, Renault, BMW, and others followed, turning the city into a self-styled “Detroit of India.”
Chennai became a technology hub too, as business parks and software centers sprang up along the main highway south of the city, towards the old French colonial trading post at Pondicherry. The state made quick social progress, helped along by innovative public programs, including a pioneering “midday meals” initiative giving free lunches to schoolchildren, and a child adoption program designed to stop female infanticide. Under her rule Tamil Nadu grew safer, richer, and better educated.16 In 2016, a survey judged it one of the country’s two best-governed states,17 despite being led for the best part of two decades by a leader who mixed prodigious corruption, autocratic whims, and a fondness for politically expedient handouts. “Jayalalithaa has become, for better or worse, the template that all India’s successful chief ministers seek to follow,” as commentator Mihir Sharma put it just after her death.18
Even at the time of her death, few bothered denying that Jayalalithaa had run a state built on graft. Court records showed her personal wealth to be a little under $10 million, a significant sum, but hardly enormous. Her indignant supporters often pointed to the far bigger sums extracted by supposedly respectable politicians in New Delhi. These holdings in turn were trivial next to the vastly larger amounts she and her fellow Tamil politicians needed to bankroll their election spending and patronage networks. Yet Jayalalithaa and her rivals managed to raise these funds without greatly damaging their state’s economic record, or indeed causing the kind of blockbuster scandals that in time brought New Delhi grinding to a halt.
This style of crony capitalism distinguished India’s five prosperous southern states—Kerala, Tamil Nadu, Karnataka, Telangana, and Andhra Pradesh—from the laggards of the north. Of these, all except Kerala were stunningly corrupt. Karnataka was India’s most graft-ridden state, one survey suggested, while Andhra Pradesh and Tamil Nadu came in second and third.19 But all were also economic success stories, with development levels that stood closer to southeast Asia than sub-Saharan Africa. The south had long enjoyed a distinct political identity, based in part on the common set of Dravidian languages most of its people spoke, and the way its leaders tended to resist creeping political and cultural influences from the Hindi-speaking north. But the region developed its distinct model of cronyism too, and one that acted as an endorsement for Samuel Huntington’s theories that corruption and growth could go hand in hand. “In the south, you can say that politicians learned to steal, but to do it while expanding the cake at the same time,” as Devesh Kapur, a professor of political science at the University of Pennsylvania, once put it to me. “In north India they just went about taking as much of the cake for themselves as they could, and soon there wasn’t any cake left for anyone else.”
Perhaps more than anyone, Jayalalithaa embodied this southern model of grand but orderly corruption. She was one of a series of powerful regional politicians who won power in the decades before Narendra Modi’s victory in 2014. Often known as “satraps,” the grouping included other leaders with power bases far outside the south, from Mamata Banerjee in West Bengal to both Mulayam Singh Yadav and Mayawati in Uttar Pradesh. Manish Sabharwal, the head of recruitment group TeamLease, once drew a distinction between their various records, contrasting their “roving bandit” and “stationary thief” models of political power. “The roving bandit is a politician like Kublai Khan in ancient China, or Mayawati in Uttar Pradesh, who says, ‘Give me everything you’ve got,’ ” Sabharwal told me. “The stationary thief, who would be someone like Jayalalithaa, says, ‘Give me ten percent of the value of this project, and now tell me how you are going to grow it.’ ”
This distinction echoed Mancur Olson, the American economist, who argued in his book Power and Prosperity that the decline in antiquity of roving-bandit-style political leaders, and their replacement by more geographically rooted rulers, marked an important stage in human development. Sabharwal’s point was that modern north Indian politicians were more likely to show bandit-like traits, helping themselves to whatever loot they could find. Because their regions lacked business investment, this typically meant plundering the state, for instance taking money from welfare programs for the poor. By contrast, southern politicians like Jayalalithaa developed efficient cronyism more akin to that in China or Malaysia, countries whose recent mixture of rapid growth and rampant corruption has sometimes been dubbed the “East Asian Paradox.”20 Southern India “had the fortune of having more stationary thieves,” Sabharwal told me. “It is a more Chinese form of profit sharing, where the incentives of the politician and the interest of their people are more closely aligned, and so the corruption is less rampant and embarrassing.”
Jayalalithaa learned the value of profit sharing the hard way during her first term, a period when she gained an early reputation for greed and excess. Public anger focused in particular on a gigantic wedding reception she hosted in 1995 for her adopted son, inviting more than a hundred thousand guests at an estimated cost of $23 million.21 The ceremony still holds two Guinness World Records, one for largest wedding banquet, the other for most attendees.22 “The three-mile drive from the temple to the grounds of her mansion was adorned with illuminated Grecian columns and statues of Indian princes in erotic poses,” as one report put it.23 The celebrations were a social triumph but a political disaster, and the main reason she suffered a heavy defeat in the next year’s election.
When she returned as chief minister in 2001, Jayalalithaa ruled more modestly. One of her most senior civil servants talked me through the change in her behavior, sitting one afternoon in an anonymous office building close to Chennai’s city center. The more brazen style of her first period in power, he explained, fitted a pattern common to Indian politicians who lacked money early in their careers. “They believe in building a substantial corpus of wealth: a personal nest egg for themselves, their children, their children’s children,” he said. But this kind of personal enrichment was less important and involved smaller amounts than the far larger sums politicians were forced to raise to meet their party’s needs for election spending. “They operate what you might call a ‘portfolio selection approach,’ in which they want to make some money in some areas, but they also want to deliver certain services in others,” the civil servant said. Money could be taken from government contracts or extracted from investment projects, or misdirected from state spending programs. Choosing between these options involved weighing up the risk of being caught. But it also meant keeping in mind the need to deliver growth, or at least to build the kind of high-profile infrastructure and public spending projects that voters seemed to like. Jayalalithaa’s compromise was to use a handful of economic sectors as her political cash cows, notably liquor and mining. In others she would take a cut at the initial stage, for instance by demanding a certain portion of the value of a procurement contract or taking a bribe from a company seeking to set up a factory. Then she would allow her bureaucrats to push the project forward as normal, taking care to make sure it was well run and delivered on time. Everyone was happy: the approach worked for
politician and public alike.
This was the conundrum of Jayalalithaa: a leader who was at once enthusiastically corrupt but also a believer in a certain kind of good governance, albeit one that left plenty of room for personal enrichment and the necessities of political fund-raising. Her instinct for populist giveaways was genuine, and if anything it deepened as she grew older. This was especially true when she lost another election in 2006: she found herself in the unusual position of being been out-promised—her DMK rivals offered free televisions to voters—a mistake she was careful not to repeat. Despite the ferocity of their rivalry, there was little ideological difference between the two main Tamil political parties. Both believed in holding power and viewed a mix of methodical corruption and election-time generosity as the best means of achieving it. But Jayalalithaa at least also believed in economic development, and managed to push policies that delivered it.
“They have found out that corruption doesn’t matter,” the civil servant told me. Tamil Nadu’s electorate did not seem to mind if their leaders were on the take, so long as they were not looting extravagantly and they delivered progress in other ways. Business leaders were similarly phlegmatic, viewing her kind of corruption as akin to a tax: a cost of doing business, but a predictable and manageable one. “They prefer Jayalalithaa because her AIADMK is more efficient at delivering once paid,” one American government official wrote in a diplomatic cable, leaked by WikiLeaks. The author also quoted a local tycoon, who complimented Jayalalithaa’s style of governing: “If I pay her, I know my job will get done.”24
The Andhrapreneurs
From a distance India’s parliament building looks serene: a squat amphitheater ringed with columns, its outline visible through the thickest New Delhi smog. Upon completion in 1927, its outer walls hid three chambers: the House of the People, the Council of States and the Chamber of Princes, the last acting as a gathering place for monarchs from the various “princely states,” which notionally still ruled much of the country under the British Raj. Designed by Sir Herbert Baker, the building was a temple to power and imperial order, fusing classical Greek and Indian styles. Not everyone liked it: “It resembles a Spanish bull-ring,” one critic wrote in 1931, “lying like a mill-wheel dropped accidentally on its side.”25
The elegant Central Hall went on to host many of independent India’s formative moments, from the transfer of power in 1947 to the high-minded debates over the drafting of a new constitution which followed over the next few years. More recently the building’s discussions turned rowdy, notably in the lower house, where Lok Sabha debates grew notorious for slanging matches and staged walkouts. Yet even in the annals of India’s bad-tempered democracy, a special place will surely be kept for the extraordinary scenes of February 13, 2014, and the man who caused them: Lagadapati Rajagopal.
That day’s argument involved a bill proposing the creation of a new southern Indian state, known as Telangana. The latest in a series of “bifurcations,” the legislation aimed to carve the existing state of Andhra Pradesh into two, unpicking the single entity created as a home for all Telugu language speakers in the 1950s, part of a national movement at the time to reorganize India’s states along broadly linguistic lines. Almost ever since that time, campaigners from the poorer Andhra Pradesh interior had been agitating for a state of their own, arguing that the people of the richer, fertile coastal belt had come to dominate the state’s politics, creaming off its resources in their own interest. Decades of separatist agitation finally produced results in 2013, when India’s ruling Congress government relented, and promised to table legislation to split the old state into two.
News of the Telangana decision proved divisive, prompting a mixture of celebration and angry protests across the region. On that day in 2014 the violence spilled into parliament. In the heat of debate, various angry anti-statehood MPs rushed into the center of the Lok Sabha chamber and began to trade blows. One ripped a microphone from his seat, wielding it with such vigor that press reports later mistook it for a knife. Another held up a sign reading “WE WANT UNITED ANDHRA PRADESH” and parked himself in front of the Speaker’s chair. Rajagopal, a Congress parliamentarian, but also a staunch Telangana opponent, rushed to join the melee. He tangled briefly with another MP before suddenly pulling a can of pepper spray from his pocket, brandishing it aloft and firing its contents into the air.
Shocked MPs held handkerchiefs to their faces as they rushed out of the chamber, tears streaming down their cheeks. One suffered a heart attack during the ruckus, and was hurriedly bundled into a waiting ambulance.26 Others emerged ready to denounce a new low for India’s tainted democracy: “the most shameful day in our parliamentary history,” as one MP told a throng of waiting cameras; “disgraceful, unprecedented, and unforgivable,” fumed another.27
From that day forward Rajagopal become known as the “pepper spray MP,” but he was intriguing for a different reason too. “The man credited with the worst conduct ever in the history of our Parliament (and it would take some doing to get that distinction) was not your usual politician, but a fabled and much-favored star of corporate India,” wrote Shekhar Gupta, a newspaper editor and intellectual, a few days after the fracas.28 With declared assets of Rs3 billion ($47 million), Rajagopal was one of the country’s wealthiest MPs. But he was also part of a growing band of Indian industrialists turned parliamentarians, who like Vijay Mallya had perfectly lawfully used their personal resources to fashion political careers, which were then often helpful to their business interests. These politician–business leaders were common across southern India, including in Jayalalithaa’s Tamil Nadu. But it was the tycoons just over the border in Andhra Pradesh who developed a particular reputation for amassing wealth at the intersection of commerce and politics. They even came to earn their own nickname: the “Andhrapreneurs.”
Rajagopal was cheerfully unrepentant about the pepper spray farrago, as I discovered when I visited his home a few years later. By then he was no longer an MP: the state he disgraced himself to save was ultimately split in two in mid-2014, a decision that prompted him to resign from parliament in protest. He still worked in politics, acting as what in America would be known as a lobbyist for his family’s conglomerate, which was now officially run by his brother. When parliament was in session he lived in a modern three-story house nestled inside an upscale New Delhi enclave, tucked in next to the Danish embassy, with a gray gate and armed guards outside. He arrived more than an hour late, entering the sitting room full of apologies for having been delayed in a meeting with a government minister. There was a gold band on his wrist inscribed with the words “Om Shanti,” a mantra and salutation often used in meditation. As we talked he was gentle and solicitous, offering tea and chatting about his young son, all of which was hard to square with his public image, which was part political hooligan, part adept crony capitalist.
In his own telling, Rajagopal’s behavior that day in 2014 was more gallant than deplorable. “What I did was self-defense, not for myself, but safeguarding one of my colleague MPs,” he told me, explaining that he had intervened to defend an elderly parliamentarian caught up in the scrum. His criticism of the Telangana movement had made him a target for political violence: “Many times people tried to attack me, so I always used to keep this spray, because I don’t want to use a gun or a knife,” he said. Neither did he regret his actions, nor had he suffered any real censure for them. In fact, back home in coastal Andhra Pradesh, he had become something of an unlikely hero, winning respect for his extraordinary efforts to halt the state’s division.
A member of the business-minded Kamma caste, Rajagopal had as a younger man joined Lanco—or Lagadapati Amarappa Naidu and Company Infratech, the company founded by his father. The business grew gradually during the 1980s and early 1990s, moving first into pig iron, then cement. After liberalization it expanded rapidly, developing a particular speciality in infrastructure, building everything fr
om fancy Hyderabad residential estates to new coal-fired power stations. Fueled by giant quantities of debt, the business took off during the mid-2000s, becoming experts in the public-private partnership (PPP) model that India began using to fund big infrastructure projects. In China, bridges and roads were typically built by government-owned companies. But in India, just as happened in America during the railway boom of the 1870s, it was private sector conglomerates that took the lead.
For a while these PPP programs seemed almost magical, bringing billions of dollars of new investment while officially adding barely a rupee in debt to the public finances.29 Inspired by similar models in the West, early supporters of the deals hoped that their strict delivery contracts would also act as an anti-corruption panacea, ending the kind of discretionary dealmaking that had dominated India’s infrastructure sector up to that point. In fact the opposite happened, as PPPs created an entirely new mechanism for astronomical rent extraction. So pervasive did the model become, and so powerful were the companies delivering it, that commentator Pratap Bhanu Mehta claimed in 2013 that India itself had grown as a “contractor state”—a “government of contractors, by contractors, for contractors.”30
The PPP model proved especially popular in Andhra Pradesh, whose conglomerates emerged as masters of the new form, bidding for everything from highways and ports to airports and public housing schemes. Traveling around India, I often found that different parts of the country took a perverse kind of pride in the ingenious and questionable practices of their own local business elite. Bankers in Mumbai held a sneaking appreciation for financial shenanigans, for instance, while in Uttar Pradesh the finesse with which politicians ripped off welfare projects was often deplored and quietly admired in equal measure. But it was Andhra Pradesh, with its sophisticated patronage-based politics and billionaire Andhrapreneur tycoons, that represented perhaps India’s most refined form of crony capitalism, and one whose sheer artistry acted as a model that others would soon go on to follow.
The Billionaire Raj Page 21