YSR hailed from Kadapa, a district in Andhra’s Rayalaseema region. Often described to the uninitiated as the “Wild West,” Rayalaseema is a parched expanse of land far removed from the sleek glass structures of Hyderabad’s office parks or the brilliant green fields of the Godavari basin. Of the three regions of Andhra Pradesh—Telangana and Coastal Andhra being the other two—Rayalaseema is considered the most backward when judged against most standard socioeconomic indicators.5 When I mentioned to a friend in Hyderabad that I was curious about visiting the region, he snorted: “You can certainly go. But do you want to come back?” Notwithstanding its harsh reputation, an article written in 1999 about life in Rayalaseema reassures visitors that “a stranger visiting the area has nothing to fear, even during an election.” It ends with the unhelpful caveat “unless s/he is caught in a crossfire. . . .”6
Rayalaseema politics has long been dominated by warring “factions,” or armed gangs, whose leaders are a modern-day hybrid of feudal lords and warlords. The British colonial authorities referred to these men as “poligars,” and their leaders were known as “Reddys,” which today is one of the dominant castes in the state.7 Rayalaseema’s clan style of governance was organized around the Reddys’ singular dominance. Noted one local observer, “Everything turns around the [Reddy’s] primary interest: the leader’s preeminence in the village, his honour, his writ, his word.”8 Although the level of local violence is not as severe as it was in previous decades, internecine disputes between dueling factions persist today.9
YSR’s father, Raja Reddy, was one such faction leader—a strongman known for taking matters into his own hands, like the time he witnessed a robbery taking place in the local market and, wanting to teach other would-be thieves a lesson, allegedly doused the thief in kerosene and burned him alive for all to see.10
On the basis of his tough-as-nails reputation, Raja Reddy was hired to manage a local barite mine, which became his passport to wealth and influence. Eventually claiming outright ownership of the mine, Reddy rocketed to prominence in Kadapa, grooming his son to join politics to ensure that the family business would be protected. YSR first contested state elections in 1978, later making the jump to national politics in 1989, all the while maintaining an unblemished election scorecard. Indeed, YSR regularly won election with solid two-thirds majorities. The succession from father to son was abruptly completed in 1998 when Raja Reddy, returning to his farmhouse late one day, was killed by a bomb supposedly planted by a rival faction leader.11
Underwritten with funds from the family’s lucrative mining operations and emboldened by his dominant position among the Reddys of fractious Rayalaseema, YSR successfully transformed his village factions “into full-fledged instruments of political and economic domination at the highest level.”12 Here was a man who was perceived by his supporters—and, crucially, by his detractors as well—to be a leader who would do anything to protect his loyal following, “even if it meant stepping beyond the bounds of law and government.”13 In the words of K. Balagopal, an author and human rights activist, people in Kadapa came in one of two types: with YSR or against YSR.14
YSR achieved his big political breakthrough in 2004 when the Congress Party trounced the incumbent Telugu Desam Party in the Andhra state elections, finally catapulting him into the chief minister’s chair. In office, YSR reimagined himself as a mass leader with a markedly softer edge than he displayed during his climb to prominence, a rise Balagopal claimed was “accompanied by more bloodshed than that of any other politician in the state.”15 Although he may have moderated his image once he rose to the state’s top job, YSR did not fully turn his back on his bare-knuckles brand of politics: those who dared oppose him personally, or the Congress Party in Andhra more generally, were said to be financially or physically harassed.16
YSR occupied the chief minister’s chair until his sudden death in 2009. His rule is hard to characterize because it combined several disparate (even contradictory) elements: “populist giveaways, smelly deals that converted politicians into millionaires, fiscal prudence and economic freedom,” topped with unabashed personal enrichment.17 This mishmash was held together by his reputation as a no-holds-barred, somewhat autocratic leader; his rule was an amalgamation of “crony capitalism and a caudillo-style leadership.”18 Strong chief ministers have never gone down well with the overly centralized Congress Party, but one close observer stated of the party brass: “as long as the suitcases of money were coming, they were happy” with YSR.19
The focal point of alleged corruption during YSR’s time in office was his son, Jagan Mohan Reddy, a charismatic and ambitious though soft-spoken young man then in his mid-thirties. Jagan fashioned himself a hotshot entrepreneur, starting or investing in multiple companies in sectors as diverse as hydroelectric power, cement, real estate, and the media.20 According to police documents, Jagan and his father used the latter’s office to carry out a massive “pay to play” operation: businesses seeking favors from the state, namely land allotments, would agree to invest in Jagan’s businesses in exchange for favorable treatment by the YSR government.21
This alleged quid pro quo—the exchange of state patronage for business investment—served Jagan exceedingly well. In 2004, when YSR first became chief minister, Jagan’s assets were estimated to be a modest 919,951 rupees (around $14,000). Within five years, his wealth had exploded: according to his own disclosures, Jagan was worth more than 730 million rupees in 2009 ($11 million). By 2014, his net worth was north of 4.1 billion rupees ($62 million).22
The firms who invested in Jagan’s assorted companies fared pretty well too. They were given highly prized land at throwaway prices, unencumbered by routine regulatory hassles, according to an examination carried out by India’s chief auditor. In auditor speak, the allocation of land by YSR’s government during 2006–11 “was characterized by grave irregularities, involving allotment on an ad hoc, arbitrary, and discretionary manner” to provide favored entities lucrative land at very cheap rates “without safeguarding the financial and socio-economic interests of the state.”23 The auditor reported that the alleged sweetheart deals deprived the state treasury of billions of dollars in foregone revenue.24
After YSR’s death, a succession battle ensued within the Congress Party. Jagan, the brash young heir to the throne, was denied his father’s political inheritance, sparking a split in the Andhra branch of the party. Jagan led an open rebellion and, not coincidentally, was slapped with serious corruption charges.25 Jagan alleged that the charges were manufactured by Congress in order to “malign [his] image and to defame [the] late Dr. YSR’s legacy and to keep [his] family away from [his] people.”26 In fact, these charges did nothing to diminish Jagan’s standing and may have done the opposite; in a special 2011 by-election to fill his father’s seat, Jagan won the race by the biggest margin in the state’s history (521,000 votes). Although he would later spend 16 months in jail awaiting trial, Jagan rejoined politics upon getting bail, winning a seat in the Andhra state assembly in 2014 with nearly 70 percent of his constituency’s vote.27
Today, Jagan remains one of India’s richest politicians. Although he failed to lead his party to power in the 2014 Andhra election, he serves as leader of the opposition in the state assembly and his ambition remains unbowed. “There are two things nobody has ever done: to stay alive after death, and to have your picture in every man’s house,” Jagan once told an interviewer. “Every poor man should have a picture of you in their house. That is a dream.”28
INDIA’S MISSING TRANSFORMATION
According to allegations levied by federal prosecutors, the rise of the father-son duo of YSR and Jagan Reddy is an apt example of what the fusion of muscle power, personal riches, crony capitalism, and natural resource rents can achieve in contemporary Indian politics. To come to grips with the role “muscle,” or serious criminality, plays in contemporary Indian politics, one has to understand the larger ecosystem of corruption and (mis)governance that prevails.
A
nd to understand how India got to this place, one first needs to recognize the impressive transformations the country has experienced, especially over the last quarter century, when it comes to domestic politics, the economy, and social relations. These transformations, which are still unfolding, have redefined the traditional India narrative in fairly fundamental ways.29
Where the story traverses from good news to bad is the quality of governance, where the status quo truly has prevailed. By and large, India’s institutional firmament has not experienced the rejuvenation—caveats and all—that marks these other three areas. The gap between the capacity of the state to fulfill its most basic obligations and the rising aspirations of 1.25 billion Indians means that India’s government has been often left in the dust, struggling to catch up.
This is not an entirely novel infirmity. The historian Ramachandra Guha has referred to India as “the most recklessly ambitious experiment in history.”30 It is, in the words of philosopher John Dunn, “the most surprising democracy there has ever been: surprising in its scale, in its persistence among a huge and . . . still exceedingly poor population, and in its tensile strength in the face of fierce centrifugal pressures.”31 Never before had a country established and sustained democracy with universal franchise at such a low level of per capita income.32 By design then, India experienced the traditional state-building process in reverse order: unlike Europe, for instance, India instituted full democracy and then set about building a state. Much of the West did precisely the opposite. As a result, underdeveloped institutions have been the Achilles’ heel of Indian democracy from the outset.
However, the dilemma of India’s anemic institutions has been brought into starker relief in recent years as the aspirations of the Indian citizenry have grown thanks to the forces of globalization, rapid economic growth, and concomitant social change. As popular aspirations have increased, so have the state’s responsibilities—revealing a larger chasm between the promise and reality of democratic governance.
The precise nature of India’s institutional weakness deserves closer scrutiny, for appearances can be deceiving. The Indian state is regularly lambasted for being too burdensome, too big, and too unwieldy, often leading analysts to prescribe a thorough scaling down. But a slash-and-burn approach is likely to fail, because the central paradox of the Indian state is that it is overbureaucratized in procedural terms but badly undermanned in personnel terms.
As successive Indian governments have failed to rectify this state of affairs, an unfortunate mismatch between tectonic democratic, economic, and social shifts, on the one hand, and India’s woeful state of governance, on the other, has been exposed—paving the way for rent-seeking and corruption. Over the last two decades, during the apogee of India’s domestic transformation amid institutional stasis, three major sources of “rents” have emerged as the principal by-products of big-ticket, “grand” corruption: regulatory, extractive, and political.33 Like circles on a Venn diagram, the categories each have their own foundations but also overlap (figure 2.1). It is the third—political rents—that is the explicit focus of this book, but it is important to understand that it is not the only form of rent-seeking gaining ground in India today, and that the three are connected in many ways. These three manifestations of grand corruption are supported by a foundation of underlying administrative, or “petty,” corruption—a much older, preexisting condition.
Figure 2.1. Ecosystem for grand corruption in India.
THREE TRANSFORMATIONS
When one pauses to consider India’s journey since independence, it is easy to be awestruck by the changes that have transformed India’s political economy. Across three dimensions—politics, economics, and social relations—the India of today looks markedly different than the India of seven decades ago.
Politics
The first transformation worth noting involves the country’s politics. Feeding off the reservoir of nationalist goodwill it accumulated as the party of independence, the Congress Party dominated India’s political scene in the first several decades after 1947. To be fair, there was a spirited opposition to the dominant party, but it was deeply divided—its influence on politics largely limited to influencing factional disputes within the Congress. Hence, the Congress was able to dominate national politics even though it never once won a majority of the popular vote in a national election (figure 2.2). The heady early years of the republic became known as the Congress “system,” to borrow a phrase coined by political scientist Rajni Kothari.34 The party was not only the preeminent party in India but also arguably the preeminent political institution in the country—playing a more significant role than even the institution of Parliament itself, according to the scholar James Manor.35
Figure 2.2. Congress Party vote share in Lok Sabha elections, 1952–2014. (Author’s calculations based on data from Election Commission of India)
Two decades after independence, the Congress system began to exhibit serious signs of strain. In 1967, the party suffered a series of electoral losses at the state level, which marked the beginning of the unraveling of its political hegemony. After 1967, Congress would maintain power in Delhi but a much more competitive multiparty system took root in the states thanks to the rise of a motley group of regional, caste-based parties. The brief exception to Congress rule at the center was a short-lived period of opposition control between 1977 and 1979. In the wake of fierce antigovernment protests Prime Minister Indira Gandhi massively overreached by imposing a 21-month period of emergency rule between 1975 and 1977. When fresh elections were eventually called, voters summarily tossed Congress out, only to bring the party back in just a few years thanks to the opposition’s foibles. By 1980, Indira Gandhi was prime minister once more, but the Congress balloon was gradually deflating.
Three trends—political fragmentation, deepening competition, and continued Congress decline—converged in the late 1980s to break open the political system in an unprecedented manner (figure 2.3). Beginning in 1989, Indian politics would become synonymous with coalition politics. After clinging to power for decades, Congress ceded its monopoly on power in Delhi and lost its prized status as the “pole against which every political formation is defined.”36
Figure 2.3. Number of political parties contesting Lok Sabha elections, 1952–2014. (Data from Election Commission of India)
The political winds of change in India revolved not simply around the identity of the party, or parties, in power but also the configuration of competition itself. The growth of regionally oriented parties, coupled with structural economic changes, also helped to shift the center of political gravity away from Delhi and toward the states. As politics became more decentralized, India’s states asserted their primacy as the key venues for political contestation.37
Economics
India’s economic trajectory closely tracked its political evolution. Independent India began its economic journey saddled with the legacy of nearly a century of British colonial rule.38 As Devesh Kapur has noted, at the start of the eighteenth century, India’s share of overall global income was roughly between one-fifth and one-quarter. At the dawn of independence, India’s share had dipped to a meager 3 percent.39 In light of the country’s colonial subjugation, the realities of India’s abject poverty, and in line with prevailing state-led economic theories of development, the government under India’s first prime minister, Jawaharlal Nehru, pursued a statist orientation in its economic policy. While India’s external posture was actually quite liberal in many respects, Nehru presided over a highly planned economy at home that placed strict controls on and conveyed a deep-seated suspicion of private sector activity. India’s political elites granted instruments of the state, rather than markets, primary control over the allocation of resources.40
Propelled by the state’s guiding hand, India’s economic performance in the 1950s and early part of the 1960s was actually quite respectable. Between 1951 and 1965, India experienced an average annual gross domestic product (GDP) grow
th of 4.3 percent (figure 2.4). Nonetheless, the temptations of manipulating bureaucratic controls for political gain proved too immense for Nehru’s eventual successor, daughter Indira Gandhi.41 Faced with a slowing economy, buffeted by external shocks, and besieged by mounting corruption scandals, Indira responded to a political challenge on her right flank by doubling down on the stifling state-led model, using myriad instruments of state power to squeeze India’s corporate sector and marginalize the opposition. India’s decent, if not impressive, economic growth would slump over the next fifteen years: between 1965 and 1981, GDP growth clocked in at just above 3 percent.42
Figure 2.4. Average annual GDP growth, 1951–2014, measured in constant 2004–5 prices. (Author’s calculations based on data from Central Statistical Organisation, Government of India)
Two oft-repeated tropes came to define this era of India’s economic development. The first was the “Hindu rate of growth,” a phrase coined by the economist Raj Krishna to describe the way India’s social and economic characteristics had locked the country onto a disappointing economic trajectory.43 The second was the “License Raj,” the watchword used to describe the ponderous system of government licenses, permits, clearances, and permissions that businesses above a certain size had to obtain in order to actually do any business. This complex web of regulation controlled not only who could be in business but what, how, how much, where, and when business could be undertaken.
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