Poppy capitalism

The past 10-odd years have seen a dramatic and disturbing shift in the imagination of Indian capitalism. Chadha was a symptom of this.

Few outside the incestuous power circles of New Delhi and Lucknow would have heard of Ponty Chadha except in a vague sort of way. With the manner of his death and the dirty secrets of his family disputes and professional discrepancies coming to light, even fewer will mourn his passing.

Indeed, it is entirely probable the politicians, civil servants and excise and tax officials who hung around Chadha and made him enormously well-connected in Punjab, Uttar Pradesh and the capital will not want to be seen in the vicinity of the grieving family. It is likely they will disown their friendship and association with him.
Laugh and the world laughs with you, weep and you weep alone: this truism acquires almost a karmic poignancy when one considers the life and death of Chadha. Through the prism of middle-class morality, it would appear an allegorical tragedy and an almost predestined culmination to a cycle of limitless grasping.
Individual stories related to Chadha — his proximity to successive governments in Uttar Pradesh, his manipulation of massive, state-wide tenders to provide food to malnourished children, his lucrative liquor contracts and profiteering per bottle, as it were, and his sweetheart land deals — will soon be in the public domain. However, it would be prudent to see his saga as not that of an individual but of a crony-capitalist system that threatens every aspect of our public life and holds back genuine economic reform and growth.
The past 10-odd years have seen a dramatic and disturbing shift in the imagination of Indian capitalism. Chadha was a symptom of this. While identifying the symptom is no doubt important, the disease too merits study. Balzac is reputed to have said, “Behind every great fortune there is a great crime.” That epigram may be overdone and over-cynical but cannot entirely be dismissed. Some of the world’s mightiest business corporations have had dubious starts. Their initial process of capital accumulation has been decidedly dodgy.
In India, among the marque brand names of old Bombay are those who made their early fortune selling opium to China in the 19th century. More recently, several ambitious industrialists have used political clout to win government contracts or tailor policies to benefit themselves — at any rate to discriminate against rivals — and grown their companies in an artificially protected ecosystem.
Yet, there has been a hunger for validation in many of these people. The opium exporters of 150 years ago gradually set up genuine factories and manufacturing facilities in India and gave this country its first modern industrial revolution. Those who sought political cosiness in the 1980s and 1990s pushed and impelled themselves to one day establishing a world-class facility — a refinery, a port, a steel plant, whatever. They began to expand and invest overseas as well to earn peer respect; to the degree possible in an Indian context, they became professionally run companies.
Of course, they retained their old tools of political leverage. They still sought to —and seek to — bribe and muscle in and influence their way around the corridors of power in New Delhi and in the state secretariats. They still seek to maximise gains in an economic regime that has seen insufficient deregulation and allows for enormous residual discretionary authority. Old habits die hard, and the nature of the relationship with government cannot be altered in a day — or even in the two decades since liberalisation began.
While this is unfortunate, it is worth noting that many of these companies are entirely capable of operating and optimising gains in an open, free-market environment and taking on any competition. They have long outgrown the phase when they needed the state and the politician-bureaucrat nexus to cosset them. Indeed, when some of these companies have set up operations abroad, in countries and regulatory systems where political influence counts for little or at least less, they have not just thrived but have been quite happy to function without the messy tangles of home. Whatever their provenance, they want to be recognised as running globally benchmarked companies. To draw an analogy, it is akin to a well-paid Indian Premier League player desperate to distinguish himself in Test cricket.
In the past decade or so, this model of Indian capitalism has begun to change and get distorted. Politically networked individuals who have made their first million fixing the system no longer feel the urge to take the next leap, enter the next orbit. Rather they are happy and content to remain in a state of permanent robber baron-hood. Do consider there are few start-up names in recent years that have made a mark in the creation of manufacturing facilities and infrastructure of any scale. To be sure, there have been new projects of established companies, but little beyond.
Part of the reason is building a big infrastructure project or manufacturing facility is extremely challenging in India. It is almost impossible to buy land expeditiously and transparently — the political system disincentivises it. A plethora of outmoded labour laws and environmental and other clearances have to be negotiated. A travelling circus of inspired and engineered activism has to be shaken off. These are the shadow areas of reform, where rent-seeking is still the norm.
That aside, the surge in land rates — as India undergoes a dysfunctional, trial-and-error urbanisation — the boom in prices of finite resources and the rise in welfare spending have all created avenues for easy money. Liquor, a critical revenue earner for so many state governments, completes this toxic quartet. The upshot is there are businessmen and politicians-turned-businessmen making a fortune by essentially playing intermediaries. They need to resort to very little value addition. In their own ways the Chadha brothers of Mehrauli and the Reddy brothers of Bellary represent (or represented) this harsh verity. Every scandal in recent years — coal and iron, Gurgaon’s irregular real-estate practices and the 2G spectrum free-for-all — can be fitted into this broad framework.
Will two deaths and a family’s blood feud change anything? No. Even so, something or somebody must and has to. India deserves better.


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