The Billionaire Raj: A Journey Through India's New Gilded Age

by James Crabtree

The cheerleaders, mostly shipped in from Eastern Europe or North America, created particular temptations. A few years later a blond 22-year-old South African called Gabriella Pasqualotto began publishing a then-anonymous blog, “The Secret Diary of an IPL Cheerleader,” filled with hints of misbehaving married sportsmen.

As editor in chief of Times Now, Goswami was widely credited with fashioning a new and aggressive reporting style, in a country where rolling news channels were still barely a decade old.

Through all this, Goswami became India’s most feared watchdog, a one-man judge, jury, and national moral arbiter. His favored catchphrase—“The nation wants to know!” often yelled at guests midway through interviews—became a byword for India’s newly assertive fourth estate.

Such theatrics make it easy to lament the state of Indian television news, and many in the country do just that. Rajdeep Sardesai, a more self-critical figure than his main rival, has lamented his industry’s obsession with the “three Cs”—crime, cinema, and cricket—describing them as a “triple-headed deity at whose altar the industry worships.”11 More telling is what newspaper editor T. N. Ninan dubbed the rise of “vigilante TV,” with Goswami as its leader. “Impartiality is for the clubby Prannoy Roys of the world,” as Ninan put it. “TV news Rottweilers in attack mode have proved for many to be as riveting as any soap opera. Breaking news is now about smashing reputations.”

The press is not exactly free—it ranked just 136th in the 2017 World Press Freedom list published by the charity Reporters without Borders—but it is often fearless.

For all his undoubted rhetorical skills, he also almost never deployed them to win over worried liberals, or to reassure minorities fearful about the rise of newly partisan Hinduism. Instead, his speeches preached a gospel of growth while dropping in dog whistles that only the attentive would hear. “Almost for 1,000 to 1,200 years we were slaves,” he told a cheering crowd of well-heeled diaspora Indians at New York’s Madison Square Garden in 2014.15 The implication was clear: Indians were subjugated not just during British rule but also under the various Muslim empires that preceded it. Only now under Modi were they—meaning the long-suffering Hindu majority—becoming free.

Modi’s taste for flashiness sometimes got the better of him. In 2015 he met President Barack Obama resplendent in a dark blue Savile Row suit, with gold pinstripes repeatedly spelling the words “NARENDRA DAMODARDAS MODI.” The costume was widely mocked for its expense and vanity. A rare public relations stumble, it was this episode that gifted his opponents the slogan “suit boot ki sarkar,” meaning a rotten regime run by the prime minister and his elegantly tailored cronies.25 Modi recovered only by selling the offending item off for charity, in the process raising Rs43 million ($672,000) and winning a Guinness World Record for “the most expensive suit sold at auction.”

The broader point was that Modi was neither a born-again technocrat nor a recovering Hindu zealot. Rather he was both those things, and he made their mix uniquely attractive.

A vast army of cheap labor, which ought to be one of the country’s greatest blessings, has gradually come to be viewed as a curse. India needs to create at least ten million jobs a year for the army of young people arriving in its labor market. Instead it is creating almost none.

The most dispiriting episodes have occurred when Modi had easy opportunities to push forward with development reforms and yet still opted not to do so. One came after his sweeping election victory in UP in 2017, when he picked Yogi Adityanath, a radical Hindu preacher, as the state’s next chief minister. The move shocked even seasoned political observers.

Adityanath showed little interest in economics, preferring fiery anti-Muslim speeches and divisive cow protection campaigns. Over two decades he had used these talents to move from firebrand priest to political power broker, founding his own vigilante group and rising to become a BJP member of parliament in New Delhi.

Rajan was kicked out because he crossed a line with Modi’s hard-core supporters, with whom Modi himself refused to disagree. The result was the needless departure of one of India’s most able advocates for economic reform, making the battle for India’s future, and attempts to push back the forces of corruption and vested economic interests, that little bit harder to win.

India’s state has often proved strikingly competent, from its ability to run vast elections to its timely response to natural disasters. It boasts many creditable institutions too, including the country’s central bank and its best universities. But more often than not, these are isolated examples of proficiency. India’s slow-moving legal system, by contrast, had thirty-three million pending cases, as the head of the Supreme Court complained in a tearful speech in 2016.47 At its current pace, another judge has suggested, the backlog would not be cleared for three centuries.

Historian Ramachandra Guha has called India’s an “election only” democracy, meaning that the majestic spectacle of its elections hides a less impressive reality in the years in between.50 Part of the problem is that India itself, for all the lofty ideals of its constitution, has never actually made the transition to becoming a full liberal democracy, with public institutions capable of guarding in every respect the civil and political rights of its many peoples. Yet it was never exactly an “illiberal democracy” either, in the sense of the phrase coined by author Fareed Zakaria to describe the likes of Turkey and Russia, which hold elections but then actively deny their citizens many important constitutional protections.

These, then, are the tragedies of Modi. The first: that such a bargain had to be struck in the first place. In 2014, many voters were forced to conclude that a personally honest and economically reform-minded leader was the best that India could hope for, even if his election came with the risks of political schism. This choice was made because the desired alternative—a leader who was popular, honest, economically imaginative, but also statesmanlike, untainted by violence, and willing to place issues of identity and faith outside the public square—was now in India almost impossible to imagine. The second: that Modi, a man of such great persuasive abilities, has consistently declined to speak up in defense of the kind of social tolerance that, in the long run at least, ought to have provided the surest footing for his own stated economic objectives. And then the third: that having struck this devil’s bargain, and chosen the hope of reform over the risk of polarization, those same voters have found their hopes of economic development at best half delivered—as Modi has proved to be a far less courageous and radical leader than they had hoped.

Those Latin American economies with the widest social divides have proved less economically stable and more likely to get stuck in the “middle-income trap,” in which poorer nations achieve moderate prosperity but fail to become rich.3 The more successful countries of east Asia, by contrast, grew prosperous while managing to stay broadly egalitarian, partly by building basic social safety nets. Of the two models, it seems clear which India should want to follow.

Sen is right to push basic education, health, and pension provision for those at the bottom of the social ladder, all areas in which Modi’s government has promised much but delivered surprisingly little. At the top, it means greater focus on raising taxes, especially from the wealthy. This does not mean attacking the rich, but it does mean ending the ridiculous situation in which only one percent of Indians pay any income tax at all, and barely 5,000 people do so on earnings above Rs10 million ($155,000).

“For any society to lift itself out of absolute poverty it needs to build three critical state institutions: taxation, law and security,” according to Oxford economist Paul Collier.7 All three in India—the revenue service, the lower levels of the judiciary, and the police—still suffer endemic graft. Perhaps most importantly, the country’s under-the-table political funding system remains largely untouched.

Corruption plagues developing countries not because their people are immoral, but because it is often useful. At its best, graft can oil the wheels of progress, as political leaders gift economic rents to favored businesses, which is what happened in the “developmental states” of east Asia. The proceeds of corruption can also bind together otherwise unstable social groups, as Samuel Huntington described in Political Order in Changing Societies.

This balance of growth and corruption then lies at the heart of the struggles of India’s industrial economy.

In India’s case, similar breakthroughs will require a focus on what is often called “state capacity.”15 Ending corruption is part of this battle, but it also involves the more complex objective of building a state machinery able to create and implement wise public policies, while remaining impartial between different social groups. That this can be done is clear from the case of China, which achieved huge social and economic progress while also being amazingly corrupt, largely because its machinery of state is so capable.

In the aftermath of liberalization, India has suffered from an enduring delusion that it might move rapidly from poverty to advanced-economy status, often by using technology to “leapfrog” towards a modern form of competitive capitalism. These hopes are understandable, but often they are also a distraction from the tedious business of building the kind of government institutions that make economic advancement most likely.

This all sounds daunting, but there are still many good reasons for optimism. India is the world’s largest remaining emerging market, a fact that should continue to attract investment from abroad.

India now stands at the threshold of the kind of superpower status it will eventually achieve. As democracy falters in the West, so its future in India has never been more critical. There is no reason why the excesses of the last decade should reemerge and turn India into a saffron-tinged version of Russia. Instead, with good judgment, India’s new Gilded Age can blossom into a Progressive Era of its own, in which the perils of inequality and crony capitalism are left decisively behind. India’s ambition to lead the second half of the Asian century—and the world’s hopes for a more democratic, liberal future—depend on getting this transition right.