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Today, India’s most exclusive club has ballooned to over one hundred, more than in any other country bar America, China and Russia.7 Together its members owned assets worth $479 billion in 2017.8 One level below them the country has 178,000 dollar millionaires.9
It is on some measures a more open economy than China, which began to liberalise roughly a decade earlier. India now trades more goods and services as a proportion of GDP than its larger Asian neighbour, and far more than America. The value of that trade has rocketed from just seventeen per cent of GDP when its economic reforms began 1991 to around sixty per cent today.13 It attracts as much foreign direct investment as China did at the peak of its growth in the mid-2000s.14 Not far off half of all the freely traded shares on Indian stock markets are owned by foreigners.15
During their feud, the two men co-ordinated their entry and exit, to avoid running into one another in the lifts.6
‘Lots of chandeliers. The chandeliers have chandeliers.’
Not long after construction wrapped up in 2010, a local journalist managed to get hold of Antilia’s monthly energy bill. It came to roughly seven million rupees ($109,000), causing a minor outcry in a country where hundreds of millions lived without power of any sort.19
‘This is where the crooked but savvy politician fits in,’ Rajan said. ‘While the poor do not have the money to “purchase” public services that are their right, they have a vote that the politician wants.’ In return the politician developed systems of patronage, helping constituents to find government jobs or receive welfare payments, or simply handing out cash. And to get the money to do this, as well as to fund election
campaigns, the politicians needed the kind of cash that only very wealthy businesspeople possessed.
Rajan’s inspiration on cronyism came from The Age of Reform, a book by the liberal historian Richard Hofstadter explaining how the US overcame its own robber baron era.
In the early stages of America’s Gilded Age, as in India’s, an alliance grew up between tycoons and politicians, with the former funding patronage controlled by the latter. ‘Obviously, to do some of this, some of these guys need resources,’ he told me. ‘And where do you get resources from? You get resources from business.’ Breaking this system of collusion was hard. In America it took a generation or more, beginning with new populist movements at the end of the nineteenth century, which gave birth in turn to the political and social reform of the Progressive Era. But it culminated only in the
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‘Any economy that grows as quickly as India’s is bound to generate enormous human temptations. These very rich people have started buying politics, and the great churning in India you see against corruption is essentially about the purchase of politics by the wealthy.’35
In time Ambani and his fellow Bollygarchs may come to be viewed in this way too, as the details of their methods fade but the scale of their achievements remains.
‘Money means nothing to me,’ Ambani told an interviewer in 2017, at a moment when his personal fortune had recently soared above $31 billion. ‘My father used to tell me: “If you start anything just to make money, you are a fool. You will never make money and you will fail. All of us eat the same dal-roti.” ’
One Indian friend told me that when his father died in the mid-1990s he left the family’s two landline phones in his will.
In North America it required $4.5 million in assets; in an average European country $1.4 million. In India the same figure was just $32,892. Yet within that group, the richest one per cent owned fifty-eight per cent of wealth, one of the world’s starkest gaps, up from thirty-nine per cent at the start of the decade.46 Meanwhile the bottom half of the country owned a paltry four per cent.
Countries with sharp economic divisions – for instance between business owners and their workers – also find it harder to create the kind of broad social agreements that can buttress support for structural economic reforms, a point made by Harvard economist Dani Rodrik and others.
‘People don’t get that in India there are three different campaigns,’ Praveen Chakravarty, a political analyst with ties to the Congress, told me during the 2014 election. ‘You have the nineteenth-century India of the villages, the twentieth century of the urban middle classes, and now the youth of twenty-first-century India, who use smartphones and want to communicate online.’ Modi targeted all three, using mass rallies to reach the first and spending heavily on television adverts for the second. A blanket social media campaign then sought out younger voters via Facebook pages, WhatsApp
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So common was corruption under the Licence Raj that it even became a mainstay of newspaper horoscopes. ‘All round improvements but not without strings,’ the Hindustan Times warned Virgos in 1985, before adding: ‘If paying a bribe to anyone, see that the job is done.’21
This meant booking a line many hours in advance, unless he was willing to pay extra for a special ‘lightning’ connection, which required a wait of merely thirty minutes. ‘This being India, even lightning took a long time to strike,’
In the 1980s, economist Robert Klitgaard defined corruption as a process involving ‘monopoly plus discretion minus accountability’.30 Until Rai came along, India’s scandals followed this formula almost exactly.
Bribery had become so socially entrenched that Kaushik Basu, the government’s chief economic adviser, called in 2011 for it to be made legal.46 His idea caused a furore, although its logic was clear, namely that people were more likely to admit to having made illegal payments if they faced no penalty, which in turn could help police identify those who had demanded money in the first place.
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.
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 street lights. ‘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.’
The dramatic rise of so-called crorepati politicians – meaning those worth more than a crore, or ten million, rupees – provided one of the clearest signs of India’s recent political dash for cash. More than three quarters of those elected to UP’s assembly on that Saturday in March crossed this threshold, meaning they had assets of roughly $150,000 or more. At the national level, the average MP was worth at least $2 million.
‘Tamil Nadu has the unique distinction of having been ruled for nearly fifty years by a screenwriter and two actors, all masters of their craft,’2
Her campaign showed all of the usual touches. ‘Voters were already speculating whether Amma will give away refrigerators or motorcycles this time,’ as an essay in Outlook magazine noted just before the poll. ‘She didn’t disappoint.’9 Among the various treats on offer were free mobile phones, subsidised scooters, yet more laptops for students, and a free 8-gram gold coin for women who were soon to marry.10
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.’
‘The last Nizam had a total of 14,718 employees when he died,’ according to one account. ‘In his main palace alone, there were about 3,000 Arab bodyguards, 28 people paid to fetch drinking water, 38 to dust chandeliers, [and] several specifically to grind walnuts.’32
‘Cement is an indispensable ingredient for construction,’ Kapur told me. ‘So we looked for data to see if cement demand would fall around election time. And it did. In fact, the link shows up beautifully.’
It even had its own name: ‘lazy banking’, a term used to mock bankers who fled from risk and happily placed most of their capital in ultra-safe government bonds.21
‘In India, the problem is nothing is ever really true,’ I was once told by Jonathan Shainin, an American who worked for years as a magazine editor in New Delhi.
In public Modi is flamboyant: a maker of speeches and an entertainer of crowds. But in private he sits impassively: a good listener, who sucks up detail, asks pointed questions and displays prodigious acts of memory, dredging up details from many months before. He has few distractions, with an estranged wife and neither children nor grandchildren.
This is the reason India is often described as having a weak state but a strong society: a social order that ‘successfully curbed and blunted the ambitions of political power, and made it extraordinarily resistant to political moulding,’ as academic Sunil Khilnani once put it.
But rare is the strongman leader who grows less autocratic the longer he stays in office.
‘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
India therefore faces a choice. For a decade after 2004 it enjoyed rocketing growth but at the cost of sky-high corruption. More recently corruption has fallen, but growth has fallen along with it. Many now dream of rapid, graft-free expansion. But this is largely a fantasy: ‘The optimal level of corruption will not, in practice, be zero,’ as Robert Klitgaard wrote in Controlling Corruption.11
By this he means that the cost of wiping out profiteering would require unacceptable collateral damage. ‘Fight corruption too little and destroy the country,’ as one Chinese communist leader is supposed to have said. ‘Fight it too much and destroy the party.’12 Instead, there is likely to be a continuing trade-off, in which India will struggle to deliver the two things Modi has promised above all: very rapid growth and very little graft.
This in turn should form part of a broader set of changes that are described in India as a transition from a ‘deals-based’ to a ‘rules-based’ model of capitalism, meaning one whose rules allow little political and bureaucratic discretion over public resources.13 Yet even this will be far from straightforward. Francis Fukuyama describes this shift away from a ‘patrimonial’ state, meaning one marked by corruption and clientelism, as the defining challenge for all developing nations. ‘[It is] much more difficult’, he writes, ‘than making the transition from an authoritarian political system to a
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‘The most important political distinction among countries concerns not their form of government but their degree of government,’ as Huntington wrote in the 1960s.
