Politics Short-Cut To Riches
What is the industry with the lowest qualifications and the highest rate of profit? Even a high-school student in India can give the correct answer: politics. In these days of electronic banking, those politicians who keep most of their funds in India are being forced to account for a bigger and bigger part of them. The self-provided statistics of the wealth of legislators are certainly gross underestimates, but even these show that wealth rises by 10 and even 20 times once a politician gets elected, and even more if she or he becomes a minister. Income-tax officers know that the Opposition of today may become the ruling party of tomorrow, hence they usually avoid looking closely into the tax returns filed by political heavyweights (unless ordered to do so by their political bosses).
Even if the Income-tax department does conduct an enquiry, a politician usually gets away. An example is the case of a former minister in Karnataka State, who was caught with billions of rupees in bank accounts controlled by him. This worthy simply declared that all the money came as gifts from his thousands of admirers. When the Income-tax department refused to accept such an explanation, he furnished a long list of names and addresses of people who claimed in writing to have gifted cash to him. Many of these were so poor that the amount they were presumed to have gifted was more than their annual income. When this was pointed out to an individual, he claimed that he and his family so admired the politician ( who is in his 40s) that they sold all their jewellery to make the donation! The Income-tax department had finally to accept the explanation and close the case, leaving the politician to enjoy the wealth that he had brought out into the open.
Of course, even in the case of the politician mentioned above, most of his wealth would be undeclared. These days, the bigger leaders are careful to avoid keeping their stash of cash in India. Instead, they put it away in offshore banking institutions, and every now and then use “hawala” channels to bring a part of it back to India, especially when elections get held. During general elections, so big is the demand for rupees that the value of the dollar falls against the rupee.
This loot has been going on for decades, ever since the 1960s, although these days there is fear that the assets held abroad may be exposed. The credit for this must go to President George W Bush, who after 9/11 stripped away the secrecy provisions of offshore banks in order to locate and confiscate terrorist funding. By about 2005, few banking institutions dared to keep client details secret from the US and from countries within the EU. Had the Indian government been zealous about finding out the extent of cash held by its nationals abroad, by now a huge cache of money could have been recovered. However, top politicians and officials are much more interested in preventing such details from ever becoming public than they are at discovering hidden hoards of cash.
As both ruling as well as opposition politicians are adept at making money illegally, neither is seriously interested in getting back the estimated $1.2 trillion of loot that Indians are said to hold in Swiss and other offshore banks. For a while, there was the hope within the middle class that Prime Minister Manmohan Singh would seek accountability among the powerful. However, the Cabinet reshuffle that was carried out two days ago indicates that the Congress Party leadership still has the upper hand over the government. About the only thing that the PM achieved was to shift Environment Minister Jairam Ramesh to another portfolio. Over the past two years, Ramesh had acted as though he were in Europe rather than in underdeveloped India. More than a dozen mega projects were held up because they were denied environmental clearances by Ramesh, who became the favourite of the NGOs for his anti-industry stance. However, a week ago, when Manmohan Singh told some newspaper editors that “poverty is the worst polluter”,it was clear that his patience with the obstacles to investment created by Environment Minister Ramesh was at an end. However, Congress President Sonia Gandhi (who shares her son Rahul’s affection for Ramesh) ensured that he was not dropped from the Council of Ministers, but was promoted to Cabinet rank, even while losing the Environment portfolio ( but getting another equally important).
Manmohan Singh wanted some ministers known to have amassed wealth to quit, but failed to have his way. The most notable survivor is former Chief Minister of Maharashtra Vilasrao Deshmukh, who is a close friend of Sonia Gandhi’s principal advisor, Ahmed Patel. Despite several reports of scams and even censure by the Supreme Court, Deshmukh continues to be a Cabinet Minister, as do others who too are said to have become wealthy through politics. Interestingly, it was during his tenure as Chief Minister that Maharashtra State saw the maximum number of farmers suicides. Despite this, he has been retained, not least because of his fund-raising skills. Some ministers have quit, including Dayanidhi Maran, who within the past three decades has seen his family rise from obscurity to great wealth. While he was Telecom minister, there were whispers in Delhi about the way in which he was supposed to have pressured telecom companies to give stakes to his family.
Maran was so confident of the power of high office that he even demanded that the Tata Group give concessions before he cleared their files. During his time as Telecom Minister, a handful of companies monopolised the industry,which is the fastest-growing in India. Mobile telephone charges were extremely high in India, despite the fact that under Maran (and before him, the BJP’s Pramod Mahajan) spectrum was given away almost free of cost. Consumers could not keep their numbers if they switched to a new operator. It was only after Maran resigned as Telecom Minister that companies other than the few nurtured under him were allowed to enter the field. Of course, even today call charges are high, though not by as much as they were under Maran. Interestingly, it is A Raja, the minister under whom competition increased and charges decreased in the telecom sector, who is in jail. Maran is still a free man, even though he has been made to quit the Manmohan Singh Cabinet.
Especially since 2005, the rate of increase of GDP in India is getting based less on increases in potential than in the denudation of resources. Iron ore is flowing out of the country, while coal is denied to existing steel companies in India and given to those with no expertise in producing coal or steel. During the past few years, huge blocks of coal have been given away almost for free to corporates who till now have not set up the power plants that was the excuse for their getting the coal. Several of the lucky recipients of coal blocks have sold them in the open market, making huge profits. Whether it is coal or land or other state-controlled assets, they are being picked up for very low prices by a few favoured groups, and later resold at huge profits. India is becoming what Russia has been since the Yeltsin era began two decades ago, a haven for those with influence and a hell for those with ability.
Looking at the way Prime Minister Singh has been denied permission by his party to drop those in his team who are known to be dishonest, it seems unlikely that matters will improve anytime soon. Once, the talk all across the world was of India Shining. These days, sadly, the buzz is more about India Stinking. The stench of corruption is everywhere.
By MD Nalapat