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Subrata Roy Foretold New India’s New Crony Capitalism

'The crooked politician needs the businessman to provide the funds that allow him to supply patronage to the poor and fight elections. The corrupt businessman needs the crooked politician to get public resources and contracts cheaply.'
Subrata Roy. Photo: X/@DilipTirkey

The death of Subrata Roy of the Sahara Group provides a much-needed occasion to meditate on the inseparability of the business community and the political class in modern India. Saharashri, as Roy called himself, came to personify a key facet of our political economy: that money power can thrive and prosper only if friendly ‘political power’ is available. 

Recall the closing days of Shining India. It is February 2004. The saffron crowd had convinced itself that it was coming back to power for another five years in a few months. And Saharashri had decided to use the occasion of the weddings of both his sons to showcase his connectivity with political players of all hues. 

Prime Minister A.B. Vajpayee travelled in an Air Force plane to Lucknow for the Sahara wedding; deputy prime minister, L.K. Advani was not one to sit out; many central ministers like Murli Manohar Joshi and Rajnath Singh felt obliged to honour the invite; even the vice president of India, Bhairon Singh Shekhawat, unmindful of the protocol and dignity of his high office, allowed himself to be persuaded to attend; chief ministers like Mulayam Singh Yadav and Laloo Prasad came; and, so did Congress leaders like Digvijay Singh, Ahmed Patel and Murli Deora. Only two leaders of some consequence, Sonia Gandhi and Manmohan Singh chose not to put in an appearance (despite many entreaties and pleadings).

Only a few months earlier, Vajpayee had warned against the possibility of ‘loktantra’ degenerating into a ‘dhantantra.’ But the Saharashri had managed to stage an intimate moment in the uncertain relationship between the business/industrial class and the political crowd; neither side felt apologetic about the company it was keeping. But that evening was to become a reminder of how money power often became dependent upon the vicissitudes of a changing political landscape. From the pinnacle of his fame and respectability in February 2004, the ‘entrepreneur’ who died in a Mumbai hospital ended up a forgotten figure because the political economy chessboard got reset and new political winners came in with their own business friends and financiers. 

Admittedly, the business community has a legitimate stake in how society gets organised and how it is governed. The Indian business community, from the very beginning, has sought a voice for itself in shaping the nation’s collective future. As early as January 1945, even before India became independent, eight business leaders – J.R.D. Tata, G.D. Birla, Sir Ardeshir Rustomjee Dalal, Sir Purshottamdas Thakurdas, Ardeshir Darabshaw, Lala Shri Ram, Kasturbhai Lalbhai and Dr. John Mathai – had proposed what came to be known as the Bombay Plan, a blueprint for economic development. 

Also read: Crony Capitalism on Modi’s Watch Means Invisible Hands Ensure You Never Go Bankrupt

The post-Independence leadership, awash as it was in the legitimacy of a mass freedom struggle, did not much care for the Bombay Planners’ advice ( though John Mathai did get inducted very early in Nehru’s cabinet as finance minister). The Bombay Plan crowd liked the fact that the state’s economic intervention created infrastructure they were not capable of generating but they were not overly amused by Nehru’s attempt to build an egalitarian social order, with ‘socialistic’ content. Of course, the business groups were savvy enough to rejig their resources and prejudices to the politicians’ need for funds. The business community was pragmatic enough to recognise, if not respect, the sanctity of democratic mandates. 

The 1971 Lok Sabha election (post-bank nationalisation and the abolition of privy purses) was perhaps the only time when the business leaders felt agitated enough to openly cross swords with sections of the political class. Industrialists like K.K. Birla and Naval Tata entered the electoral arena against Indira Gandhi’s Congress. Once again, they adjusted to political realities; and the Indira Gandhi regime, on its part, did not try to carry out any kind of vendetta against recalcitrant industrialists. Soon the various chambers of commerce were ordering the second and revised edition of the book of protocol of crony capitalism.

In the following two decades – before Narasimha Rao and Manmohan Singh unleashed India’s ‘animal spirits’ – the political leaders’ need and appetite for funds (for party and personal coffers) acquired a definite momentum and a certain grudging acceptability. The Dhirubhai Syndrome was to get consecrated. 

In 1991, Corporate India came of age. The politicians not only vacated the economy’s ‘commanding heights’ but they also stepped down from their high moral perch. The desi seths were now joined by unscrupulous global ‘investors’ in creating new political players with needs and greed. Governmental ‘stability’ had to be orchestrated. Businessmen were needed with whom the politicians’ ill-gotten funds could be parked. And, a political leader’s association with shady businessman was not looked down upon because governmental ‘stability’ had to be purchased. The whole business of electoral democracy became exponentially expensive.

The new nexus was dissected insightfully by Raghuram Rajan: “So the circle is complete. The crooked politician needs the businessman to provide the funds that allow him to supply patronage to the poor and fight elections. The corrupt businessman needs the crooked politician to get public resources and contracts cheaply. And the politician needs the votes of the poor and the under-privileged. Every constituency is to the other in a cycle of dependency.”

Saharashri would have recognised the ‘cycle of dependency’ that Raghuram Rajan was talking about. Just as he would recognise that even in ‘New India’ that cycle remains not only unbroken but has been refined and almost institutionalised. Crony capitalism now goes by a new name called ‘Vikas.’ 

Harish Khare is a former editor-in-chief of The Tribune.

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