//When Politicians Get Too Close to Businessmen, The Telegraph

When Politicians Get Too Close to Businessmen, The Telegraph

I write this on Tuesday the 21st of July, with the Bangalore edition of The Hindu in front of me. The front page carries a large photograph of Mallikarjun Kharge, the veteran Congress leader from Karnataka who is currently the de facto leader of the Opposition in the Lok Sabha.

Interestingly, the photo does not accompany a statement or speech made by Mr. Kharge in Karnataka or Delhi. Rather, it is part of an advertisement placed by a certain Prudential Properties. The text accompanying the photo begins: ‘May the Choicest Blessings be Showered on Dr. Khargeji’. It continues: ‘On the Occasion of His 74th Birthday on 21st July, We Pray the Almighty to give strength to Mr. Khargeji for achieving success in all his endeavours’.

I found this ad curious, for two reasons. One is frivolous—namely, the abrupt and unexplained transtiion from Doctor to plain Mister. (Like so many of his ilk, Kharge did not have to write a scholarly dissertation to be awarded a doctorate—knowing this, the copy-writer seems to have hedged his bets). The second reason is serious—namely, that a private company would so nakedly flatter a senior politician in public.

Who is or are Prudential Properties? Googling them, I find that they don’t seem to be a listed company. One property site mentions an apartment complex being built by a firm of this name in Bangalore. So perhaps that is what they are, a developer in Mr. Kharge’s home state (which is also mine).

Why would Prudential Properties wish to spend money to felicitate Mr. Kharge? That is a question only they can answer. But it does seem rather strange. If the owner is a friend, he can just as well wish Mr. Kharge over the phone. If he is a close friend, he could have thrown a private party for Dr. Kharge. But why this ad in a prominent English newspaper? Why does Prudential Properties wish to convey their affection for Mr/Dr Kharge to the public at large?

The ad in today’s paper reminded me of another story, about another Congress politician in another age. In 1949, Jawaharlal Nehru visited the United States for the first time. The Mayor of New York threw a large banquet for him. The Mayor began his welcome speech by saying: ‘Mr. Neroo, there are a billion dollars around this table’.

Designed to impress the honoured guest, these words ended up offending him. For Nehru had a well advertised dislike for business and businessmen. The Mayor would have been better advised to have invited a dozen Nobel Laureates or Fellows of the Royal Society instead.

So long as Nehru was Prime Minister, the Congress party kept the capitalist class at arm’s length. Nehru’s own attitude towards businessmen combined Brahminical disdain with socialist contempt. A strong role for the state in the economy was necessary in the first decade of Independence; indeed, it was endorsed even by leading Indian industrialists in their ‘Bombay Plan’. On the other hand, by the late 1950s the time had come to liberalise the economy. This was recognised by Nehru’s former colleague, C. Rajagopalachari, whose Swatantra Party, founded in 1959, asked for the dismantling of the license-permit-quota-raj.

Nehru’s daughter was even more skeptical of the benefits of free enterprise. By the late 1960s, it was evident that most public sector industries were inefficient and unproductive. Tragically, as Prime Minister, Indira Gandhi undertook a fresh round of nationalisation, further setting back economic growth in India.

Perhaps Nehru and Indira Gandhi were unduly suspicious of businessmen. And perhaps politicians now are too close to businessmen. For the ad for Mr. Kharge is symptomatic of a larger trend, that cuts across states and political parties. Thus, as the Economic Times reported in May 2014, ‘Adani Group stocks especially Adani Enterprises has [sic] been on a roll since the BJP announced Narendra Modi as its PM candidate for the 2014 Lok Sabha elections’. Since September 2013, reported the paper, Adani’s ‘stock has been the clear winner, rallying as much as 250 per cent in a matter of just nine months.’ (http://articles.economictimes.indiatimes.com/2014-05-16/news/49898483_1_adani-enterprises-gautam-adani-adani-group).

In April 2015, another newspaper carried a report about the proximity between Narendra Modi and Gautam Adani. According to the Hindustan Times, ‘Adani was a fixture when Modi went to the United States, Australia, Brazil and Japan. In New York, he was frequently spotted going up from the foyer of the New York Palace Hotel to the floor where Modi was staying.’

The report in the Hindustan Times continued: ‘This relationship may be more in the public eye now, but goes back to the days when Modi was chief minister of Gujarat. Adani journeyed to China, Japan, Singapore and Russia with his leader’ (http://www.hindustantimes.com/india-news/gautam-adani-pm-modi-s-constant-companion-on-overseas-trips/article1-1337692.aspx).

If one industrial house’s stock rose after the NDA came to power in 2014, another industrial house’s stock fell. Thus, as the DNA newspaper reported in September 2015, the Jindal Group had witnessed a ‘sharp fall in its share price on the operational side’ in the past year. It further noted that in 2009, when the UPA was in power, the Jindals ‘got coal blocks worth thousands of crores’. At the same time, ‘the government’s Navratna, Coal India Ltd, was asked to go look for coal in Mozambique’. (http://www.dnaindia.com/money/report-high-profits-at-low-cost-era-over-for-jindal-steel-2021375)

There is no prohibition, moral or legal, to a businessman befriending a politician, or vice versa. Perhaps Narendra Modi and Gautam Adani are just friends, nothing more. But clearly the investors perceive a deeper meaning in the friendship. This perception, whether real or imagined, has had a manifest impact on the stock market.

Likewise, it may indeed be the case that Mallikarjun Kharge and the owner of Prudential Properties are just friends, nothing more. But it does seem odd that this friendship is advertised on the front page of a newspaper.

The erection of a big brick wall between politics and business in the first decades of Indian independence was not necessarily a good thing. For the suspicions of businessmen among leading politicians were also shared by leading civil servants, who stultified entrepreneurship through a bewildering mass of rules and regulations.

At the same time, the breaking down of all boundaries between politics and business is not a good thing either. For it gives an undue advantage to entrepreneurs who are good at cultivating contacts with those in power.

Jawaharlal Nehru did not think capitalists, as a class, were central to India’s progress. Rajagopalachari disagreed—he thought capitalits, as a class, could best generate the jobs and incomes that Indians needed. In either case, there was nothing personal about it. On the other hand, the attitude of politicians to business today is not based on ideological factors. Rather, they choose to favour individual businessmen, or to disfavour others. Personal connections decide public policy in a manner that would have appalled Rajagopalachari as much as Nehru.

The best networked businessmen are not necessarily the most productive or innovative. It is surely no accident that among the most profitable sectors in India are real estate and mining. For these depend crucially on access to resources owned by the state, which has the discretion to allocate them to individuals or corporations they like.

The increasingly permeable boundaries between business and politics is evident in ways other than the preferential awarding of contracts. In Karnataka, many real estate developers and mine owners have become MLAs and Ministers, so as to more directly influence public policies in their favour. Other states have witnessed similar trends. Meanwhile, some businessmen have bought their way into the Rajya Sabha. And on retirement senior IAS officers often make a seamless transition into the private sector, sometimes to industries which they had to oversee when in public service.

Powerful business interests are also increasingly influential in the media. Some companies pay for news; others go further, owning and running newspapers and TV channels. Even more disturbingly, they hire gangsters to intimidate and sometimes even murder independent reporters.

How can we move towards a fairer and more efficient system, where there is a proper level playing field for entrepreneurs, whereby those with no contacts among politicians have the same opportunities as those with all the contacts? As that excellent and independent watchdog, the Association for Democratic Reforms, has documented (see www.adr.org), a major cause for political corruption is our opaque system of election funding. Businessmen favour politicians with funds during election campaigns; politicians favour businessmen with contracts when the elections are done and won.

Clearly, the process of election funding must be reformed. The major political parties must heed the advice of the Supreme Court and place themselves under the Right to Information Act. At the same time, we should canvass vigorously for state funding for elections. As Rajagopalachari argued as far back as 1962, we must work out an ‘election procedure putting a maximum share of the cost on the State and saving the expenses for candidates’.

The framing of a transparent and fair system of election funding lies within the domains of economics and constitutional law. However, as a student of Indian history and society I can say this: that while the sharp separation between politicians and businessmen in the 1950s and 1960s was bad, the ever closer connection between politicians and businessmen now may be even worse.

by RamachandraGuha
(published in The Telegraph, 25th July 2015)