Saturday 5 February 2011

Economic chaos spreads in India (PO)

M D Nalapat

Banks that will not lend to companies even at very high rates of interest, because bank officers are wary of being questioned by the police about such loans. Multiple tax raids across the country on those not having VVIP protection, most of which end up getting compounded after the payment of bribes to the officers concerned. A mushrooming of regulations in each field of economic activity, so that the avenues for corruption get increased. Extreme incompetence on the part of governmental agencies, often deliberate. Targeted speculation in food grains and vegetables, that send retail prices shooting up while denying the farmer any benefit from such increases. A handful of big business interests who have free access to VVIPs and who can get appointed their agents to ministerships and to senior administrative appointments. This is the India of 2011,a country that must be bringing tears to the eyes of Prime Minister Manmohan Singh, who is facing sabotage within his own team, designed to make him unviable as in his present job.

Weeks ago, the mountain of speculaion about a thoroughgoing reshuffle of the Union Cabinet produced a mouse. The corrupt were rewarded rather than dropped. To take the example of Vilasrao Deshmukh, during whose tenure as Chief Minister of Maharashtra more than 30,000 farmers committed suicide. Despite the severe strictures passed on him by the Supreme Court, which pointed out that he favoured moneylenders rather than farmers, the Prime Minister was forced by the leadership of the Congress Party to give Deshmukh the portfolio that controls the administration of rural India, presumably so that he can make a dent in the population explosion by presiding over mass suicides of farmers, this time on an all-India scale. Of course, it is no secret that Deshmukh has been one of the most generous contributors to the financial kitty of the Congress Party. Friends in Mumbai often talked about huge suitcases filled with “ mangoes” that would be sent every few days from Mumbai, Pune and Nagpur to Delhi by chartered flights, so as to keep Deshmukh’s chair safe despite his having made Maharashtra one of the worst-administered states in the Indian Union.

But why only Deshmukh? It has long been common knowledge in Delhi that coal blocks get awarded not to genuine power companies but to those close to VVIPs. A similar situation prevails with respect to contracts to build power plants. And as for the health ministry, everything from bandages to surgical instruments got sanctioned only after “mangoes” were sent to the decision-makers concerned. Thinktanks dealing with illicit money flows have estimated the flow of illegal funds from India to international tax havens to have been $19 billion last year. This seems like a gross underestimate. Every government project, including roads and essential infrastructure, costs several times more in India than it would in more honest countries. Fortunately for the handful that have profited fro this, as yet no one is paying attention to such sectors, in a situation where much of the attention has gone to the Commonwealth Games scandal and to the Telecom scam.

Why the Commonwealth Games and Telecom? In the case of the Games, there was a UK tip-off about a scam that brought into focus the fact that several billions of dollars were being skimmed from the $11 billion spent directly or otherwise from the 2010 Delhi Games. But for the action of the UK authorities on an obscure company, the entire scam may have gone unnoticed. Even today, for example, the High Commission officials in London who facilitated those responsible for the scams have escaped even minor departmental action. And as yet, none of the powerful people directly responsible for the theft of millions has been prosecuted. The highest target has been the former head of the state broadcasting company, and word is that he has been singled out because of a claimed closeness to the Prime Minister’s family. Action against this individual is being used to smear the name of the PM and his wife Gursharan, a lady who those who know her say is of impeccable integrity and patriotism. Those close to the VVIPs running the Congress Party have thus far escaped, even though the PM has pesonally asked the agencies concerned to see that “the guilty do not escape”, no matter how powerful they be.

And why Telecom? The reason may lie in corporate rivalry. A handful of players had cormered the fast-growing telecom market in India, thanks to their political contacts with the previous regime, and these had apparently worked in unison to ensure very high roaming and call charges. Indeed, till recently, mobile phone charges have been extortionate in India, so much so that any calls outside the city where the phone has been registered had become too costly to make. Once a new team came along in the Telecom ministry, the old players got pushed aside and new entrants got favoured. While the exchequer lost billions, the consumer gained through the increased competition. Roaming charges and call charges fell, although both are still far higher than they ought to be. Those in the know say that the earlier players - angry at the collapse of their monopoly - got released the recorded conversations of a prominent lobbyists who had been active in helping new entrants gatecrash into a very lucrative field. The transcripts showed the way decisions get taken in India, and even the involvement of influential mediapersons in the cajoling of politicians to take decisions that help a few corporates.

There is alarm in VVIP circles in India at the transparency that is slowly coming into the arena of government decision-making. That is why the Commonwealth Games and Telecom scams are as yet not joined by similar (and even more lucrative) scams in other sectors of the economy, where too decisions - and vital resources - have been gifted to a few on payment of not just Indian “mangoes” but Swiss “cheese”, American “candy” and EU “perfume”. If an inventory were taken of the land and other resources arbitrarily allocated by successive governments in India to a handful of people, the reason why there are over $1.4 trillion of illegal deposits held by Indians in foreign tax havens would become clear. If the funds parked by relatives who are foreign nationals get included ( and several VVIPs in India transfer funds to relatives who are foreign ctizens), the overall figure would cross $2 trillion. Or in other words, almost as big as the foreign exchange reserves of the Peoples Republic of China. Even if an amnesty scheme were to get launched, the money that would return to India would cross $200 billion at a minimum, but because a few VVIP families with foreign relatives are unwilling to allow such a scheme, as yet these funds remain outside the reach of the exchequer.

Several terrorist groups that seek to weaken or even to extinguish the Indian Union seek economic targets, so that trade and investment will suffer. However, each such attack has been met by an immediate bounceback, with people determined not to allow terrorists to succeed. Even after the horrendous explosions in Mumbai in 1993, within less than forty hours, the city was back to normal. No terror attack has been able to cause significant damage to the economy. Even the few that were designed to scare away foreign nationals ( such as the Mumbai attack in 2008) would have had zero impact on the economy even were foreign nationals to leave the country, for the reason that India has enough trained manpower to replace them. However, what terrorists could not achieve is now being done by a handful of VVIPS in India whose sole motive is the personal enrichment of themselves and their family members, most of whom are parked in safe havens outside India, the way their moneys are. These few are guilty of much worse damage to the country than even the terrorists who still routinely seek to strike.

Just as in Pakistan, where millions look to Chief Justice Choudhury for succour against the corrupt, in India it is Chief Justice Kapadia who is the hope of those eager to see transparency and accountability in the country. Although Prime Minister Singh would like to see that justice be doe, yet he has constantly been shackled by a corrupt party machine that seeks only the generation of cash,in whatever way possible. Into this breach has stepped the Supreme Court of India, which hopefully will soon get PILs detailing corruption in the various sectors of the economy that have yet to come to public attention. This may lead to chaos in the short term, but would be a needed corrective to corruption in decision-taking. A few years of turmoil would be a small price to pay, if the reward is a cleaner administration in India than the collection of kleptomaniacs seen at present in virtually every political formation.

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