The Billionaire Raj: A Journey through India’s New Gilded Age review: The rise of Bollygarchs

A sharp, lucid chronicle of India’s contemporary history, with a close up view of its private wealth and public squalor

Published - September 22, 2018 07:45 pm IST

Even as there is talk of the impending extradition of billionaire fugitive Vijay Mallya from London, there is news that he was able to slip out of the country despite a nationwide Look Out Notice against him. Around the same time, a Greenpeace activist was detained at Delhi airport and prevented from leaving the country to attend a conference. Because there was a LON against her. Does this show the clout of billionaires in bending the law in their favour? Or was it also because Mallya was a member of Parliament for 12 years, and hence enjoyed special privileges and immunity from the law?

Inequality, corruption

Mallya has a full chapter devoted to him in James Crabtree’s TheBillionaire Raj , a sharp, lucid and eminently readable chronicle of India’s contemporary history. Crabtree, a professor in Singapore now, was Mumbai bureau chief of the Financial Times . He spent five years criss-crossing all corners of India, with a close up view of its private wealth and public squalor. His book combines academic dispassion with the keen (and sympathetic) eye of the “embedded” journalist.

The anecdotes are woven seamlessly into the bigger narrative of India’s modern economic development. The book arose out of circumstance, but his insight on India’s pressing problems are spot on. He focuses on three: inequality, corruption and industrial bust following the binge of debt-fuelled growth.

Post 1991, as India pursued liberalisation (the dismantling of the “Licence Raj”), and as economic growth picked up pace, the proceeds of that growth went disproportionately to the very top. The share of income of the top 10% is now 55%. The top one per cent’s share in 2014 is the highest since 1922, as documented by Thomas Piketty.

The number of dollar billionaires, numbering 2 two in the 1990s is now more than 120. Their rise is not dissimilar to the rapid rise of Russia’s Oligarchs, which prompted the author to coin a new class: the Bollygarchs.

One of them is Mallya, and his story is not isolated. Behind the rise of many a tycoon is the story of entrepreneurship embellished with political connections and crony capitalism, well oiled with the grease of corruption. This allowed them easy access to large loans from public sector banks. Crabtree says “the cleverest industrialists found ways to parachute pliant bankers to positions where they could help get loans approved”. The phone-a-loan scam led to a debt-fuelled growth, and the current mess of a mountain of bad loans. The government’s Chief Economic Adviser called it stigmatised capitalism.

Is the state missing?

Why did the state lack capacity to rein in rapacious robber barons? Or did government inefficiency breed corruption? Was it due to desperate attempts to clear the proverbial “file” that gets stuck? Or is corruption not just a side effect, but a necessary lubricant for modernisation, as propounded by political scientist Samuel Huntington (and quoted by Crabtree). Former Governor of the Reserve Bank of India, Raghuram Rajan, once described his model to the who’s who of India Inc in a speech called ‘The Threat of Oligarchy’ in 2008. He said there is a self-sustaining system, between the venal politician, the large mass of poor voters, and corrupt oligarchs. The politician needs the poor for the votes, and the poor depend on his patronage to navigate through the rotten state of public services. The politician needs businessmen to fund the patronage and electoral campaigns, and in return the businessmen gets national resources cheaply.

Rajan had pointed out that per trillion of GDP, India had the second highest number of billionaires. The only way out, Rajan says, is to break the nexus of corruption. In that same speech Rajan alludes to the Gilded Age of 19th century America, which is also the subtitle of Crabtree’s book. That term was originally coined by Mark Twain and referred to the ugly underbelly of corruption beneath the glitter of the wealth of the Carnegies, Rockefellers and Vanderbilts. Indeed in a notable piece in the Financial Times , the unlikely duo of former investment banker and now Union Minister Jayant Sinha, and left-leaning Professor Ashutosh Varshney, had said that what India was witnessing was its own version of the Gilded Age. They wrote their op-ed at a time when the India Against Corruption movement was at peak momentum.

There is one big difference though. America’s robber baron capitalism thrived with minimal democratic constraints (women’s and black suffrage was in the future), and there was the absence of the glare of internet and social media, or pesky right to information. India’s gilded age thrives despite a more entrenched democracy and (supposedly) free press. The problem is more serious.

What lies ahead

Crabtree is a diehard optimist, and his optimism (with a slight mischievous British chuckle) runs through the book. Just as America’s gilded age preceded the New Deal, the Progressive Era and policies to remedy inequality, so also he foresees India riding into a more just and less corrupt future.

The challenge of writing a book like this is that it reads as if unfolding newspaper stories have spilled into the book. Current events have already overtaken the book’s main narrative. Mallya’s extradition is uncertain, as is India’s march into a New Deal. Maybe we should await an equally lucid and topical sequel. Crabtree after all lives in Singapore, which he calls “India’s best city.”

The Billionaire Raj: A Journey through India’s New Gilded Age; James Crabtree, HarperCollins, ₹799.

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