One of my first assignments as a cub reporter was to cover the Punjab Assembly. There was a big ruckus going on. Members, mostly belonging to the Opposition, were shouting in earthy Punjab of a big golmal in the construction of the Bhakra-Nangal dam. Sardar Pratap Singh Kairon, who was the chief minister, stood up and asked, "when hundreds of lakhs are involved, why bother if few thousands go this way or that? Let our farmers get water at the earliest.
Those were the days when Jawaharlal Nehru's "temples of modern India were being constructed at a frenzied pace "" three integrated steel plants were being built simultaneously. Even then there were stories that a politician-bureaucrat nexus had developed to obtain kickbacks from contractors and suppliers of equipment for public sector projects. Aspersion were cast on Swaran Singh and the late S Bhoothlingan, who were steel minister and steel secretary respectively. K D Malaviya, the oil minister, in fact, had to resign in the face of similar allegations. T T Krisnamachari also had to resign as money was siphoned off from the freshly nationalised Life Insurance Corporation to help Haridas Mundara, the Harshad Mehta of those days. Corruption penetrated the Prime Minister's office also "" Nehru's personal assistant, M O Mathai, had to resign because of his dealings with the Birlas.
Experience here in India and of socialist countries showed that corruption is system-neutral. Yet, enemies of socialism latched on to corruption and made out that socialism is synonymous with corruption. They said that the increased role of the politicians and bureaucrats cannot but breed corruption. The licence-permit Raj become a most pejorative term. It is, perhaps, true that corruption was not the key issue which precipitated a systemic change in 1991. But it was widely believed that one of the positive side effects of reforms would be a lessening of corruption. The retreat of the government from the economic sphere, competition and ending the era of shortages, would reduce the scope for it.
However, the experience of the past five years has shown that it was not to be. The government which ushered in reforms has, in fact, been the most corrupt in the history of independent India. The mud is sticking even on the reformist former prime minister. The opening up of the telecommunication sector was hailed as the most bold move, more so when very few countries have opened this sector to the extent India has done it. But the pecuniary motivations of politicians converged with the zeal of reformers. The politicians took the reformers for a ride.
However, corruption is not peculiar to India. Some of the fastest growing countries in the last 50 years have been also very corrupt. Politicians in Japan and South Korea have been world's worst offenders. In Indonesia, an Asian Tiger, the President's family owns some of the country's largest corporations. The President's relatives are sought after by foreign companies for partnerships.
But in case of India there are two peculiar problems. The first is the level of sensitivity of the people to the issue of corruption. In the 'socialistic phase', the level of corruption was relatively moderate. Most of the corruption was for political funding. Rafi Ahmed Kidwai, C B Gupta, Atulya Ghosh, S K Patil etc, were big fund collectors. But they didn't use the money either to build personal assets or maintain a vulgarly luxurious life-style. Many of them died in debt.
The standards started deteriorating steadily from about 1974. For instance, during Indira Gandhi's time, it was a joke in political circles that "Madam permits a 70:30 split "" meaning 70 per cent of the collections for the party and 30 per cent for personal use. By the end of the Indira era, the ratio was reversed: 70 per cent of collection for personal use and 30 per cent for the party. And now Sukh Ram's case indicates that for some time the ratio is perhaps 10: 90 in favour of the collector.
When the 'Jain dairy' scandal broke, many well-meaning commentators argued for the state funding of elections to end political corruption. How naive. Sukh Ram was collecting money not to finance his political activities but to build personal assets. Next to smuggling of drugs, politics has become, perhaps, the most lucrative profession.
Secondly, the tide of privatisation of the public sector is irresistible. It is a matter of time. But it will be taking place is an era of political instability. The spectre of next elections will be constantly haunting every minister. No minister will be sure whether he will be a minister a month later or not. This environment of political uncertainty breeds extreme cynicism. This provides fertile ground for the growth of mafia capitalism or crony capitalism as Dr Manmohan Singh once said.
An easy prey for the political mafia is the huge public assets. Exploiting the intellectual backing for privatisation, politicians will resort to day-light robbery of the public sector. The national exchequer will receive pittance for the public asset built with taxpayer's money and generous foreign assistance.
In the former Soviet Union, politician-bureaucrat mafia has cornered most of the state-owned companies. Even foreign companies in Russia cannot operate, except through the mafia. The state has become too weak to protect the life and property of its citizens. Those with means have to buy security from the mafia.
Mafia capitalism might bring higher economic growth. But mo-ral revulsion will be so widespread that it could erode popular support base for reforms. It must be clear that crony capitalism cannot sustain reforms for too long. The only ray of hope is the recent judicial activism. A vibrant capitalism needs the enthusiastic and active popular support. A cynical and passive people don't make history.
