India: Democracy or Oligarchy?

Is India an oligarchy controlled by its 55 recently-minted billionaires whose wealth equals one-sixth of their country's GDP?

The answer to this question came when, as part of India's 2G scandal revelations, the Billionaire businessman Mukesh Ambani was quoted as bragging that the ruling Congress Party is "Apni Dukan" (our shop), implying that he owns the ruling party. The scandal also produced evidence of collusion of India's corporate-owned mainstream media in their deliberate attempts to impose a blackout on the whole affair until it was finally broken by the relatively obscure Open magazine.



Here's an excerpt from today's New York Times story that captures the essence of crony capitalism and the rise of Indian oligarchy as being among the world's largest:

"India’s billionaires control a considerably larger share of the national wealth than do the superrich in bigger economies like those of Germany, Britain and Japan. Among the Indian billionaires included on the most recent Forbes rich list, a majority have derived their wealth from land, natural resources or government contracts and licenses, all areas that require support from politicians."

Among India's powerful billionaires, the New York Times story particularly features Gautam Adani whose cozy relationship with Gujarat Chief Minister Narendra Modi has made him the tenth richest man in India. It says that "Mr. Adani has benefited from various governmental approvals and also bought coastal land from the Gujarat government at very low prices — in one instance paying as little as $540 an acre. Once he completed infrastructure, Mr. Adani sold land at a handsome profit to corporations locating inside the economic zone, including one parcel to Indian Oil Corporation, a state-owned firm, for $54,000 an acre."

The New York Times compares India's new billionaires with America's robber barons during the Gilded Age, a period of rapid economic growth which preceded the deep depression of 1893-1897.

The extraordinary power and influence of India's super rich has played out to the detriment of ordinary Indians who make up the world's largest population of poor, hungry, illiterate and sick people. It poses a serious challenge to India's democracy, often claimed as the world's largest, to meet the very basic needs of its people in whose name the rulers supposedly govern the country. It also raises the specter of significant social strife which could spark a bloody revolution shaking the Indian society to its core.

Back in 1988, Pakistani economist Dr. Mahbub ul Haq said that "our system has all the worst features of oligarchy and democracy put together." It now appears that India's system today is not much better than Pakistan's which has less inequality between the rich and the poor.

Related Links:

Haq's Musings

India's 2G Scandal

Bloody Revolution in India?

Is There a Threat of Oligarchy in India?

Political Patronage in Pakistan

India at Davos 2011: Story of Corruption and Governance Deficit

Challenges to Indian Democracy

India After 63 Years of Independence

Comments

Riaz Haq said…
The GDP share of Indian billionaires' wealth is more than four times of the global average. Forbes magazine put the combined wealth of all 1,125 billionaires in the world at 4.4 trillion dollars, which is just about seven per cent of the world's total GDP size, according to The Financial Express of Indiareport in 2008:

New Delhi, March 9: The domestic economy is smaller than that of China and the US, but the wealth of billionaires from India is equivalent to a larger share of the nation's GDP, compared to Americans and Chinese in their respective countries.

The wealth amassed by Indian billionaires -- estimated at 340.9 billion dollars by the US business magazine Forbes – is nearly 31 per cent of the country's total GDP. This gives them nearly three times more weight in the economy than their American counterparts and over ten times of those in China.

The net worth of all the Chinese billionaires is just about three per cent of the country's GDP, while that for the US billionaires is nearly 11 per cent.

In its annual list of world's billionaires, Forbes said there are a total 42 billionaires in China and 469 in the US with a combined net worth of 95 billion dollars and 1.6 trillion dollars, respectively.

The magazine put the number of Indian billionaires at 53.

According to latest data available with International Monetary Fund (IMF), the GDP size of India, China and the US for 2007 are estimated at 1,089.9 billion dollars, 3,248 billion dollars and 13,794 billion dollars respectively.

The percentage figures for the share of billionaires' wealth in the three countries are based on the analysis of Forbes net worth figures and the GDP size of these economies.


http://www.financialexpress.com/news/gdp-share-indian-billionaires-beat-americans/282207/
Riaz Haq said…
"The Next Crisis Will Arise in the BRIC Countries" says Ignacio de la Torre, director of finance programs at IE Business School, in a recent Forbes magazine article:

A steep rise in credit; rapid increases in house prices to levels way beyond available income; use of overvalued property as further collateral to demand additional funding from the banking system, resulting in even higher levels of debt; an increase in the amount of credit needed for the marginal growth of gross domestic product; a constrained installed capacity that yields to inflationary tensions; a labor force with double digit wage rises; limitless liquidity flowing into sectors with low productivity, such as real estate; a relaxation of the rules for granting loans; a rapid increase in corporate debt as a consequence of accelerated investment, mergers, and acquisitions, all fanned by the intoxicating feeling that demand will just keep going up; a central bank incapable of containing such a self-complacent liquidity binge, with interest rates far below those recommended by the Taylor rule; a political class living off an apparent bonanza, refusing to carry out the reforms needed to avoid disaster when the cycle eventually changes, ignoring calls for serious cutbacks in spending, or rises in taxes that could counteract the exuberance.

Spain in 2006? The U.S.? Britain? Iceland, Greece, Ireland? No. I am talking about emerging countries, in particular Brazil, Russia, India and China, the four known collectively as the BRICs. In my opinion, the BRICs are repeating many of the same errors committed by Europeans and North Americans in the lead-up to 2007, namely the following:

A housing bubble. Lax monetary policy has allowed unsubstantiated rises in the price of housing vs. available income, fuelled by bank loans....

Inflation. Savage increases in circulating capital, to keep pace with the speed of price rises, have made inflationary tensions inevitable. ....

Over-reliance on the financial sector. This results from failing to curb increasing credit penetration as a percentage of GDP, dodgy criteria for awarding loans, dubious value of collateral assets, and, in China, the increasing influence of a “shadow banking” sector.

Unprecedented widening of the inequality gap. ....

Too much investment with uncertain returns. ...

Dependence on cheap money: “The dollar is our currency, but your problem” John Connally, the U.S. treasury secretary, said to his French counterpart in 1971, just before the Bretton Woods monetary system blew up. The same is true today, The U.S. Federal Reserve’s zero rates of interest are aimed at resuscitating the American economy, but they have brought about a wave of liquidity that looks to emerging economies for profit, worsening an already delicate situation....
Riaz Haq said…
"The Next Crisis Will Arise in the BRIC Countries" says Ignacio de la Torre, director of finance programs at IE Business School, in a recent Forbes magazine article:

A steep rise in credit; rapid increases in house prices to levels way beyond available income; use of overvalued property as further collateral to demand additional funding from the banking system, resulting in even higher levels of debt; an increase in the amount of credit needed for the marginal growth of gross domestic product; a constrained installed capacity that yields to inflationary tensions; a labor force with double digit wage rises; limitless liquidity flowing into sectors with low productivity, such as real estate; a relaxation of the rules for granting loans; a rapid increase in corporate debt as a consequence of accelerated investment, mergers, and acquisitions, all fanned by the intoxicating feeling that demand will just keep going up; a central bank incapable of containing such a self-complacent liquidity binge, with interest rates far below those recommended by the Taylor rule; a political class living off an apparent bonanza, refusing to carry out the reforms needed to avoid disaster when the cycle eventually changes, ignoring calls for serious cutbacks in spending, or rises in taxes that could counteract the exuberance.

Spain in 2006? The U.S.? Britain? Iceland, Greece, Ireland? No. I am talking about emerging countries, in particular Brazil, Russia, India and China, the four known collectively as the BRICs. In my opinion, the BRICs are repeating many of the same errors committed by Europeans and North Americans in the lead-up to 2007, namely the following:

A housing bubble. Lax monetary policy has allowed unsubstantiated rises in the price of housing vs. available income, fuelled by bank loans....

Inflation. Savage increases in circulating capital, to keep pace with the speed of price rises, have made inflationary tensions inevitable. ....

Over-reliance on the financial sector. This results from failing to curb increasing credit penetration as a percentage of GDP, dodgy criteria for awarding loans, dubious value of collateral assets, and, in China, the increasing influence of a “shadow banking” sector.

Unprecedented widening of the inequality gap. ....

Too much investment with uncertain returns. ...

Dependence on cheap money: “The dollar is our currency, but your problem” John Connally, the U.S. treasury secretary, said to his French counterpart in 1971, just before the Bretton Woods monetary system blew up. The same is true today, The U.S. Federal Reserve’s zero rates of interest are aimed at resuscitating the American economy, but they have brought about a wave of liquidity that looks to emerging economies for profit, worsening an already delicate situation....
Riaz Haq said…
Here's an excerpt from Indian journalist Kuldip Nair's Op Ed in Express Tribune:

Six farmers committed suicide in Maharashtra this past week. Two landless workers yoked themselves as bullocks to plough a field whose owner could not afford the cost of getting a pair. This happens when India enters the twenty-first year of reforms which the-then finance minister Manmohan Singh had initiated to announce to the world that India was ‘wide awake’.
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Resources for development were supposed to be raised from those who have the capacity to pay. This called for an increased rate of taxation. But the ceiling of income tax has been fixed at a mere 30 per cent. Millionaires are happy with the tax, which is less than what the same class pays in developed nations. There are now as many as 59 billionaires compared to just one 20 years ago. And now the retail trade, the backbone of the lower and middle-classes, is being opened to multinationals.

The country’s economy is guided (or misguided) by the World Bank. America is its boss. US Secretary of State Hillary Clinton admitted in Chennai recently: I can tell you that we (the West) are, in fact, betting on India’s future. We are betting that the opening of India’s market to the world will produce a more prosperous India.

I don’t know about India, but America has gained a lot by selling defence equipment worth $800 billion. India’s investment is the highest from among the investors in the UK. What has it got in return is the question that people ask Manmohan Singh.

After signing the nuclear energy treaty, Washington has not implemented it because it fears India’s indemnity act does not waive off the responsibility on the suppliers of nuclear power plants. After the experience of the Bhopal gas disaster, no government at Delhi can let the suppliers run away from compensating the victims for faulty equipment.

The US did not even insulate India from the treaty by the Nuclear Suppliers Group so as not to give access to nuclear enrichment and reprocessing technology to those countries which failed to sign the Nuclear Non-Proliferation Treaty. The 2008 India-US treaty had promised New Delhi a clean waiver for India.

As for the UK, it came through the East India Company and ruled us for 150 years. Now London’s ambition is not territory but free markets. New Delhi has made all the concessions that the British industry wanted. Tariffs have been lowered for all their imports. This benefits other foreign exporters as well.

The West, particularly the UK, is interested in services and has a substantial share of them in India. Our industry is beginning to be counted. Yet it has to have foreign investment, technology and markets. But there is no word on that. British Prime Minister David Cameron and Hillary Clinton must realise that it cannot be a one-way street.

In his speech on July 24, 1991, Manmohan Singh had quoted Victor Hugo’s observation that no power on earth can stop an idea whose time has come. He said India’s time has come. Let the prime minister learn from the progress that the country has made in the last 20 years and introspect where things went wrong. Some 30 per cent Indians, according to a report which has official backing, live on less than $2 a day. Around 52 per cent of the population is said to live in poverty. Maybe India’s time has come but the idea has gone awry because it has benefitted the upper strata. The rest are still wallowing in poverty and helplessness.
Pavan said…
Nayar could have done better. His figures are patchy. How does he say 30% live under 2 dollars. Its more than double that number. Anyway, at least some sensible people are supporting what he says
Riaz Haq said…
Here's NY Times on the widening iron ore corruption scandal involving politicians and oligarchs in India:

MUMBAI, India — India’s wave of corruption scandals has hit yet another industry, iron ore mining, implicating companies that include the flagship of one of this nation’s richest men.

As a result of a government investigative report issued late last week, several stocks have lost value — including shares of Adani Enterprises, the biggest piece of a mining, port and power plant empire built by the billionaire Gautam S. Adani, India’s sixth-wealthiest person.

Adani Enterprises has denied wrongdoing. But it and several other big Indian companies are facing tough questions from investors and policy makers.

The 466-page report, by a former Indian Supreme Court justice who is now a public ombudsman, contends public officials and companies cheated the government of Karnataka state out of billions of dollars in royalty, tax and other payments from a lucrative domestic and foreign trade in iron ore. The ore is an important raw material for steel that has been in great demand in fast growing China and India.

“Huge bribes were paid,” said the report, written by Santosh Hegde, the former justice. “Mafia type operations were the routine practices of the day.”

Analysts say Mr. Hegde’s findings provide evidence of corruption in important parts of the Indian economy, including land and natural resources, that are still tightly controlled by politicians and corporate executives — even as other sectors, including consumer goods, banking and information technology, have become more competitive and open.

Procedurally, it is unclear what will happen next. Mr. Hegde does not have the power to prosecute the companies and individuals he accuses in his report. That is up to Karnataka’s government, which has previously played down concerns about mining, or to the judicial system.

India’s Supreme Court on Friday temporarily suspended all iron ore mining in Bellary, the region that was the main focus of the inquiry. The court in recent years has often led the charge to prosecute officials accused of corruption, and anticorruption advocates hope that it will do so in this case.

The scandal forced the chief minister of Karnataka state to resign on Sunday, although he has denied wrongdoing.

Shares of Adani Enterprises were down nearly 23 percent on Thursday and Friday, but they regained almost 9 percent on Monday.

The stock of another company implicated in the report, JSW Steel, fell more than 10 percent late last week. JSW’s shares dropped by an additional 10.3 percent on Monday, after Citigroup downgraded the stock and put a sell rating on it.
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In the case of Adani Enterprises, Mr. Hegde’s report says the company helped mining concerns export illicitly obtained iron ore to China and other countries from the port, while engaging in a systematic bribery campaign that covered virtually every level of government. He recommended that the company be “barred from participating in any future contract, grant or lease, etc. by the government.”


http://www.nytimes.com/2011/08/02/business/global/indias-iron-ore-industry-is-called-graft-ridden.html?scp=4&sq=india&st=cse
Riaz Haq said…
Here's an interesting piece about democracy and oligarchy by Michael Hudson:

Book V of Aristotle’s Politics describes the eternal transition of oligarchies making themselves into hereditary aristocracies – which end up being overthrown by tyrants or develop internal rivalries as some families decide to “take the multitude into their camp” and usher in democracy, within which an oligarchy emerges once again, followed by aristocracy, democracy, and so on throughout history.

Debt has been the main dynamic driving these shifts – always with new twists and turns. It polarizes wealth to create a creditor class, whose oligarchic rule is ended as new leaders (“tyrants” to Aristotle) win popular support by cancelling the debts and redistributing property or taking its usufruct for the state.

Since the Renaissance, however, bankers have shifted their political support to democracies. This did not reflect egalitarian or liberal political convictions as such, but rather a desire for better security for their loans. As James Steuart explained in 1767, royal borrowings remained private affairs rather than truly public debts. For a sovereign’s debts to become binding upon the entire nation, elected representatives had to enact the taxes to pay their interest charges.

By giving taxpayers this voice in government, the Dutch and British democracies provided creditors with much safer claims for payment than did kings and princes whose debts died with them. But the recent debt protests from Iceland to Greece and Spain suggest that creditors are shifting their support away from democracies. They are demanding fiscal austerity and even privatization sell-offs.

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What is missing is the counterweight to a tiny minority who didn’t set out to be petty kings but who know perhaps realize that there is no one and nothing in their way as things stand. . . . As things stand: things will change. Revolution is as likely as oligarchy; more likely I would say. And revolution has more modern precedents than does oligarchic recession. But I do think that society is not presently well-balanced to restrain finance-capital: so it’s them or us who goes down. Let’s make it them.


http://www.nakedcapitalism.com/2011/12/michael-hudson-debt-and-democracy-has-the-link-been-broken.html
Riaz Haq said…
Here's a critical analysis of Tom Friedman's "Flat World" on India:

In the first chapter of his bestseller on globalization, The World Is Flat, three-time Pulitzer Prize–winning foreign affairs columnist for The New York Times Thomas Friedman suggests that his repertoire of achievements also includes being heir to Christopher Columbus. According to Friedman, he has followed in the footsteps of the fifteenth-century icon by making an unexpected discovery regarding the shape of the world during an encounter with “people called Indians.”

Friedman’s Indians reside in India proper, of course, not in the Caribbean, and include among their ranks CEO Nandan Nilekani of Infosys Technologies Limited in Bangalore, where Friedman has come in the early twenty-first century to investigate phenomena such as outsourcing and to exult over the globalization-era instructions he receives at the KGA Golf Club downtown: “Aim at either Microsoft or IBM.” Nilekani unwittingly plants the flat-world seed in Friedman’s mind by commenting, in reference to technological advancements enabling other countries to challenge presumed American hegemony in certain business sectors: “Tom, the playing field is being leveled.”

The Columbus-like discovery process culminates with Friedman’s conversion of one of the components of Nilekani’s idiomatic expression into a more convenient synonym: “What Nandan is saying, I thought to myself, is that the playing field is being flattened… Flattened? Flattened? I rolled that word around in my head for a while and then, in the chemical way that these things happen, it just popped out: My God, he’s telling me the world is flat!”

No compelling justification is ever provided for how a war against deterrables will solve the problem of undeterrables who by definition cannot be deterred.

The viability of the new metaphor has already been called into question by Friedman’s assessment two pages prior to the flat-world discovery that the Infosys campus is in fact “a different world,” given that the rest of India is not characterized by things like a “massive resort-size swimming pool” and a “fabulous health club.” No attention is meanwhile paid to the possibility that a normal, round earth—on which all circumferential points are equidistant from the center—might more effectively convey the notion of the global network Friedman maintains is increasingly equalizing human opportunity.

An array of disclaimers and metaphorical qualifications begins to surface around page 536, such that it ultimately appears that the book might have been more appropriately titled The World Is Sometimes Indefinitely Maybe Partially Flat—But Don’t Worry, I Know It’s Not, or perhaps The World Is Flat, Except for the Part That Is Un-Flat and the Twilight Zone Where Half-Flat People Live. As for his announcement that “unlike Columbus, I didn’t stop with India,” Friedman intends this as an affirmation of his continued exploration of various parts of the globe and not as an admission of his continuing tendency to err—which he does first and foremost by incorrectly attributing the discovery that the earth is round to the geographically misguided Italian voyager.

Leaving aside for the moment the blunders that plague Friedman’s writing, the comparison with Columbus is actually quite apt in other ways, as well. For instance, both characters might be accused of transmitting a similar brand of hubris, nurtured by their respective societies, according to which “the Other” is permitted existence only via the discoverer-hero himself. While Columbus is credited with enabling preexisting populations on the American continent to enter the realm of true existence by reporting them to European civilization, Friedman assumes responsibility for the earth’s inhabitants in general without literally having to encounter them.


http://www.guernicamag.com/features/3284/fernandez_12_1_11/
Riaz Haq said…
Here's NY Times piece by Jim Yardley on growing clout of Indian business lobby in New Delhi's policies:

The foray into Pakistan is further proof of the increasingly important role of India’s private sector in foreign policy. India’s leaders, eager for a bigger footprint in global affairs, now aspire to a permanent seat on an expanded United Nations Security Council. But the Indian Foreign Service, though consisting of top-notch officers, is too understaffed to provide a comprehensive global presence.

To compensate, the government often relies on the private sector to serve as an intermediary abroad. India’s two leading business groups — C.I.I. (the Confederation of Indian Industry) and Ficci (the Federation of Indian Chambers of Commerce and Industry) — now have offices around the world and sponsor informal diplomatic dialogues between India and countries like Japan, China, Singapore and the United States.


http://india.blogs.nytimes.com/2012/04/02/indias-industry-helps-open-a-door-to-the-world/
Riaz Haq said…
Here's a News story on increasing private wealth in Pakistan:

KARACHI: Pakistan has seen significant increase in the number of wealthy people as compared to a total of approximately 22 families during the era of Field Marshal General Ayub Khan in 60s, experts told The News.

According to a study of a financial think-tank from Switzerland, there are 415 people in Pakistan, who own more than $30 million each as compared to 310 last year, registering an increase of 33.9 percent, which is a record in Asia. Collective income of these people remained around $50 billion, the study revealed.

Only seven to eight business groups of the 22 families continue to operate their businesses significantly and the remaining families have either closed their businesses or have shifted abroad.

Dr Ishrat Husain, former governor of the State Bank of Pakistan (SBP), and a renowned economist, said only Dawoods, Adamjees, Sehgals, Shaikhs, Nishats and a few others have survived the economic ups and downs during this period, while Haroons, Batlas, Valikas, Isfahanis, Noons, and Rangoonwalas, have disappeared from the economic scene.

The nationalisation process in 70s also affected their economic position, he said, adding that some of the families went abroad and later shut their businesses due to one reason or the other. “Disputes and rivalries within the family and group also forced them to wind up their businesses,” Dr Husain said.

In 1947, the first budget projected a revenue of Rs150 million and the government had to borrow Rs80 million from the Habib Bank Limited to pay salaries to its employees and meeting other contingencies.

Likewise, Dentonic tooth powder was the first industrial project launched in the country followed by the inauguration of the first soft drink, Pakola, which was launched by the then prime minister.

Dr Riaz Shaikh, head of Social Sciences at Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST), said that several well-established individuals and families had emerged after the nationalisation process initiated by Zulfikar Ali Bhutto. “Now the number of such individuals and families has increased to hundreds, if not thousands,” he said.

Families of Agha Khan, Kasuri that owns a school chain, Patel family that owns hospitals and Malik Riaz, top real estate developer, along with several others are some of them.
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A few top families in the list included Sehgals, Habibs, Dawoods, Adamjees, Crescent and Valikas.
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(Shahid) Rahman wrote that nationalisation retarded Pakistan’s growth in many ways but its worst consequence was the scars inflicted on the psyche of the big businesses, which were flourishing even after passage of two decades. “It alienated the industrialists from the economic mainstream and, as if by a collective decision, several of the original 22 families who pioneered development in Pakistan switched off investment in the long gestation projects,” he wrote.

The Pakistani businessmen who were planning mega projects in 1971 and are still capable of setting up mega projects resigned to remain spinners, sugar manufacturers or at best cement manufacturers.

Field Marshal Ayub Khan’s decade of development (1958-68) divided the society into two categories, privileged and underprivileged, which led to the explosive situation of the 1970’s, culminating in the severance of Pakistan and induction into power of a socialist government of Bhutto.

The second phase, (1971-77) under Pakistan People’s Party was the era of dismantling monopolies, nationalisation, hitting at the power base of industrial barons and clipping their wings, while 11 years rule of General Zia-ul-Haq was the period of status quo for the economy....


http://www.thenews.com.pk/Todays-News-3-217083-Record-increase-in-number-of-wealthy-people-in-Pakistan
Riaz Haq said…
What if Modi becomes prime minister?
Myth 1: Modi is a development man
This cannot be further from the truth. Gujarat has always been a developed state from the time it was carved out of Bombay state in 1960. Economic indicators clearly show that Gujarat under Modi has been ‘worse off’ than under previous governments (even the BJP one before him).
The fact is that foreign direct investment in Gujarat has taken a severe beating in the last few years and even local investment is far below what is being flaunted. Regarding social indicators, Gujarat fares poorly.
A UNICEF report published in 2013 says social development in the state has not kept pace with economic development; almost every second child in Gujarat under five years old is undernourished, while three quarters are anemic.
Myth 2: The Gujarat carnage is a thing of the past and Modi has been given a “clean chit”
Many believe the courts exonerated Modi of involvement in the Gujarat anti-Muslim riots in 2002. The hard facts are, however, very different. First of all, no court has given Modi a clean chit.
True, there is a Special Investigation Team (SIT) report that says there is not enough evidence against Modi.
But this has been challenged, with the petitioner Zakhia Jafri being given leave by Ahmadabad magistrates to question the merits of the SIT report in a higher court.
Raju Ramchandran, appointed by the Supreme Court as amicus curiae for many of the Gujarat riot cases, asserts that there is enough evidence to prosecute Modi on several counts with regard to the violence in 2002, in which more than 1,000 people died.
Modi has neither shown any remorse nor taken responsibility for the killing of innocent people under his watch. The least a chief minister could have been expected to do was to enforce law and order and protect the life and property of every citizen in his state. That he ignored this responsibility, there is no doubt among many. That he has denigrated minorities has been documented by the print and the electronic media.
Myth 3: Modi has “made up” with the minorities
There are some claiming to be representatives of minority Christian and Muslim communities who sing Modi’s praises.
A careful analysis indicates these people have vested interests, especially in business, and are not really interested in their community or what is happening to minorities in the country.
In 2003 Modi introduced an anti-conversion law and established rules to govern the implementation of this law in 2008.
It is perhaps one of the most draconian laws in the history of democratic India. It forbids a citizen from converting to another faith unless she/he has permission from civil authorities.
Even now, police and intelligence officers constantly visit Christian institutions and Christians in general, making all kinds of inquiries and demanding to check baptism registers and other records.
Myth 4: Modi is not corrupt
In May 2012, anti-corruption campaigners Anna Hazare and Arvind Kejriwal visited Gujarat. They came away declaring it the most corrupt state in the country. Why they have not continued to highlight corruption in Gujarat is anyone’s guess.
Several years ago, the Tata Motor Company was allowed to establish a plant to build the “world’s cheapest car” in Gujarat with surprising ease, flouting every rule in the book and even the state’s industrial policy.
http://www.ucanews.com/news/what-if-modi-becomes-indian-premier/70249
Riaz Haq said…
Here's a BBC report on "paid news" in Indian elections:

In recent years, India has seen a growing phenomenon called 'paid news'. This is where money changes hands in return for sympathetic press coverage.

There have been hundreds of cases involving politicians, celebrities and businessmen paying for favourable reports in the media dressed up as real news.

With the country gearing up for elections soon, the issue has been in sharp focus, but is there any chance of tackling the problem?


http://www.bbc.com/news/business-26689192
Riaz Haq said…
Modi is where he is today – on the cusp of power — not because the country is becoming more communal but because the Indian corporate sector is becoming more impatient. Every opinion poll that shows him inching towards power sets off a bull run on the Bombay Stock Exchange. In a recent dispatch for the Financial Times, James Crabtree noted the exceptional gains notched up by Adani Enterprises – the company’s share price has shot up by more than 45 per cent over the past month compared to the 7 per cent rise registered by the Sensex. One reason, an equities analyst told the FT, is that investors expect a government headed by Modi to allow Adani to expand his crucial Mundra port despite the environmental complications involved. “So the market is saying that, beyond the simple proximity of Mr Adani and Mr Modi, these clearances may no longer be so hard to get under a BJP regime,” the analyst is quoted as saying.

http://svaradarajan.com/2014/03/27/the-cult-of-cronyism/
Riaz Haq said…
Your (Thomas Piketty's) data says that the top 1% in India owns about 8-9 % of national income. That's not much compared to the West, yet inequalities here appear starker. Is it that inequality being a relative measure, the absolute nature of poverty gets sidelined?

Let me make it clear that there are major problems with the measurement of income inequality in India. Of course, there are data problems in every country. But among all democracies, India is probably the country for which we have met the largest difficulties in getting reliable data. In particular, India's income tax administration has almost given up compiling detailed income tax statistics, although detailed yearly reports called "All-India Income Tax Statistics" are available from 1922 to 2000. This lack of transparency is problematic, because self-reported survey data on consumption and income is not satisfactory for the top part of the distribution, and income tax data is a key additional source of information in every country. The consequence is that we know very little about the actual decomposition of GDP growth by income and social groups in India over the past few decades.

You propose a 'utopian' global wealth tax to redistribute wealth. If it is so impracticable, what's the use of proposing it?

A global wealth tax together with a global government is certainly a utopia. But there is a lot that can be achieved at the national level and through intergovernmental agreements. In particular, countries like US, China or India are sufficiently large to make their tax system more progressive. For instance, the US — about one quarter of world GDP — could transform their property tax into a progressive tax on net wealth. They are sufficiently large to impose credible sanctions on countries and banks (like Swiss banks) that do not transmit the information they need to enforce their tax law.

You criticize economists for their 'childish passion' for mathematics in your book. How should they deal with their subject?

I am trying to put the distributional question and the study of long-run trends back at the heart of economic analysis. In that sense, I am pursuing a tradition which was pioneered by the economists of the 19th century, including David Ricardo and Karl Marx. One key difference is that I have a lot more historical data. With the help of many scholars, we have been able to collect a unique set of data covering three centuries and over 20 countries. This is by far the most extensive database available in regard to the historical evolution of income and wealth. This book proposes an interpretative synthesis based upon this data. I also use simple theoretical models in order to account for the facts.

http://timesofindia.indiatimes.com/home/stoi/deep-focus/Top-1-in-India-owns-8-9-of-national-income-rockstar-economist-Thomas-Piketty-says/articleshow/34949259.cms
Riaz Haq said…
French Economist-Author Thomas Piketty to #India’s "Hypocritical" "Self-Serving" Elite: ‘Learn From History’ http://nyti.ms/1lQ5b4z

After he fled to the authors’ lounge, Mr. Piketty told me that he found the elite of India “hypocritical” for urging their government to address inequality by pouring resources into economic development, like building infrastructure or helping selected industries. This is self-serving, he says, and only increases the gap between the rich and the poor. In his opinion, governments should find the means to invest more in social welfare, like primary education and health care.

Before the world wars, he said, “the French elite used to say the same things that the Indian elite now say, that inequality would be reduced with rising development.” But after the wars, he said, the French began to see that direct investment in welfare was the way forward.

“I hope the Indian elite learn from the stupid mistakes of the other elites,” he said. “Learn from history.”

India is just emerging from what many regard as a catastrophic experiment in a type of socialism, the sort that economists like Amartya Sen, the Nobel laureate, say was not socialism in the first place, because it neglected health care and primary education. What the Indian elite learned from that history was to fear and loathe the idea of the welfare state.

In 1991, India reached the nadir of an economic crisis that forced it, in exchange for a financial rescue from the International Monetary Fund, to begin liberalizing its economy along the free market lines that were championed then by Washington. In the years that followed, the rich and the educated benefited the most, though the poor are better off today than they were before those changes.

Having prospered in recent decades, the Indian elite have faith in this economic model. But there is also a wide acceptance that India’s inadequate investments in education and health are holding the nation back.

“The problems India is trying to solve are problems other countries are trying to solve,” Mr. Piketty had said during his lecture. “India is trying to solve very complicated problems.”
Riaz Haq said…
#Modi's #India, world's biggest oligarchy, sends elite commandos to guard billionaire's wife http://www.riazhaq.com/2011/07/india-worlds-biggest-oligarchy.html …

https://www.washingtonpost.com/news/worldviews/wp/2016/07/27/india-sends-elite-commandos-to-guard-billionaires-wife-outrage-ensues/

Imagine, if you will, the kind of outcry that would occur in the United States if the government sent a Secret Service detail to protect Melinda Gates, wife of Bill Gates.

That explains a bit of the furor in India this week after a Hindustan Times report that the Indian government was dispatching a team of elite commandos to protect Nita Ambani, the socialite wife of India’s richest man.

Her husband, Mukesh Ambani, an oil and gas magnate worth $21 billion, has had a government security escort since 2013, when he was the subject of terror threats, and covers the costs himself.

But in a country where there is a shortage of police officers, the news about 10 additional officers for the wife rankled.

“Women raped daily in Delhi. No security for them despite repeated requests. But [prime minister Narendra Modi] providing security to his friends,” Delhi’s chief minister, Arvind Kejriwal, said in a tweet.

The government said that a threat-assessment report by central security agencies deemed Nita Ambani’s protection necessary, according to the Hindustan Times report.

Ambani, 52, is an art collector and serves on the board of directors of her husband's company and chair of its charity wing. The couple live in a famous 27-story home in Mumbai that has a ballroom, a movie theater and six parking levels and has been featured in Vanity Fair.

As pretentious as it gets - 27 floor Mumbai house of Ambani family, 600 servants, $2 billion. pic.twitter.com/XsQUwk3mm6

— Frank Vivier (@dievlamgat) June 17, 2016

The news reignited the debate of “VIP privilege” in India, where in recent years ordinary citizens have begun to chafe against what they see as undue perks given to the rich and famous, who are whisked through airport waiting lines, ride in motorcades that clog traffic and, in the case of politicians, live in luxury, government-assigned bungalows.

The data site IndiaSpend estimated in 2013 that in India, which is short about a half-million police officers, an estimated 47,000 officers are dispatched to protect 14,842 VIPs.
Riaz Haq said…
The richest 1% of #Indians now own 58.4% of #India's wealth. #Modi #BJP #Oligarchy

http://www.livemint.com/Money/MML9OZRwaACyEhLzUNImnO/The-richest-1-of-Indians-now-own-584-of-wealth.html

In the last two years, the share of the top 1% has increased at a cracking pace, from 49% in 2014 to 58.4% in 2016.

The richest 1% of Indians now own 58.4% of the country’s wealth, according to the latest data on global wealth from Credit Suisse Group AG, the financial services company based in Zurich. Credit Suisse has published the report every year since 2010.

The share of the top 1% is up from 53% last year. In the last two years, the share of the top 1% has increased at a cracking pace, from 49% in 2014 to 58.4% in 2016

Does that mean the trend of the very rich getting richer is because of the Modi government? Not really—as the chart shows, the share of the top 1% in the country’s total wealth improved from 40.3% in 2010 to 49% in 2014. But the numbers do suggest that the very rich are expanding their share at a faster clip now. The richest 10% of Indians haven’t done too shabbily either, increasing their share of the pie from 68.8% in 2010 to 80.7% by 2016. In sharp contrast, the bottom half of the Indian people own a mere 2.1% of the country’s wealth.

Data from Credit Suisse shows that India’s richest do well for themselves whichever government is in power. In 2000, for instance, the share of the richest 1% was a comparatively low 36.8% of the country’s wealth. In the last 16 years, they have increased their share from a bit more than a third to almost three-fifths of total wealth.

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