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Sunday, March 6, 2011

Corruption tarnishes shiny India


Special to The Japan Times

HONG KONG — Corruption in India has become so public and pervasive that the government of Prime Minister Manmohan Singh has been forced to take action on two blatant abuses. The problem is that corruption is only one highly visible part of a hydra-headed monster that is preventing India from fulfilling its great promise and keeping hundreds of millions of Indians in poverty.

The expensive mess of the New Delhi Commonwealth Games last year, costs of which exploded from an originally estimated $352 million to $13 billion, proved a scandal too much for the government, which had to take action.

Another expensive scandal was the award of telecommunications licenses in 2008 at knockdown prices, which may have deprived the government of $39 billion in revenues. The public outcry has been so great that police authorities called in some of the big tycoons for questioning, the first time they had endured such humiliation.

Things are so bad that Rahul Gandhi, scion of the family that has ruled India for many years and secretary general of the Congress party, this year called for vigorous action to root out corruption.

Two homes tell part of the story. Late last year a super-billionaire moved into the world's first billion dollar residence, an oddly shaped 27-story mix of brick, steel and glass — looking rather like a badly stacked pile of books 173 meters high — that contains a health spa and swimming pool, a ballroom with a single chandelier reminiscent of the Palace of Versailles, a 50-seat cinema, six levels of car parking plus a maintenance center, three helipads and a temple. Six hundred servants maintain it, and from the main residence on top with mother of pearl floors, it offers sweeping 360-degree views of the Arabian Sea and the slums of Mumbai far below.

"It is good to breathe fresh air up here, away from the pollution of the street," gushed one of the guests at the housewarming party, who declared the house the Taj Mahal of the 21st century. The owner is Mukesh Ambani, India's richest man and chairman of Reliance Industries, his wealth battered down by the recent downturn to $27 billion.

Just 50 km from Agra, home of the original Taj Mahal, is another huddle of homes, each single story, consisting of two or three rooms that families share with their animals. None has running water or electricity, and the village of a few hundred people lacks a school, post office, anything resembling a shop or a properly paved road, though it does have temples and several wells, strictly designated as to which caste can use which.

Gentle progress has come to the village, so that many houses are shored up with brick, instead of being traditional mud and thatch, and they are decorated with tablets to the Hindu gods. A large wooden box, opened up to offer trinkets and sweets, sometimes comes as a traveling shop. Many of the men have gone to work in Agra or even Mumbai.

In between there is an India of 1.2 billion people that is hard to sum up because any statement is liable to be contradicted just around the corner. India's economic statistics portray a country that is on the move, growing almost as fast as China, at 9 to 10 percent a year. Montek Singh Ahluwalia, the head of the Planning Commission, projects growth continuing at 8.5 to 9 percent so that, by 2035, India will be the third biggest economy in the world, after China and the United States.

By then, India would be the biggest country in the world in population. Some Indians cherish a hope that their country may even surpass China economically. From 2015, India will be boosted by the "demographic dividend" of a younger population profile than China, which will be aging thanks to the policy of allowing most parents only one child.

But India has many flaws. According to official reports, 37 percent of Indians live below an austerely defined poverty line. Amartya Sen, the Nobel Prize-winning Indian economist, last year appealed to the government to do more to make growth more inclusive: "It is silly to debate on whether growth is a good thing. Of course it is. But we have to do more to get the fruits of growth inclusively shared."

On this score India is still failing. The lack of basic education for the poor, the wretched infrastructure, especially the bad roads from the villages — which mean that up to half of produce perishes before it gets to market — all hold back the Indian masses. Education is a key that unlocks many opportunities, and Indians who have gotten a good education have shown talent and initiative that has helped stimulate some world-beating companies and created a middle class of 300 million to 400 million people, bigger than any other country except China.

Some economists differentiate China's and India's economic miracles by saying that China's is authoritarian and state-led export-oriented growth, whereas India's is the product of democratic, private enterprise capitalism. There is truth in this, especially the success of China and the failure of India in building infrastructure that is essential underpinning for rapid economic growth.

India's economic reforms and dismantling of the so-called permit raj did not go far enough. In many business sectors, India's lauded dynamic private enterprise is a small and exclusive club whose members know their way around the political salons. The Asian Development Bank reported in 2009 that 50 billionaires in India control 20 percent of GDP and 80 percent of stock market capitalization. Some estimates say that pervasive corruption takes 2 percent a year off potential growth.

Perversely, India's very democracy and the rise of caste-based politics in the Hindu heartland have increased the numbers of people with sticky fingers determined to get their share of prosperity at whatever cost to the economy or to their fellow Indians.

Corruption is not the only ugly head on India's monster. A bigger problem is how to extend democracy after elections so that ordinary Indians get education and access to opportunities and a chance to use their talents and shape their destiny.

Kevin Rafferty was executive editor of the Indian Express newspaper group.


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