India's political turmoil reveals deep malaise

As the world's most populous democracy emerges as a global economic power, one big-money case illustrates India's trouble with entrenched corruption.

Andimuthu Raja, the former telecoms minister, in being investigated for the mobile telephone spectrum licence scandal. Bloomberg via Getty Images

In comparisons between China and India, the subcontinent is often given the edge over the Middle Kingdom on account of its political system.

India has a deep-rooted democracy, the argument goes, while China is a brittle autocracy whose government functions without transparency or accountability. The idea of India as Asia's democratic alternative to China was underscored during the US President Barack Obama's visit to India last month. "In Asia and around the world, India is not simply emerging; India has emerged," he declared.

A cursory look at Indian newspapers during the past six weeks, however, portrays a country submerged in corruption.

Exhibit A: the so-called 2G telecommunications scam of 2008, involving the claimed allocation of licences for a pittance followed by the recent resignation of the Indian telecoms minister, who denies any wrongdoing, and an alleged US$40 billion (Dh146.92bn) fraud that taints powerful politicians, leading industrialists and some of the best-known names in Indian journalism.

And although the Indian economy continues to grow at an impressive 9 per cent per year, the depth of the rot suggested by the scandal raises questions about the sustainability of the Indian model of development. That sometimes corner-cutting corporations benefited the most from the corruption that accompanied India's opening throws a shadow over the economic-reform process.

Despite loosening government control over the economy, enough remains for wayward politicians to milk.

The country's businesses - hardly Boy Scouts themselves - remain beholden to an anarchic and greedy political class whose appetites have multiplied manifold since the advent of economic reforms nearly two decades ago.

That the taint comes from the telecoms industry, an archetype of Indian reform thanks to a huge user base of 600 million built up over the past decade, could hurt public appetite for further reforms.

And unless the country moves decisively to stem the haemorrhaging confidence, large businesses - foreign and domestic - may think twice about future investments. The ultimate loser would be the people of India.

The 2G scandal, involving the government's 2008 allocation of valuable telecoms spectrum to favoured firms at throwaway prices, already brought this year's winter session of parliament to a halt after unsuccessful opposition demands for a wide-ranging inquiry.

The man at the centre of the storm, the former telecoms minister A Raja, was forced to resign pending an investigation. Mr Raja claims innocence.

Meanwhile, India is agog over the publication by two news magazines last month of a series of secretly taped phone conversations between Nira Radia, a high-powered lobbyist for two of India's richest men, Mukesh Ambani of Reliance Industries, and Ratan Tata of the Tata Group, as well as influential journalists, politicians and industrialists.

The recordings, part of an income-tax investigation into Ms Radia, reveal a country run by a clubby elite whose allegiance to one another is apparently greater than to the general public they are supposed to serve.

In the aftermath of national elections last year, Ms Radia worked the phones in an attempt to ensure that the telecoms portfolio - dubbed an "ATM ministry" in India's political parlance for its lucrativeness - remained with Mr Raja, already under a cloud of suspicion for alleged corruption.

Well-known journalists apparently offered to act as intermediaries with the ruling Congress Party, agreeing to pass on messages from Ms Radia to senior party figures and reporting back to her on conversations.

In an unrelated matter, influential editors alluded to a capacity to fix a court judgment on a multibillion-dollar gas pricing dispute between Mr Ambani and his estranged younger brother Anil, or blithely discussed story placement and media strategy with Ms Radia.

An opposition member of parliament is heard allegedly plotting to change the order of speakers in a parliamentary budget discussion to benefit a potential tax break for Mukesh Ambani. The 142-year-old Tata Group, long known for a squeaky-clean reputation, is under a cloud for using Ms Radia to lobby on behalf of an allegedly corrupt minister.

Although most speakers on the tapes are not accused of illegal activity - and virtually all claim that the conversations have been misinterpreted by the public and the press - taken collectively, the tapes nonetheless create an overwhelming impression that the exercise of power in India is compromised by a culture of rampant cronyism.

So far, middle-class ire - expressed on Twitter, Facebook and a plethora of blogs - focuses on the state of Indian journalism.

Over the years, educated Indians have grown cynical about politics and politicians. Individuals regarded as personally honest, such as Manmohan Singh, the prime minister, and senior opposition BJP leader LK Advani, are seen by many as the exception rather than the rule.

More worrying, from a longer-term perspective, is the idea that the tapes reveal undue corporate influence in the country's affairs. For the first time since the advent of economic reforms, a large section of educated Indians blames business rather than government for creating a national problem.

That India's institutions have failed to tackle corruption is undeniable. Transparency International ranks India 87 out of 178 countries surveyed for perceptions of public corruption, behind countries such as Malawi and Morocco. China is number 78.

But, although individual business houses are often guilty of playing the system, the genesis of the problem in India is cultural and political. At best, 300 million Indians can be called middle class by even the most generous estimate. Most of the rest are too poor and ill-educated to make corruption an electoral issue. Caste, creed and the price of onions are more likely to influence their vote than looting in distant Delhi.

Moreover, India's splintered politics is littered with caste-based or regional parties with little concept of the national interest.

Mr Raja belongs to one such party, the DMK, an important congress ally from the southern state of Tamil Nadu whose campaign blandishments for prospective voters it is claimed sometimes include cash-stuffed envelopes and cable TV connections.

For its part, the middle class tends to personalise corruption rather than focus on the system. In prosperous democracies, leaders are deemed upright as much for presiding over a clean government as for personal honesty. By contrast, Mr Singh has remained beyond reproach despite the accusations of misdeed against some in government.

But this does not mean India cannot begin to curb corruption. The uproar over the secret tapes shows that society's capacity for outrage remains intact. Every walk of life has its share of the scrupulously upright.

And, unlike many developing countries, India has created and sustained credible institutions such as the Election Commission, the Supreme Court, and the Securities and Exchange Board of India.

If India wants to be taken seriously as a world power, it must establish similar institutions to fight corruption.

Sadanand Dhume is the author of My Friend the Fanatic: Travels with a Radical Islamist

* Yale Global