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The ‘Ruling Class’ of India

November 27, 2012

A month earlier, many of the leading newspapers and television channels around the world reported a significant event that happened in Russia. The Russian President Vladimir Putin had sacked his Defence minister, Anatoly Serdyukov. The reasons given out by the Russian President’s office was that this move would facilitate an unbiased investigation into the numerous corruption scandals that the Defence ministry had got entangled in. While other rumors circulated for the reasons of this dismissal, what was evident was that as the Russian Defence Minister, Anatoly Serdyukov had antagonized many powerful forces. Many of them were corporate forces and power brokers that were keen on having a slice of the pie of the Russian military modernization program. Anatoly had pushed many of these private companies to accept lower prices for their products and this had not gone down well with them. These companies had only two alternatives – supply at lower costs or have a more pliant minister at the helm of affairs. While this explanation that has been widely reported both in Russian and International press cannot be ignored, we need to take a careful look at the impact and consequence of similar events in other countries and in India too.

Let us go back to the 2008 US Presidential elections and the funding that both the Democratic and Republican candidates received from the Oil and Gas industry. The Center for Responsive Politics, a non-profit in the USA trying to bring about clean and transparent politics reports that this industry, which includes multinational and independent oil and gas producers and refiners, natural gas pipeline companies, gasoline service stations and fuel oil dealers, has long enjoyed a history of strong influence in Washington. Individuals and political action committees affiliated with oil and gas companies have donated $238.7 million to candidates and parties since the 1990 election cycle, 75 percent of which has gone to Republicans. Though former oilmen George W. Bush and Dick Cheney occupied the White House for eight years, the oil and gas industry could not win support for repealing bans on drilling in the Arctic National Wildlife Refuge. However, Congress voted in 2008 to lift a ban on offshore drilling. These companies are also wary of cap-and-trade climate change legislation, such as the measure Democratic President Barack Obama supports. Yet Obama still received $884,000 from the oil and gas industry during the 2008 campaign, more than any other lawmaker except his Republican opponent, Senator John McCain. How can one expect these lawmakers to take decisions in public interest that are not aligned with the corporate interests of these companies?

More recently in India, we had news reports that the Reliance Group of Industries was behind the then Petroleum Minister Jaipal Reddy losing his portfolio. We had the opposition parties charging the Prime Minister Manmohan Singh and the Congress with buckling under pressure from this influential industrial house. The shifting of Mr.Reddy to Ministry of Science and Technology is largely perceived as a move to appease the Reliance Group as the minister had stood up to them. We also need to recollect the observations of the Supreme Court of India in the PIL filed by Prashant Bhushan in the 2G spectrum case. Revelations of the influence wielded by corporate power players, evident from the telephonic conversations involving corporate lobbyist Nira Radia had shocked the Court and the Judges. “We have been talking about pollution of the sacred rivers like the Ganga. This pollution is quite mind-boggling”, a bench comprising Justice G.S.Singhvi and Justice A.K.Ganguly had remarked.

Developments, including the release of intercepts of a telephone conversation between corporate lobbyist Nira Radia and a Dravida Munnetra Kazhagam MP, Parliament uproar over the underselling of telecom spectrum, the recent stand-off in the Parliament regarding FDI and media stories on the growing power of the lobbyist–politician–policymaker nexus have highlighted a major affliction of the Indian polity which should concern all conscientious citizens. Lobbyists and businesses have come to acquire enormous clout, to the point of influencing the choice of cabinet ministers, nominating key bureaucrats, and formulating economic and industrial policies at the nuts-and-bolts level. There are other instances too of business interests interfering with policy making processes, political party affairs and parliamentary dynamics in ways which would have been unthinkable only years ago. Corporate and lobbyist groups have become important mediators, and sometimes active players, in business-government relations in a number of areas, including infrastructure, energy, telecom and mining. Not to be ignored is the clout that they wield in military contracts, agribusiness, civil aviation, and opening up retail trade to organized business, including multinational hypermarket chains like Metro and Wal-Mart.

While this may all seem to be of recent origin, we need to remember that the powerful clout of private players in Government is not so new to the Indian sub-continent. The first evidence of such power can be traced back to the East India Company. It was the East India Company that can rightly be called the world’s first corporation. It was an early stock company founded by a coterie of businessmen who obtained the Crown’s Charter from Elizabeth I of England on December 31, 1600 with the intention of favouring trade privileges in India. The mainstay business was cotton, silk, indigo dye and tea. By 1689 the company was virtually a nation in the Indian mainland, independently administering the vast presidencies of Bengal, Madras and Bombay and possessing a formidable military strength. The company transformed from a commercial venture to one that virtually ruled India as it acquired auxiliary governmental and military functions until its dissolution in 1858 following the “Indian Mutiny”. The prosperity that the employees of the company enjoyed allowed them to return home to England to establish estates and businesses and to obtain political power. Consequently the company developed for itself a lobby in England’s Parliament. One can see how this corporate entity not only enjoyed power in India but also acquired the ability to negotiate law and policy in their own homeland of England.

If this is just one side of the story, we also need to be wary of a new breed of industrialist-politicians. Not only have industrialists like Vijay Mallya, Naveen Jindal, Praful Patel and Rajeev Chandrashekar started dabbling in politics but hard-core politicians like Nitin Gadkari, Sharad Pawar, Murugesh Nirani and others are metamorphosing into industrialists. How they can prevent a conflict of interest and stay committed to citizens and national interests is anybody’s guess. A visible example of interests being driven by ‘larger and more powerful’ pressure groups can be seen in the way the political class has been rewarding the Corporate World. An observation of the ‘Statement of the Revenue Foregone’ section of the Union budget for the year 2012-13 shows a loss of nearly 5 lakh crores of revenue in tax concessions and exemptions given to Industry and the Corporate World. One needs to compare this against shrinking resources for the social sector. The Government pleads helplessness and states that it is not able to mop up the required resources for programs like Employment Generation or Food Security or for providing Universal Health Access. We have the Finance Minister Chidambaram lamenting that the subsidies for our poor are the problem and that he views allowing FDI in retail as a solution to all of India’s economic woes. Why not address the problem more simplistically by plugging this revenue loss? What does all this mean to the ordinary Indian and Nation’s progress at large? If majority of political interests begin to represent the rich and the mighty, who then will be the voice of the poor and the marginalized? Will the interests of the millions of toiling Indians be protected at all?

Corporate power and lobbying is far more insidious and commercially collusive than the politician-criminal nexus. It’s also much more damaging at the national level. They exert the most pernicious conceivable influence on policy-making and corrupt the process of democracy. They introduce irrational and extraneous elements in decision-making and subvert the public interest. Our present democracy might recognize the ‘people’ as the ‘class that is ruled’ and the ‘elected representatives’ as the ‘class that rules’, but the harsh reality is that of the unseen third class in India – the true ‘Ruling Class’ who are powerful Corporates who wield enormous power with absolutely no responsibility or accountability.

Unless this toxic influence is removed, it will undermine and destroy Indian democracy, our most precious possession. Democracy must be defended against business manipulation and predatory corporate lobbying. We must ensure that our citizens awaken to this threat and give back to themselves the true rulers of the people – themselves.


Categories: Musings
  1. Arun Karpur
    November 27, 2012 at 7:01 pm

    Balu: You bring up a very important issue in your blog today. Most troubling of this is that India is following the paths of Western systems in institutionalizing corruption where lobbying becomes not-such-bad word in comparison after all. Increasingly democracies and individual liberties are held hostage by the ‘haves’ and I hope that civil society continues to fight against this move of institunalization of corruption in India. Government and politicians have vested interest in ensuring this happens as they can then get away from the rigors of public scrutiny. The masses can no longer not care of politics as they have the most to lose in this scenario of neo-capitalism brewing uderneath the socialist facade of Indian politics. I am also curious to know how the direct cash transfers would allieviate poverty scenario. Blaming poor for lack of development is an easy escape route in politics for a consumer-based economies. But I like to believe that our country was founded on deeper philosophies of sharing the world with fellow humans and existing in an ecosystem. However, the shifting culture of consumerism and materialistic aspirations can easily put a veil on the eyes of the growing middle class who are primed to embrace this model of neo-capitalism. India has to revisit its philosphical past and understand the role it has played in educating the world about the meaning of co-existence in an ecosystem. It is important spread words of Swamiji about what it means to be an Indian and our philosophy of life.

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