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Review: ‘The Billionaire Raj’ Offers Reasons for Optimism in India’s Gilded Age

Category: Business,Finance

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For close to a century leading up to its independence in 1947, India operated under a system of British governance known as the Raj, taken from a Sanskrit word meaning “kingdom” or “rule.” Then, more or less until the introduction of economic liberalization in 1991, the country stagnated under a planned economy whose overwhelming regulatory demands were described as the License Raj.

The title of the new book by James Crabtree, “The Billionaire Raj: A Journey Through India’s New Gilded Age,” suggests that India has now come under the grip of a new but no less troublesome regime. In a nation no longer at the mercy of imperial administrators and maharajahs or petty bureaucrats, “a new system has grown up,” and the emerging superrich are firmly in charge.

Mr. Crabtree, a former Mumbai bureau chief for The Financial Times, makes a compelling case for focusing on billionaires. In the mid-1990s, only two Indians made Forbes’s annual list of the world’s wealthiest. Twenty years later, there are over 100, behind only the United States, China and Russia. A World Bank economist recently found that the growth in wealth had been surpassed only by how quickly income inequality had increased. India now ranks above the United States, Brazil and even Russia. Only South Africa is less egalitarian.

Unfortunately, Mr. Crabtree does not fully profile the diverse community of Indian billionaires, who collectively own close to half a trillion dollars in assets. In fact, he devotes only the shortest of the book’s three sections to descriptions of individual billionaires. The more detailed and most entertaining of these are of the anachronistic Trump-like moguls who crave the spotlight, or the fallen moguls looking to redeem themselves and to settle scores.

Mr. Crabtree seems to have had limited direct access to more mainstream billionaires like India’s riches man, the Reliance Industries chairman Mukesh Ambani, whose story frames the overall narrative of the book. A firsthand description of the 2015 Reliance public shareholder meeting is not particularly revealing.

The failure of “The Billionaire Raj” to deliver on the promise of a comprehensive portrait of a newly minted cluster of billionaires who rule the world’s second most populous country does not mean the book is without interest. On the contrary, the book is chock-full of profoundly revealing vignettes from various corners of India’s endlessly diverse society and economy. Mr. Crabtree introduces us to local political fixers, national anticorruption crusaders and even India’s equivalent of Bill O’Reilly (complete with a demagogic catchphrase: ”The Nation Wants to Know!”). The chaotic and complex nation that emerges does not appear to be under the rule of billionaires or anyone else.

Two pervasive themes touch most of the assorted observations that fill “The Billionaire Raj”: the influence on the country of corruption and of Narendra Modi, India’s prime minister since 2014. On both of these topics, Mr. Crabtree seems deeply conflicted.

With respect to corruption, a distinction is made between the fleecing of public resources that underpinned the fortunes of many of the earliest Indian billionaires and an equally “grand but more orderly” form of corruption in which the spoils are used to fund social progress and encourage growth. The latter is treated sympathetically, although the lines between the many forms of corruption described are far from clear.

Mr. Modi has done much to reduce some of the most flagrant forms of corruption, but at the price of a disturbing increase in nationalism and a Trumpian authoritarian streak. Although Mr. Crabtree credits Mr. Modi with having “reset the balance of power between politics and business,” he concedes that “kickbacks still dominate swaths of public life.” Despite these and a variety of other concerns about the current regime, he concludes that Mr. Modi’s victory “rebuffed the notion that India itself had grown ungovernable, as if its turbulent democracy had become such a drag on its economy that it could not follow China’s rapid process of development.”

Although there may be cause for such optimism, I could not find it in the pages of “The Billionaire Raj.” Only 30 years ago, the economies of China and India were roughly the same size. China’s economy is now almost five times as large, and at India’s current growth rate, it would take decades for India to reach China’s current size.

As Mr. Crabtree’s narrative makes plain, the primary source of financial corruption — the immovable rot at the base of the Indian economy — is “the exorbitant and rapidly rising election costs for political parties, which has pushed them to raise huge quantities of illicit funds.” A candidate in a close parliamentary race must raise at least $1 million, a monumental sum that is largely unachievable without some illicit quid pro quo. It is hard not to conclude that India’s turbulent democracy poses a serious threat to its future development. If you want to feel better about our own problems in the face of the Supreme Court’s decision in Citizens United, read “The Billionaire Raj.”

Mr. Crabtree believes “there is no reason” that India’s current Gilded Age cannot “blossom into a Progressive Era of its own, in which the perils of inequality and crony capitalism are left decisively behind.” The nuanced portrait of contemporary India that he has provided may not support this level of confidence, but I can’t help but agree with Mr. Crabtree that “the world’s hopes for a more democratic, liberal future” very much depend on India’s “getting this transition right.”

Jonathan A. Knee is professor of professional practice at Columbia Business School and a senior adviser at Evercore Partners. His latest book is “Class Clowns: How the Smartest Investors Lost Billions in Education.”


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