Brown University professor Ashutosh Varshney has argued thatIndia’s current climate of high growth and rampant graft mirrors America’s“Gilded Age”, when so-called Robber Barons built untold fortunes throughsweetheart deals related to the construction of the transcontinental railroadand other government projects. But there are some salient differences, too,Varshney writes in a national newspaper.
As GlobalPost reported in 2011, just as during America’sGilded Age, when bankers and industrialists like Andrew Carnegie, John D.Rockefeller and John Pierpont Morgan amassed their enormous fortunes, India’scelebrated entrepreneurs have capitalized on the country’s rapid economicgrowth to rocket up the charts of the world’s rich list over the past decade.
But as Forbes feted the rise of the self-made Indianbillionaire and free market champions credited the decision to liberate theeconomy from government quotas for manufacturing in 1991, some vital featuresof the enormous increase in India's wealth were overlooked.
Taking into account family associations, the BusinessWorldmagazine’s list of 2011’s 10 richest Indians looks a great deal like the listone might have drawn up in the 1980s ” featuring Tata, Birla and Ambani ” onlythe sums are vastly larger. Despite claims that Indian business flourishes inspite of the state, virtually every name on the roster has reaped dramaticgains through accessing or taking over government-owned resources.
Meanwhile, ever greater wealth has increased their influencein politics and control over regulatory policy ” raising concerns that theworld’s largest democracy is quietly becoming the world’s largest oligarchy.
But not everything is the same in India as it was inAmerica’s Gilded Age, Varshney points out.
Point one: India already has a railroad. What it lacks isfactories, and what's needed to build them is land. So that’s where thepolitically connected are making their dosh.
“The US did not have a great scarcity of land when theGilded Age was in full bloom,” writes Varshney. “Today, India has four times asmany people as the US, but only a third as much land. Land in India, in otherwords, is very scarce. Therefore, India’s politicians and businessmen end upbuying land wherever they can, and then get the government to convert its usefrom agricultural to commercial. Such transformation of land-use raises thevalue of land by 10 to 20 times.”
Point two: India’s highly regulated economy -- even with thereforms initiated in 1991-- is what creates the largest opportunities forgraft.
“If an economy is growing at an average of 8 percent perannum, some sectors are likely to grow at 15-18 percent. And if governmentregulations and permissions are required in such sectors, a government-businessnexus is very likely to emerge. Rapid growth makes overnight millionaires, evenovernight billionaires, possible.”
