Is corruption taking a toll on India’s growth story?
On Monday night a TV newschannel erroneously reported that diamantaire fugitive Nirav Modi, who in collusion with officials defrauded Punjab National Bank to the tune of $2 billion, was caught in Hong Kong and would soon be extradited to India. Unfortunately it was fake news. Yet it is clear the government wants to bring Nirav to justice; the taunts of “Chhota Modi” have hit home once too often. Businessmen expect that sooner or later (but not later than the November-December round of assembly elections in four states where the BJP faces stiff anti-incumbency), Nirav Modi would be brought back to India to face justice.
It is also expected that Chanda Kochhar, the managing director and CEO of ICICI bank, will similarly face action soon. The banker who was once extolled as a role model is in a mess of her own making — her bank loaned $500.5 million to Videocon, whose promoter also happened to be in partnership with her husband Deepak. The loan committee to approve such lending was headed by Chanda herself; the loan turned into a bad one. At first ICICI bank closed ranks behind its MD but governmental pressure has peeled away support from board members. Action might have happened sooner had Finance Minister Arun Jaitley not been suffering kidney failure (he was to get a renal transplant on Sunday, but for the time being is making do with dialysis). Jaitley is expected to be out of action for the next three months, and even if Prime Minister Narendra Modi were to appoint a new finance minister — always a challenge given the paucity of talent in his Cabinet — it would still take some time for the new person to get up to speed.
Modi needs action against these individuals to burnish his anti-corruption credentials. Before coming to power Modi had famously promised “na khaoonga, na khane doonga”and he had also cast himself as the nation’s chowkidar. Presently, anti-corruption is the only thing differentiating him from the rest of the political class. Herein lies the rub, however: to be an anti-corruption crusader in the eyes of the voter, it is not enough to go after a diamantaire or a banker. Middle-class Indians see such persons as gaming the system, which in their eyes is not necessarily a bad thing. For middle-class Indians, the true personification of corruption is the politician.
Who are the politicians that Modi has gone after? One is P. Chidambaram’s son Karti, who is said to have his fingers in some telecom and media pies, and against whom apparently Peter and Indrani Mukerjea, who are in jail for the murder of Indrani’s daughter Sheena Bora, have given witness. The Mukerjeas had 10 years ago launched a failed TV news channel and Karti is said to be part of the nefarious deal there. However, the arrest of Karti has not made much waves, even in the TV channels favouring the government. One reason is that P. Chidambaram is a marginal figure in Tamil Nadu politics; the cases are seen more as the personal enmity against Chidambaram of two persons, Bharatiya Janata Party MP Subramanian Swamy, and S Gurumurthy, also known as the father of demonetisation. This is one alleged corruption case, however, that has had no political pay-off for Modi.
Another political corruption case appears to have backfired. Former Bihar chief minister Lalu Prasad Yadav has been mired in a fodder scam for the past two decades. He has been convicted and thus disqualified from electoral politics. Lately he has been sent to jail for five years. Incidentally, the man who started the scam — an upper caste predecessor named Jagganath Mishra — roams free since he has aligned himself with the ruling Janata Dal (U) of Nitish Kumar. Last July, Nitish jettisoned Lalu’s Rastriya Janata Dal and formed a government with the opposition BJP. This has led to severe criticism in Bihar, and despite a spate of intercommunal violence in Bihar lately — intended to polarise the vote ahead of the 2019 parliamentary election — sympathy for Lalu grows with each passing day.
Middle-class Indians see such persons as gaming the system, which in their eyes is not necessarily a bad thing. For middle-class Indians, the true personification of corruption is the politician.
The real headache for Modi though is not Lalu but his own Railways Minister Piyush Goel, who has been caught in yet another bank scam. A company of which he was once director, Shirdi Industries, took a loan of $39.7 million from a consortium of banks led by the Union Bank of India. It then allegedly lent money to another company headed by Goel’s wife Seema. The Congress has called it “a loot of public money” and has called on Goel to resign. Widely regarded as a wunderkind of Modi’s cabinet, Goel has fallen on bad days. Newspapers have reported on how Modi has shot down two of Goel’s proposals: the electrification of railways, and the installation of new signalling to cost $12 billion.
The PM has sent Goel a message, though whether they will oblige the Congress is another matter. Modi knows it won’t be enough to bring Nirav or Kochhar to book, if he wants to keep his anti-corruption credentials intact.