Geography Reference
In-Depth Information
partners so that the companies (especially American, because of US laws) can deny they
paid anything. Such bribery and extortion is not confined to the public sector: executives in
private sector corporations take bribes for giving business to suppliers and contractors.'
Since I wrote that, the scale and extent of corruption has escalated dramatically. Econom-
ists often argue that it should decline a few years after a country liberalizes its economy and
removes restrictive regulations that had previously created openings for graft. That has not
happened in India, as it theoretically should have done from the mid-1990s, partly because
the government still wields extensive basic powers that give politicians and bureaucrats in
the central and state governments the freedom to interpret laws and regulations as they wish
and to generate massive riches for themselves and their cronies.
Large-scale illicit wealth now comes largely from manipulating the allocation and reg-
ulation of licences for natural resources such as the development of land, mining rights,
oil exploration, mobile telecommunications, airlines and aircraft landing and maintenance
slots at airports, and permissions to import new aircraft. Illegal mining is widespread across
the country, ranging from sand in river beds to marble, coal and other minerals, often car-
ried out in defiance of Supreme Court orders and closely protected by well-rewarded state-
level politicians. There are associated environmental and other approvals that govern when
and where such resources can be used, plus approvals for construction and completion of
buildings and other items. Then there are large-scale contracts for building and operating
highways, ports, and airports that are fixed. As Raghuram Rajan said in 2010, 'the pre-
dominant sources of mega wealth in India today [are] the guys who have access to natural
resources or to land or to particular infrastructure permits or licences. In other words, prox-
imity to the government seems to be a big source of wealth.'
Most of India's fastest-growing companies, aside from those in information technology,
operate in these sorts of areas - the Ambani brothers' two Reliance businesses (oil and
gas exploration, telecommunications and infrastructure), Naresh Goyal's Jet Airways, the
Adani group of Gujarat (coal imports and trading, ports and energy), K.P. Singh's DLF
(Delhi land and real estate), and the GMR, GVK and Lanco infrastructure companies from
Hyderabad and Bengaluru. The families and their executives in charge of such companies
are closely connected to central and state-level politicians and bureaucrats. Politicians also
invest in companies that they are helping. Often (without pointing specifically at any of
these names), a company's unusually rapid expansion raises suspicions that financial in-
vestment is coming from politicians' bribe money, maybe through proxy names. The funds
are often kept abroad and are funnelled back through private equity and other investment
companies located in the African island nation of Mauritius, India's officially recognized
tax haven, or elsewhere.
Talking about links between companies and bureaucrats, a source told me that 'they buy
people's souls, offering senior officers, with five years' career to go, double their salary'.
