Fault Lines - Implosion: India's Tryst with Reality - page 24

The fixing has been lauded by at least two leading writers - Arun Shourie, originally a
campaigning newspaper editor and then an MP and BJP government minister, and Swam-
inathan Aiyar, a leading political commentator and journalist. At a meeting in 2003 to
commemorate the first anniversary of Dhirubhai's death, Shourie paraphrased Friedrich
Hayek, a Nobel prize-winning economist. Previously a critic of Reliance's business ethics,
Shourie surprisingly praised the Ambanis for undermining government policy. 'By exceed-
ing the limits in which restrictions sought to impound them', companies such as Reliance
had 'helped create the case for scrapping regulations', he said. 11 (There are many other ex-
amples of companies 'exceeding limits' in this topic, but few of them can be seen in the
same pioneering light as Reliance.)
Aiyar perceptively tied what the Ambanis did directly with jugaad, and applauded them
because they broke through restrictions that were impeding their business growth. In an art-
icle headed ' Jugaad Is Our Most Precious Resource', 12 Aiyar wrote in 2010 that 'Dhirubhai
Ambani was the master of jugaad. The licence-permit raj made it impossible for him to
progress legally, so he exploited the corruption and cynicism of the system. He exported
junk to get profitable import entitlements. He created industrial capacities vastly in excess
of licensed capacity. He imported huge textile machines as “spare parts”. He engineered
highly profitable changes in rules for polyester imports and telecom licences. The jugaad
he used to overcome hurdles was not distinguishable from crony capitalism.' Yet, Aiyar
added, when the licence-permit raj gave way to a more open and deregulated economy,
Dhirubhai used the same jugaad 'to scale dizzying heights of productivity' and become
world class. 'He showed that manipulation and world-class productivity are two sides of
the same coin called jugaad. If governments create business constraints through controls
and high taxes, jugaad will be used to overcome those hurdles. But if deregulation abol-
ishes these hurdles, the main business constraints become lack of quality and affordability,
so jugaad shifts to improving productivity, quality and affordability. That ultimately makes
you world class.'
Using jugaad to become 'world class', of course, also undermines basic ethics as well as
institutions, so once companies had less need to bypass controls after 1991, many moved
on to bribing politicians and officials for favourable allocation of natural resources, some-
times investing jointly with them. As Ahuja wrote, 'the practice of jugaad can lead to a
vicious cycle, in which institutions are steadily undermined.'
In an era of growing corruption and collusion between politicians and businessmen, this
reduction in the role of institutional systems weakens accountability, notably of parliament
and the government. This was particularly evident in 2011 and 2012 when popular anti-cor-
ruption movements led by two social rights campaigners, Anna Hazare and Arvind Kejriw-
al, challenged the authority of the government and, backed by access to right to information
legislation, began to expose the depths to which the ethics of the country had sunk.