An Onion Republic

Indias success story as an emerging economy is like an onion. When you peel away the layers you taste the bitter core: gross inequality, crony capitalism and crippling poverty. Ratan Tata, an industrialist, let the cat out of the bag when he famously remarked that India was on the path of becoming a banana republic. He ought to know as he was identified as one of the major beneficiaries of the 2G spectrum allotment scam which cost the public exchequer a whopping sum of Rupees 1,70,000 crores(1.7 trillion rupees). In an interview with Shekhar Gupta on Walk the Talk on NDTV 247 Ratan Tata bitterly lamented that the freedom of speech was a luxury India could ill afford. Bad publicity about India especially exposure of corporate corruption- was adverse for the investment climate in India. Joining the symphonic orchestra impliedly justifying a clampdown on exposures of corporate corruption, Deepak Parekh of HDFC warned that stories of negativity has taken the wind of Indias growth. He said: We had really taken off and we were the darling of the Western world, of the multinationals, everyone wants to invest in India and suddenly theres a snap and its amazing it has really taken the wind off our ambitions and I am very disappointed. Saddened more than disappointed to see whats happened.[i] The convoluted reasoning of corporate elites appears to be that corporate corruption by itself does not undermine the investment environment but that exposure of corruption does is quite strange. Moreover, the Radia 2G tapes were disquieting for the corporate honchos. If Ratan Tata and Anil Ambani- both prominent industrialists- were involved in the scam- which corporate skeleton would now tumble from the cupboard? The pejorative term banana republic refers to the form of government whose sole purpose is commercial profit by collusion between the State and favored monopolies, whereby the profits derived from private exploitation of public lands is private property, and the debts incurred are public responsibility. A characteristic feature of such an economy is uneven development of metropolitan cities and rural villages. The standard operating procedure of banana republic is that people holding high offices in government exploit their positions for personal gain through bribery and fraud and foist the cost of corruption through taxes on the public. In such a republic the elected representatives are largely up for sale for corporate interests. The elected representatives, having abdicated their constitutional obligation, have only a ceremonial rubber stamp role to perform.[ii] While India is a banana republic, certain events like spiraling prices of onions which shot up from Rupees 15-20 per Kg to rupees 80 per kg makes one wonder whether it would be more appropriate to describe India as an onion republic. The soaring onion price which is staple food in India has hit the poorer families. While the supply lag has been blamed for the price rise by official sources of the government it may not be the reason. The supply lag theory came under fire when it was pointed out that in Delhi the supply of onions in December 2010 was 2.57 lakh quintals compared to 3.8 lakh quintals in 2009 and 1.5 lakh quintals in 2008. It points to large scale hoarding by traders and middlemen who artificially rigged up the prices. In one day (21-12-2010) alone wholesale traders in Delhi made a whopping 135% profit margin by buying onions at 34 rupees per kilo and selling at 80 rupees per kilo. The price gauging was enormous as in Bangalore alone the consumers were fleeced to the tune of 10.5 crore rupees

every day, in Delhi around 81 lakhs per day, Kolkata rupees 1.3 crore rupees per day and Chandigarh to the tune of 32 lakh rupees per day.[iii] In the month of December the all round food inflation rose to 12.13%. The prices of tomato and garlic also rose biting into the wallets of the middle income urban class who had less disposable income. There was also a hike in petrol and milk prices which put increasing pressure on family budgets. When contacted about the food inflation Sharad Pawar, the minister for agriculture in the UPA government, casually replied that the prices would remain high in the near future and the price may show signs of abating in the next two or three weeks. When asked about an action plan to rein in the food inflation the minister calmly said he was not aware of any plans. Some critics of Pawar allege that he spends more time in running the cash rich BCCI (cricket) than his own ministry. There has been no dearth of spin masters who paint a rosy picture of the Indian economy. Soaring GDP figures, endorsements of foreign leaders about its vibrant democracy, and its bright chances of making it to the UN Security Council are bandied about as firm indicators that India has arrived. Unfortunately, it is a false vision. In terms of social parameters the country has regressed: 80% of Indias 1.1 billion people live on less than $2 a day, meaning more than one-third of the worlds poor live here.[iv] According to P Sainath, journalist, argues that India remains at an abysmal rank in the UN Human Development Index. India is positioned at 132 place in the 2007-08 UN HDI index. India has the highest number of malnourished people, at 230 million, and is 94th of 119 in the world hunger index, and the number of malnourished children, 43% of Indias children under 5 is underweight, the highest in the world as of 2008. Another study shows that there are more poor people in eight Indian states (421 million in Bihar, Chhattisgarh, Jharkand, Madhya Pradesh, Orissa, Rajastan, Uttar Pradesh, and West Bengal) than in the 26 poorest African countries combined (410 million). [v] The overall picture is not a pleasant one: Indias success story as an emerging economy is like an onion. When you peel away the layers you taste the bitter core: gross inequality, crony capitalism and crippling poverty. Post liberalization the corruption has increased in the UPA government of Dr Manmohan Singh. In the nine years from 1980 to 1989, there were 16 scams but in the present six year UPA government the corruption has grown three times. The 2g telecom scam, the CWG scam, and the Adarsh Housing society scam point out that corruption has become more vicious after liberalization as motley elements became key players in the new globalized economy. These motley elements are often upstarts, international racketeers, fixers, middlemen with international links and interests in smuggling and arms trade. With the roll back of the state on controls serving public good, the plunder of the national economy started in real earnest with the help of bureaucrats who had close links with IMF-World bank. [vi]The false assumption of the free market mantra was that the sum total of human greed contributes to public good and that private profit equals public purpose. With the alignment of global capital which served global and not national interests, many avenues for corruption opened up and India truly morphed from the staid Nehruvian model to an onion republic. The nemesis of the onion is a powerful one as the surging prices of the vegetable belonging to the allium family brought down governments of the BJP in Delhi and Rajasthan in the 1998 elections. In 1980, the Janata party suffered electoral defeat on the issue of high onion prices. And it is the very same nemesis of the onion that casts a long shadow on the present UPA government and may signal its electoral defeat in the years to come. C.R.Sridhar.

[i] India story at risk PM must act- expressindia-21-12-2010 [ii] Banana republic- Wikipedia. [iii] Great Onion Robbery- TOI-23-12-2010. [iv] http://www.livemint.com/articles/2007/10/16235421/80-of-Indians-live-on-less-th.html [v] http://timesofindia.indiatimes.com/india/8-Indian-states-have-more-poor-than-26-poorestAfrican-nations/article [vi] The market that Failed-C.P. Chandrasekhar/ Jayati Ghosh-page 37. C R Sridhar