Indian economy’s journey of Expressway to PMGSY road [2]
This is the second part of series : Indian economy’s journey of Expressway to PMGSY road .
In first one I describe how the political stability is necessary for economic growth. and Here in second part I focused on how crony capitalism affect economy.
The term ‘crony capitalism’ describes the close relationship between the state and big business in contemporary world. Crony capitalists are ‘private-sector businessmen who benefits enormously from close relations’ with leading officials and politicians. They obtain not only protection from foreign competition, but also concessions, licences, monopoly rights, and government subsidies
CapitalismVs. Crony capitalism
In a book : India grow at night when govverment sleep , Gurucharan das said : 1991 is the reason for the private success AND public sector failure.
but actually situation is : the private success ON THE PRICE of Public sector failure and all due to the nexus between politicians and businessman . it’s call crony capitalisam
As example ...Jet airways grow and air india pay the price for it , same in case of BSNL-Airtel , Relince –OVL etc .
“Politics as business and business through politics is becoming the norm. This assault on democracy needs to be checked” ~ Prakash karat (CPM)
it’s true that 1991 economic liberalization proved good for indian society but it’s equally true that it’s also a birth place of Crowny capitalisam in india.
It’s true that : young Indian seat in MaCdonald and talk with parants on mobile seating 1000s of miles far from his – all thanks to 1991 reforms
But on the other side this young man has to work hard for paying the price for the privatisation of Delhi and Mumbai airports , high price for Private gas and electricity.
Following are the some stats & Info which proved the presence of crowny capitalisam in india :-
* 5% Indian own 95% asset in India.In first one I describe how the political stability is necessary for economic growth. and Here in second part I focused on how crony capitalism affect economy.
The term ‘crony capitalism’ describes the close relationship between the state and big business in contemporary world. Crony capitalists are ‘private-sector businessmen who benefits enormously from close relations’ with leading officials and politicians. They obtain not only protection from foreign competition, but also concessions, licences, monopoly rights, and government subsidies
CapitalismVs. Crony capitalism
In a book : India grow at night when govverment sleep , Gurucharan das said : 1991 is the reason for the private success AND public sector failure.
but actually situation is : the private success ON THE PRICE of Public sector failure and all due to the nexus between politicians and businessman . it’s call crony capitalisam
As example ...Jet airways grow and air india pay the price for it , same in case of BSNL-Airtel , Relince –OVL etc .
“Politics as business and business through politics is becoming the norm. This assault on democracy needs to be checked” ~ Prakash karat (CPM)
it’s true that 1991 economic liberalization proved good for indian society but it’s equally true that it’s also a birth place of Crowny capitalisam in india.
It’s true that : young Indian seat in MaCdonald and talk with parants on mobile seating 1000s of miles far from his – all thanks to 1991 reforms
But on the other side this young man has to work hard for paying the price for the privatisation of Delhi and Mumbai airports , high price for Private gas and electricity.
Following are the some stats & Info which proved the presence of crowny capitalisam in india :-
* 9 or 10 Indian in forbes top 200 billioner list but not a single company in fortune 50best company
* Not a single Indian education institution get place in Top 200
*Radia Tapes
Interesting analysis :-
India's billionaire wealth much above country's fiscal deficit :-
An
analysis of Forbes rankings of Indian billionaires shows that just 10 richest
from the country together command a total wealth of over $100 billion - a
figure higher than the estimated fiscal deficit of about $95 billion for the
financial year ending this month.
India's
fiscal deficit for the year 2012-13 is estimated at little over Rs 5 lakh crore
or 5.2% of the country's total GDP.
crony capitalism operates most in areas that are heavily regulated
by the government, or where rent-seeking is the norm. Power
, oil , Airways , Gas, real estate etc
These are the basic operating principles of
crony capitalism:-
#1: Allot projects – hand out mines, airports, spectrum or oil blocks – on the basis of the highest bids (or rigged bids). So everything looks hunky dory.
#2: Once the deal is signed, since it is obvious that no one can make money from it, start tweaking the policy so that both the politician and the businessmen benefit. Thus, after a coal block is allocated for the lowest power tariff bid, the allottee will be allowed to sell the coal to another plant. Thus, a captive mine becomes a merchant mine.
Similarly, after allowing GMR and GVK to bid heftily for the Delhi and Mumbai airports (46 percent revenue share in Delhi and 38 percent in Mumbai), the government started modifying rules to allow the winning bidders to make money. Now, airport tariffs are soaring dramatically, making the whole purpose of privatisation – improved operations at affordable costs – irrelevant.
It is quite clear who benefits from all this confusion: politicians and crony capitalists. The former make private gains by fiddling with policies to favour private parties, and the latter obtain a licence to make monopoly profits.
Some examples :-
>> Bharti and Jet Airways have grown mainly through regulated sectors—namely telecom and aviation respectively—where private sector entry was permitted after liberalization. Today Bharati is on the 8th rank of richest indian though his is not in top 25 in 1991
It’s the common tax payer who pay the price for the rise of Airtel and Jet airways .
>> GMR’s Mumbai & delhi airport project on PPP – CAG report said that government policy help compny to make 3400 crore extra profit.
>> Relince and oil ministry – it’s well discussed all over country , Kejriwal alleged that in 2006 then petroleum minister Mani Shankar Iyer was removed and Murli Deora brought in to increase Reliance Industries' capital expenditure from $2.39 billion to $8.8 billion, and to hike gas price from $2.34 per unit to $4.25 per unit.
>> When warthon cancelled the speech of Narendra modi in a just few minutes Adani cancle his sponcership to warthon .what is show ? A perfect example of crowny capitalisam
>> In the Niira Radia tapes, Ranjan Bhattacharya is heard telling Niira that Mukesh Ambani told him 'Congress to ab apni dukaan hai.
>> GMR – maldivs :- Crowny capitalism is not only effect the economy it’s important to national security also, MAldivs is important for indain geopolitics but when Maldivs new elected government cancelled the GMR airport project.
Bilateral relations between the two countries hit an all time low after the GMR row. Indian government froze its US$25 million aid to the island nation. Construction of a national police academy in Maldives has also been put on the back burner besides other infrastructural commitments that India had made to Maldives earlier. The ties between the two countries strained after the cancellation of the GMR airport contract, the largest single Indian investment in the island nation
>> We have an oil pricing policy, where the idea is to subsidise diesel, kerosene and cooking gas. But the net effect of this policy is to ensure that the country’s biggest refiners – Reliance and Essar, among them – will export all their stuff while the public sector oil companies bleed to death or live on delayed doles from the exchequer.
>> there are many more cases of crony capitalism : Reddy brother - yedurappa and shushma swaraj , Jindal - coal block , Ratan tata in radia tapes etc
Under capitalism, man exploits man. Under communism, it's just the opposite.
~ John Kenneth Galbraith
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