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The Billionaire Raj

The Billionaire Raj

Book Review

This review is featured in Australian Foreign Affairs 4: Defending Australia. To read the full issue subscribe or buy the issue.

The Billionaire Raj: A Journey Through India’s New Gilded Age
James Crabtree
Oneworld Publications

Indians have long learned to live with inequity. Our society is stratified, our regions disparate, our religions hierarchical. But for visitors to a great Indian metropolis such as Mumbai, the degree of visible inequality comes as a shock.

The city’s sleek new airport is surrounded by slums; destitute migrants from the interior knock plaintively on the windows of sleek BMWs; the towers of the rich dominate the skyline, but at street level you can see the hardscrabble existence of the other 99 per cent. Mumbai is where much of James Crabtree’s The Billionaire Raj is set, and his thesis is that this uneasy juxtaposition is not just skin-deep, but emerges from the bone and sinew of India’s lopsided growth model.

It has long been argued that as countries grow rich, the pattern of income inequality in their societies comes to resemble an “inverted U”. At first, the benefits of growth go to those who already have resources, to innovators and to other first movers. Inequality skyrockets. But as time passes, growth becomes more broad-based, and the country becomes comfortably middle-class. For many economists on the right, therefore, inequality doesn’t matter – it’s a transitional stage, at worst. Yet it hasn’t traditionally been a problem for economists on the left in India, either. They have worried more about the level of absolute poverty, and the stunning decrease in destitution during the high-growth decades since economic liberalisation in 1991 – the proportion of Indians living on US$1.90 a day dropped from 46 per cent in 1993 to 21 per cent in 2011 – has kept progressives from rocking the boat.

But an increasing number of voices are challenging that comfortable consensus. Crabtree quotes Thomas Piketty, capital’s arch-tormentor, as arguing that India was more unequal than at any point since 1921, and that such inequality without greater redistribution might make capitalism itself “unsustainable”. And the rest of Crabtree’s book follows up that argument as he piles on one damning insight after another, superbly embellished with quotes, data and the occasional revealing anecdote. Few writers have met as many of India’s billionaires, and it is somewhat surprising that many of the tycoons, whom he compares to nineteenth-century America’s “robber barons”, come across less as out-and-out villains than as relatively conservative men. There’s the occasional flamboyant exception, such as the fugitive liquor baron and ex-MP Vijay Mallya – but even Mallya seems to want to argue that his Branson-esque lifestyle was merely a sensible business decision that just happened to backfire. Mallya escaped to London a few steps ahead of the law, and his flight and attempted extradition is now a major political issue in India. The opposition argues that the government, which Mallya supported in parliament, didn’t do enough to prevent his escape; the government snaps back that its predecessors lent him the money he is accused of running off with.

Crabtree’s analysis reflects the conventional urban middle-class wisdom in India about incidents such as this: that our political system has been bent to grant the rich impunity, even as they walk off with public property – whether state bank loans, coalmines or telecom spectrum. Yet, in the midst of all this clamour about India’s “bollygarchs”, I cannot help but remember one simple fact: the years in which such men grew rich were also those in which India grew fastest, and pushed more of its citizens out of poverty. Morality is never free, not if it is real. Yet it is India’s poor who will pay for the simplistic moral judgement that underlies middle-class contempt for the rich.

If India is living through its equivalent of the US gilded age, are we also on the brink of a progressive moment, such as Theodore Roosevelt unleashed with his trust-busters and so on? Crabtree hopes so. And certainly, anti-corruption rhetoric is a vote winner. When Narendra Modi was elected prime minister in 2014, many expected him to govern as a pro-business reformer, but he has – like many of his strongmen peers worldwide – adopted a more populist stance. Many of his government’s actions, such as the extraordinary 2016 decision to withdraw almost all of India’s currency overnight, are being explained as attempts to clean up India’s economy or to go after “the corrupt”. Modi could be capital’s worst nightmare: a leader unconvinced of the virtues of structural reform and unsympathetic to markets, who will not listen to business, and to whom there seems to be no real political alternative.

Yet I am unconvinced that India is standing at the dawn of its progressive era. Australian readers will be familiar, perhaps, with the name of at least one Indian tycoon close to Modi: Gautam Adani. When in 2002 Indian industry launched an informal boycott of Modi, who was then chief minister of the western state of Gujarat, after he was accused of standing by – at the very least – as mobs rampaged through his streets killing hundreds of Muslims, a much younger Adani led the chief minister’s backers in business. And since Modi came to power, Adani’s businesses – whether coal, power or ports – have thrived. A single photograph, taken in Brisbane in 2014, summarised for many of us how little had changed: it showed Modi and Adani sitting at a breakfast table with the then premier of Queensland, Campbell Newman, and the head of India’s largest state-run bank, the $500-billion State Bank of India. On that trip, Adani announced that his controversial coalmine in the Galilee Basin would be financed by a $1-billion loan from the State Bank. There was enough of an outcry that the deal eventually fell through, but the damning photo of the banker, the politicos and the tycoon was a sharp reminder of how India’s oligarchs continue to be embedded in its politics.

Those who agree with Crabtree or Piketty will argue that this is dangerous enough to derail India’s faith in democracy. But I think this argument is fatally flawed. Democracy is under threat, whether in India or elsewhere, not from the oligarchs but from those who promise to control them. You don’t even need your oligarchs to hold enormous political power to create the appearance of a grave threat that needs to be corralled – if your propaganda machinery is good enough. We in India are threatened with the worst of both worlds. The rich will retain control of our markets and our resources, but they will be those who have come to an accommodation with the populists in power. Meanwhile, a supposed anti-corruption campaign will keep growth from hitting the heights that it has in the past, thereby keeping millions in poverty. This combination is not unique to India, either; more and more emerging markets are falling victim to the same disease. If this is a progressive era, then India, I fear, is destined to go backwards.

Mihir Sharma

This is a book review from Australian Foreign Affairs 4: Defending Australia. To read the full issue subscribe or buy the issue.