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Poverty. Riches. The world's largest democracy. An ancient caste system. Bollywood. India is a land of contrasts, a booming new power that remains baffling to outsiders and insiders alike. The Shiva Rules is a year-long GlobalPost series that decodes the many mysteries of India's uneven rise in the 21st century.


The Shiva Rules: India's new robber barons

A new Gilded Age threatens to make India the world's largest oligarchy.

The so-called 2G spectrum scam captivates India today. But the CBI allegations that billionaire industrialists used shell companies to violate regulations and engineered payoffs to former telecom minister Andimuthu Raja are only the tip of the iceberg. And while one might argue that the people have benefited from those allegedly corrupt deals with a rapidly growing mobile market and low airtime charges, that kind of justification is much more difficult when it comes to other government policies like the allocation of Special Economic Zones and mining rights.

Since 2005, India's SEZ policy has allowed corporate developers to acquire hundreds of thousands of acres of land, running roughshod over the protests of small landowners with the aid of the state. Supposedly to encourage employment-generating industries, India granted developers and zone-based businesses exemptions from import and export duties, excise and sales taxes, and up to 15 years of tax holidays on profits.

Yet most of the SEZs mushroomed in desirable areas where no incentives were needed, and many turned into residential real estate plays or IT sector office complexes. Moreover, few of the 400,000-odd jobs resulting from the scheme are of the type that could absorb the farmers that the zones displaced, and their net effect actually appears to have exacerbated, rather than reduced, inequality, argues Loraine Kennedy, deputy director of the Centre for South Asian Studies (CEIAS) in Paris.

Similarly, in the mining sector, various state governments have required forest dwellers and indigenous tribal groups to turn over mineral resources to industrialists like Vedanta Resources' Anil Agarwal. And while the industry displaced some 2.6 million people between 1959 and 1991 — most of them from indigenous tribes — the pace of mining clearances has accelerated dramatically in recent years according to a recent Times of India report that synthesized government data. Between 1998 and 2005, 216 mining projects a year were granted clearance to extract minerals from India's forests, compared with only 19 per year from 1980 to 1997, the paper found.

The resulting concentration of wealth is stunning. Going by the Forbes list, the combined wealth of the 10 richest Indians, at around $150 billion, accounted for 12 percent of the country's gross domestic product in 2010 — the annual income of some 150 million average people.

But it's the influence and sheer power of the new robber barons and the changing character of the Indian political system that's most disturbing. According to an analysis of mandatory filings conducted by India's Association for Democratic Reforms (ADR), the number of Indians in the parliament with more than 10 million rupees in assets — known here as crorepatis — doubled from 2004 to 2009.

While it's true that America's Congress is also stacked with millionaires, the amount of wealth amassed by India's leaders over the past five years alone is remarkable: The assets of the average MP increased from around $400,000 in 2004 to around $1.2 million in 2009. Meanwhile, the composition of the committees that steer government policy has also changed.

"Money has been playing such a huge role [that] it's obvious," said ADR's national coordinator, Anil Bairwal. "If you look at the committee on finance, mostly industrialists are sitting on it. If you look at policy making, in the Lok Sabha [lower house] or Rajya Sabha [upper house] most people represent industry one way or the other."

Conflicts of interest go unmonitored or ignored. MPs in the lower house do not have to declare their interests in corporations, and the declarations of MPs in the upper house have not been made public — though a Right to Information request from ADR is pending. A similar RTI request revealed that no objections to the inclusion of an MP on any parliamentary committee on the grounds that he or she had a personal or financial interest in its affairs over the past five years, according to PRS Legislative Research, another civil society group.

And there were only two instances during the 2004-2009 session when upper house MPs voluntarily declared their personal stakes in the proceedings before speaking before the parliament, while no such declaration was made by lower house representatives.

Perhaps they didn't bother, thinking that the conflict of interest was glaringly obvious — with flamboyant Kingfisher Airlines promoter Vijay Mallya sitting on the civil aviation committee and enjoying day-to-day interactions with the minister.

But consider some of the cases illustrated by muckraking journalist Shafi Rahman in India Today magazine. During the 2004-2009 session, for instance, MP Nageswara Rao asked for details about the government's plans to build eight-lane expressways without mentioning that he also happened to be the non-executive chairman of the Madhucon Group — a company involved in a dozen-odd projects with the National Highways Authority of India.

Meanwhile, although the composition of parliamentary standing committees often changes during a government's five-year term, Rahman pointed out at the time that the standing committees on finance, industry, public accounts and health included tycoons with massive holdings in IT, media and cement, hotels and shipping and medical colleges — though on the parliament's website they ticked industrialist along with a laundry list of other professions, calling themselves agriculturalists, educationists and social workers. Since then, little has changed but the names of the players.

"They are writing policies more or less," said Bidwai. "This is something that perhaps not even Rockefeller or Morgan was able to do as successfully."