The Spread of Crony Capitalism

Interesting piece in today’s FT speculating on links between high growth in the Russian and Indian markets of late, zeroing in on cronyism, India’s January telecoms corruption scandal over 2G licenses, and broader concern over the rise of corruption in the country.   

Even as the country becomes one of the great economic growth stories of the 21st century, significant members of the Indian elite fear it may be following Russia in developing a kind of crony capitalism dominated by powerful insiders. A slew of recent corruption scandals – notably in telecommunications – has nourished anxieties that the combination of fantastic wealth creation and weak governance threatens to undermine India’s long-term success.

[…] Tony Jesudasan, an aide to Anil Ambani, one of India’s most powerful industrialists, says “judicial activists” in India are gripped with the notion that Asia’s third-largest economy is following Russia’s example in creating a generation of oligarchs. […] India’s corporate landscape is dominated by a handful of family-led companies. Some of the biggest are household names, such as Tata and the Reliance companies led by brothers Mukesh and Anil Ambani. Other clans include the Birlas, Godrejs, Bajajs and Mahindras. Among newcomers are Anil Agarwal with Vedanta; Bharti Airtel, led by Sunil Bharti Mittal; and Hero Honda’s Munjals. Economic growth is making these families richer.
Read the full article here.