Corruption in India

There’s absolutely no way getting around this issue. Corruption is a major problem in India, as it is everywhere else. In India, the issue’s been on the front page of its very watchful & critical newspapers for a very long time. In fact, some like Tehelka.com have built a reputation around exposing scams. The sheer fact is that corruption continues, and it seems not much can derail the gravy train in India.

From an international investment perspective, they all know that corruption exists. They all know that people need to be paid off or provided hospitality to. They all know the importance that the business world places in cementing its relationship with Government, so they try to replicate it – rather than take a stand as per their corporate governance rules in their own countries.

Or do they?

Evidence suggests that corruption is as much an issue in the western world as it is in places like India. In well known cases of British firms, the Government has blocked enquiries into trade deals (BAE Systems), been complicit in trying to sway deals by offering generous hospitality (FIFA World Cup bid) etc etc.

In the past when I’ve discussed India’s woes with Indian business leaders, their view is summed up in the following quote “as long as our work is done, why should we care if a margin needs to be paid”. I suspect most western business leaders would disagree with this on the face of it, but privately would concede that they’ve had to somewhere down the line compromise on their ethics.

Given that India has a free and (very) critical press, is a very (colourful) and vibrant democracy, the only hope it has of tackling this scourge, is that of inspired political leadership.

It’s fair game to be critical of Manmohan Singh, the Gandhi’s and the ruling party, as it is about LK Advani and the BJP lead NDA coalition.

What’s the point of being a man of character & integrity as Prime Minister, or having a vibrant democracy, when they keep quite on scams such as those witnessed recently – Commonwealth Games, Adarsh Society, and the massive 2G scam.

One can only conclude with such behaviour that they’re on the take. India needs inspired political leadership.

Who will that be?

Does the BJP have what it takes to steal a victory?

So, what’s the latest thinking on the Indian elections:

1. Voter turnout has been poor in Mumbai, pundits say this is down to two things: (a) generally, middle class and urban populations don’t vote and (b) abstaining due to the Mumbai terrorist attack of last year.

2. Lower caste commuity in Uttar Pradesh, Mayawati’s back-yard – where she was expected to clean up, it seems are not as enthusiastic as she is about broadbasing the Bahujan Samaj Party by providing upper caste people berths in the party. As a result, voter turnout has been low in some parts of UP.

3. Given Mayawati’s slowdown, people are talking up the possibility of the BJP picking up seats whereas this seemed improbable previously.

4. There’s been a continuous campaign to create a split in the NDA with suggestions that partners like Nitish Kumar in Bihar are going to gravitate towards the third front. In all honesty, he hasn’t made it easy for himself either by being vague in a key TV interview.

5. It seems likely that the BJP will emerge as the single largest party in the Lok Sabha. Whether this guarantees them the numbers required to form a government is opaque at the moment. It all comes down to the level of horsetrading they want to get down to.

On the eve of Indian elections… new poll research

Thought you may be interested in the Indian election survey we commissioned.

What it shows:

• So far, the electorate have been treated to a ‘policy-lite’ campaign, with no real debate on substantive issues. Caste and religion remain defining issues in this election.

• Anyone can still make it. It’s all down to the post poll alliances that are struck at the end.

• The Congress & BJP will have an equal share of seats, it’s their coalition allies that will make the essential difference.

• Previous groupings like the UPA (Congress Party + partners) & NDA (BJP + partners) have more or less been disbanded. They remain convenient terms to apply, but mean little in the real sense.

• Regional parties are flexing their muscles by choosing to join together, under banners such as the Third Front or Fourth Front, avoiding grand alliances offered by the Congress or BJP.

Detailed breakdown of projected wins under four main scenarios is here: http://indiabriefingcentre.files.wordpress.com/2009/04/090414-sc-team-cvoter-election-survey2.pdf

Musings from last week…

The Congress withdraw a senior Congress MP over his alleged involvement in the 1984 Sikh riots that occurred after Indira Gandhi was assassinated by her Sikh bodyguards. At a press conference last week, a Sikh journalist threw a shoe at the Home Minister as a sign of protest, which snow-balled into the two MPs withdrawing their candidature and bringing media attention to the Congress Party’s record on communal politics, which was a huge relief for the BJP as this shifted media attention from Varun Gandhi’s “hate speech”, that was being played out in the media in preceding weeks.

Personal attacks from the Congress leadership have intensified. Manmohan Singh (uncharacteristically) and Rahul Gandhi have publically criticised Advani, the BJP’s Prime Ministerial candidate. Excerpts from a press conference below:

“Mr Advani has strength in speech with weakness in action.” – Manmohan Singh on LK Advani

“I would not have been found weeping in the corner, when a mob of hoodlums was destroying the centuries’ old mosque.” – Manmohan Singh on LK Advani when the Babri structure was razed to the ground in 1992.

In obvious reference to the Kandahar plane hijack episode Manmohan Singh said, “The difference between the UPA government and the NDA government is that they released terrorists while we killed nine and captured one alive.”

Referring to Mr Advani’s remarks that he did not know about the release of terrorists and the flight to Kandahar carrying Jaswant Singh, Rahul Gandhi said: “If he is such a strong leader, how come then the home minister did not know something…there are two possibilities. Either he is not telling the truth or his senior leader, Prime Minister Vajpayee, did not trust him”.

Likewise, LK Advani demanded an apology from Sonia Gandhi for her statement that India was in greater danger from people inside than foreign terrorists, which he said was an implied attack on the BJP. Advani said he was shocked about her remarks that “we are in greater danger from people inside than from foreign terrorists entering India”.

He said though Gandhi did not name his party, it “substantially accuses us and the comments were clear”.

On the third front, he said: “The so-called Third and Fourth Fronts were irrelevant as they were opportunists, who had no platform on their own or a common platform. The CPI(M) was trying to cobble a Third Front only to fight its own growing irrelevance.”

Who's going to be the next Indian PM?

With India on the verge of general elections, I thought it may be useful to look into my crystal ball to find out who may become India’s next Prime Minister. In most democracies, elections come down to a couple of major political parties, but, as with everything in India, it’s not as straight forward as that (what a surprise!).

As a result of coalition politics firmly embedded in India, we not only have to keep our eyes on the national parties, but also on regional outfits that can return spectacularly low numbers of MPs to New Delhi but hold the sway of power.

So, who’re the main contenders:

SONIA GANDHI / MANMOHAN SINGH / RAHUL GANDHI
Representing the grand old party of India, the current Prime Minister – Dr Singh – has just had heart by-pass surgery – but hopes lead the next election campaign, seems unlikely to me. There are two other options for the Congress – ‘Madam Sonia’, or her son – Rahul Gandhi – who’s an unknown & untested entity, but given the Congress Party’s adulation for the Gandhi family, I wouldn’t be surprised if either name came to the fore after the election.

India likes nothing more than someone who’s made a sacrifice – think about Buddha, Ashoka, Mahatma Gandhi and other illustrious persons, to which you can add Sonia Gandhi’s name. For she, sacrificed the position of PM last time around (on the issue of her Italian origin) to install Manmohan Singh as PM and win over a new fan base and acceptability.

LK ADVANI
India knows Mr Advani very well. He’s been around for half a century or so and until the last election played an effective no2 to Mr Vajpayee, who’s since bowed out of politics. Being the numero uno, he’s finally the contender, but it seems the Obama effect has resulted in his chances being drastically reduced. A lot of people I speak to all say they want someone younger (Obama effect) to lead the BJP.

With the increasing acceptability of Narendra Modi, it seems the pressure on Mr Advani is that much greater. It’s lucky for him that he’s already been nominated as their Prime Ministerial candidate! I witnessed the tension just a few weeks ago when I attended the Vibrant Gujarat Investors Summit and on the following day, read in the newspapers the furore his success has caused within party ranks. After all, it’s not often that a politican receives the backing of India’s biggest businesses in such a visible manner. At the risk of saying something obvious, I have no doubt that Mr Modi will ascend to the national stage after the next election, however I don’t think he’ll take the post of Home Minister if the BJP win.

MAYAWATI, PRAKASH KARAT, AMAR SINGH, SHARAD PAWAR
In my view, any one of these could determine the next election, if not become the next PM. Mayawati’s increasing reach is unnerving everyone. She’s the Chief Minister for Uttar Pradesh, which returns the largest number of MPs and as she’s ruling, her chances of success are huge.

Prakash Karat’s monumental miscalculation of withdrawing its support to the Congress over the US – India Nucelar Deal has provided Amar Singh’s Samajwadi Party a huge advantage in the run-up to the polls. The Communists haven’t been able to extend their reach outside West Bengal & Kerala, but enjoy huge loyalty in these two states.

The Samajwadi Party lead by Amar Singh, as always, could upset Mayawati’s coronation. You can expect the unexpected when it comes to these two. Amar Singh, after years of hurling abuse at the Congress, decided to jump into bed with them and extend unconditional support to the Congress.

The Maratha vote, lead by Sharad Pawar, who’s NCP is a current coalition partner could also emerge as a victor. A former Congress leader, he split and formed his party focusing on his home state of Maharashtra. With charismatic operators like Praful Patel, I wouldn’t rule him out of the running. Of course, as President of the cricketing board, he’s used to taking on heavy weights in battle.

Elections in any country are interesting to watch. In India, you’re assured a fantastic contest in which a billion people make their way to the polling booths to cast their votes electronically over a six week period. India’s faith in democracy, itself, is worthy of celebration.

As for my crystal ball, it tells me that despite Congress winning the most seats, it see someone like Mayawati at the helm for a couple of years.

India this week: Advani, Sonia, Blair, and India Inc.

Quite a week in India as far as the interplay of politics and business are concerned. Let me explain:

LK ADVANI & INDIA INC

With a number of state elections taking place as we speak, and the prospect of a general election within the next six months, LK Advani, Prime Ministerial candidate, brought business leaders together, on Thursday, to advise him on the options available to take control the impact of the financial crisis in India.

It’s been reported that the good and great of Indian commerce advised him to work with the Congress to help India weather the storm, knowing fully well that with elections pending, it was a tough commitment for Mr Advani to make. The BJP have been quick to point out that comments such as those of Mr Chidambaram, equating Mr Advani to John McCain, have made it impossible for the two sides to work together in a bipartisan manner.

SONIA GANDHI – BANK NATIONALISATION IS GOOD

Reacting to the press coverage of Mr Advani meeting the ambassadors of India Inc, UPA Chairman, Sonia Gandhi’s gone out and made remarks of her own that support her mother in-law, Indira Gandhi’s decision to nationalise banks four decades ago.

Sure, India’s prudence and protectionist attitude may shield her from some of the turmoil being witnessed today, but I believe that India stands to gain from a more open economy. I’m not just talking about the burgeoning middle class, but also of the most vunerable sections of society.

TONY BLAIR

Mr Blair’s delivered a speech at the Hindustan Times leadership Summit and and excerpt from his speech struck me as being spot on. He said:

On India’s role, he said, “India has to decide its future path. One thing is for sure, India will demand its rightful place in the councils of the world…no wonder it was the G-20 that met in Washington and will meet in London, not the G-8. A UNSC without India as a permanent member is an anachronism. An IMF or a World Bank without a proper role for India, will no longer do. Across the world’s agenda, India will demand and will receive the position due to one of the world’s major powers.”  

But, he cautioned: “Beware one thing: with the power will come the responsibility. All of a sudden, you will find the expectation that, just as you will, in partnership with others, lead the world, so you will be able to solve the problems. People will knock on your door not to give opinions, but to hear answers. It is an exciting prospect but also a daunting one.”