The Billionaire Raj
At 1.30am on a December night almost five years ago in Mumbai’s most expensive residential area, a speeding Aston Martin rammed into another car driven by a young woman. She told police the other driver, a young man, had quickly jumped into an escorting SUV and left the scene.
Mumbai’s cops soon realised they had an awkward case. The Aston Martin was registered to the household of Mukesh Ambani, India’s richest man, with assets of $US38 billion. Ambani’s 27-storey residence, named Antilia after a mythical undersea kingdom, towered over the neighbourhood. But it was all solved. A portly 55-year-old driver came down to the police station the next day and said he’d been the culprit. The young woman amended her statement to say that now she considered it, the driver had indeed looked like the older man.
This is the opening anecdote in James Crabtree’s entertaining excursion around the new wealth of an India where accelerating economic growth has seen many business tycoons emulate the old maharajahs in conspicuous consumption.
It might be contrasted with another late-night car crash, in Beijing in 2012, when the son of a Communist Party politburo standing committee member killed himself and one of two naked Tibetan women joy-riding with him in a Ferrari. The father was later purged and given a life sentence for corruption. In China, getting included on the Hurun rich list makes tycoons nervous: the Party doesn’t like it. In India, it still brings deference.
There had been an intervening period between the old and new wealth, when the state under Jawaharlal Nehru applied the Harold Laski model of Fabian socialism to the nth degree, creating what became the “Licence Raj” and economic stagnation. That ended in 1991. Now, Crabtree says, it has been replaced by a “Billionaires Raj”.
India has some 55 billionaires. As Financial Times correspondent in Mumbai, Crabtree mixed with several. Vijay Mallya, in emulation of Richard Branson’s Virgin, took the Kingfisher brand of his family brewery to an airline and proclaimed himself the “King of Good Times”. Gautam Adani built an empire of ports and power stations in an astonishingly short time, and of course wants to open a mega coalmine in Queensland. We meet a clutch from the south, all named Reddy after their caste. They splash money around, on cricket teams, TV networks and, most lavishly of all, weddings for their kids.
Crabtree draws on Indian investigators, government auditors and brave journalists to suggest the list shows principally a talent to work the regulatory system in sectors such as telecommunications, power, ports and aviation, and then get funds from the fearful bureaucrats running the banks that Indira Gandhi nationalised in 1969. This wealth is conjured up in symbiosis with ruling politicians, who need suitcases of cash to win elections.
He did not get to talk to the reclusive Ambani, a second-generation tycoon whose late father created an oil-to-textiles cash machine and set the model of “regulatory capture”. Initially limited by a no-competition agreement with his brother in telecoms, Mukesh Ambani got into the sector stealthily, gaining a licence for a nationwide data service. A later rule change allowed him to add voice traffic. But family control – the norm for Indian firms – allows big gambles and long-term plans. In 2016, Ambani launched his Jio mobile network, offering six months’ free voice and data and virtually free 4G handsets that don’t work with other providers. He now has 200 million subscribers.
Yet Ambani still cannot get permission from the Indian Navy to land helicopters on the roof of Antilia. The car crash shows him wary of scandal. For others, time at the top is often short. Mallya is holed up, luxuriously, in London, resisting extradition over the crash of Kingfisher Airlines. Another billionaire, jeweller Nirav Modi, is there too, after defaulting on loans. Mukesh Ambani’s brother Anil is now fighting to save his part of the inheritance. Despite his closeness to Prime Minister Narendra Modi, Gautam Adani is also on the defensive, after a senior figure in Modi’s ruling party called him India’s biggest “trapeze artist” for his balancing act with non-performing loans from the state banks.
The Billionaire Raj, it emerges, was effectively over by 2014 when Modi’s Hindu nationalists replaced the indulgent Congress Party government run by the Nehru–Gandhi family. Crabtree’s book soon morphs into a more conventional political story, showing that India’s institutions and civil society eventually, if precariously, get the upper hand.
Modi himself is far from an economic liberal, Crabtree says: “The longer he stays in office, the clearer his comfort with state power becomes.” And he’s slow on deep reform of the “sclerotic” state. As put by a disillusioned stalwart of Modi’s party, Arun Shourie: “... when all is said and done, more is said than done.”
In a too-short summary, Crabtree tries to draw lessons from this spurt of entrepreneurship. He laments the lack of the East Asian model: not enough manufacturing to employ the demographic youth surge, weakness of taxation and impartial regulation, lagging basic education and welfare. But despite the majoritarian Hindu thuggery of some of Modi’s supporters that he won’t condemn, the system is stable. Compared with China, “it is much easier to imagine India retaining roughly the same political set-up fifty years from now”. And vibrant services, such as Ambani’s Jio, point Crabtree to conclude that “India must chart a hybrid economic model of its own”. He might have looked to Mumbai’s celebrated tiffin wallahs, delivering home-cooked lunches by train and bike across the city, as a precursor to ecommerce. JF
Oneworld, 320pp, $35
This article was first published in the print edition of The Saturday Paper on Sep 8, 2018 as "James Crabtree, The Billionaire Raj". Subscribe here.