All governments are crony capitalists

Source: The post is based on the article “All governments are crony capitalists” published in the Business Standard on 9th February 2023.

Syllabus: GS 3 – changes in industrial policy and their effects on industrial growth.

Relevance: About business-political nexus.

News: Political connections for business purposes often happen due to complex rules and regulations and the evasive nature of rules in India. The recent Hindenburg report on the Adani group again created a debate on the business-political nexus.

Why there is a debate on the business-political nexus at present?

This is because the a) Adani group has a dominant presence in areas in which government policy plays a major role — ports, airports, electricity, green energy — and the principal competition mostly comes from the public sector, b) CAG report also raised questions about “undue benefits” that the Gujarat government gave to Adani Ports by waiving waterfront and other charges, c) Involvement of government-owned Public Sector Banks participation and d) Both the NITI Aayog and the finance ministry raised questions citing financial risk and performance issues in the Adani group’s airport projects.

What are a few examples highlighting the business-political nexus?

The telecom sector spectrum allocation has highlighted the business-political nexus. The Supreme Court’s judgement cancelled all those allocated licences.

The sand mafias, who are destroying the environment, would never have flourished without local political backing.

The construction business, which has long been India’s largest and fastest growing employer, is a good example of cronyism.

To prevent the business-political nexus some degree of moderation is required to ensure the government’s incorruptibility.