Long on rhetoric, short on practice: Modi government battling corruption

The government over 10 years has shown no evidence that petty corruption has abated. On the other hand, big-ticket corruption has risen.

Mundra Port, the flagship port of the Adani group, in Mundra, Gujarat. | Photo Credit: PUNIT PARANJPE

A decade ago, in the run-up to the 2014 Lok Sabha election, Narendra Modi, then still the Chief Minister of Gujarat, famously declaimed: “Na khaoonga, na khaane doonga” (Neither will I take bribes, nor will I let others take bribes). He added that he would bring back illegal wealth stashed away in tax havens abroad by rich Indians and distribute the money among the poor—Rs.15 lakh for each poor family. Modi projected himself as a crusader against corruption in general and the corrupt Congress party in particular.

However, the illicit money never returned to the country. His extravagant claim was later dismissed by Amit Shah, then president of the BJP who went on to become Union Home Minister. Shah conceded that Modi’s slogan was a mere jumla, or an exaggerated claim, made in the heat of an election campaign.

There has never been an election campaign in India where corruption has not been highlighted as a political and an economic issue. Political leaders who succeed in presenting themselves as campaigners against corruption, arguably the most pervasive issue that confronts and concerns Indians across classes, have usually struck a sympathetic chord with voters, irrespective of whether they have eventually succeeded in reducing corruption while in power.

Modi is no exception. Today, he is rightfully being questioned for being long on rhetoric and short on actual practice in combating corruption. In fact, his attempt at containing the consequences of the disclosure of the buyers and beneficiaries of electoral bonds following the Supreme Court’s orders have merely highlighted his hypocrisy and doublespeak on corruption.

Vishwanath Pratap Singh’s highly successful campaign in the late 1980s to portray the then Prime Minister, Rajiv Gandhi, as corrupt—epitomised by his catchy slogan “Gali gali mein shor hain, Rajiv Gandhi chor hain” (The buzz around town is that Rajiv Gandhi is a thief)—influenced many voters; the Congress government that had the largest ever majority in the Lok Sabha was electorally defeated. It was alleged that Rajiv Gandhi had received kickbacks on account of his government signing a contract with the Swedish armaments company Bofors to supply field guns to the Indian Army.

Until he became Prime Minister in May 2004, Manmohan Singh enjoyed a squeaky clean reputation. As Finance Minister in the P.V. Narasimha Rao-led Congress government, he was accused of having slept through a securities scandal masterminded by Harshad Mehta that rocked the country’s financial markets in 1993. Towards the end of his 10-year tenure as Prime Minister between 2004 and 2014, Singh’s government was rocked by a series of scandals relating to the allocation and pricing of coal-bearing blocks and telecommunications spectrum in apparent violation of established policies and procedures. Reports prepared by the Comptroller and Auditor General of India—a constitutional body to oversee how public money is spent—were severely critical of the government’s inaction and complicity with impropriety.

What made things worse for the Congress-led United Progressive Alliance (UPA) government were accusations of wastage of funds in the conduct of the Commonwealth Games in New Delhi; controversial land and real estate deals involving the then Congress president Sonia Gandhi’s son-in-law, Robert Vadra; and an unsuccessful attempt to change a law following the conviction of Lalu Prasad, former Chief Minister of Bihar and leader of the Rashtriya Janata Dal, an alliance partner of the Congress.

On January 5, 2014 (by which time Modi was the undisputed prime ministerial candidate of the BJP), while delivering a speech at the foundation day celebrations of a trust where among those present was Baba Ramdev of Patanjali Ayurved Ltd, Modi said: “The way to end corruption is a progressive, policy-driven state with proper implementation.”

When we look back, how hypocritical could he have been? In April 2024, the Supreme Court flayed Ramdev and his associates for placing misleading advertisements, including ones claiming that there were Patanjali “medicines” that “cured” those afflicted by COVID-19, forced him to appear in court and refused to accept his “unconditional” apologies. Both Ramdev and Modi are closely aligned with the RSS, the ideological parent of the BJP.

The turnover of the businesses of the Patanjali group has expanded exponentially in recent times. Several media reports, including one by Reuters, have suggested that the group received generous discounts from BJP-ruled governments in Maharashtra, Uttar Pradesh, Haryana, and Assam to acquire land, among other “favours”.

At a meeting of the BJP’s national executive in New Delhi on September 15, 2017, Modi reiterated his resolve to eliminate corruption, but he did not elucidate how he would achieve his goal. He said: “My battle against corruption is uncompromising and no one will be spared; I have no relatives.”

While pointedly making a politically motivated reference to the Congress being dominated by the Gandhi-Nehru family, Modi was evidently not relying on policy-driven governance to eliminate corruption but on specific action against corrupt practices—focussing more on the symptoms and less on the causes.

What Modi’s articulation on corruption also revealed is his incomplete and statist understanding of the phenomenon. It is incomplete because he appears to be oblivious to the forces that encourage corrupt practices. It is statist because he seems to ignore the role of efficient and well-regulated governance structures in tackling corruption.

What subsequently transpired was that the Modi government—much more than any of its predecessor regimes—deployed law-enforcing agencies such as the Directorate of Enforcement, the Income Tax Department, the Central Bureau of Investigation, the National Investigation Agency (NIA), and even the Narcotics Control Bureau (as in the case of popular actor Shah Rukh Khan’s son) to target the government’s critics and political opponents.

Instead of curbing corruption, the government treated these agencies as “weapons” to target those opposed to it and “weaponised” two extant laws, the Unlawful Activities (Prevention) Act and the Prevention of Money Laundering Act. Under these laws, it is very difficult for an accused person to obtain bail and the “burden of proof” has shifted from the accuser to the accused.

The sources of corruption in India are many. A few of them deserve to be recounted here to show where and how Modi’s comprehension of corruption falls woefully short. Even after the country’s economy was “liberalised” in the 1990s, the Indian state continues to remain one of the most overregulated and under-governed systems in the world. Remember his phrase: “minimum government, maximum governance”.

Relying on state discretion in rule-making and in order to monitor and enforce such a non-transparent regime, the state has been using the heavy arm of the political establishment. Not without reason has Indian society been notoriously described as a victim of the neta–babu (politician-bureaucrat) nexus, aided and abetted by a licence-permit raj. Corruption cannot be curbed until and unless it is supplemented by legally enforceable regulation accompanied by a transparent system for funding elections and political parties.

None of these concerns and issues are reflected in Modi’s statements on corruption. What is missing is a deeper understanding of why corruption takes place. A disease can be tackled only if its root causes are diagnosed. Modi’s pronouncements sound like pious homilies. Nevertheless, his statements have played a stellar role in creating his image as a warrior against corruption, earning him and his political party electoral dividends.

Modi undertook the most disruptive of all decisions on November 8, 2016: demonetisation. Overnight, high-denomination currency notes of Rs.500 and Rs.1,000 were annulled. This was a huge blow to India’s cash economy as the currency notes declared invalid and illegal formed almost 87 per cent of the total value of the currency in circulation at that time. Modi defended the move, claiming it was aimed at tackling black money and corruption: “Demonetisation was a major step to fight black money and corruption. People had asked me to fight graft.”

The adverse impact of the disruptive move was felt on the Indian economy for years, with its rate of growth slowing down. Demonetisation evidently affected the livelihoods of some of the weakest sections of Indian society: women, senior citizens, farmers, daily wage labourers, besides small shopkeepers, and traders, many of whom were part of the country’s large “informal” sector that largely transacted in cash. After November 2016, government functionaries have stopped talking about notebandi, leave alone defend the decision as an anti-corruption move.

One initiative of the government in eliminating corruption was to amend the Prevention of Corruption Act (PCA), 1988, which covered the offence of giving a bribe to a public servant under abetment. However, three major gaps in the proposed changes in the law passed by Parliament in July 2018 showed how the Modi government’s approach to cracking down on corruption by public servants has been underwhelming, to put it mildly.

Going against the widely acknowledged wisdom that all bribe-givers should not be painted with the same brush, the amended Act makes inadequate distinction between a collusive bribe-giver and one who has been coerced into paying bribes. Worse, the amendments have done away with the provision that used to grant “protection” to a bribe-giver from prosecution for any statement made by him during a corruption trial. With the change in the law, bribe-givers are most unlikely to appear as witnesses in court.

Another major lacuna in the amended PCA arises from its redefinition of what constitutes criminal misconduct. Under these changes, the intention to acquire assets disproportionate to known sources of income will also have to be “proved” by the public servants concerned, in addition to possessing such assets. Thus it has made the law a little favourable to public servants, a move that dilutes Modi’s claimed resolve to make corruption laws more stringent. What is more, criminal misconduct has been redefined to cover misappropriation of property and possession of disproportionate assets.

Non-resident Indians wait to exchange demonetised currency notes outside the Reserve Bank of India, in New Delhi on January 23, 2017. | Photo Credit: SUDERSHAN V

But the amended law is not comprehensive enough to cover circumstances where the public official either uses illegal means, abuses his position, or disregards public interest and obtains a valuable thing or reward for himself or another person. While the amended law streamlines many other provisions in the earlier statute, the fact that it took more than four years to get these amendments passed by Parliament underlines the tardy pace of the Modi government in strengthening the legal framework against corruption and the significant gaps between Modi’s public posturing on tough action against corrupt public servants and the dilution in legal provisions pertaining to their criminal misconduct.

One of the last pieces of legislation passed by the Manmohan Singh government was the Whistle Blowers Protection Act (WPA), which received the President’s assent on May 9, 2014. The law provided a mechanism for anyone bringing to the notice of the government any acts of corruption, wilful misuse of power or discretion, and criminal offences by public officials. The law was framed in a way to ensure that the identity of those who make these disclosures to the government could be kept secret so that more people could come forward and expose illegal acts and corruption in public offices. It was supposed to become a major tool to fight corruption in the high offices in the government.

However, in 2015, the Modi government moved a set of amendments to the WPA that diluted the effectiveness of the law. Whistle-blowers would now cease to enjoy the safeguards against prosecution under the Official Secrets Act, 1923, thereby effectively silencing them in the government system, which is admittedly responsible for much of the corruption that prevails in the country.

The ruling dispensation has also not strengthened the legal framework to effectively implement the provisions of the Right to Information Act, 2005. The RTI Act, introduced by the Manmohan Singh government, had been a potent tool to curb corruption and brought about greater transparency in the way public offices work. Instead of working towards strengthening the office of the Information Commissioners, the Modi government has presided over proposals that dilute their effectiveness.

A major source of corruption in India has been the funding of elections. Despite the disclosure of the names of the buyers and beneficiaries of electoral bonds, the overall way in which political parties receive their funds from various sources, including companies and people, remains opaque. The official accounts of even the national political parties show that their actual spending on elections is much more than what they receive as income through donations from various sources.

Over the past decade, new allegations of “regulatory capture” and the absence of a level playing field came up in the telecommunications, airports, seaports, coal mining, and power generation sectors, where particular corporate conglomerates, notably, the Reliance group and Adani Group, were said to have benefited considerably from the policies of the Modi government. The head of Adani Group, Gautam Adani, is known to be close to Modi, who used an aircraft owned by the group for election campaigning in early 2014.

In the petroleum sector, ONGC bailed out the debt-laden Gujarat State Petroleum Corporation, considered a “favourite” of the State government when Modi was Chief Minister.

Even as the government claimed that it had brought down the incidence of corruption, allegations of crony capitalism and “sweetheart deals” involving the rich and the powerful in India continued unabated. In January 2015, a controversy broke out over Modi wearing a fancy suit that had his name monogrammed along its pinstripes. Opposition leaders derogatorily described his government as a suit-boot ki sarkar (meaning “a government for the rich or those who wear suits and boots”).

There was a swift reaction: the suit was put up for auction and it was stated that the proceeds would go to a charity that would use it to clean the Ganga. The reserve price of the suit was kept at Rs.11,00,000, but the final price at which the suit was auctioned was Rs.4,31,31,311, or nearly 400 times higher. It was thereafter pointed out that Laljibhai Patel, the Surat-based trader who bought the suit, was associated with an entity that had been allotted land by the Gujarat government to build a private sports club.

Lalit Modi, a former functionary of the Indian Premier League cricket tournament, who is currently in London, purchased shares at a hefty premium (9,618 times the face value of the shares) in a company controlled by Dushyant Raje, son of Vasundhara Raje, former Chief Minister of Rajasthan. These deals were not dissimilar to the deals that the BJP and Modi had publicly flayed—for instance, the ones involving Robert Vadra. A major real estate conglomerate, DLF, bought land purchased by a company controlled by Vadra in 2008 at a huge premium, enabling the former to earn a hefty profit.

The Modi government has also been attacked by its political opponents for allowing a private group, the Anil Ambani-led Anil Dhirubhai Ambani Group, to partner with multinational defence giants to manufacture equipment to help foreign suppliers fulfil their offset obligations under the current defence procurement policy. The group is associated with the French company Dassault Aviation that has supplied Rafale fighter aircraft to the Indian Air Force.

It has been further alleged that under the Modi government, sector regulators have been allowed to use discretionary powers to allegedly favour certain players in the telecom and Internet sector, notably, Reliance Jio, which is part of the bigger Reliance Industries Ltd led by Mukesh Ambani.

Congress workers shout slogans against billionaire jeweller Nirav Modi during a protest in New Delhi on on February 16, 2018.  | Photo Credit: CHANDAN KHANNA

In early 2018, a group of firms led by Nirav Modi and his uncle Mehul Choksi, diamond merchants from Modi’s home State, Gujarat, were accused of defrauding India’s second largest public sector bank, Punjab National Bank, to the extent of over $1.8 billion, making it one of the biggest, if not the biggest, bank frauds of its kind in the country. Like Lalit Modi, Nirav Modi and Choksi were declared absconders after they left the country. Belatedly realising that apart from the people mentioned, other economic offenders, too, had left the country to remain largely outside the jurisdiction of Indian laws, the Modi government quickly introduced a new law in March 2018, the Fugitive Economic Offenders Act, to take possession of the Indian assets of such offenders.

In retrospect, it could be argued that the Modi government’s response to corruption was not only reactive but also suffered from inordinate delays. The liquor baron Vijay Mallya left India in March 2016 just before the banks could move the debt-recovery tribunal to secure repayment of loans worth Rs.9,000 crore that had been given to his companies. Mallya had secured these loans during the tenure of the UPA government. But his leaving the country happened under the watch of the Modi government, which is trying hard to secure his return from the UK. Mallya is still to be repatriated. The Fugitive Economic Offenders Act came into being in 2018 only after the Nirav Modi scandal broke.

Reports of financial scandals have appeared with unerring regularity during the Modi regime. Chanda Kochhar, the former chief executive officer and managing director of ICICI Bank, the country’s largest bank in the private sector, was apparently aware of loans that had been disbursed by the bank to the Videocon group of companies whose promoter, Venugopal Dhoot, in turn, struck sweetheart deals with her husband and relatives through a company called NuPower. These allegations of conflict of interest are reportedly being investigated internally by the bank as well as by external law enforcement agencies.

The Wire reported that Cabinet Minister Piyush Goyal (who held the Railways portfolio and is now Minister of Commerce & Industry, Consumer Affairs, Food & Public Distribution, and Textiles) sold the entire stock of his privately held company at nearly 1,000 times the face value to the Piramal group.

The BJP stated that Goyal had decided to exit the company before he became a Minister and that the transaction was concluded in early July 2014 and recorded in compliance with the law. The Modi government was formed in May 2014. Goyal had, until 2010, been chairman of the Mumbai-based Shirdi Industries that owed Rs.650 crore to eight public sector banks after becoming sick.

The Insolvency and Bankruptcy Code has also facilitated large corporate conglomerates to write off debts at the expense of public sector banks. The manner in which the National Company Law Tribunal and the National Company Law Appellate Tribunal has functioned in recent years has given rise to several charges of corruption and sweetheart deals, favouring some stressed assets over others, as decisions have been taken through executive action without the necessary legal backing and a transparent bidding process as provided under the code.

It is ironical that despite having come to power on an anti-corruption platform, the Modi government took administrative measures to target the symptoms of corruption and failed to tighten various laws to prevent the possibilities of illegality and dishonesty. His government also changed many laws that effectively diluted the provisions to tackle the root causes of corruption in India.

In the 10 years of the Modi regime, there is no evidence that petty corruption has abated. However, there is considerable evidence that big-ticket corruption has risen. As income and wealth inequalities have widened, micro, small, and medium enterprises are struggling to survive while oligarchs like Adani and Ambani have been able to expand their corporate empires, with the government acting in a brazenly complicit manner to ensure that the playing field is not level and that policymaking is blatantly partisan.

That cooperative banks associated with Modi’s right-hand man Amit Shah received large sums in the immediate aftermath of demonetisation in November 2016, and the rise in the stature of Shah’s son as a sporting czar are two examples of nepotism that belie the BJP’s claim that it has succeeded in cleaning the system of corruption. The disclosure of the circumstances under which electoral bonds were purchased, the biggest beneficiary of which was the BJP, has merely bolstered this perception.

Like fascist regimes the world over that propound theories of “purity” and “superiority” of race and culture, supporters of the ruling right-wing, Hindu nationalist regime have attempted to argue that a monolithic Hindu-Bharatiya society was corrupted first by foreigners (the Muslims and the British) and, then, by the family-dominated Congress. These arguments continue to be bandied about as this election unfolds, even if the claims no longer convince many, not even Modi’s andh bhakts (blind followers). 

Paranjoy Guha Thakurta is an independent journalist, author, publisher, and documentary filmmaker.

This article uses extracts from a contribution by A.K. Bhattacharya and Paranjoy Guha Thakurta publishedin Re-forming India: The Nation Today edited by Niraja Gopal Jayal (Penguin Viking, 2019).