Monday, November 07, 2011

Reliance and a Weak State

I just finished reading Hamish McDonald's acclaimed book, "Ambani & Sons -The Making of the World's Richest Brother's and their Feud". Its an amazing piece of work.

It is surprising that it took an Australian journalist to dig out murky details of corporate India and present it in such an eminently readable form. On the other hand, perhaps this is something only a foreigner could do: cutting through entrenched biases of individuals and holding up a mirror to demolish self-serving myths of an emerging nation; acting like the little boy who shouted, "But the Emperor is naked!"

Yet, the author could hardly be called a neutral observer presenting the facts - he is self-serving too, in his own way. McDonald is meticulous while naming the numerous politicians & bureaucrats who were in cahoots the Ambani's during the period 1977-2009. At the same time, when it comes to folks of his own ilk - journalists - MacDonald is more coy. Instead of naming the Indian journalists who systematically planted stories and subverted the truth for three decades, he repeatedly refers to them as just the "dirty dozen".

In the final analysis, McDonald quotes Gurcharan Das to conclude that -
A large part of the problem might be cultural: a 'bias for thought against action', or that bureaucrats 'value ideas over accomplishment'...The Indian state no longer generates public goods. Instead it creates private benefits for those who control it.

Some of the most important post-1991 reforms succeeded because of the regulatory institutions established by the state. While India needs entrepreneurs like Mukesh Ambani, it also needs a much stronger state to apply rules against any abuse of market power. Businessmen will do what they can get away with...A strong state should devote more resources to relevant and updated policies, better revenue collection and accountability and effective policing of rules, rather than persisting with so much effort in micro-managing affairs. It should strengthen its bureaucracy, not with great powers but with better resources, education and discipline so as to be truly the 'steel framework' that Nehru envisaged, or the rule-keepers prescribed by Hayek.

Das, Gurcharan (2006): The India Model, Foreign Affairs (Jul., 2006), Reprinted in NYT. URL -

Cream Weaver: Review in the Outlook (Oct., 2010) URL -

Review at CNN-Go, URL -

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