Maharashtra and Karnataka….a case of common corruption

Vivek Kulkarni throws light on corruption in Karnataka and Ashok Malik talks about governance issues in Maharashtra (HT: Ajay Shah’s Blog).

Both have many common threads. In both,  the capital cities are where most activity is centred. The capital cities lead to most of money-making but least is spent on improving lives in these cities. They are just cashcows. Then land/real estate is where much of corruption and kickbacks happen.

This bit on Karnataka is amusing:

The recent events in Karnataka showed how easy it is to take over or destabilise a government. MLAs are available for sale for Rs 25 crore each. They are ever willing to travel with you anywhere, as long it is a five-star resort. Have they visited their constituency lately? Having seen the government as an IAS officer and worked on three State budgets quite closely, I have worked out how profitable the Government can be for any investor.

While the Tata-Corus deal was over Rs 36,000 crore, they could have acquired the Government of Karnataka for just Rs 2,825 crore by buying 113 MLAs. Another Rs 1,000 crore might have had to be doled out to mid-term dissidents and other contingency expenses. For such investment, the returns from bribes are fabulous. Even Warren Buffet cannot match it.

Both are  very disappointing pieces. Important to point that both Mumbai and Bangalore are not just any state capital. Both have leading companies’ headquarters, and are financial and software capital of the country as well.

Malik says India does not have any real choices for a city that one could work in:

How long can Mumbai sustain this? Once India’s shining city, today it may just be the goose that has laid its last golden egg. Delhi is no paradise and Chennai is not perfect; Hyderabad still has miles to go; Bangalore remains in infrastructure-upgrade mode. Yet all these cities have that one abiding quality that sustains an urban consciousness: hope. Mumbai has none. Its optimism lies crushed under the weight of Adarsh Housing Society.

When you have such poor standards in states which are considered to be better-off, one can just imagine the scene in other states.

I had written this post nearly a year ago – Indian political system – why don’t we see the risks? I find the risks growing exponentially over a period of time but are just not getting priced. It is all about India shining and financial markets going crazy. Not many are asking  serious questions. Barring GDP and Equity market growth, we are way behind in terms of all our policies. They are not just inadequate but have huge holes. The intention behind policies is just to create middlemen who make a living

But it cannot go on like this. My fear is just like Great moderation came to a shuddering halt, we might see a similar halt in India’s case. I am no India pessimist but the situation here does not make sense. Reading the business press along with general press gives one an impression of two different countries. One just shines and other goes deeper into abyss. As two are highly linked, it might take time before the two get linked.

2 Responses to “Maharashtra and Karnataka….a case of common corruption”

  1. Why doesn’t the government interfere to lower other prices apart from air fares? « Mostly Economics Says:

    […] Why doesn’t the government interfere to lower other prices apart from air fares? By Amol Agrawal My confidence index on Indian government’s capabilities are dipping with each passing day. Each time I think a low has reached and may be things improve from now on, we have something more to offer. Despite a huge interest in Indian economy, I continue to maintain we are not assessing the risks of Indian Political System (see this as well). […]

  2. Reading Milton Friedman in Dublin « Mostly Economics Says:

    […] but note the similarity in India… We don’t still have a Friedman walking here but the links between politics and real estate development are just too strong. Many such connections have come to limelight in the 2G scam and it is not a […]

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