The required election expenditure has created a scenario where no party can function solely with donations from the general public. Those rich enough to fund a party and its electoral expenses are industrialists and business houses who are all too happy to buy their way into having some influence in policymaking.
Once a business house funds a party, it aims to recoup the investment after the party comes to power. This doesn’t just happen in the form of government contracts and tenders like it does at the local level, but as policy changes, it creates an unequal playing field for businesses. Such benefits being bestowed upon ‘preferred’ businessmen is what has led to the current crisis in banking.
Most public sector banks, which are entities backed by the government and bailed out using taxpayers’ money when they fail, are facing a major crisis of non-performing assets on their balance sheet. NPAs are loans that banks made to businesses that the businesses were unable to repay.
A certain level of NPA is a natural part of banking, and business loans involve the same level of risk as a business. If a business fails, it might be unable to pay back its loans, but that is why banks are supposed to assess repaying capacity and the collateral that can be sold if the business defaults on loan payments. It is now becoming obvious that over the past few decades, many businessmen who lived lavishly and delivered sermons in conferences on how to succeed in business were, in fact, funding their lifestyles not from the profit of their businesses, but from the money they had borrowed from public sector undertaking (PSU) banks.
The present government under Prime Minister Modi has claimed that the NPA crisis is a legacy issue inherited due to crony capitalism under the earlier UPA government, and that such loans are not sanctioned anymore. Since loans take years to turn into defaults, only time will tell how accurate this claim is.
The Rafale Scam, on which the Opposition has tried to corner the government, is a defense deal for buying thirty-six jets from French company Dassault Aviation for a price of ₹58,000 crores. The deal was inked between India and France in September 2016. The original deal that the UPA government had proposed in 2012 was to buy 18 ‘ready-to-fly’ jets from France, with another 108 others being assembled in India by the state-run Hindustan Aeronautics Limited (HAL).
This deal was changed by the Modi government in 2016 to 36 ‘ready-to-fly’ jets. The Congress started calling it a scam as soon as it was signed, owing to the offset clause of the agreement. The Modi government refused to release any details of the deal and the jet prices citing national security.
In what appears to be a first for India, the public, already primed with sermons on nationalism and a daily dosage of messaging from social media and WhatsApp, seems to have bought the national security argument even though that wasn’t the case for earlier controversial defense deals.
India has a long history of alleged scams in defense procurement, starting with an alleged scam right after Independence. In 1987, another major defense deal came under widespread scrutiny — the ‘Bofors scam’, in which allegations of corruption reached Prime Minister Rajiv Gandhi.
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