India@75: Fighting nepotism, corruption

Seventy-five years of Independence marks a significant milestone in the history of a nation rising. We can quibble over past events, remain distraught about the present socio-political strains or look to the future to ask what must be done to move to a better place.

In his Independence Day speech from the Red Fort, the Prime Minister highlighted two key challenges facing the nation – corruption and nepotism. There will be some immediate guffaws, given that the ruling political establishment is not beyond practising both. But away from scoring political points, what does it really mean to fight the two ills?

Inevitably, immediate attention gets drawn to the political battleground, given that dynasty has been used by BJP and its friends to mostly refer to the leadership of the Congress, Samajwadi Party and other assorted political heirs and a number of anti-BJP players in various States. Uddhav Thackeray of Maharashtra’s Shiv Sena is only the latest example (and victim) of BJP statecraft in this regard.

But on August 15, the Prime Minister did make the significant point that his understanding of nepotism is not about politics alone – “not at all”, as he put it. In the Prime Minister’s words: “Unfortunately, it (nepotism) is being nourished in other Indian institutions as well. Family bias, nepotism has gripped many of our institutions today. This is sadly harming the immense talent pool of our country. The future potential of my country is suffering. Those who are legitimate contenders of these opportunities and are genuinely eligible get side-lined due to nepotism. This is a good reason for corruption.”

In this characterisation of the twin ills, corruption is caused in part by nepotism, and the widening of the frame of familism beyond the political arena appears to take the issue into many other facets of Indian life.  It challenges the widely held notion in the Indian context that a family member who has moved up the ladder is expected to help others in the family rise. This is the way a family stays together, ties are strengthened and indeed new bonds built as each helps the other – private space that inevitably spills into public space and often makes its biggest impact there. The family system builds on these connections. A rather rustic if naked example of this was once displayed by the former Deputy Prime Minister Devi Lal who reportedly said something to the effect on political fortunes in Haryana – if not my son, then whose son would I make the Chief Minister! The BJP sits in power in Haryana today with the great grandson of Devi Lal, Dushyant Chautala as the Deputy Chief Minister and son Ranjit Singh as a minister.

To make matters complex, the I-Day speech notes the significance of the family as well. “The joint family system is an asset,” the Prime Minister said.

So, it would be fair to ask if the Prime Minister and the party he leads are really up to fighting nepotism? Or is this the launch of a new election campaign looking to a third term for the BJP in 2024, and in that sense is one more clichéd political narrative for the headlines? If this is not the case, then how precisely will nepotism be contained?

The immediate answer is merit, which is a loaded term given the way it has been used in popular perception by those talking against reservations for the backward castes and the downtrodden. An early answer to merit was offered by Vishwanath Pratap Singh who once famously said to the effect: What am I to do with a person who has a head when he doesn’t have a heart to serve the people.

Yet, there is no question that the modern State apparatus will have to be protected from the ills of power and patronage, from the club-like mentality that keeps out ordinary people and feeds on power and privilege.  In this, the one institution that has not been discussed is India’s corporate sector and its growing reach and power.

Is the son or daughter of a Chairperson sitting on the board of a company his or her parents built, and then inheriting the business, a case of nepotism?      

This leads to the touchy question of tax, and how wealth is inherited and transferred tax-free in India so that some of the biggest sources of power and privilege, are untouched by the political campaign against nepotism and corruption.

Even in the United States, a country with distinct capitalist approaches and a strong anti-tax bias, the inheritance tax remains in vogue

The corporate sector itself has been working internally for better governance standards. But equally, tales of inner deals and backroom machinations have only grown, not died, just because the BJP came to power.

This then may be a good place and time to discuss the return of the inheritance tax, which India had up until 1985 when it was scrapped on the argument that it had not achieved the goal of reducing unequal distribution of wealth and of garnering resources for developmental use. On the other hand, most developed economies have such a tax. Even in the United States, a country with distinct capitalist approaches and a strong anti-tax bias, the inheritance tax remains in vogue though the threshold at which it kicks in changes often. Called the federal estate tax, or the “death tax” by some, the levy has a history of 100 years in the United States. It makes those with the highest ability pay, raises revenues, promotes charitable giving and puts some brakes, albeit light ones, on power and privilege.  Further, the tax is on market value, not book value, and kicks-in with valuations above 12 million USD, with a top rate of 40%.

In the Indian context, some have asked for the return of this tax. There has been talk that the BJP would reintroduce it. Yet, the actual return of the tax will be a big step politically, an anti-nepotism tax of sorts that can give a very different kind of fillip to the agenda on fighting nepotism and building a less unequal society.

(The writer is a journalist and faculty member at SPJIMR. Views are personal)