The Anatomy of Crony Capitalism in India

The unholy nexus between the political class and the business persons is called crony capitalism. It is an indicator of the overall health of an economic system and the nature of the governance. In India, crony capitalism is a direct result of the licence permit raj and the subsequent adoption of the liberal and neo-liberal economic policies of successive governments, irrespective of the political parties they belong to. Though we can trace the existence of crony capitalism in almost all economies of the world, its presence is more rampant in India due to certain structural problems.

Before we delve deeper into various dimensions of crony capitalism, it is pertinent to understand clearly the meaning of this novel phenomenon. Simply speaking, crony capitalism is a system of favouritism and partiality where only a few selected business persons or business houses are showered with special treatment from the political class and the bureaucracy. Such a precipitation of rewards and concessions are provided not because of the superior or outstanding talent that they possess or the distinctive abilities they have inherited, but out of predilections and predispositions. It is a symbiotic relationship between the political class and the capitalists, where they both gain handsomely due to the mutual aid and assistance at the cost of certain essential attributes of a sound economy, such as open market, perfect competition, rational price mechanisms, transparency, rule of law and the principle of natural justice.