Author: R Vaidyanathan

The recent finding by Patrick French (India: A Portrait) is that more than two-thirds of the under-40 members of the Lok Sabha are hereditary and many of them are hyper-hereditary, based on their dynasty. Actually many of us forget that since 1885, members of the Motilal Nehru family have presided over the Congress party for 39 of its 125 years.

Motilal Nehru was president for two years, Jawaharlal Nehru for nine, Indira Gandhi for eight, and Rajiv Gandhi for seven. Sonia Gandhi holds the record both within the dynasty and the party by having the longest, unbroken tenure of 13 years and is still going strong.

The party has become a family enterprise and a non-family man like Narasimha Rao is not even recognised as a former prime minster. Following this tradition, we have Agatha Sangma from Megahalya to Omar Abdullah in Jammu and Kashmir to MK Alagiri in Tamil Nadu, inheriting the political throne.

The important point here is not about the national agenda of these political parties but their functioning and control. Whether it is DMK or the Shiv Sena, where the family battles have come out in open, or the NCP, where the heir apparent has been anointed – the issue is the family business called political parties. It is important to mention that Tamil Nadu is a pioneer of this model wherein the interests of the state, party, government, and people are subsumed for the welfare of the family enterprise.

Like in all businesses, it is required to delineate the nature of the business model adopted by these family enterprises. In any business, particularly listed business, the shareholders’ wealth maximisation is the main objective. Unfortunately, these regional parties are not listed on the stock exchanges and hence the correct market valuation may not be available. But the total wealth declared by these leaders (including that of their multiple wives!) during election time in the form of affidavits can be a guide for the net worth of the enterprise.

The preliminary expenses here are related to rabble-rousing on caste or language or pro-poor issues. Another method is to promise largesse in the form of free electricity, free TV, free cinema, free rice, to be paid for by the state exchequer. In this model, the actual business entity need not worry about expenses since post-power, there will be a continuous revenue stream.

The family business has to be conducted through various functional departments called commerce, agriculture, irrigation, roadways, education, power, and so on. Some are low-volume, high-margin centres like land allotment or C’Wealth Gamea or second generation mobile telephony spectrum, where one project can earn up to thousands of crores. Other business units, like elementary education, which is a large-scale transfer industry, are low-margin but high-volume business.

Every teacher transferred may provide only thousands of rupees, but the numbers are large. The family also needs to take care of the interests of other families (sub-regional or other caste parties), hence the creation of strategic business units. In this model, the expenses are borne by the government but revenues are enjoyed by the family. It is a win-win model that does not have any comparable international example.

The time-frame for maximising the family wealth is specified after one election and that differentiates it from the other regular business models. Due to the short time span, the family can and does become rapacious and they need continuous extraction of higher bribes to meet their collective greed. The turnover and attrition among supporters is also high, since their aspirations also grow. Hence, the need to create powerful entry barriers as well as exit costs.

But if you or your children opt out of politics, then you cannot be a “dacoit capitalist? anymore since your ability to formulate policies is gone and there could even be vendetta by the current rulers. So make sure your son/daughter/wives/sambandhis (children’s in-laws) are in some business unit or the other.

Will this business model meet its nemesis? Not for some years yet. One reason it will flourish is the increasing importance of land as a factor of production. In the 60s, capital was scare and land was easily allotted. Now capital is available, even from global sources, but land is scarce and that is the strength of these families. Control of land and its allotment is the primary sonrise (pun intended!) industry. To that extent, the family business will flourish.

With further fragmentation, many family enterprises will be either in a merger and acquisition mode or in a small business-smaller reach mode. In such situation, some can go sick. Second, due to the greed of some of these families, the margins demanded from projects may exceed the cost of the project.

The future of India is ironically linked with these 40-50 families with their capacity for rabble-rousing along and their rapaciousness and greed. Let us celebrate our grass-root democracy that enhances such “family values?.

Source: Dynasty politics is about protecting ill-gotten wealth

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