The relationship between state and capital is an important capillary of power in a modern democracy. This relationship is governed by many contradictory impulses. In a democracy, politicians need capital for elections and for sustaining politics as a career choice. But politics also has to be responsive to the demands of social legitimation. There is a second issue. There is often a tension between seeking policies that favour particular businesses and policies that favour a level playing field based on principles that produce growth. The third tension is between the imperatives of looking business friendly on the one hand, and incorporating genuine public goods into regulation on the other — like environment and human rights. These tensions are perennial in any democracy.
The UPA mismanaged these tensions. Corruption had reached a point where the demands of social legitimation had become nearly impossible; the state became an outright plutocracy. This spawned not just an anti-corruption movement that delegitimised Congress at the time. It led to a whole series of hit and miss judicial interventions. The inability to meet the demands of legitimation produced a policy paralysis of sorts. The second tension was manifest largely in the way the government doled out credit. The exercise of discretionary power in this area brought the banking system to its knees. It produced a protracted crisis that continues: Private investment is still tepid. And third, on labour and environment, the government doled out symbolic protections but, by and large, capital had the upper hand... The BJP, therefore, had the task of re-managing these tensions.
The jury is still out on whether India is less plutocratic than before. But the BJP has sought to manage the tensions by three devices. The first lesson they learnt from the Congress debacle was this. During Congress rule, individual Congressmen were benefitting from using state power, but the party was losing. This was double jeopardy for the Congress. On the one hand, it meant lots of Congress leaders were exercising their individual channels of influence without the benefit accruing to the party. The result was that individual Congressmen were rich but the party was poor. This still haunts the Congress. On the other hand, the system created a free-for-all which magnified perceptions of corruption. The BJP has the advantage that its state-capital dealings are more centralised, so the more benefits accrue to the party and its centralised leadership, it also has the advantage of reducing the appearance of transactional corruption since, if the party has an efficient resource mobilisation strategy, it can often afford to rein in on more transactional corruption by individual leaders. The second device was to create new instruments like electoral bonds that are opaque to the public but provide a new channel of financing. Third, it tried to occupy the space of anti-plutocratic politics with decidedly mixed results. Demonetisation was one element of this gambit. There has also been a slew of measures that empower governments to go after economic offenders (attaching properties, making bribe-giving as much an offence as receiving it). But the results are yet to accrue… read more: