Flush with new money, filled with destitute poverty, the ugly contrast in Delhi seemed to have created ample room for not just entrepreneurship, but also exploitation, bribery, extortion and nepotism.
Thousands of Indians—about 2,85,000 a year1—were moving to the Indian capital, whose population swelled to three times that of Switzerland and double that of Sweden! People’s motivations were varied—labour, skilled jobs, education, marriage . . . They felt there were opportunities for everyone, and so they would come here from various towns and villages. While some came to roll out big businesses, others were searching for just a livelihood, having relinquished their small towns to move here. All arrived with hope in their eyes and a few things or skills to sell. In a big city, chance is blind, the stakes are high, and fortune can favour anyone who dares to try. As Chirag ventured out to procure land, government permits, manufacturers and labour for construction, we noticed a dire eagerness among the people we met—wealthy or impoverished—to bend every rule for profit. There was no rule written in stone—this ‘flexibility’ created both confusion and opportunity, depending on how one leveraged it.
The combined force of the deluge of manpower and financial capital was clearly transforming the architectural landscape as well as the ethical boundaries of the city. And what we experienced intimately in Delhi while setting up a small business was a clear reflection of the broadening income inequality I saw as I travelled to many places in India, working for the Jindal Group and interacting with other large companies.
In India, the richest 1 per cent own 53 per cent of the country’s wealth, the richest 5 per cent own 68.6 per cent, while the top 10 per cent have 76.3 per cent. At the other end of the pyramid, the poor half jostles for a mere 4.1 per cent of the national wealth.2 India dominates the world’s poorest 10 per cent with 22 per cent of the population living below the international poverty line. We even had the unfortunate honour of being home to the largest number of malnourished children in the world in 2016.3 India is already the second most unequal country globally,4 and the rich are only getting richer.5 I believe that if the incomes of all Indians congregating on a Friday evening at India Gate are to be compared, then the spectrum would well reflect the overall inequality of the entire country, and also show that it has only widened over the past seven decades.
It seems that as long as inequality thrives, businesses in India profit. Take a look around and you will see that successful businesses are those that have tapped into the country’s obscene income gap—producing where incomes are low and selling where they are high. For example, the labour cost for the production of, say, wooden furniture is a pittance compared to the purchasing power for that furniture when retailed even at ten times its cost price in the same neighbourhood. The salary of a twenty-year-old who speaks broken English is far lower than the money he generates for his employer, who caters to companies that outsource their business processes to him. Labour in a steel manufacturing unit is cheap, whereas the final product can be sold at a price commensurate to the high demand from infrastructure development projects. The salary of teachers, even in private schools, is meagre compared to the utterly exorbitant fees charged by some schools. The salaries of trained hotel staff, even in the most luxurious of hospitality establishments—and you can check any—are shamefully low compared to the room rates the hotel’s guests are charged. The CEO of India’s top IT firm earns 416 times the average salary of an employee in his company.6 In every sector, profit margins in India are based on income inequality.
He had leveraged the cost advantage in India by getting the complex machinery designed and manufactured by a small waterworks company in Pune, using cheap labour at half the cost quoted to him by a manufacturer in Germany.
His was just one example among thousands of entrepreneurs in the country who are enamoured by the market opportunity here; they benefit from leveraging the income inequality, and are hounded by corruption and nepotism. The Indian middle class is dependent on the poor to keep itself afloat, and they have no desire to alter this. If the poor in India were not so desperately needy, how would the middle class convince them to work at the most abysmal wages? The unfortunate and gaping disparity in resources available to the poor and the middle class creates opportunities for cost arbitrage that are useful for the middle class’ business. In fact, sociologist Dipankar Gupta writes that in India there is no middle class. He demonstrates that upwards of the middle class, social strata actually comprise the rich of Indian society—standing out not necessarily because of their accomplishments, but because those below them live in such desperate, unenviable conditions.7 As I have written in more detail earlier, for an individual to be perceived as ‘higher’ in the social hierarchy, there must be many others perceived as being ‘lower’.8
I have also explained earlier the peculiar nature of politics in India, in which, again, success depends upon the continuation of poverty.9 Politicians cannot win elections without wielding power over their minions. In villages, political power comes from the existence of a vast number of landless farmers, who are socially and economically in a despicable condition. And in both rural and urban India, the poor have neither the voice nor the will to oppose the drops of patronage coming their way.
Government officials, acting as agents of governance, often thrive on poverty as well as excess income. The salary from a government job in India is paltry, but the potential to earn through parallel means is enormous. Unless the official is altruistic and unusually committed to developing their specific sector, area or the country, the benefits of illegal earnings outdo the costs. However,
