India’s Gilded Age in "The Billionaire Raj" by James Crabtree

The Billionaire Raj is an enlightening and intriguing book in which James Crabtree makes an analogy comparing India with the United States gilded age in the late 19th century. This analogy implies that other countries have been through similar periods, many including in Asia over the last half-century. Crabtree does not argue that India’s growth is unsustainable and with suitable reforms, high and stable growth in India can be possible. He believes that there is no reason for India’s current gilded age to not “blossom into a progressive era” of its own in which the jeopardy of inequality and crony capitalism are left decisively behind.

To move beyond its gilded age, India needs to fix the three things that define “The Billionaire Raj”. Hence, this analogy is both appropriate and useful to understand the problems in India today. The three challenges that outline this book are; inequality and the super-rich, crony capitalism, and travails of the industrial economy. As James Crabtree discusses each challenge, he compares it to the United States gilded age. For example, like the barons of the gilded age, most of India’s billionaires have used three methods to tilt the playing fields to their advantage. The three methods were: securing rich natural resources such as mines and land, ensuring favourable regulations in various industries, and restraining the entry of foreign competition wherever possible.

Also, India’s recent growth created billionaires to equal the Vanderbilts, Rockfellers and Morgans of America. The Vanderbilts legacy divided America, just like the Ambani’s on how they divided India. The Ambani’s were a wealthy family in India, and Mukesh Ambani became India’s biggest billionaire in which his house is 160 meters tall. In 2013, India’s GDP per capita (adjusted for the cost of living) was around $5, 200 and the United States reached the same level at the height of the gilded age in 1881. Half of Mumbai’s 20 million residents lived in slums while few residents lived in houses and had a better lifestyle. During the boom-and-bust cycle, many billionaire tycoons borrowed recklessly, and banks lent aggressively only in the 2000s. This caused for projects to come unstuck that had banks with $150 billion or more of bad loans.

Crabtree writes how India’s Prime Minister, Narendra Modi, despite his formidable image and solid accomplishments, he has done little to help reverse the three issues. He proved to be a less courageous and radical leader than the citizens of India hoped for. India has a problem with infrastructure and its prime minister who loves infrastructure projects was unable to create conditions in which more could be built. Modi is a man who has great persuasive abilities, however, he is incapable to speak up in defense of the kind of social intolerance. India’s previous prime ministers, Jawaharalal Nehru and Indira Gandhi wanted to use India for good socialist purposes by curbing the power of big businesses. However, back in the day it would be hard since the country did not have enough money and closed off business with other countries. In 1947, after winning independence from the Britain’s India did shut off its economy building a close, statist system of licenses, permits, and tariffs known as ‘License Raj’ and it was not until 1991 when it re-opened itself to the world. Hence, when India was on a shut down, it was hard for it to develop since it had no contact with the outside world. This analogy is quite useful in framing a development paradigm for India going forward, as well as other democratic emerging countries. As stated before, many countries are going through their own gilded age, many including in Asia. This is useful because it shows how other countries can benefit from this gilded age and how its economy can move forward. Many developing countries like India, including China, Latin America, etc. have close economic and political systems. Thus, it could get people thinking that these countries as well could reach their ‘gilded age’. For instance, Latin American have proved to be less economically stable and are likely to fall into the “middle-income trap”, in which poorer nations fail to become wealthy.

In moving forward, India will hopefully be able to understand its economy better, in that more people may be able to move out of the slums and billionaires would not take up majority of India’s wealth. The development aims can be uncomplicated; first to cement its position as a firmly middle-income parliamentary democracy, and then to enter the ranks of advanced economies at certain levels after the midpoint of this century.