Corporate-controlled capitalism in India


IN September 2020, three controversial farm acts passed by the Parliament gave way to one of the largest protest movements in recent history. But the protests were about much more than India’s agricultural policy – and they had significant resonance beyond the farmers of Haryana and Punjab that were most affected by the controversial farm bills.1 Rather, the larger critique made by the farmer protests coalesced around a criticism of bowing to ‘corporate interests’ supported by the ruling Bharatiya Janata Party (BJP). In my view, the farmer protests had great impact and resonance, eventually causing the government to rescind the laws, due to popular anxieties about the changing face of business-politics relations in India.

In this piece, I chronicle the extraordinary level of economic centralization and corporate consolidation taking place in India today. I attempt to theorize how this consolidation is both a result of the prevailing political environment in India, and how it perpetuates greater political and economic centralization. I hope this short piece encourages others to focus research and commentary on the unprecedented levels of economic centralization we are seeing in India today and its impacts on society.

A common refrain is that levels of economic centralization and inequality we see today in India are a natural consequence of capitalism and economic markets. But as any scholar of political economy knows, competitive markets, capitalism, and state intervention have had radically different consequences for economic centralization across countries. To properly analyze the structural shifts in India’s political economy today, we need a more nuanced understanding of how states manipulate economic markets and make larger economic policy.

At the outset, let us distinguish between three types of state-business relations in capitalism that have consequences for economic concentration: laissez-faire capitalism, state-controlled capitalism, and corporate-controlled capitalism.2

The first type, laissez-faire capitalism, is a model in which the government follows a principle of minimal government intervention in the functioning of economic markets, while allowing for legal frameworks that support competitive markets. In this model, entrepreneurs, firms and labour bargain in a ‘decentralized’ fashion, responding to incentives of market competitiveness, to shape the overall economy. A prototype of this model is found in Anglo-American contexts like the United States.3

The second type, state-controlled capitalism, is a model in which the state actively intervenes in the market, often to manipulate incentives for companies and to boost exports in privileged market sectors. Chalmers Johnson famously described these states as ‘developmental states’ in contrast to the ‘regulatory states’ that govern laissez-faire capitalism.4 The prototypes of the state-controlled capitalism model are successful economies in East Asia like Japan and China.5



The third type, corporate-controlled capitalism, is a model in which macro-economic policy is strongly guided by the interests of the largest business (corporate) actors. In this model, the structure of the economy is strongly shaped by the proximity of entrepreneurs and large firms to political power and thus the levers of policymaking. The prototypical case is post-Soviet Russia (particularly under the leadership of Boris Yeltsin), although it has been observed in many countries transitioning from socialist economies.6


Naturally, the type of capitalism in a country has implications for the pattern of economic centralization likely to be observed.7 State-controlled capitalism is likely to generate less economic centralization than other models of capitalism, as the state ostensibly represents the interests of a broad swath of the public. In laissez-faire capitalism, corporate actors are free to consolidate wealth, but the regulatory state’s focus on maintaining competitive markets prevents the extreme economic centralization that would occur from oligopolistic and monopolistic pricing. In corporate-controlled capitalism, the wealthiest persons are able to influence policy in ways that are likely to generate disproportionate benefit to themselves, by creating oligopolistic arrangements or through the purchase of previously state-owned assets, suggesting a particularly high level of economic centralization.


To understand how the level of economic centralization among the super-wealthy in India compares to those resulting from these types of capitalism, I compare economic centralization in India with that of China, Japan, Russia, and the United States. One intuitive measure of the concentration of wealth in this super wealthy class is to look at share of national  income attributed to the top
1% of the highest earners. Figure 1 displays the share of income for the
top 1% across these five countries, as calculated by The World Income Database developed by scholars at the Paris School of Economics and UC Berkeley.

There are several key points to be gleaned from figure 1. The end of World War II (and colonialism in India) ushered in a sharp drop in economic centralization, but
this trend has been steadily reversing around the world from the 1990s onward. Nonetheless, there are
key differences across countries. Consistent with the framework described, those countries with state-controlled capitalism, China and Japan, demonstrate structurally lower levels of economic concentration of wealth, while the the United States displays significantly higher economic centralization than cases of state-controlled capitalism. However, India and Russia demonstrate the highest economic centralization among this group of countries; in fact, India’s share income to the top 1% of the population (21.7%) is estimated to be slightly higher than that of Russia (21.4%), which is particularly worrying given that Russia is seen as the prototypical case of corporate-controlled capitalism.

In India, economic centralization has accelerated faster than much of the world in the wake of the economic liberalization reforms in the 1990s. Although it does not display the levels of economic centralization observed in Russia during the most extreme abuses of the Boris Yeltsin era, India is today displaying unprecedented levels of economic centralization – even more than the pre-independence era.



While the data establish that India has seen worrying levels of economic centralization, this need not imply corporate consolidation and policy-making influence. Indeed, Thomas Piketty’s magisterial work chronicling rising inequality across the world has more to do with the return on inherited wealth than corporate consolidation per se.8 Nonetheless, this pattern of income generation merits closer scrutiny on profit generation for the largest Indian corporates.



To understand the level of corporate consolidation, I rely on recent analyses of the profit share of India’s most profitable firms. A recent analysis by Krishna Kant9 reports nearly 65% of all corporate profits accrued to the top 20 firms (see figure 2), a slight dip from a high above 70% in fiscal year 2020 but much higher than the period before 2014 when the Bharatiya Janata Party (BJP) came to power. Indeed, this profit share was less than 50% as recently as fiscal year 2011. These data tally closely with the work of Saurabh Mukherjea and Harsh Shah at Marcellus,10 who have calculated a similar metric back 1994. These analyses agree on a simple fact: the scale of corporate consolidation, as measured by profit share, has significantly grown in the post-2014 period especially after India’s demonetization exercise.


At first blush, the level of corporate consolidation in India since Narendra Modi became prime minister might be surprising. Prime Minister Modi has overseen extensive political centralization predicated on his personal appeal11 and even sought to bring certain key corporate personalities like Vijay Mallya to task. A similar misconception exists about Vladimir Putin in Russia, who has centralized power in the country and famously expropriated Yukos Oil from Mikhail Khodorkovsky. Yet, a closer look at Russia reveals that Putin has cultivated an extensive network of ‘oligarchs’ – Russia’s super-wealthy business elite – who are loyal to him.12 While political centralization requires the filiality of a country’s corporate elite, it is also likely strongly dependent upon its wealth (as I document in some detail below).



How might this corporate consolidation have taken place in India? As in Russia, there have been concerns that India’s corporates are able to wrangle previously state-owned assets to bolster their wealth. A key example of this phenomenon is the purchase of six airports previously controlled by the Airport Authority of India (AAI) by Gautam Adani in 2019. Indeed, the AAI’s employee union recently alleged that assets and equipment were sold to Adani at well below market valuations.13 With the purchase of Air India from the government, the Tata Group now has controlling in stakes in three airlines – Air India, AirAsia, and Vistara – that can plausibly fly international routes from India (Air India and Vistara already have permission to do so, and AirAsia is in the process getting a permit).

Relatedly, concerns have been raised that Mukesh Ambani’s Reliance Group was given preferential treatment by the government in setting up operations in the telecom sector and now has the largest market share in the sector.14 The perception of proximity to government also makes a company a more attractive destination for foreign direct investment (FDI). Indeed, while India showed record-breaking FDI in the previous fiscal year, more that 40% of FDI inflows were captured by Ambani’s Reliance Group due to a large investment in Jio from Facebook in that year.

In short, the noticeable corporate consolidation in the past few years seems to be about much more than market behaviour. Rather, the sale of state assets and preferential political treatment are alleged to be significant factors in the consolidation. This has also skewed the pattern of foreign investments in the country, creating a feedback loop for greater consolidation.



The growing economy, combined with greater levels of electoral competition from the 1990s onward has ushered in a period of increasingly wealthy individuals entering the political arena and financing their own campaigns.15 This fundamentally changed the social profile of candidates. Indeed, Gilles Verniers has shown that by 2017, 50% of Uttar Pradesh’s elected members of legislative assembly (MLAs) were businessmen compared to less than 10% in the 1980s. These businessmen were were predictably drawn from ‘local’ sources of wealth, like real estate and transport.16 

But these ‘local’ sources of wealth also pose problems for any political actor seeking centralize power. First, the ‘aaya Ram, gaya Ram’ politics of party defection and floor crossing of legislators and candidates is a well known phenomenon. If the sources of capital are local in nature, then the volatile nature of party membership induces bargaining and complex concessions to local capital. Second, as Kanta Murali has shown persuasively, differences in local business interests can generate different economic policies from state to state ­ especially if local capital has a significant role to play in financing politics.17



The greater economic concentration and corporate consolidation observed since the BJP came to power enables the political centralization project of the government in important ways. Large corporations likely generate revenue at an all-India level and abroad, and thus their demands are more likely to  be ‘national’ and less ‘local’ in nature – which should advantage the party at the Centre. Furthermore, as figure 2 suggests, demonetization has almost certainly decimated many sources of local capital, which was often derived from real estate and corruption in local contracts. In sum, economic centralization and corporate consolidation implies that corporates with ‘national’ preferences are likely to play a much bigger role in politics – and may offer the financial backbone for political centralization.

Significant political centralization in India has been observed in India since the BJP came to power in 2014 across, among other things, welfare policy and federalism18 to the role of the BJP’s central leadership in state-level campaigns.19 Fundamentally, this consolidation requires the ‘centralization of political appeal’ to Prime Minister Narendra Modi. In order to achieve this outcome,
the ruling BJP must mobilize significant financial resources in deploying media resources and funding party machinery.



Corporate-controlled capitalism need not imply that corporate actors become direct policymakers. Rather, it need only be the case that fostering political centralization and fostering corporate consolidation is ‘incentive compatible’ for both political actors and business interests. In such a scenario, political actors willingly adopt policies that foster such corporate consolidation. Indeed, the scale of funds required for political centralization and the demands raised by increasingly wealthy big capital generate natural complementarities. A small number of highly profitable firms with national-level demands should find it easier to negotiate with a strong, unitary actor at the Centre, rather than a fractured coalition or a collection of different regional leaders. Similarly, the Centre should find it easier to negotiate between and inculcate loyalty between a small number of business actors.

In this way, there is a symbiotic relationship between political and economic centralization. The desire for political centralization creates incentives to create a small number of loyal wealthy corporate actors, who then wield greater influence in policy – generating corporate-controlled capitalism. This creates a feedback loop for even greater economic centralization.



The relationship between big capital and political financing has undoubtedly been strengthened through India’s controversial electoral bond scheme, which allows for large-scale donation in an anonymous manner. Anonymity  is key for political financing from businesses, as parties do not want to be seen as biased in favour of any particular business and businesses do not want to be perceived as enga-ging in corruption. Furthermore, the anonymity does away with plausible spending limits for political financing. Now, a small number of business actors holding a disproportionate amount of
the country’s profits may plausibly provide for a significant portion of a party’s financial needs. With greater levels of political centralization, the ruling government is more capable of manipulating economic policy if it should choose to do so.

According to analysis of party funding in fiscal year 2019-2020 by the Association for Democratic Reforms (ADR), 70% of funding for national parties comes from ‘unknown sources’. Among these unknown sources, 90%  is attributable to electoral bonds.21 Notably, the ruling BJP has received more than 78% of its funding from unknown sources – which is 3.5 times higher than funding from unknown sources for all other national parties combined. (It is worth noting here
that even for regional parties, 55% of funding comes from unknown sources.)



As I have argued here, two patterns are particularly worrying in understanding the role of India’s corporates in political financing. First, the desire for political centralization for the ruling party, and the fact that policies encouraging corporate consolidation are incentive compatible may lead to the manipulation of national economic policy. Second, the opaque nature of party funding implies that
a small number of corporate actors can plausibly provide significant money to parties in exchange for preferential treatment. Nonetheless, it is important to note that none of what I have shown necessarily implies political corruption or even illegal activities pursuant to laws around political financing.

In popular discourse, politics is disproportionately discussed through the lens of electoral behaviour. In academic discourse, too, there is a greater emphasis on studying the characteristics of individual legislators and local politics. However, the larger trends in the country are showing political and economic centralization growing in tandem – and this I believe is the core structural shift taking place in the political economy of India today. In this piece, I have tried to offer a simple set of logics which offer plausible explanations for the extraordinary economic concentration of wealth we are seeing in India today, and how it relates to policymaking. However, far more detailed empirical work is needed to truly understand the structural shifts we are observing in India’s political economy.



1. Neelanjan Sircar, ‘Where the State Failed to Build a Credible Case for Agricultural Reforms’, Hindustan Times, 29 November 2021. 20for%20agricultural%20reforms.pdf.

2. To be clear, the characterization of various models of capitalist economies is a vibrant (and at times contentious) literature, and this typology will necessarily cut across other theorized classifications of economies. My aim with this categorization is to focus on the key agents in framing policies for domestic economic markets.

3. Of course, some deviations from this model take place in the United States from subsidies in agriculture to differential taxation policy.

4. Chalmers Johnson, Japan, Who Governs? The Rise of the Developmental State. W.W. Norton & Company, 1995.

5. In framing this discussion, I am deliberately sidestepping a larger debate on the ‘varieties of capitalism’, which separate economies in to ‘liberal market economies’ and ‘coordinated market economies’. This characterization (and its criticism) has led to a fruitful debate on the structure of economies, demonstrating, among other things, a significant amount of variation in the role of the state in various East Asian economies.

See Peter A. Hall and David Soskice (eds.), Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. 1st edition. Oxford University Press, Oxford and New York, 2001.

6. This pattern of policymaking is closely related to what is commonly called ‘crony capitalism’ in which entrepreneurs use political proximity to extract benefits for themselves – although crony capitalism need not imply that entrepreneurs influence policy as in corporate-controlled capitalism.

7. Of course, the assumption in this typology is that the leadership is interested in wealth generation for some segment of the country’s citizens and residents and not just personal wealth (e.g., a ‘kleptocracy’).

8. Thomas Piketty, Capital in the Twenty-First Century. Reprint edition. Belknap Press, Cambridge and London, 2017.

9. Krishna Kant, ‘Profit Concentration in India Inc Rises amid Private Sector Growth’, Business Standard News, 25 November 2021,

10. Saurabh Mukherjea and Harsh Shah, ‘India’s Top 20 Leviathans’ Awe-Inspiring Dominance’, Marcellus, 2021,

11. Neelanjan Sircar, ‘The Politics of Vishwas: Political Mobilization in the 2019 National Election’, Contemporary South Asia 28(2), 2020, pp. 178-94.

12. Roman Dobrokhotov, ‘How Putin Became a Problem for Russian Oligarchs’, 24 December 2017,

13. Jagriti Chandra, ‘Adani Got Assets at 3 Airports for a Song, Says AAI Union’, The Hindu, 5 October 2021,

14. V. Venktaswara Rao, ‘The Rise of Monopolies in “New India”,’ Deccan Herald, 19 November 2020,

15. Neelanjan Sircar, ‘Money in Elections: The Role of Personal Wealth in Election Outcomes’, in Costs of Democracy. Oxford University Press, Delhi, 2018,

16. Gilles Verniers, ‘The Transformation of Backward Class Politics in Uttar Pradesh’, Economic and Political Weekly 53(33), 18 August 2018, pp. 7-8.

17. Kanta Murali, Caste, Class, and Capital: The Social and Political Origins of Economic Policy in India. Cambridge University Press, Cambridge, 2017.

18. Yamini Aiyar and Neelanjan Sircar, ‘Understanding the Decline of Regional Party Power in the 2019 National Election and Beyond’, Contemporary South Asia 28(2), May 2020, pp. 209-22.

19. Neelanjan Sircar, ‘The Welfarist Prime Minister: Explaining the National-State Election Gap’, Economic and Political Weekly 56(10), March 2021, pp. 7-8.

20. Sircar, 2020.

21. Association for Democratic Reforms, Analysis of Sources of Funding of National Parties – Fiscal Year 2019-2020, 2021,

22. Association for Democratic Reforms, Analysis of Donations Received by Regional Parties – Fiscal Year 2019-2020, 2021,