Wealth of crony capitalists in India declines: Economist

A study by The Economist shows that the wealth of crony capitalists in India fell from its peak of 18% in 2008 to 3%, with the government taking several measures to clean up the system.
In its latest issue, The Economist says a slump in commodity prices has wiped off the balance sheets of several mining tycoons across the world. At the same time, the Indian government has got tough on graft, and the central bank has prodded state-owned lenders to stop ever-greening loans  given to Indian promoters like Vijay Mallya who left India after banks moved the Supreme Court to recover their Rs 9100-crore debt. The vast majority of Indian billionaires wealth is now from open industries such as pharmaceuticals, cars and consumer goods. The pin-ups of Indian capitalism are no longer the pampered scions of its business dynasties, but the hungry founders of Flipkart, an e-commerce firm, the report said.
The Economist's index on crony capitalism across the world is based on work by Ruchir Sharma of Morgan Stanley Investment Management and Aditi Gandhi and Michael Walton of Delhi’s Centre for Policy Research, among others. It uses data on billionaires’ fortunes from rankings by Forbes. The report labelled each billionaire as a crony or not based on the industry in which he is most active. It also compared countries’ total crony wealth to their GDP.
The Modi government came to power on the promises that it would take steps to curb crony capitalism in India. But soon the Opposition-led Congress leader Rahul Gandhi termed Modi as "suit-boot" government for favouring top industrialists.
Russia tops the list, followed by Malaysia and Philippines. India is ranked 9th in the listing of billionaires wealth to GDP index.
The Economist said the crony index is the idea that some industries are prone to “rent seeking”. This is the term used when the owners of an input of production — land, labour, machines, capital — extract more profit than they would get in a competitive market. Cartels, monopolies and lobbying are common ways of extract rents. 
Industries that are vulnerable often involve a lot of interaction with the state, or are licensed by it: for example telecom, natural resources, real estate, construction and defence, the report said. India Inc has successfully managed to stop FDI in many sectors including in insurance and defence and later made huge capital gains by selling their stake to foreign companies once the sector was opened up.
While the good news is that crony capitalism across the world is shrinking, developing countries still account for 65% of global crony capitalism.

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Wealth of crony capitalists in India declines: Economist