Crony Capitalism

Crony Capitalism

Crony Capitalism is a pejorative term used to refer to the corrupt business dealings carried out by  government officials in a  capitalist economy . What is it that politicians do when they become ministers ? They help their family members and friends make money by awarding them government contracts , legal permits , special tax breaks etc. This favouritism that they show towards family members and friends is calling called crony capitalism , ‘crony’ as being a ‘close friend ‘.

This term was initially applied to states involving involved in the 1997 Asian Financial Crisis such as Thailand and Indonesia . In these cases, the term was used to point out how family members of the ruling leaders become extremely wealthy with no non political justification.

This practice became increasingly prevalent in India after the 1990s liberalization, whereby , land and other resources were given at throwaway prices in the name of public private partnerships . Similarly the special economic zones ( sez) became an opportunity for land grabbing  . Unfortunately, cronyism has become an integral part of indian business .

Thus  by killing transparency and competition, crony capitalism is harmful to free enterprise , opportunity, and economic growth .

 

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