Beware the Tax Man

For many Indians, their country’s most exciting politician is neither the firebrand Hindu nationalist Narendra Modi nor the Nehru-Gandhi dynasty scion Rahul Gandhi, but Arvind Kejriwal, a mustachioed, bespectacled former tax inspector whom most people had barely heard of just three years ago.

In February, Kejriwal resigned as chief minister of Delhi just 49 turbulent days after he took office. Freed from the daily grind of running a megacity of 17 million people, the 45-year-old former anti-corruption activist can now concentrate on pole-vaulting his fledgling Aam Aadmi (Common Man) Party into Parliament in national elections in April and May. Although most polls suggest AAP will win fewer than 10 of the 543 seats up for grabs — coming in far behind the opposition Bharatiya Janata Party (BJP) and the ruling Congress party — campaigning is far from over and the party has proved naysayers wrong before in Delhi.

Kejriwal’s supporters see him as a squeaky-clean outsider who will transcend narrow appeals to caste and community to banish corruption from public life. For them, he stands for qualities all too rare in Indian politics: merit, courage, and simplicity. His detractors see instead a slippery opportunist less interested in governing than in grandstanding for the cameras with outlandish protests and florid allegations against top politicians and businessmen. For them, Kejriwal stands not for the promise of clean government but for the certainty of chaos.

Both versions contain an element of truth. And indeed, even if his party ends up with just a handful of seats in Parliament, Kejriwal’s everyman appeal, guerrilla campaign tactics, and relentless attacks on graft may end up transforming the face of Indian politics. In the end, however, the evidence favors the skeptics. Whatever his personal virtues, Kejriwal’s rhetoric, economic thinking, and actions in office suggest a throwback to India’s pre-liberalization past: He appears to believe that baiting the wealthy is the surest route to popularity with the poor. Kejriwal’s popularity raises questions about whether India’s democracy can outgrow the socialist bent that has kept the country poor while much of East Asia has raced ahead.

After a decade of policy paralysis under outgoing Prime Minister Manmohan Singh, India’s global standing has already taken a beating. With the International Monetary Fund estimating 2014 GDP growth at 4.4 percent, less than half India’s historic 2011 high of 10 percent, the last thing the country needs is a charismatic populist who portrays foreign investors as exploiters and Indian businessmen as crooks. Despite occasional lip service to the private sector, at his core Kejriwal is an old-fashioned Indian statist whose ideas belong in a museum, not in Parliament.

* * *

Kejriwal first sprung into national consciousness in 2011 as the architect of an anti-corruption campaign led by then 74-year-old social activist Anna Hazare. Angered by multibillion-dollar government corruption scandals spanning the sale of the telecom spectrum, real estate, and procurement for the 2010 Commonwealth Games in Delhi, India’s normally apathetic middle class protested in the streets to back Hazare’s demand for a janlokpal — a powerful anti-corruption ombudsman insulated from political interference. As Hazare’s right-hand man, Kejriwal became a fixture on national television, where he bore the brunt of explaining why the janlokpal was necessary and how it would work. His appeal to idealism and his ability to convey a broadly shared sense of outrage quickly made him a hero to much of the middle class.

In August 2011, after the high-voltage drama of Hazare’s 12-day hunger strike on live television, the Hazare movement managed to extract a promise from India’s government to agree to set up a janlokpal. But once the pressure of the hunger strike was over, negotiations stalled and a rift developed in the movement between two factions. A group led by Kejriwal argued that Hazare’s movement, India Against Corruption, needed to transform itself into a political party to force change from within the system. Others countered that it made more sense to stay above the fray as a pressure group that could influence politics without fighting elections itself.

At first, Kejriwal played the role of a good lieutenant, publicly likening himself to Hanuman, a character from the Hindu epic the Ramayana known for his steadfast loyalty to his king. But when it became clear that Hazare had no intention of entering politics, Kejriwal parted ways with his mentor. In the first clear sign of Kejriwal’s soaring ambition, he chose Mahatma Gandhi’s Oct. 2 birth anniversary in 2012 to announce the creation of a new political party.

The date was no coincidence. Kejriwal calls his fight against corruption "India’s second independence struggle." AAP supporters sport the cloth caps associated with India’s independence movement, emblazoned with the words "I am a common man" in Hindi to set them apart from run-of-the-mill politicians, most of whom have abandoned the old-fashioned headgear. In 2012, Kejriwal published a slim book called Swaraj (Self-Rule), which echoes Gandhi’s Hind Swaraj (Indian Self-Rule), written in 1909. (Swaraj has been republished in several Indian languages but remains better known to journalists than the general public.) Written before the demands of full-time electoral politics took over, it remains the single best guide to Kejriwal’s core beliefs.

If Kejriwal stands for one thing to his fans, it’s a fierce sense of morality. For party supporters, AAP, whose symbol is a broom, will sweep away the rot of the old order to usher in a clean and accountable government. During his brief stint as Delhi chief minister this year, Kejriwal eschewed common trappings of political power, such as a gaggle of machine gun–toting bodyguards and a car with a flashing red light that cuts through traffic. On the stump, Kejriwal never tires of reminding voters of how he could have made a fortune shaking down businessmen as a corrupt tax official but instead chose to quit and become a social activist before turning to politics. "I was an income tax commissioner," he declared in October at a typical campaign rally in Delhi. "With just one raid, 2 crore rupees [$327,000] would have landed in my home."

AAP’s transparent approach to finances — it holds U.S.-style fundraising dinners and says it lists all donations on its website — and inexpensive campaign tactics, such as door-to-door canvassing by unpaid volunteers, contrast sharply with the usual murk of Indian politics. While Congress and the BJP plastered Delhi with expensive billboards, AAP relied on volunteers to stand on overpasses with party banners. And Kejriwal’s willingness (some would say eagerness) to be grilled by journalists on television is a departure from the aloofness of established politicians like the BJP’s candidate, Narendra Modi, and the Congress party’s Rahul Gandhi. By publicly hurling accusations of corruption against some of India’s most powerful people — including Congress President Sonia Gandhi’s son-in-law, the businessman Robert Vadra, and India’s richest man, Reliance Industries Chairman Mukesh Ambani — Kejriwal has built a reputation for raw courage that few of his peers possess.

Kejriwal’s uncommon biography also helps. Unlike most professional politicians, whose chief qualification for public life is usually either a family pedigree or a talent for sycophancy or rabble-rousing, Kejriwal passed two of India’s most competitive exams: those for the Indian Institutes of Technology and the Indian Revenue Service. Unlike the archetypal rustic politician, he’s fluent in both Hindi and English. Despite the occasional nod to Muslim clerics, for the most part Kejriwal avoids naked pandering to caste and religion. His two main policy goals — a janlokpal with teeth and radical decentralization of power to neighborhoods and village councils — are big ideas, not narrow appeals to identity.

It’s hardly surprising then that Kejriwal has struck a chord with many middle-class Indians fed up with politics as usual. For those uncomfortable with the muscular Hindu nationalism of front-runner Modi, Kejriwal offers change without the baggage of religious chauvinism. For those underwhelmed by the dilettantish Gandhi — with little to show for a decade in Parliament despite his famous last name — the former tax man stands for merit and hard work. For those who despair of the enduring pettiness of India’s regional and caste-based parties, AAP offers a bracing dose of idealism. Since its establishment less than 18 months ago, the party has signed up more than 10 million members and has established chapters among overseas Indians in 31 countries across five continents. On Twitter and Facebook, reliable proxies for middle-class sentiment, Kejriwal has quickly built a vast following.

Despite this impressive start, to most observers AAP’s prospects in the forthcoming elections, which begin April 7 and conclude May 12, don’t look bright. Notwithstanding the usual caveats (election surveys in India remain as much crapshoot as science; most polls underestimated AAP’s performance; and campaigning for the national elections has only just gathered steam), only an audacious gambler would bet on AAP. India’s gargantuan democracy — with 814 million eligible voters picking 543 directly elected members of Parliament in a first-past-the-post system akin to Britain’s — doesn’t usually favor newcomers.

Although AAP plans to contest an ambitious 350 to 400 seats, it lacks the organization, rural name recognition, and grassroots support outside Delhi to make a serious electoral impact or to significantly dampen the wave of support Modi appears to be riding. The arguably best-regarded Indian poll, by the Delhi-based research institute Centre for the Study of Developing Societies, gives the party only between one and five seats in Parliament and just 3 percent of the national vote. (Modi’s BJP appears on course to emerge as the big winner, with between 193 and 213 seats and 33 percent of the vote.)

Nonetheless, AAP has already changed the grammar of Indian politics. By capturing power in Delhi, it showed that a party rooted in a middle-class ethos can challenge an entrenched political class. Kejriwal is also arguably India’s first truly television-savvy politician. No other Indian leader owes as much to nonstop (much of it fawning) coverage by India’s Delhi-based national news channels. He has mastered the art of the TV interview and appears to have an instinctive sense of what will capture the headlines: reconnecting power for a poor consumer who couldn’t pay his bills, taking the Metro to a public swearing-in before thousands of supporters, or spending the night on the street to demand control of Delhi’s police force. By contrast, the election front-runner, Modi, appears limited: master of the televised speech, but reluctant to grant interviews and flat-footed when it comes to exploiting the power of the visual image. (The less said about Gandhi’s gaffe-prone and lackluster efforts the better.)

AAP has already forced its competitors to mimic it. At party rallies, the BJP has also taken to supplying its supporters with cloth caps, albeit in saffron, the color of Hinduism. Its website too calls for donations, in part to blunt AAP charges that Modi is beholden to corporate fat cats like Ambani and the infrastructure and commodities billionaire Gautam Adani. And, somewhat ironically for a party associated with the most staggering corruption scandals in Indian history, Gandhi too has now made graft-busting a central feature of his campaign.

In Delhi, AAP mostly ran fresh-faced outsiders rather than career politicians. The party’s slate of parliamentary candidates includes India’s most prominent election pollster, a fiery former television anchor, a prominent anti-dam activist, a flamboyant Hindi poet, a peace activist grandson of Mahatma Gandhi, a former Miss India, and the former head of Royal Bank of Scotland in India. By running untainted candidates new to politics, AAP may force other parties to widen their nets instead of only nominating the usual cast of thugs, crooks, and dynasts invariably chosen purely for their chances of getting elected.

* * *

But Kejriwal’s gift for grabbing headlines also underscores AAP’s essential problem: It’s heavy on symbolism and light on substance. Kejriwal has yet to show the faintest temperament for governance. Instead of sticking it out as chief minister, he resigned after just 49 days, citing an inability to get his version of the janlokpal passed in Delhi. And Kejriwal’s economic ideas are a blueprint for disaster.

When he took power in Delhi in December, after one of the most stunning campaign debuts in Indian politics, Kejriwal set about implementing a populist agenda. Keeping a campaign promise, he halved power tariffs. He also dropped legal proceedings against anyone who hadn’t paid an electricity bill in the previous 10 months. (He had claimed, without evidence, that private power companies were cooking the books to gouge consumers.) In an arid region, Kejriwal granted Delhi residents, including the rich, 20,000 liters of free water per month. In February, Delhi became the first Indian state or union territory to scrap foreign direct investment in big-box stores such as Tesco and Walmart, rolling back a 13-month-old reform by the federal government meant to modernize India’s retail sector. (The BJP-ruled state of Rajasthan quickly followed suit.)

And instead of focusing on the city’s real problems — such as pollution, traffic, and drainage — Kejriwal spent his time in office preening for the cameras. In January, he brought life in central Delhi to a halt by taking to the streets over a squabble with Delhi’s police force, which the federal government controls. He also managed to get bogged down in warding off allegations against his law minister, Somnath Bharti, who organized a bizarre midnight vigilante raid against African immigrants he accused of prostitution.

In a February speech to the Confederation of Indian Industry, an influential association of Indian businesses, Kejriwal tried to calm fears that he’s just another fiscally reckless populist eager to squabble publicly with the private sector in order to garner votes. He spoke with feeling about his grandfather’s small oil mill and the harassment he faced from petty officials. He distinguished between capitalism and crony capitalism and conceded that the vast majority of businessmen were forced to pay bribes by India’s complex bureaucracy swaddled in red tape. AAP’s economic agenda talks of restoring high growth and boosting manufacturing. Not coincidentally, the election front-runner, Modi, is campaigning partly on the strength of his pro-business record running the western state of Gujarat.

Unfortunately, Kejriwal’s attempted makeover lacks credibility. AAP’s top leadership draws heavily from grizzled foes of liberalization and globalization. A senior AAP leader, Prashant Bhushan, has reportedly called for the nationalization of airports and power plants. And the only time Kejriwal sounds remotely reasonable about business is when he’s speaking to a business audience. For the most part, a common theme runs through his writing and speeches: Foreign investment is evil, and businessmen who make profits are crooks unless proven otherwise. His book, Swaraj, opens with a laughable anecdote about an honest income tax official bullied by a corrupt multinational executive who claims that India’s Parliament is in his pocket. In reality, multinationals in India often complain of harassment by whimsical tax men with vast discretionary powers.

In his campaign speeches, Kejriwal sometimes sounds as though AAP is running against Ambani — whom Kejriwal regularly accuses of colluding with the government to inflate gas prices — rather than against the BJP or Congress. Journalists who question this shoot-from-the-hip style are immediately dismissed as being on the take.

And AAP’s signature idea — a janlokpal tougher than the one Parliament established in December in response to the 2011 protests — fundamentally misreads the causes of corruption in India. It assumes that a new layer of bureaucracy, staffed by officials miraculously immune to bribery, will solve a problem caused by too much bureaucracy in the first place. The World Bank ranks India 134 out of 189 countries in terms of ease of doing business, behind such exemplars of free enterprise as Pakistan, Ukraine, and Uganda. On average, starting a business in India requires 12 procedures and takes 27 days; in Singapore it takes three procedures and less than three days.

Kejriwal also shows a capacity for hypocrisy unusual even for a politician. Throughout 2013, he repeatedly promised Delhi voters that AAP would never work with Congress to form a government, only to swiftly reverse himself once the results came in and showed him short of a majority. After campaigning against ostentation in public life, he shocked many supporters by commandeering two houses luxurious by Delhi standards, before an outcry forced him to change his mind. Despite frequently attacking Modi for using private jets, Kejriwal hopped onto one himself in early March to return to Delhi in time for a speech at a high-profile media conclave. And after claiming that AAP representatives elected as state legislators would not contest parliamentary elections, Kejriwal himself is poised to run against Modi in the northern city of Varanasi.

* * *

In the long term, anyone serious about ending corruption in India must fight it while growing the economy. For all his graft-busting zeal, Kejriwal appears to have ignored a simple fact: Governance in rich countries is usually cleaner than in poor ones. Average per capita income in the five countries perceived as the least corrupt, according to Transparency International’s 2013 ranking, was about $40,000. For the five most corrupt countries it was $1,500; India’s is roughly $4,000.

With the possible exception of tiny Singapore, countries became rich before they became clean. To emulate them, India needs private firms to be treated as job creators, not criminals, and it needs plenty of foreign investment by multinationals. The last thing it requires is a return to the reflexes of the license-permit raj, when government was the solution to every problem and anyone who ran a successful business immediately became an object of suspicion.

In a March 2013 speech at the Wharton India Economic Forum, Kejriwal observed that "when Indians go abroad they have excelled in every field" because "Indians are first-class people who are victims of third-class governance." There’s a grain of truth in those statements. But if Kejriwal wants people to trust him to fix the problem, he ought to consider earning that trust by running a state effectively for a full five-year term. Until he can prove that he won’t shred business confidence and turn government into a kind of vaudeville act for the cameras, India is better off with Citizen Kejriwal as a maverick on the sidelines rather than as a serious contender for power.