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Govt's non-recognition of Bollywood forced the deadly mafia embrace

There is a lot of breast-beating in the Indian media about the deteriorating law and order situation in the country following the brutal daylight assassination in Bombay of audio cassette king and movie mogul Gulshan Kumar on August 12. And last fortnight a real estate tycoon was gunned down in broad daylight in similar fashion in Nariman Point, the heart of Bombay's central business district.

But in the hurly burly, one vital factor has not received sufficient attention: the film and entertainment industry (and the real estate development business) is not an industry. At least not in the eyes of the Union finance ministry, banks and the financial institutions in India. And this lack of recognition of the film industry as such is the reason why Bollywood's movie moguls have become deeply involved with the mafia dons of Bombay's notorious underworld.

The attitude of the foolish politicians and bureaucrats in New Delhi who formulate the nation's economic policies -- to disastrous effect thus far -- towards the world's largest feature films or movie industry is bizarre.

On the one hand, politicians cutting across party lines take great pride in proclaiming a nation. They are well aware that this industry contributes substantial amounts to the exchequer of the central and state governments, by way of income, customs, excise, and entertainment taxes. They are also well aware that the film industry provides employment to millions of people in Bollywood, Mollywood (Madras) and in thousands of large and small towns across the country where distributors, cinema owners, and the like hire armies of clerks, ushers, snack vendors, and others to keep the reels of movie production running.

Yet, for the past five decades, the world's largest film industry which cranks out more movie than Hollywood every year, has not been accorded formal recognition as an industry. The consequence of this amazing act of neglect and/or deliberate omission is that banks and financial institutions, largely owned by the government, are not permitted to lend money -- even as working capital -- to the movie manufacturing industry. And it is typical of the schizophrenia which characterises Soviet-style central planning adopted by post-Independence India that the Union and state governments and their tax-collection agencies have turned a blind eye to the sources of finance of the world's largest film industry.

At zero ground level and in the real world of industry and commerce, it has always been an open secret that the primary source of funds for the film industry has been the shadowy crime syndicates of Bombay and other metros. These syndicates began as modest gangs of smugglers and prospered thanks to the ridiculously high and conveniently leaky tariff walls erected by the mandarins of the Union finance ministry to protect Indian industry from foreign competition. Since then, these gangs have very profitably diversified into gold smuggling, narcotics, gun-running, illicit liquor, prostitution, and protection rackets. And now their leaders are fast entrenching themselves in the nation's institutions of political governance.

In retrospect, the growth of India's film industry is astonishing given the privations to which it has been subjected. Typically, an Indian feature film is produced in bits and pieces depending upon the flow of funds to the producer. The initial reels usually featuring a song and dance sequence, are shot with money raised from crime syndicates or the producer's own funds. These reels are then exhibited to territorial distributors who buy the rights to purchase an agreed number of prints to exhibit the movie (when finished) in their territories. After having collected these advances the producer completes the shooting and editing of the feature film. Top-up finance, if required, is once again provided by the crime syndicates. Little wonder most Indian films lack credible story-lines, continuity, and are of poor quality.

The denial of institutional finance to the film industry is probably rooted in impractical puritanical notions which leftists and socialists harbour within their dictatorial psyches. Instead of letting bank managements decide their own lending priorities, the nation's banks have been driven to the edge of bankruptcy by government-directed lending. Socialists are invariably too business illiterate to grasp the reality that a well-developed film industry has great educational potential and can help to usher in modernisation ideals into developing societies.

Indeed, despite the generally abysmal quality of mainstream Indian cinema, it is arguable that the film industry has done more to promote communal harmony and national consciousness than all the lectures of the entire political class. Nor are the politicians and bureaucrats in New Delhi or the state capitals likely to derive any mileage from the fact that the well-organised American films and entertainment industry is the second largest export revenue earning industry of the USA.

The plain truth behind the spate of murders and extortion threats which have created panic in India's film industry is that by denying it institutional finance, the nation's politicians and bureaucrats have driven the film industry into the deadly embrace of organised crime. In the process, not only have they stifled the growth impulses of this high-potential industry by have also denied the nation's bad debts ridden banks and institutions a profitable business opportunity. Such are the wages of 50 years of business-illiterate socialism.

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