What is the similarity between Atal Bihari Vajpayee, Manmohan Singh, Narendra Modi and Nitish Kumar? They all claim that they are economic leaders par excellence. Either at the national level or the state level, they accelerated economic growth, reduced poverty levels, and enhanced expenditure on welfare schemes. They developed an almost-perfect development model that can be successfully replicated in the next few decades. They are the modern economic visionaries.

One can obviously dispute their successes. Vajpayee’s growth did not trickle down enough and that’s why his alliance lost the 2004 national elections, despite the ‘Shining India’ campaign. Singh’s two regimes have been among the most corrupt in independent India’s history. Modi was given undue credit for the Gujarat growth story and Nitish’s achievements were exaggerated.

However, in this barrage of arguments and counters, a crucial point gets lost in heated debates. The exploits of all the four leaders are not just based on what they did with the mainstream economy. Instead, their accomplishments also depended on how they either deliberately or willy-nilly dealt with the ‘black’ economy. Only because these leaders provided enough incentives to investors to re-route their hidden and illegal wealth into legal businesses did they achieve what they did. The specific policies that determined the conversion of black money into white were different in each case.

In Bihar, Nitish took upon himself to tackle the dismal law and order situation. Once the wealthy felt safe from extortions and kidnappings, they were willing to spend their money. Earlier, they hid their ill-gotten riches, and underplayed the assets they owned because of the fear that they would attract the goons. During Nitish’s time, they invested their black money. This explained why the highest growth rate witnessed in the state in the recent past was in real estate and construction, the two sectors where the maximum amount of black money is earned and invested.

Vajpayee was helped by the Mauritius route. During his tenure as PM, the government somehow widened the contours of the tax haven route to allow Indians to bring back the money they had stashed abroad in secret bank accounts. For the first time, domestic investors realized that they could safely invest their black money as white in India without any tax implications. In addition, they could earn huge profits. In droves, they pumped in money into manufacturing, real estate and stock markets. Despite criticisms, between 2004 and 2013, Singh’s regimes kept this route open.

Ever since he became the Chief Minister, Modi improved the business sentiments. He made sure that not only was it easy to invest in his state, it was also more profitable. Thus, there was less incentive to earn black money and this reflected in higher growth rates. He gave huge sops in the form of tax holidays, stable land prices, and efficiencies that translated into cost-savings. Since Modi ruled like a dictator, no one opposed his policies which, in any other state, could have turned into mega scams. The incentives were democratized; every businessman got them and did not complain against others.

Singh’s modus operandi was to unlock the hidden value of the scarce natural resources, not to benefit the government but the business community. During his two tenures, the sale of spectrum (mobile telephony), allocation of coal blocks and lease of mines, helped businessmen to secure these resources at considerably cheap prices. With dollars dancing in front of their eyes, many investors immediately used their black money for the purpose. It led to the second phase of the telecom revolution, and gave an indirect fillip to the improvement of infrastructure across the country.

Clearly, there is a ‘black’ side to economic upturns propelled by all the four leaders. It is possibly a lesson for others too. If one wishes to achieve high growth rates in India, one has to tackle the black economy, and ways have to be found to bring this money into the mainstream economy. Only when a country can unlock the value of the hidden wealth is it in a better position to help its poor. In some senses, development is a negative-sum game; it is higher if the government helps the corrupt!