India's crony wealth plummets to 3.4%

Crony capitalism is a description of capitalist society as being based on the close relationships between businessmen and the state.

The success of a business is dependent on the favoritism that is shown to it by the ruling government and not on free market values and rule of law.

This can be in the form of tax breaks, government grants and other incentives.

According to a study by the Economist, India ranks ninth in the world crony-capitalism index with crony wealth accounting for 3.4% of GDP down from 18% in 2008.

Key factors responsible are a slump in commodity prices, weak currency, end of the property boom in Asia and the Modi-government's tough stance on corruption.

Russia tops the list, followed by Malaysia and the Philippines.

Using data from Forbes list of the world's billionaires and their worth, each individual is labeled as crony or not based on the source of their wealth.

Germany is cleanest, where a small fraction of the billionaires' derive their wealth from crony sectors.

Crony capitalism in Russia is at an all time high, with crony wealth accounting for 18% of its GDP. ​

According to the Economist, there has been a backlash against cronyism from a growing middle class in the emerging world.

Another reason leading to the decline of crony-capitalism is the fall in global prices of mines, steel mills and oil-fields and real estate sectors. These sectors are closely associated with crony capitalists.

In India, pharmaceuticals and consumer-goods are major contributors to current billionaires' wealth.