The most significant growth in the black economy occurred during and after the 1960s. Until this time, Gandhian and Nehruvian politicians who had been part of the independence struggle had largely administered the government. As their careers ended, officials who lacked their idealism, and were more likely to engage in corruption and rent-seeking practices, entered the government.The keynote of this "great divide in the history of public administration in India" was amorality.

Since the sixties, a new brand of electoral politics has seen leaders succeed who cater to specific regional, caste, religious, or linguistic communities as well as distinct private lobbies. In order to be reelected in a divisive environment, officials hand out benefits to private supporters and client communities. Nepotism in the allocation of government contracts and the siphoning-off of public sector funds occur on a large scale. For example, public sector real estate plots are taken over by individual politicians who then sell them at preferential rates to family members, campaign contributors, and other supporters in a process that is called "writing down". Democratic corruption is further compounded by rampant electoral malpractice, which undermines the legitimacy of the participatory process. Vote buying and voter coercion, political thuggery and warlordism are commonplace. Corruption pervades the political realm from the local district level, to the state level, to the national level, to the Prime minister's office - "The scams and scandals of the nineties revealed that among the persons accused of corruption were former Prime Ministers, former Chief ministers, and even former Governors."