Kamis, 03 April 2014

The virus of corruption

In the previous posts developing the economic manifesto, we had parked the issue of corruption to be discussed separately. We now address the tackling of corruption, arguably one of India's biggest problems and one which is indisputably linked with any economic road map.

My first submission is that corruption can never be totally eliminated - for it stems from one of the basic human  vices - greed. We can, and should, control it as much as possible. But elimination is impossible.  Nowhere on earth has corruption been made extinct.

The battle against corruption needs to be tackled on three fronts

  • Minimise the chances of corruption by removing the need for government clearances, permits, licenses, etc except for where this is absolutely necessary
  • Transparency and oversight over commercial transactions involving the government
  • A powerful and vigilant independent body that monitors, checks and prosecutes cases of corruption

The problem with the Anna Hazare movement is that it exclusively focused on the third element and completely bypassed the first two. The reason why his political successor, the AAP, will not succeed in tackiling corruption is that it too exclusively focuses on Item No 3 and actually seeks to increase the first problem.

The first front of the battle has to be to eliminate the need for licenses, permits, and various clearances, that have long outlived their utility and which are exclusively designed to breed corruption. Every commercial activity in India is subject to a plethora of rules, procedures and licenses, three fourths of which are not required and are primarily the source of petty corruption. These can be eliminated easily by

  • Trawling through such laws and repealing them
  • Consolidating all others and making them single window procedures
  • Making them  transparent, online and therefore not subject to the whims and fancies of the babus

There are many examples of this being successfully done in India. In 1991, we took the bold step of abolishing Industrial licensing , a previously unthinkable step. P Chidambaram, then a young turk full of energy simply abolished the Controller of Exports and Imports in one stroke - one of the most corrupt bodies then ( famous quip of his when he met the worthy was,  "I can understand somewhat your trying to control imports, but why on earth are you controlling exports !") . It has been done and can be done now.  It doesn't need a financial emergency to goad action. I am not advocating the Wild West at all - clearances such as pollution, fire safety, etc are paramount. But do you have to have laws saying the font size in which the name board of your company has to be in and the  need for first having Kannada and then only English in the name board. Or the need to inform the local babu everytime you have to open the office on Kannada Rajyotsava day ?  You would be amazed how many such requirements exist.

The second, and most important battle is to govern the processes of economic transactions with the government.  These are primarily in the areas of price fixation for assets owned by the government - spectrum, coal, etc,  and the execution of government projects such as roads, public events like the Commonwealth Games, etc. This can be achieved by 

  • Clear and transparent, published rules governing each type of such transactions
  • Oversight by independent regulators (already happens today when such transactions come under the purview of SEBI or TRAI or RBI, etc). As a corollary, make all these regulators independent, starting with the RBI.
  • Create an ombudsman body, staffed by eminent independent Indians, who will pre approve all transactions above a certain limit (very high limit obviously)
  • Government to get out of price fixation for products (like electricity, gas, coal, etc ) everywhere and leave it to markets. If it wishes to intervene, these will be in the form of open market interventions, very similar to how the RBI acts today
  • Pricing of natural resources is to be through an open transparent auction (like what happened for 3G telecom)
A leader who is personally non corrupt, powerful and is prepared to leave government decisions in the hands of professionals will ensure that this is effective. Something like this is what has happened in Gujarat and is the reason for the halo around that leader. Copy the model elsewhere, although that will take some doing with two of the three gargantuan megalomaniac ladies that dot our political landscape.

The third (and only the third) step is to create a powerful, anti corruption oversight body. In the absence of the first two steps, this will never be effective. But in conjunction with the first two, this can be a solid weapon. Enough has been said on this subject. Simply enact the Lokpal Bill.

Is all this simplisitic. Yes, it is. I had no desire to write a thesis, but I will be happy to get into a detailed discussion on any aspect with any reader.

There is a missing ingredient in all this. It is the moral fabric and value system of the citizens of India - a factor rightfully emphasised repeatedly by The Million Miler, one of the regular commenters.  Unfortunately this is India's greatest weakness. The moral fabric of the nation and its citizenry, I am deeply saddened to say,  has been completely torn apart. It pains me to say this, but we are a corrupt nation intrinsically. It is a rare Indian who is not corrupt at heart. He expects everybody else to be clean, but doesn't think a fraction of a second before bribing anybody to get his job done.  That is the reason why corruption will always be a significant element in Indian life. A messiah is needed who will lift us from the sad levels to which our values have degraded to. Until then, we cannot eliminate corruption. But we can try to contain it.
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