Weeding Out Corruption in India by Cleo Pascal
There is a revolution in India.
Individual by individual, an anti-corruption wave is growing within Indian civil society. In recent months, people from all sectors of Indian society have said 'enough is enough' and, each in their own way, are doing something about it. Some are taking to the streets, others are online, some are using the courts, others have turned to the media. The swelling wave has already washed away one government minister and is lapping at the ankles of some of the country's biggest players.
The implications are global. As the West and India work more closely together, corruption in India risks spilling over into partner systems. By cleaning up India, Indians are not only reclaiming their own country, they are making the world a more stable place. For anyone interested in lasting global security, it's important to understand how India has ended up where it is today and what Indian civil society is fighting for.
Origins of Corruption in Modern India include:
- Public sector pay and powers
- The tax collecting system
- Campaign financing
1. Public Sector Pay and Powers.
When the British took over large sections of what is now India from the East India Company, the British government acknowledged that, given the vast discretionary powers of the administrators, there could be the temptation to skim from the booty. So, they put in place a system that ensured that British officials posted to India would be very well paid -- and punished for dishonesty -- in order to mitigate the urge to dip into the coffers.
When the British took over large sections of what is now India from the East India Company, the British government acknowledged that, given the vast discretionary powers of the administrators, there could be the temptation to skim from the booty. So, they put in place a system that ensured that British officials posted to India would be very well paid -- and punished for dishonesty -- in order to mitigate the urge to dip into the coffers.
When India gained Independence in 1947, Prime Minister Nehru retained the extensive powers of the British colonial administration -- including laws that gave officials the right to intervene in almost any aspect of daily life. However, at the same time, he also dramatically reduced salaries in the public sector.
The result was a system in which an enormous number of poorly paid public employees had wide-ranging opportunities to 'make a bit on the side' through administrative coercion. It was almost inevitable that corruption would start to infect the system.
For example, the average Indian policeman is paid so poorly that taking bribes is almost part of the salary structure. In 2009, the housing allowance for the head of a police station in Mumbai, one of the most expensive cities in the world, was $45 a month. To be able to afford to house themselves and their family, it is not surprising if some have resorted to taking bribes. Usually the informal 'income supplement' is limited to relatively minor cases, like a small pay-off to get out of a traffic stop, but once the rot sets in, it can spread fast and deep.
Similarly, the Indian legal system is staffed by underpaid law clerks, prosecutors and lawyers, and moves at the lethargic, erratic pace of a drunken slug. Wealthy accused can give bribes for bail or for stay orders that can last for decades or a lifetime, if necessary. As a result, the Indian legal system is a weak deterrent to crime.
The problems with the system were so obvious that when Lee Kwan Yew set up his administration in Singapore, he was careful not to replicate India's mistakes. He ensured that officials were well paid (and harshly punished for indiscretions). Currently, in Singapore, the Prime Minister earns over five times the salary of President Obama and top ministers are paid around $1million a year. Corruption is extremely low.
2. Taxation.
In India, the situation grew even worse with Nehru's introduction of a tax scheme designed in large part by Hungarian Nicholas Kaldor. By the 1970s, the highest earners were required to pay 93.5 percent in tax. And, in some cases, the combined wealth and income taxes exceeded actual income. In many cases, it was simply not possible to survive if you paid the tax that was legally required. Combine this with the enormous discretionary powers of the tax collectors and, again, it was inevitable that tax evasion through corruption began on a massive scale.
In India, the situation grew even worse with Nehru's introduction of a tax scheme designed in large part by Hungarian Nicholas Kaldor. By the 1970s, the highest earners were required to pay 93.5 percent in tax. And, in some cases, the combined wealth and income taxes exceeded actual income. In many cases, it was simply not possible to survive if you paid the tax that was legally required. Combine this with the enormous discretionary powers of the tax collectors and, again, it was inevitable that tax evasion through corruption began on a massive scale.
3. Campaign financing.
Simultaneously, a range of profitable sectors were heavily restricted by the government, including some foreign trade and the sale of liquor. The result was that by the 1960s, as in the United States during prohibition, mafia elements took control of the sectors, generating huge amounts of black money.
Simultaneously, a range of profitable sectors were heavily restricted by the government, including some foreign trade and the sale of liquor. The result was that by the 1960s, as in the United States during prohibition, mafia elements took control of the sectors, generating huge amounts of black money.
That illegal money started to slosh around the system, contaminating all it touched, including campaign financing. While the cost of running for office in India is astronomically high, legal spending limits for campaigns are unrealistically low. This means that many potential candidates start their political careers by having to engage in illegal activities such as forging campaign documents, securing funding from dodgy sources and owing debts to various mafias.
Once elected, this has the twin effect of leaving the newly elected politicians open to blackmail and also of having to repay the money borrowed to get into office. Through blackmail, they may be pressured into enacting legislation that favors the illegal sectors. In order to repay debts, they may use their position to extract bribes and provide favors.
Additionally, officially, politics pays very poorly and, as the politicians might only be in office for a single term, they only have those 4 years or so to secure their family's fortune and set up connections that will serve them well out of office or ensure their reelection.
If so inclined, and they use their position to generate cash, they might also use hawala networks and the like to stash their illegal money in safe havens, which then makes the politicians vulnerable not only to domestic blackmail but to the influence of international terrorist networks, as well (for more on this click here).
As a result of all these factors and more, India is now caught in a situation where many sectors are steeped in endemic corruption, including those charged with controlling the corruption itself: from the politicians who write the laws to the police charged with enforcing it. Recently the amount of Indian black money in offshore accounts was estimated to be about $1.4 trillion.
Why Now?
Indians from all walks of life have been the real heroes of the modern anti-corruption movement in India. However, for a long time there was virtually no national-level civil society in India -- most activity was regional, language or religion-based. Much of the media, which could have acted as a national unifier, is owned by some of the same large companies that have benefitted from the existing system. As a result, there was no real challenge to the arbitrary misuse of power.
But several things have changed since the time of Nehru. And key among them are:
- Economic liberalization
- Positive effects of globalization (including a growing awareness of other ways of doing things)
- Increased use of English
- Social Media
Economic liberalization.
Until the end of the 1980s, most of the big companies in India were run by the public sector. This large economic turnover offered equally large opportunities for the misuse of funds by the 'corporate' sector and their political overseers. (As a side note, this is the current situation in Iran, where the Revolutionary Guard runs large sectors of the economy.)
Things began to change in 1992, with the economic liberalization policy of Indian Prime Minister P. V. Narasimha Rao. Public control of the 'commanding heights' of the economy was diluted. At the beginning, those personally closer to key government officials developed faster.
During this period of 'influence-based capitalism', many well-connected companies expanded quickly. Naturally, they also used their influence to get changes in policy that favored their businesses. The result was that the growth was often based not on business efficiencies, but on favorable policies.
Devesh Kapur, director of the Center for the Advanced Study of India at the University of Pennsylvania, describes how that affects the Indian middle class by saying: "This middle class is less about 'what the state can do for me' than 'the state is preventing me from doing what I want to do.'"
In the mid-1990s, there was a growth breakthrough in sectors unconstrained by regulations. For example, the vast regulatory system was slow to catch on to the IT sector and service industries. As a result of this blind spot, both sectors grew exponentially, and quickly became global players.
This has resulted in the creation of a new class of business people who have succeeded not through corruption, but in spite of it. While previously, industry grew through influence/corruption, the new private sector finds corruption not an asset, but a hindrance.
Positive Effects of Globalization.
This new globally competitive business sector is largely fluent in English and social media savvy. They see how things are being done elsewhere and want the same efficiencies and freedom from corruption at home.
And it's not just the business sector. The number of people with a vested interest in an honest system has exploded. From the newly educated middle class to those in rural areas, people are becoming aware that the local corrupt officials are part of a larger system that is smothering the country and stealing the future from their children.
Through the common use of English and technological innovations like cheap mobile phones and Internet access, a truly national Indian civil society is coming of age. It has seen that corruption is not necessary. For example, not long ago, something as simple as booking a rail ticket or flight could require a bribe. Now it can be done cleanly online. Before, getting a phone line put into a home or office took months and a pay-off. Now you can get a mobile phone and SIM card at the corner shop.
Times have changed. And, when it comes to corruption, the Indian public isn't going to take it anymore.
What now?
As understanding grows that corruption isn't fixable in a one-off solution, those who have been tracking and analyzing these issues for decades are stepping forward. On October 14th, India's newly formed Action Committee Against Corruption in India (ACACI) held its first official meeting. The Committee's core team consists of many key members of the brain trust who have been guiding the movement since the early days, and is a who's who of the anti-corruption wars.
Some of the members:
The Committee is chaired by Dr. Subramanian Swamy, a Harvard professor and former Indian government Law Minister. Firebrand Dr. Swamy has a track record of bringing to book some of the biggest political players so far caught up in the corruption scandals, including a government minister.
Prof R. Vaidyanathan, from the Indian Institute for Management Bangalore, has been systematically looking at the issue since the mid-1990s, producing groundbreaking research on the causes and reach of the challenge.
Journalist M. D. Nalapat wrote a series of columns in the 1970s condemning public sector illegalities and was forced to quit as editor of Mathrubhumi newspaper as long back as 1984 because of his anti-corruption coverage. When he was finally hired by the Times of India in 1989, his first story was about how the Chief Minister of Karnataka was giving away expensive land on the cheap to favorites. Another series on corruption in 1995 finally got him pushed out from the Times, as well. Nalapat turned to academics and column writing. In a sign of the changing times, Nalapat recently returned to a staff position in journalism, becoming a columnist for the Sunday Guardian.
The Committee's objectives include analyzing, and proposing counters to, the root causes of corruption in India. A main goal is to give information to Indian civil society.
For many, social activist Anna Hazare, recently arrested and released in connection with his anti-corruption fast, has become an important symbol of the anti-corruption movement. However, there is growing concern that, in spite of his best intension, and those of his followers, his single shot solution (an anti-corruption superagency that itself, despite the best of efforts, risks becoming corrupt) may not be enough to inoculate the system from the debilitating parasite of corruption. The challenges are too complex and embedded. There is a growing need and demand for systemic solutions. Which is where the new Committee comes in.
While many brave individuals have been fighting the anti-corruption battles for a long time, they have been largely voices in the wilderness, until recently.
However, as these experts combine forces with the new wave of courageous, aware and engaged Indian civil society, there is a chance that the hold corruption has over India may start to weaken. Through the efforts of Indian civil society, India as a nation is truly coming of age.
This is something that will benefit not only India, but also those who are her partners. It's crucial for the West to understand and appreciate the monumental struggle now unfolding in India -- a critical ally in the fight for worldwide democracy, prosperity and secularism.
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Article: IMPASSE OVER: Anna to end fast at 10 am on Sunday
Anna 's faston Aug 28, 2011 06:21 PM
Detractors are stooping to low levels to demean the noblest, non-violent movement of recent times. If Anna was taking water or glucose as reported and sat in fast, was it not still a miracle that he survived? Dr.Trehan has gone on record that it was a medical miracle for a 74 year man to survive for 13 days without food. So, no further certificate is required. Let us see the background. Widespread corruption and PM's inability to control it inspite of his distinguished record is the cause for public anger. In no way, it is a comment on public policy to ameliorate the condition of deprived sections. So, let us avoid the mischief of confusing the people. The corrupt ones like terrorists are no one's friend. We should get rid of this menace and the culprits as early as possible for the larger good of the country.