Push development to kick corruption

The Radia tapes have exposed the business-politics-media nexus. There are scandals in loans for real estate companies in which PSU banks are implicated, housing allocation, and IPL. One reason for corruption is that there are economic goods—contracts, land deals, permits—available at an administered price that understates their true value. The agent in charge of allocating such goods is in a pivotal position. Corruption is embedded in the democratic political process and the prevailing ideology shared by all parties (conveniently and profitably) that the state must play a large role in economic life, writes Meghnad Desai in The Financial Express.

We have all known about corruption in Indian political and business life. Many of us have had to give bribes to municipal officers, electricity or water suppliers, for telephone connections in the old days or for getting a gas cylinder. Few of us get the chance to take bribes. This is the side of the bargain we only hear about.

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The Radia tapes have exposed the business-politics-media nexus, which oozes corruption. Along with these, there has been a minor scandal of underhand loans for real estate companies in which PSU banks are implicated. The Maharashtra chief minister resigned for a housing allocation scandal and the Karnataka chief minister refused to resign despite a land scandal. Meanwhile, the IPL continues to speed along its own dubious trajectory. Business tycoons, normally reticent, have begun to speak up about the corruption they encounter. And, all this in a space of four weeks.

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Why is there so much corruption? One way to see it is that there are economic goods—contracts, land deals, permits—available at an administered price that understates their true value. The agent in charge of allocating such goods is in a pivotal position. He can grant it to you or deny you; he can delay you if you have a right to it and in the ultimate analysis, he can frustrate you be granting something, but in such a way that you can't use it. Jean Jacques Laffont, a brilliant French economic theorist, who died far too young, advanced the hypothesis that corruption is a principal agent problem.

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Corruption as rent seeking is a familiar idea. The opportunity to exploit the gap between the list price and the market price of controlled goods is obvious. But the need to keep goods under control for allocative purposes also needs to be endogenised. In India, the fashionable argument is that markets cannot be trusted to allocate goods fairly because of market failure. Hence the state has to allocate these goods. But the state is not a person. Its agent is the government, which is represented by politicians in office and their party apparatus. Where governments are honest, there is no need to worry about the gap between the actual and the market price of goods, like the NHS in the UK. I don’t need to bribe my MP to get admitted to a NHS ward for an expensive operation. I don’t need to bribe my local councillor to get planning permission to extend my patio.

So why are governments corrupt in India? They were not always so. In the 1950s, it was known that while there was corruption at lower levels of administration, the top echelons were uncorrupt. The black market, which had begun in the war years, had lasted for a while in the post-war years. Regulations such as prohibition encouraged more such black market, as did custom regulations and tariffs. Black money provided much of the finance for the film industry because the law forbade banks from loaning money to film producers (an anomaly corrected by the NDA government when Sushma Swaraj was the I&B minister). Thus black money did not lie idle; it recycled itself profitably in alcohol, films and often real estate. House purchase remains a black-plus-white payment activity still.

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Political parties are closed private firms in which outsiders cannot easily enter. They also restrict competition since it costs a lot to start a new party. Since independence, many national parties have folded—PSP, Swatantra, and apart from Jan Sangh renaming itself as BJP, there has been a stable number of parties. Congress, BJP and the Left (itself a divided house) are the only three stable actors at the national level. The Left has never been in power at the Centre (except the brief period of 1996-1998 in a coalition), and, even so, it is probably not very corrupt. The two national parties collude in making a show of fighting corruption, but never harm each other. It also does not benefit them to have an effective and independent anti-corruption agency. There are, indeed, no agencies in India—the top judiciary apart—that are independent of political parties in power, neither civil service nor the police. Even the Army has begun to enjoy the fruits of corruption.

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I am sceptical of the notion that corruption in India has a cure. It is too embedded in the democratic political process and the prevailing ideology shared by all parties (conveniently and profitably) that the state must play a large role in economic life. Jean Jacques Laffont in his article showed that corruption has U-curve if plotted against per capita income; development is thus a long-term cure for corruption, but his curve turns a corner very late in the development process. The only exception to this U-curve is the group of Scandinavian countries which are not corrupt at all. But that has to do with their religion, the Lutheran Church, and the discipline of their civic life. Religion does not seem to offer any lesson for non-corruption in India; just read the Mahabharat and you see why. So, the only cure is to wait for development .

The politics of money

The wind is blowing in favour of the ruling coalition in the Bihar Legislative Assembly when the last phase of the Bihar Legislative Assembly polls is drawing to a close. The assets of the JD (U)’s MLA candidates’ average have seen a three fold spike. It could even be that new and richer individuals are being put forward as candidates. Being rich is not a factor of importance in predicting election outcomes. MLAs are truly representative of their states’ progress, writes Nikhila Gill in The Indian Express.

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With campaigning for the last phase of the Bihar Legislative Assembly polls drawing to a close today, and the results due on November 24, the wind seems to be blowing strongly in favour of the ruling coalition. In addition to Nitish Kumar’s ‘SSS’ policy of sadak, shiksha, suraksha, the pro-Nitish sentiment can be attributed to the overall clean reputation of the JD (U) government. The fact that the JD (U)’s MLA candidates’ average assets have spiked from Rs 19,71,998 in 2005 to Rs 64,60,088 in 2010, a three-fold increase, does make this claim look a bit hollow. But it doesn’t necessarily imply corruption; a possible explanation for this is that new and richer individuals are being put forward as candidates.

Interestingly, the rise in asset values isn’t restricted to Bihar, with the average assets of MLAs seeing an upward swing in almost all states across India. The hikes range from 141% in Chhattisgarh and 283% in Rajasthan (the states that bring up the lower order) to 1,000% in Haryana and 1,170% in Andhra Pradesh between 2003 and 2009. Not surprisingly, Andhra Pradesh is home to the richest MLAs in the country, with average declared assets worth Rs 22.6 crore per candidate.

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Back at the state level, a closer examination reveals the performance of individual states and parties. Haryana has some of the richest MLAs in the country (save for Andhra Pradhesh), whose average assets range from Rs 3.87 crore (for the Congress) to Rs 16.28 crore (for independent candidates). This not surprising, given that Haryana has one of the highest per capita incomes in India (excluding small states and Union territories like Goa and Delhi) and, on average, its MLAs declared assets worth Rs 7.74 crore in the 2009 assembly elections.

Chhattisgarh, where MLA wealth has gone up on average by about two times, from Rs 44 lakh to 1.08 crore between 2003 and 2008, still has one of the lowest average MLA asset bases. This is despite the fact that the state has been one of the fastest growers in GSDP terms, averaging about 20% in the same period. In contrast, although Madhya Pradesh’s per capita GDP is about a fourth less than Chhattisgarh’s and its GSDP growth rate 11.6%, its MLAs are 1.5 times richer than those from Chhattisgarh. Similarly, the assets of the MLAs of Uttar Pradesh—a state notorious for lawlessness and slow growth, with one of the lowest per capita incomes—weigh in at Rs 1.46 crore, about 1.5 times that of Chhattisgarh.

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So is being rich a factor of importance in predicting election outcomes? It appears not. In Karnataka, the richer Congress-JD(S) alliance was voted out in the 2008 assembly elections. There are other instances of richer candidates being defeated—in Rajasthan, the BJP lost out to the Congress even though its MLAs were 1.8 times as rich as those belonging to the Congress. In Andhra Pradesh, the TDP candidates were almost 10 times richer than the Congress candidates and still lost out. So money cannot buy all; it’s parties that matter, not their assets.

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So, is it fair to say that MLAs are truly representative of their states’ progress? The answer, contrary to popular perception, is yes. For the most part, anyway. The same, however, doesn’t hold true for MPs. By and large, the poorer the state, the richer the MP and vice-versa.

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Beyond the blame game: Need for well meaning and educated Indians to enter electoral process

India's achievements in the first decade of the 21st century leaves a warm after-glow. However, many Indians are prone to playing the blame game. Politicians, bureaucrats, corporate biggies and acedemics including others are good at the blame game. The media targets people who can't hit back.Instead of blaming others and system, all well-meaning citizens should become a part of the electoral politics, writes Jaimini Bhagwati in Business Standard.

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"India’s achievements in the first decade of the 21st century leading up to the 64th anniversary of its Independence on August 15, 2010 leave a warm after-glow in their wake. At the same time, it is apparent from our writings and pronouncements that Indians are prone to playing the blame game. Namely, we tend to look for someone else to blame for our collective failures. "

"Among the accused, politicians complain about the arbitrary manner in which electoral constituencies are redrawn and how caste and other partisan considerations rather than hard work determine their re-election prospects. Civil servants are forever complaining about arbitrary transfers and postings which have little to do with their competence and are motivated by nepotism and on and on. Corporate biggies and their acolytes protest loudly against any vestige of “command and control” and “licence and permit raj”, and also protest when there is a push towards enhancing domestic and particularly global competition. Academics justifiably complain that they are poorly paid. "

"The media’s favourite whipping boys are the softer targets who cannot hit back. "

"Who is a representative and average Indian: the hard-working landless farmer or tribal who may be illiterate and insecure about the future; an outraged English-medium television programme moderator who is shrill on demand; perpetrators of the so-called honour killings; the new strains of mining mafia dons who also double as political leaders; those who murder people or destroy property in the name of religion; the educated and dedicated professionals who work diligently and honestly; the obviously corrupt public officials living extravagantly; or the acquiescing politicians or civil servants who are personally scrupulously honest? "

"It is unfortunate that after more than 60 years of Independence, the level of responsibility among some of our elected representatives seems to be lower. Maybe this was inevitable since the leaders at the time of Independence were from a self-selected group and could relate better to each other through the bonds formed during the freedom struggle. Has self-esteem among our educated, professional and political classes become brittle, aggravated by caste, income and other factors, making it difficult for us to function well as teams?"

"To summarise, if we want to progress faster towards meritocracy with social justice, there is no alternative to a wider cross-section of Indians, including the educated and well-meaning, participating directly and personally in electoral politics. Alternatively, we are likely to periodically hear from columnists about how “Nehruvian policies” continue to be at the root of our current difficulties (Jawaharlal Nehru passed away on May 27, 1964, more than 46 years ago)."

Read the article on Miracle Of Democracy

UK: Indian origin mayor says politics without power is a waste

Neeraj Patel is the first Kannadiga to become a mayor in the UK. He is a doctor who was born in a politically active family and bred in a small town."Winning an election is like winning a war. And every thing is fair in this love and war. Politics is war without bloodshed and politics without power is a waste of time." , said he, reports Daily News And Analysis.

Read the whole article here.

Dr Neeraj Patil has a first to his credit — he’s the first Kannadiga to become a mayor in the UK. On his first visit to Bangalore after the “historic” victory, the first citizen of the London borough of Lambeth made time to share his view on politics, at a felicitation ceremony on Saturday.

“Politics had always been a passion, but I never had the courage to jump in. The secret to my success is that I have always been true to myself,” he told a roomful of students, politicians, bureaucrats, teachers and fellow Kannadigas who had come to meet the “man who had made them proud in a country that had ruled India for centuries”.

The doctor who was born in a politically active family and bred in a small town — Kalamalapur — in Gulbarga moved to the UK in 1994. He was elected councillor of Lambeth before he was chosen mayor in May this year.

“Winning an election is like winning a war. And every thing is fair in this love and war. Politics is war without bloodshed and politics without power is a waste of time. Politics is a bloodsport. Politics is not about appeasement, it is about making the right decisions for the benefit of the people,” he said at an event organised by Amruta Institute of Engineering and Management Sciences that was attended by mayor SK Nataraj, minister R Ashok, managing trustee of Adamya Chetana Tejaswini Ananthkumar, environmentalist AN Yellappa Reddy and others.

Peppering his speech with Sanskrit sayings and quoting well-known Kannada poets, Dr Patil said that the secret to his success in the elections is “concentrating on the campaign, working and studying hard and his Indian accent that people in his constituency just love”.

Commenting on Indian democracy, he said three aspects need to be looked into – recruitment, funding and electoral reform. What does he have to say about the political drama being played out in the state and the common citizens staying away from politics? “Politics is seen as a joke everywhere. Even in the UK, 100 MPs were accused of misusing taxpayers’ money. Citizens have to make sure they choose the right candidate. As for the common man, he is equally responsible for the political situation because he too is selling his vote.”