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BW Businessworld

Monsoon Dramatics

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The Arab world continues to be in turmoil. Demonstrations continue in Syria; while President Assad manages to keep control of his capital, Damascus, people elsewhere show no signs of being subdued. In the meanwhile, his troops continue to use them for target practice. The crowds in Libya do not present such an easy target. Armed surreptitiously by some powers across the Mediterranean, they drive around in jeeps with machine guns; casualties mount in the skirmishes between them and the forces of President Gaddafi. In the meanwhile, Britain has seen unprecedented waves of street violence. Its troops are less trigger happy; but without guns, crowd control requires large police forces, and Britain is hard pressed to find the manpower to confront hooligans.

India too is having a turbulent summer; it is monsoon, and an occasional shower helps to cool tempers. But the lack of violence on the streets of Delhi has much to do with the character of agitators. Led by Anna Hazare, they have been largely peaceful. The government forces have been tempted from time to time to use the stick, but have been shamed into more civilized behaviour by the non-violent ways of the crowd. Some would say that Anna's fast is a violent method of forcing the government to toe his line. But the Gandhian precedent makes it a respectable form of agitation, so the government has felt itself disarmed against it.

However, the confrontation cannot go on for long; if Anna Hazare's condition worsens, there will have to be a compromise. Hurried compromises tend to be untidy. Fortunately, the differences are narrow, and can be easily papered over. The extension of the discipline of the Lokpal Bill to the Prime Minister and the President may sound shocking to those in the ruling party who look up to them; but they are just two people at the top of the government hierarchy. However unimpeachable the current incumbents may be, those who will occupy their positions in the years to come would come from the same class of politicians who are under suspicion today, and arguably deserve to come under the same discipline.

The question is whether the discipline likely to be imposed will make any difference. Let us take the recent scandals that led to the current agitation. First, there was the Adarsh Housing Cooperative Society. A junior official formed the cooperative to get control of army land. Then he enrolled influential politicians, soldiers and their relatives to pacify the powers that might have made trouble for him. And up went the condominium. If he had not chosen to go so high up, he might have got away.

Then there was the Commonwealth Games scandal. As usual in India, the task of building the infrastructure for the games was begun late, so it had to be built in a great hurry. Contracts had to be signed, and contractors had to be paid to hasten. Incentives to perform were built into their contracts, and kickbacks into the incentives. If the games had gone smoothly, the corruption might have been buried.

And then there was the 2G spectrum scandal. It was a smooth operation; spectrum was rolled out, and money made. But it was too much of a private enterprise; A. Raja kept all others out of the loot. That did not matter so much; even the Prime Minister did not complain about not being consulted. But then, he was too arbitrary in the allocation of spectrum. He had the model before him of Pramod Mahajan, who set up such a smooth process of consultation and profit sharing that he retired with the largest bribe paid in Indian history — till Raja came along, that is.

These examples illustrate the pathways of corruption in this country. First, get control of a scarce resource in the government's possession — land in the case of Adarsh, time in the case of Commonwealth Games, spectrum in the case of 2G. Second, take on board all people in the government that might make trouble. Third, carry out the operation efficiently.

Let us now get back to Anna Hazare and Lokpal Bill, and ask if it would make any difference to a corrupt man who did all these three things perfectly: would it stop him? It is most unlikely. If he makes enemies or is otherwise caught, the Lokpal Bill would create a machinery to investigate his misdoings, and may bring him to justice faster. But the incentives to catch the corrupt would remain just as weak as they are now. Instead of trying to get better at finding and punishing the guilty, we need to find ways of making the initial crime impossible. It would involve using the market mechanism more for allocation, as well as other stratagems. We need to look for and develop them.

The author is Consultant Editor of Businessworld.

ashok(dot)desai(at)gmail(dot)com

(This story was published in Businessworld Issue Dated 05-09-2011)