Thoughts on economics and liberty

This flimflam about Jan LokPal bill won’t clean India’s image

Indians are DELUDED if they think that the enactment of a Jan LokPal bill will clean India's image in the world.

All the gloating and celebrating about this Bill won't budge corruption ONE BIT, because EVERYONE in the world knows that this Bill is a sham.

The Bill  doesn't deal with the fundamental DRIVERS of corruption. They know that just aping (and that too badly) a tiny part of Hong Kong's anti-corruption framework won't make the slightest dent in corruption in India.

I therefore GUARANTEE (and I'm happy to be held to account on this guarantee) that the rankings of India on the Transparency International index won't budge even after five years of enacting this bill UNLESS the other reforms, clearly outlined in BFN, are implemented.

Without very significant policy changes, corruption in India CAN'T be budged. 

The right policy changes CAN make a huge difference, within less than fives years. The Freedom Team is India that aims to deliver such fundamental reforms is India's ONLY HOPE.

I encourage you to join/support FTI! Be not deluded by the enactment of trifles. The goal should be not just to stop the generation of corruption but to create high quality education for everyone, and freedom to trade and produce. 

Not ONE party (or the India Against Corruption movement) understands what it will take to move India in the right direction.

Investment in India now suffering due to corruption

The future of India is being compromised by bad policies. Corruption is just one of the many reasons why India is losing its attraction as an investment destination. The package we offer to investors is decidedly unattractive – blocking them at every step. 

Just for the record, I'd like to copy most of this article from The Economist, for wider dissemination.

The price of graft

Investors have gone off India. Blame, in part, uncertainty over corruption

Mar 24th 2011

CORRUPTION is dreadful in India, as shown by a current “season of scams”—over mobile-phone licences, the Commonwealth games and more. Politicians, notably the ruling Congress party, are now feeling the public’s ire (see article). Worries have also grown that graft is scaring away foreign businesses.

Circumstantial evidence points that way. A spokesman for a big Western firm mutters into his cappuccino about a recent High Court decision, which if upheld would cost his company billions. It was so strange, he says, it could be explained only by judicial graft. A representative of a British media firm, SIS Live, which broadcast the Commonwealth games from Delhi, in October, is furious—along with other contractors—at being left millions of pounds out of pocket because, he says, payments have been frozen by investigators digging up evidence of corruption at the event.

Across the board, surveys regularly tell how graft is an unusually heavy tax on Indian business. An annual one published on March 23rd by PERC, a Shanghai-based consultancy, shows investors are more negative than they were five years ago. Of 16 mostly Asian countries assessed, India now ranks the fourth-most-corrupt, in the eyes of 1,725 businessmen questioned. Being considered worse than China or Vietnam is bad enough; being lumped with the likes of Cambodia looks embarrassing.

Outsiders may get an exaggerated view. India’s democracy, with a nosy press and opposition, helps to trumpet its scams and scandals, more than happens in, say, China. Yet locals tell similar tales. A cabinet minister frets that there is so much ghotala (fiddling), “it tells the world we are all corrupt. It may be a dampener to investment.” Others agree. KPMG this month reported on 100 bosses who were asked about their own experience of graft. One in three said it did deter long-term investment.

Clean-up costs

Judging how much difference it makes is tricky. Right now, investors may be spooked as much by the fight against graft as by the corruption itself. Arpinder Singh of Ernst & Young in Mumbai says foreigners, especially those with some connection to America, increasingly hire firms like his to help them comply with America’s Foreign Corrupt Practices Act. Once a foreigner holds more than about 5-10% equity in an Indian firm, it is seen as having some responsibility for how it is run.

Now even Indian firms, if they want to raise money abroad, or if their bosses want to protect their own professional reputations, are doing the same. As other countries, such as Britain, bring in tough anti-graft laws like America’s, the trend will continue. Yet many Indian firms still fail to comply with higher standards, so deals falter. Mr Singh ticks off a list, “in infrastructure, ports, toll roads, irrigation, microfinance”, of deals he has worked on that collapsed over “governance problems”.

None of this is enough to prove that graft, alone, is scaring off business. Pranab Mukherjee, the finance minister, insists there is no correlation between corruption and foreign direct investment (FDI).

[Pranab Mukherjee is CLEARLY a big DONKEY – anyone have any doubt on this??]

But something is keeping investors wary. In 2010 the country drew just $24 billion in FDI, down by nearly a third on the year before, and barely a quarter of China’s tally. There is no shortage of other discouragements: high inflation, bureaucracy, disputes over land ownership, and limits on foreign ownership in some industries.

Even so, India is home to an unusually pernicious form of corruption, argues Jahangir Aziz of JPMorgan. Elsewhere graft may be a fairly efficient way to do business: investors who pay bribes in China may at least be confident of what they will get in return. In India, however, too many crooked officials demand cash but fail to deliver their side of the bargain. Uncertainty, not just the cost of the “graft tax”, may be the biggest deterrent of all.

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16 thoughts on “This flimflam about Jan LokPal bill won’t clean India’s image
  1. Sunil Jha

    Mr. Sabhlok,
    Thank You for your works and efforts put in India as as IAS officer to offer your contribution in removing corruption. I am still reading BFN. 
    But I must say, At present; We need not to clean the whole system to make it 90% corruption free. Most of the corruption in India  in due to politician and bureaucrats.  USD $1.4 Trillion (in which more than USD $9 billion of Gandhi family) black money from India are not deposited by small fished and the medium fishes are not even more than 20,000. 
    Based on my understanding, We simply have to put those corrupt politicians and bureaucrats into jail for life time prison or hang till death. The rest will be automatically controlled. JLP Bill is nothing but simply a fast tract supreme court which is the demand of present situation.
    I think, It should not take much time to create situation under control   and Other development policies (as suggested by you and many more) can be followed after this. …..

  2. Sanjeev Sabhlok

    Dear Sunil

    Thanks for starting to read BFN. Let me assure you that your assumption is totally wrong. It is grossly incorrect to assume that “We simply have to put those corrupt politicians and bureaucrats into jail for life time prison or hang till death. The rest will be automatically controlled.”

    I find it really odd that I haven’t come across almost anyone in India who understands the causes of India’s misgovernance (including corruption – which is a SMALL part of misgovernance).

    No wonder my message is rolling off the backs of India’s like water off the duck’s back for the past 13 years.

    I write, I explain, I speak, I cajole, I persuade. And yet people stick to their grossly simplistic and incorrect ideas.

    I’m afraid, Sunil, I can only do so much to help India. If Indians are unwilling to think and learn about world-best governance policies, nothing and no one will be able to save India.

    I can GUARANTEE that LokPal Bill won’t make the slightest dent in India’s corruption. I only hope you won’t wait to test this guarantee, but will work to ACTUALLY reform the system.

    Remember even today there are an ENORMOUS number of laws against the corrupt. I myself was the senior-most anti-corruption official in Assam (State Enquiry Officer), and can assure you there is no shortage of laws in India. One more law WON’T make any difference unless the causes of India’s problems are addressed.


  3. mats

    The responsibility lies with individuals. Stop paying bribe to get things done for yourself. Forgo all unfair advantages gained by paying money. No point in blaming politicians.
    And while on the 2G Spectrum fraud, why the honchos of the big corporates (who are all over the place teaching us about ethics) who are the main players and the actual beneficiaries of the multi billion fraud  arrested and put in jail along with the Minister Mr. Raja? Why are the parties in the opposition, mainly BJP, not asking for corporate culprits' scalps?

  4. Sunil Jha

    Thank You Mr. Sabhalok for your assurance, I am taking back my statement about putting into jail and….. .
    Which policies should be made/ followed to bring back the black money ? .. Any suggestion ..?

  5. Sanjeev Sabhlok

    Dear Mats

    When the government is the coercive monopolist, there is NO REAL CHOICE for those who are being asked to pay bribes. Often it is in their interest to pay, as well, to block out a competitor, or to get something undue.

    The problem has to be stopped at source, not at the end.

    You are better off not trying to stop the upper jaw and lower jaw meeting when a tiger’s mouth is over your head. Which jaw hurts most is difficult to say. Instead, you are better off by ensuring (a) that the tiger is caged and (b) the tiger is not hungry in the first place.


  6. Sanjeev Sabhlok

    Do not consider one policy at a time. There is NO WAY ON EARTH to bring back black money stashed abroad.

    Indeed, I think Indians are big fools to worry about black money stored abroad. Their real money is the Indian brains they have lost to other countries. The loss of these Indians is greater, by far, than whatever black money has been stored abroad.

    Only a total reform of India’s policies will shift India’s governance.


  7. mats

    Dear Sablok, your reply did not satisfy my query. Mostly people pay bribe to get unfair advantage over other aspirants to the same benefit, like jumping the queue in a waiting list, or like in the 2G spectrum fraud. That I think is the source pf c corruption.
    You also did not answer my question about the beneficiaries of the 2G Spectrum Fraud. Do you think they did not commit any malfeasance? If so why the whole issue? If they did, why not arrest them and give them the severest punishment and make them an example to deter others? Are they untouchable? Can there be a fight against corruption without tackling this ethical issue head on?

  8. Sanjeev Sabhlok

    Dear Mats

    It is a criminal offence in India to bribe someone so what you are saying is already covered off.

    However, that is NOT the cause of corruption in India.


  9. mats

    You are still evading the crux of my question (whether you advocate application of punishment for the criminal offense against Corporate honchos).
    I give up.

  10. mats

    There is a surfeit of information on the frauds and what constitutes  a criminal offense, and I do not need any lessons on this. My question is, as you seem to be on a campaign against corruption, whether,  at least in case of the 2 G spectrum fraud,  you would campaign for equal (nay, harsher) punishment for the actual receivers of the loot ( active participants in the fraud), now that the minister Raja is deservedly  in jail? I have, for instance, Tata, in mind, based obn the inputs I have. I just want to know your opinion on this. If you still prefer to beat around the bush, I must conclude that your campaign is purely political in nature and has nothing ti do with ethics. Do you have a response to this? I am not interested in information or a lecture on what is criminal offense etc., but only your opinion, view, on this.

  11. Sanjeev Sabhlok

    Mats, I am NOT interested in individual cases which are matters for the law to consider. The issue for me is to change the system so that bribes are not demanded in the first place.

    ONLY when the system has sufficiently changed to ensure that bribe demanders are brought to their knees (they are the primary guilty party), would I care to bother about those who give bribes.

    Currently it is like holding a gun to a person and stealing his wallet and claiming that the person who gave his wallet is guilty. Clearly the courts are aware, everyone is aware that the guilty party is primarily the one who demands. The laws are made accordingly. That does not absolve Tata or whoever is involved. It simply means I’m NOT interested in petty matters of this sort.

    I do NOT want to deal with individual cases. I’ve written clearly in BFN that I want to stop corruption EVERYWHERE IN INDIA. There are millions of cases of corruption each day. I’m more interested in systemic reform.

    And YES, I’m into politics. I believe I offer India a path that IS GUARANTEED to take it to great success. No other politician in India comes even close.


  12. mats

    Having a view or opinion on an issue, for instance, on the issue I raised, is merely a matter of volition. Every thinking person can have a view. Some questions are uncomfortable, I admit. Nevertheless, thanks for being honest. 

  13. Sanjeev Sabhlok

    No one has answered that. It appears that is the only money – a pittance – that Indians can think about, not the 100s of trillion dollars worth that they can PRODUCE from their heads, through hard work.

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