Thoughts on economics and liberty

Tag: Corrupt India

आज़ादी मिलती नहीं है. जीती जाती है. लड़ कर.

Thanks to Allwyn Mascarenhas for referring me this video. It is very well done, poignant, reminds us that we can either choose the life of an ant, always worried about one's food, shelter and safety, or the life of a human.

I do suggest that RTI is NOT going to solve India's problems. It is undoubtedly a crucial piece of the overall jigsaw puzzle of reforms, but the reform must start with the electoral system. Our system is currently DESIGNED to elevate psychopaths and criminals to the very top. We need a systemic reform movement. That is what FTI aims to undertake. FTI needs you. You must rise and take charge of India, or be content to live the life of an ant.

I have nothing but praise for RTI activists. May their tribe increase. But I'd hope some of these activists will join FTI, to undertake more sustained and successful reform.

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A three-pronged approach to removal of corruption in India

Here's a summary of the approach that splits the anti-corruption strategy into three key components. 


This shows that a Lokpal bill can only address (at best) only a small part of the corruption problem. The greatest benefits come from (1), but that is the hardest for people to understand, so they focus on (2), i.e. punishing the corrupt. BFN deals with all three aspects, primarily (1), which is the most difficult to understand.

This diagram shows that if IAC can step back from its narrow focus and start thinking about the bigger picture, India can make rapid progress on this front.

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Eliminating corruption in India will also require Indian businesses to demand anti-corruption laws

Anti-corruption movements typically tend to focus on bribe receivers. This focus is well placed. Without dealing with the drivers of corruption (basically, socialist policy), no country can successfully deal with this problem.

However, there is another side to corruption, as well: the giving of bribes.

Potential givers of bribes face three choices:

a) Do not bribe and face possible loss of business

b) Bribe through an agent in a manner that can't be traced to the business

c) Bribe directly and record it as a legitimate expense of doing business.

When even the smallest "inspector" has the power to shut down your business, (a) is not a real choice. It is not a real choice when the truck you are driving has been stopped by police at a checkpost and they won't let you through till you pay them a bribe (else they may even beat you up). In India, most small businesses don't really have a choice to not pay a bribe.

But big businesses do have a choice. They CAN stop paying bribes if they really want to. But they don't. There are reasons for that, as well.

When late Chief Minister Hiteswar Saikia shunted me out from my role as Director, Rural Development, Assam because I refused to award a large cement contract to a private company that was not the lowest bidder, there were two basic problems involved: The TOTAL corruption of the (socialist) Congress party, but also the willingness of that private company to pay Congress a bribe to obtain an illegitimate business advantage.

A big company has the ability to not pay bribes but such companies know that if they don't pay bribes, then other large companies will do so, and their business will go bust, particularly where government is a large buyer.

At one time, option (c) was available to international companies that operated in India. They could officially record their bribes as a business expense. That option has now been removed through various amendments to Western country laws that forbid the payment of bribes.

Some big prosecutions have occurred in this area (e.g. of Siemens), thereby helping reduce the tendency of Western companies to bribe developing country public officials.

Such whole-of-business perspective is necessary, else corruption won't be controlled.

Therefore, it is necessary to bring in legislation in India that will severely punish companies that GIVE bribes. Only companies with turnover larger than Rs.10 crores should be roped in at this stage, since there are just too many small businesses which simply can't survive without paying bribes on a daily basis.

Bring such legislation into effect would ensure that (a) becomes a real choice for big Indian companies.

I wonder if big Indian companies would be willing to come together and demand such legislation. It will be in their interest to do so.

FTI would be (probably) be happy to help draft such legislation.

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Agree with JP that even the most corrupt politician deserves natural justice

JP of Lok Satta Party has rightly spoken against the tendency of some members of Team Anna towards histrionics. This was most pronounced with Kiran Bedi's wild claims at Ramlila ground last year.

Sharply reacting to Team Anna’s demand for an inquiry by a panel of judges into allegations against Prime Minister Dr. Manmohan Singh and 14 other Union Ministers, Dr. JP said in a media statement that assuming every one is corrupt and every Government decision is tainted with corruption unless otherwise proved is a sure recipe for disaster. 

“Nothing can be more illogical and untrue than assuming that everyone in politics is bad and those outside politics are angels.

“Those who fight against corruption must have respect for truth and evidence and not rely on hearsay and speculation.”

Dr. JP underlined that there are many men and women in public life who maintain high standards of conduct and probity against heavy odds and named leaders like Dr. Manmohan Singh, Pranab Mukherjee, A. K. Antony, L. K. Advani, Arun Jaitley, Nitish Kumar, Buddadeb Bhattacharya, Navin Patnaik, Narendra Modi, Mamata Banerjee, Prakash Karat, Suravaram Sudhakar Reddy and N. Rangasamy.

I agree that natural justice must be available to everyone. However, I don't agree with JP's clean chit to these specific politicians. The fact that they are part of the system which starts with crores of rupees of black money in elections and false declarations at the start of their parliamentary career, undermines any credibility these politicians might have. 

According to me, MMS, Modi, Advani, etc. are thoroughly corrupt. If they claim to be innocent I'd like to interrogate them on their actions over these past many years.

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