The Past as Farce
At the end of a hard, divisive 2011, a quirky look at the year that wasn’t, but just might have been
As in all new beginnings, the start of a new year is a time to look forward with hope, in anticipation of a better tomorrow. It is also a time to look back at the year gone by and to take stock of successes and failures, triumphs and tragedies. Many would consider 2011 a sad year for India. Beginning with the country riding high, following a sustained burst of high growth that defied the fears of a slump after the US crisis in 2008, the year ended with deep economic woes, a parliamentary logjam and India’s image taking a considerable beating.
Critics bemoaned the lack of strong leadership, a governance deficit, policy paralysis, corruption and cronyism. Most fire was directed at the government, though some companies and their top executives are also in the dock for corruption. Civil society too, fighting for probity in government, has not always been beyond reproach.
Even the year-end festive merriment failed to lift the gloom of high inflation and low growth; a ‘fast’ movement and a slow government; large outlays and small achievements. To help dispel despair, so inappropriate at the inception of a fresh and unsullied year, we look back here at 2011 in a lighter vein. CPM continued to be the most popular and crucial factor for the country. Lest rightthinking compatriots (and much of corporate India) throw a fit and quote ancient scriptures to prove that the left is never right, and before big brother and elder sister threaten mass agitations, let it be clarified that the acronym mentioned is not their bête noire, but refers to cricket, politics and movies. Despite the Commonwealth Games and the whitewash in England, cricket continues to be the dominant sport in India. While the ever-larger moral police squad and the nanny government rant against dirty pictures on the Internet, Dirty Picture on the big screen draws even bigger crowds: emphasising, once again, the centrality of movies in the mind-space of Indians. As for politics, it is to India what weather is to the British: fickle, unpredictable, all-pervasive, and a topic of conversation even amongst strangers.
The food security law, touted as version 2 of NREGA in terms of being an electionwinner for UPA-II, polarised views. Some see it as another crucial element in the social security net, a welcome antipoverty measure; others view it as one more leakageprone populist and profligate measure that the country can ill-afford. Many worried about the adequacy of government stocks of grain to meet the commitment. They overlooked the brilliant strategic thinking of government, whose subtle moves led Anna to go on an indefinite fast. With many threatening to join him, the consequent drop in grain consumption could have helped to build buffer stocks for the food security scheme. Furthermore, the mass fast would have quickly brought down worrisome inflation in food prices. On the other hand, calling off the fast meant a political victory for government: a truly Machiavellian manoeuvre that ensured a heads-Iwin-tails-you-lose situation. Clearly, the government — pilloried for being incompetent and stupid in its handling of the Anna movement — deserves credit.
Anna and Lokpal were the staple diet of the year for media. Every flutter of the flag at Ramlila Maidan was covered, analysed and deconstructed by experts on each TV channel. The verbosity and volume of voices from TV studios was such that one could probably hear them in all of Delhi without the aid of TV transmissions — a new form of direct-to-home. The anchors may not always have been models of objectivity, but they were certainly leagues ahead of MPs in the art of interrupting and sheer lung power to outshout others. In terms of headlinegrabbing sensational statements, though, they were considerably behind the head of a media body.
In Delhi, everyone is ji (including Uncleji and Auntyji); thanks to 2G, the most popular new ji is CAG. Some are unhappy with his astronomical imputed-loss figure of . 1,76,000 crore (roughly 2 followed by a dozen zeroes). Just wait till he calculates other imputed losses caused by government policies. For example, the loss due to government’s education policy: if seats in IIMs, IITs and other such premier institutions were auctioned, tens of thousands of crores could have been collected over the last 50 years. After all, if Harvard charges well over $100,000 for an MBA seat, surely the IIMs too can fetch as much. All computations for past seats will, of course, be done at today’s rates.
Meanwhile, the judicial system has found its own solution to the continuous barbs about justice delayed being justice denied. It has hit on the idea of jail first, trial later — after all, like presumptive loss, there can be presumptive guilt.
Some see 2011 as a year of wasted opportunity, with brand India losing a lot of its sheen. Yet, we Indians are given to meanderings, interrupting our journeys to savour roadside distractions. Like traffic on our streets, or Brownian motion of particles, there is chaos at the micro level, but a steady onward flow at the macro level. Anyway, if the world is ending in 2012 — as prophesied by some — then why hurry? And, if it is not, then what’s the rush? To ensure good spirits all around, the government announced a cut in the import duty on alcohol at the end of the year. A crucial session in the Rajya Sabha helped to take the focus off another lost opportunity in Melbourne. But then, tomorrow is another day. RIP, 2011; welcome 2012.
Great Expectations
Services, rather than manufacturing, are likely to offer India the jobs it needs
“ Aman’s reach should exceed his grasp, or what’s a heaven for?” The National Manufacturing Policy (NMP) and its lofty ambitions seem to have taken Robert Browning’s lines to heart. The policy’s objective is to boost manufacturing output so that it is 25% of GDP by 2022, and creating 100 million additional jobs in the next 10 years. Scepticism may well be in order.
Numerous constraints inhibit manufacturing, and while some of them may be minimised — even overcome — the possibility of achieving a compound average growth rate of over 12% is, indeed, dim, and the 100 million jobs seem like a pie in the sky. Increasing productivity, new production techniques and greater automation are all contributing to a reduction in the labour-intensity of manufacturing. Productivity, for example, was growing at over 7% a few years ago, against 4% a decade ago. It would, by now, be higher. Little wonder then that in Gujarat, the state favoured by most industry honchos, organised employment grew by a measly 0.5% a year from 1995 to 2008, though the state domestic product grew at a brisk 8% annually.
In today’s world of freer global trade, India in unlikely to be competitive in the massmanufacture of standardised low-value products. Despite the proposed National Manufacturing Investment Zones — which would, presumably, have first-rate infrastructure and logistics — countries with more efficient systems, better infrastructure and low costs (China, for example) will dominate this segment. Also, lower-value and standardised manufacturing, which create mass-scale employment today, is getting increasingly automated. Even in industries like automobiles or steel, which have seen rapid growth in India over the last few years, employment growth has been only marginal. More importantly, in all industries, the automation typically takes place from the lowest levels. Therefore, even as manufacturing grows, there is unlikely to be much demand for unskilled and semi-skilled labour. Since the competitiveness of such manufacturing is based mainly on wage arbitrage, companies and industries tend to continuously migrate to ever-lower wage locations, as their suitability improves. Thus, banking on low-value mass-manufacturing as a source for job creation is fraught with risks, because of both automation and migration to lower-wage foreign destinations.
India’s real advantage lies in manufacturing products that leverage its abundance of engineering and science talent, and IT software capabilities. Such products are typically high-value and, compete on the basis of parameters like quality, design and innovation, rather than merely on cost. Infrastructure efficiencies are, therefore, less important. These hitech, high-value products, however, do not typically generally large employment. Let us not count on manufacturing to create the jobs we need. Services, on the other hand, are less prone to automation. The rapid growth in India’s service sector has been matched by growth in employment. While an overwhelming majority of all employment in India is in the unorganised segment, it is noteworthy that the singlelargest employer in the organised private sector is an IT services company. The phenomenal growth of India’s IT software and services sector has led to unprecedented growth in job opportunities. While the direct employment is over 2 million, the indirect jobs created are estimated to be 3-4 times this number. A majority of these support and spin-off jobs employ persons who are not graduates; in fact, many have not gone beyond the school-level.
It seems clear that the services sector is, potentially, the most dependable source for mass employment in India, on the scale required and to sustain the millions of semi-skilled villagers who can no longer be gainfully employed in agriculture. Unfortunately, present policies — and their implementation — do not encourage the growth of the services industry. The full potential of IT software and services, for example, is stymied by myopic and excessively aggressive stance of tax authorities, focused on short-term revenue maximisation. Policies like the SEZ scheme are of little use to the services sector.
It is not a question of manufacturing versus services: India needs to grow vigorously in both. Manufacturing needs to focus on key areas like strategic sectors: aerospace, nuclear, defence; IT, communications and electronics (else, imports of equipment in this sector alone will exceed our oil and gas imports in but a few years); and areas of comparative advantage, like pharmaceuticals and automobiles. However, as far as job creation is concerned, the emphasis must be on services. This will create far more employment, in a dispersed, decentralised manner, and for semi-skilled and unskilled people. It will, thereby, ensure growth that is more equitable and sustainable. However, this requires vision, backed by appropriate initiatives and action.
Ultimately, India needs a large, vibrant, value-creating manufacturing sector that is knowledge-based rather than wage-arbitrage driven. Equally important, it requires a much larger employment-creating services sector, which spans the value chain from low-end localised services, to the most sophisticated globally-competitive, intellectual property-based services. For this to happen, the manufacturing policy needs to be complemented by a services policy.
CSOs and Caesar’s Wife
The villains of the piece, with regard to corruption, have long been politicians and administrators, including the police. Newspapers revel in exposes about corrupt leaders and babus; TV channels enjoy playing prosecutor (and, often, judge); and movies have the mandatory corrupt politician in their plot. It is only recently that bribe-givers, particularly business organizations, are also in the limelight. High profile cases connected with mining and telecom have brought to the fore the active role of corporates, and whispers in the market-place have now become headlines in the media. Earlier, a financial fraud of massive proportions sent tremors through the corporate world, triggering many a discussion and report about corporate governance and ethics.
Issues related to corruption and fraud by the private sector have now turned the spotlight on governance in companies and led to new regulations, including strict norms – especially for companies listed on the stock exchanges – regarding Board composition, disclosures and transparency. Also, Ministry of Corporate Affairs has published voluntary guidelines, which raise the bar beyond what the law mandates. A new Companies Act is in the final stages of clearance and enactment; it seeks to strengthen various aspects of corporate governance. There is a lively debate about whether PPP projects should also be under the ambit of right to information. In fact, some would like the private sector too covered under RTI. All in all, there is much focus and regulatory activism aimed at enhancing accountability, transparency and honesty amongst companies.
At the same time, a Lok Pal will – almost certainly, one expects – come into existence in the near future, and will act on corruption in the government. A similar law is likely to ensure that the judiciary too is covered. These are welcome developments: while they are unlikely to end corruption, these could certainly help to curb it.
Apart from business, judiciary and government, there is now an increasingly important role being played by two other segments: media, and civil society. The former wields disproportionate power, because of its ability to set agendas, steer discussion and influence opinion. As in other sectors, there are those who are corrupt and others who are honest. The ills range from paid news and insider trading, to outright extortion and blackmail. Self-regulatory mechanisms are in place and seem to be making some impact; also, private media is subject to the same laws and voluntary guidelines as corporates in other sectors.
Civil society organizations (CSOs), in contrast to the segments mentioned earlier, have far less regulation. They are, of course, under the ambit of the Societies Act (or its equivalents, depending on their organizational form) and constrained by other applicable laws (e.g., on foreign donations). However, they are rarely – if ever – under the public scanner or in the media glare. As a result, one hears little about any corruption, fraud or malpractice amongst CSOs. While one explanation could be their innate honesty, few would attribute it to this. As in other fields, here too there are honest organizations run by selfless persons, and others who are there only to make money or seek undeserved fame by any means.
A recent high-profile case has highlighted ethical – if not legal – issues related to the operation and management of CSOs. Other attempts – many by motivated detractors – to defame CSOs or individuals connected with them, have raised doubts about their quality of governance. The laws relating to Societies and Trusts (under which most CSOs operate) are often archaic, with periodic tinkering making them generally worse. “Light touch” regulation is appropriate for this area; however, there is a need for safeguards, checks and balances, and transparency. At the same time, governmental control in any form is contrary to the very purpose of such organizations, and regulations like the new apparently draconian ones in Gujarat, are definitely undesirable.
One cause for the clouds of suspicion is that this new growth sector has attracted many people out to make a quick buck. The dedicated, do-good, stereotyped “jholawala” – surviving on a pittance and commitment to a cause – yet exists, but has now been joined by those for whom CSOs are only a convenient mechanism to tap funds (mainly from government), and by socialites who are in CSOs for visibility or as an excuse for kitty parties. Some CSOs are but proxy marketing and public relations arms of the corporate that funds them, often with undeclared connections; others are used as a tool against corporate rivals; some are also being used as fronts by companies, political parties, and religious organizations. here are many that have become very important pillars of our democracy and do outstanding work. While some have excellent governance with well-defined procedures and systems, numerous CSOs have poor accounting practices and petty frauds are not uncommon. Unlike corporate Boards, there is no requirement for independent Directors, and few CSOs have the equivalent of an Audit Committee.
Clearly, there is need for some minimum standards of governance, especially since CSOs get substantial funding from the government, and many raise resources from the public. Therefore, mechanisms to ensure good governance and transparency, while safeguarding against financial improprieties and frauds, are necessary. Ideally, CSOs would themselves come up with a self-regulatory code, taking forward efforts like the Credibility Alliance. It is time for genuine CSOs to stimulate a debate on ethics, good governance and ways of enforcing standards of transparency and probity in this sector. To sustain credibility, CSOs – and their founders – must, like Caesar’s wife, be above suspicion.
Science as the Foreign Jamaai
India’s policy establishment neglects basic science and technology at its own peril
Science and scientists are now like the foreign jamaai in the traditional Indian household: treated well and showcased to outsiders, but never really integrated into the larger family. Immediately after Independence, Nehru provided a great thrust to science, with rationalism or the ‘scientific temper’, a key pillar of the new India which he sought to create. He accorded scientists special respect, and many of them had direct and unhindered access to him. Subsequent prime ministers — particularly Indira Gandhi — continued this tradition till the 1990s.
Over the last two decades, India’s achievements in space and nuclear technology have won much acclaim, and its phenomenal success in IT has led to its global recognition, however exaggerated, as a technological powerhouse. Today, the world has become dependent on technology, which increasingly drives the global economy. India itself is transitioning into a knowledge economy. Despite this, the government seems to be less enthusiastic, and its commitment to S&T appears lukewarm. One indication is the proportion of the country’s GDP spent on S&T. Two decades ago, it was decided that this should be at least 2%; today, it stagnates as it has for years, at under 1%.
Scientists no longer have the privileged position that they enjoyed in the past, and the bureaucracy often calls the shots in many matters related to science. Politicians talk about the importance of science, but increasingly this seems like mere lip service. Even as the S&T establishment has grown in size, its relative importance has shrunk. This is analogous to the position of India in global science: absolute growth, but relative decline. Some countries like China and South Korea have hugely raised their share in global science publication, while India has fallen far behind.
India is considered the world capital for frugal engineering with examples like low-cost refrigerators, medical equipment and cars. However, the under-pinning of basic science to support these technological and design innovations is weak and getting weaker.
This is why many looked at the Twelfth Five-Year Plan with great anticipation. One hoped that it would impart a new impetus to science and integrate S&T into core areas of development. Just about a year ago, the Scientific Advisory Council to the Prime Minister brought out a vision document outlining steps to make India a global leader in science, emphasising the vital role of S&T in the context of India’s developmental goals.
The expectation was that this exercise would be taken further, in a concrete manner, in the years ahead. In this context, the Planning Commission’s approach paper to the Plan is a disappointment. S&T could well have been the central core of the 2th Plan, instead of an addon. While a separate chapter on innovation is a welcome step, it has practically no linkage with the one on S&T. In the education chapter, there is next to nothing on enhancing research in universities, or the need for a huge increase in the number of high-quality doctorates in S&T, or the acute shortage of faculty in science and engineering. While the approach to innovation is fairly comprehensive, education and S&T are in silos, reflective of the actual position.
Science is global, but the S&T chapter does not place Indian science in the global context. It notes, again, the need to raise R&D expenditure to 2% of the GDP from the present 0.9%; but of the incremental 1%, it wants private R&D to contribute three-fourths. Apart from the impracticality of expecting such a large increase in private sector R&D, this raises doubts about the government’s own commitment to R&D.
Since private R&D is likely to be concentrated at the delivery end of the research-development-engineering chain, science will again get a short shrift. Socalled ‘small science,’ done typically in the universities, gets no mention, though it is this, around the world, which is the foundation of bigger science and of technology. This is also, typically, the breeding ground for innovation and breakthrough technologies. There is no mention of the policy regarding technological self-reliance in strategic sectors: has this goal been abandoned? The growing strategic importance of electronics, high-performance computing and communication needs recognition. The need to liberate S&T institutions from the stranglehold of bureaucratic procedures — including those affecting recruitment and investments — and to give greater freedom and autonomy to research institutions is downplayed. Bureaucracy is one reason why Indian scientists do so well abroad, but not in India.
The S&T chapter in the approach paper misses many key areas. It could have broken new ground and identified more specific policy directions, especially with regard to energising science research in universities, redefining the role of government R&D establishments and integrating S&T into mainstream development efforts. The needs of mission-oriented efforts, say, in strategic sectors, industryled R&D, and basic science are quite distinct, and need different approaches.
Indian industry has a dismal record of R&D; but market compulsions are changing that, and some fiscal incentives can stimulate investments. Government commitment, though, seems to be trending in the opposite direction. There is need to recognise that development, economic growth and geopolitical power are dependent on S&T capabilities; the government must, therefore, invest far more in S&T, and completely overhaul the machinery of managing science.
Anna Movement: Other Facets
In the media frenzy, it has been forgotten that corruption has many variants that no single law can end
Much has been written about Anna’s pals (Team Anna), people (the “movement”) and people’s pal (civil society) — as also a semi-translation of the last: Lokpal. However, some facets have not evoked the depth of attention that they deserve. Certainly, Anna was little-known outside his home state when his protest began at Jantar Mantar; nor is he a particularly charismatic leader or a great orator. What, then, accounts for his — or the movement’s — appeal? Corruption itself — especially the type that affects the “common man” on a day-to-day basis — is, after all, not a new phenomenon in India. So, was it the timing: the fact that “nothing can stop an idea whose time has come”?
Many have looked at the sociopolitical and economic factors that triggered the movement, and these are undoubtedly major contributors; but, was there also an underlying psychological element? For many years now, across divides of caste, class and community, the commonest “other” — disliked, distrusted and perceived as being corrupt, if not criminal — has been the politician.
So, an agitation directed primarily against the political class, was bound to evoke support. Also, to a vast number of people — possibly a majority — the State (identified mainly as politicians in or out of government, and the administration) is perceived as being exploitative and often oppressive. This image of politicians and officialdom, even if it is an exaggerated caricature, is probably the conducive psychological soil within which the agitation took easy root and flourished. Ominously, this is also a nurturing environment for both anarchism and fascism.
Arguably, this was India’s first media-fuelled movement, through wall-to-wall 24×7 coverage (one estimate was that it made for over 80% of content on TV news channels). The known (but little discussed) agenda-setting power of the media was amplified by the positive feedback cycle between coverage (drawing crowds) and crowds (getting coverage). The mindset of the TV editors, in an intensely competitive media market, ensures that most channels cover the same issue, enforcing a common agenda on a very diverse audience. If the issue to be covered has visual dimensions, that seems to immediately add to its news-worthiness; and, if it is easily accessible, so much the better.
Avisual spectacle in the cities was certainly a god-send for TV. The key players making statements that could be from the pen of a Bollywood dialoguewriter not only added to the audio dimension, but provided grist for the shouting matches (outdoing Parliament) that masquerade as “panel discussions”. The media was, clearly, amajor factor and an amplifier. In fairness to TV, despite some anchors being blatantly partisan — participant, rather than moderator — almost all channels gave a fair airing to different shades of opinion. Yet, one pined for a genuine public-service broadcaster, as counterpoint to the all-powerful market-driven media.
Unfortunately, the issue of corruption itself received short shrift. In the now-standard knee-jerk reaction to any transgression, a new law with harsher punishment — overseen by a saintly big brother super-cop — is the prescription. There is little focus on systemic issues, on better investigation or on ways of speeding up the justice system, and no attempt to differentiate between coercive corruption and collusive corruption. Coercive or extortionist corruption — a common experience in daily life — is what affects and irks most people, especially the poor and powerless. Faulting the bribegiver in such cases is akin to punishing the victim of a crime.
Reducing this form of corruption requires tighter supervision, automation, transparency and overhaul of procedures, more competition in goods and services, and certainty of quick punishment for the bribe-taker.
Collusive corruption, on the other hand, is a “joint venture” between bribegiver and bribe-taker; a transaction in which both benefit, at the cost of the public exchequer or of third parties. This can extend from petty corruption (bribing the ticket-checker when you do not have a ticket) to really big-ticket items (multicrore procurement deals, or sanctioning mining rights). These are inevitably difficult to prove — especially in a court of law — as neither giver nor taker is likely to complain, Such instances, therefore, require intelligent and painstaking investigation; something for which the agencies concerned will require considerable training, especially in understanding complex financial transactions and tracking money trails.
There is a third form of corruption: a variant of coercive corruption, with the roles reversed. In this, “don’t-youknow-who-I-am” mode, power —not money — is used, and the law-breaker (or queue-jumper) uses his position or contacts to have his way. Asymmetry of power and a feudal mindset (“the king can do no wrong”) facilitate such corruption. For both forms of coercive corruption, greater social and economic equity are the best longterm preventive.
Choking the supply-side of corruption necessitates high standards of corporate governance and tight auditing. A tough stance on corruption by industry associations will add peer pressure. Strangely, the Anna movement chose not to take on the major source of bribe-giving: the corrupt corporate. The next movement may not be so kind.
India’s statute books are full of laws for practically everything. The problems lie in their strict and fair enforcement, preceded by good investigation. The popular perception is that the powerful — politicians, top officials and the rich — are able to subvert the law. Another law and another agency may only be marginally more effective; worse, it may paralyse governmental decision-making while driving up the cost of corruption. The gains of public awakening should not be frittered away through tokenisms.
Choke Corruption’s Supply-Side
The corporate sector must do its part in the anti-corruption war by enforcing norms through peer pressure
He who is without sin, let him cast the first stone”: this biblical admonishment seemed, for many years, to be the guiding motto of most politicians. Now and again there would be allegations, but the extent of mudslinging was limited. Possibly, politicians in the past were more law-abiding; more likely, they realised that all of them were in glass houses. Now, there is widespread and open recognition about the reality of criminalisation of politics. There are few claims of honesty, and the arguments centre around whom and which party is less tainted. “My crime is smaller than yours” is the new defense, and a way of establishing superiority. One result is competitive allegations, with charges flying around fast and thick.
In contrast, the corporate world seems more mindful of advice from the Bible. Even as they compete — often as vigorously as political parties — the bad-mouthing of rivals is limited, and inevitably done on the sly: indicative of its lack of acceptability amongst peers. While this is, in some ways, a positive feature of inter-corporate behaviour, it does raise ethical issues about how the corporate world deals with illegalities within its flock.
Consider the issue of illegal mining in Karnataka. For some time now, this has been a hot topic in the political sphere, with a few political leaders facing considerable fire from other politicians and the media. Now, following the Lokayukta report indicting the chief minister, he has announced his resignation — after considerable pressure, including from within his own party too. Similarly, after allegations and charges related to the 2G spectrum licences, two ministers of the central government have resigned. This was preceded by a great deal of political pressure and media “exposures” about their role. On the other hand, involvement of companies and corporate leaders has received far less media attention and coverage, and there is little or no peer pressure on the organisations or CEOs concerned. For example, the same Lokayukta report — instrumental in the resignation of the Karnataka CM — has named some companies. However, one is yet to see media discussion and exposures about most of them, or any known condemnation from peers.
Some weeks ago, media carried a story about a state minister’s son misusing his father’s position (and official paraphernalia) to pressurise farmers into selling their land to a company. The company in question had apparently hired the son for this role. Yet, there is little discussion in the media about such unethical practices adopted by the company for land acquisition, nor did one read about any criticism by other corporate leaders.
These are but few of the many instances of unethical — even illegal — practices of some companies. Clearly, these are contrary to any basic norms of corporate governance. One wonders if the boards of these companies have taken any corrective actions or questioned those responsible, at least after the public disclosure of improper corporate behaviour.
Undoubtedly, such cases are aberrations, triggered not only by opportunity and greed, but sometimes also by unrealistic regulations and laws. This makes it all the more important to ensure punishment to the deviant delinquents and, thereby, serve as deterrence to others. However, the police have a dismal record of securing convictions and these, too, take forever with the tortuous legal system. One has, therefore, to look for alternatives.
The best — and probably the most effective — means of enforcing norms is through peer pressure. A major reason for pervasive corruption in certain segments is not the lack of laws (in any case, conclusive evidence is often difficult to find), but the breakdown of the social sanction against giving and taking bribes. If, then, corruption is to be curbed, it is as important to focus on societal norms as on creating new bodies or laws. Combating corruption by choking the supply-side and following the best standards of ethical corporate behaviour will require strong internal intent and external peer pressure for each company to attain the highest standards of corporate governance.
It is unfortunate that corporate governance through board action is so slack, and that peer pressure is practically non-existent. Industry captains and associations have a major responsibility, and must be seen as publicly taking a stance against wrongdoers — some thing that one has seen little of so far. As a result, the image of the corporate sector as a whole has taken a beating. While politicians are widely seen as being generally corrupt, the political process itself tends to expose wrongdoing. In addition, the hawk-eyed media, ever looking for “breaking news”, is quick to investigate issues (even at the cost of sometimes tilting at windmills). In the case of companies indulging in corruption (they are, after all, the source for the biggest illegal gratifications), media coverage is far more benign. Internal processes and peer pressure are, therefore, more essential.
It is time directors monitored closely the operations of their company, and boards took greater responsibility to ensure that ethical business practices are actually followed. One expects action, at least following exposures of corrupt deals indulged in by the company. Associations too — most of which now flaunt an ethics committee — need to act, if they are to retain credibility regarding corruption. After all, for individuals and organisations, few things are more effective as a deterrent than the fear of social disapprobation and ostracism. Will company boards, corporate leaders and associations wake up and act before it is too late?
Heed Small Matters, for Small Matters
“Little drops of water, little grains of sand, make the mighty ocean, and the beauteous land”. As in Julia Carney’s hymn, it is the “small” elements of one’s day to day existence that determine the larger whole. It is these that, for much of the time and most people, make life easier, better and more enjoyable – or cause pain and unhappiness. Some of these are influenced by the individual or by friends and family; many others, though, depend on what organizations or governments do (or not do). There are actions that governments could take, which would improve the quality of life for citizens. Each person would have his or her own list of such items; here are but a few random examples.
Many cities now have toll-roads, especially to access near-by suburban areas. Used by tens of thousands of commuters every day, these roads are designed to be high-speed corridors. Yet, bottlenecks at the toll-gates often cancel the advantages of a speedy and smooth drive. Some of this is caused by lack of enforcement: for example, of the “tag” lane. Apparently, this cannot be enforced because of buck-passing about authority and responsibility between the parties concerned. To make matters worse, the odd amounts of toll-fee add to the delays, It would require a considerably thick head to not anticipate a problem if the toll is not a round figure (the present toll on the Delhi-Gurgaon expressway is, believe it or not, Rs 21). Doubtless, those in charge will have many rational explanations as to why the toll is not a simple, easily payable amount. But, one would have hoped that someone with an outlook beyond that of an accountant would have stepped in. A small matter; yet, a cause for much agony for many people every day.
Resentful of the hundreds of cars in Delhi with red flashers atop (signifying a VIP), accompanied inevitably by an armed security escort that threateningly pushes aside all other traffic, many welcome the bold step of Delhi Police in announcing that they would stop unauthorized usage of such flashers. Particularly pleasing was the widely publicized advertisement listing those eligible to use such red flashers and lights on their cars. It does, though, raise two questions: first, why was no action taken earlier on this many-years-old illegality; second, what action is being taken against those who flagrantly violated the law, including many ineligible bureaucrats? One also wonders whether the Cabinet Secretary has formally written to all Ministries to immediately comply with the law by removing the red lights from the cars of all those who are not eligible. Just a small issue again, but a matter of unease that the government itself is amongst the law-breakers, and causes disruption to the harried commuter.
If driving on India’s roads is a hazard, being a pedestrian is even more so, with a lack of proper foot-paths, encroachments on pedestrian space (for parking, and by shops and hawkers) and few – if any – regulated road crossing points. This is made worse by foot-paths and road edges that are constantly (and serially) dug up by multiple agencies, never to be properly repaved again. Every now and again one reads about plans to ensure co-ordination amongst agencies that need to dig up roads. Yet, this seems a goal that is always in the future. Certainly, enforcing such coordination should not be that difficult? Nor should ensuring the full restoration (if not improvement), after digging, be an impossible challenge. These small actions can contribute to the comfort and safety of millions of pedestrians.
How good it would be have displayed at each public-work site, the budget, expenditure, time schedule, executing organization, and names and numbers of those responsible. This can be accessed through the right to information (at least till the government decides that this, like CBI investigations, is sensitive and, therefore, secret!), but why not a simple board at every project site itself? Would this not be more indicative of transparency and accountability than mere good words? Also, it may convey the implicit message (as articulated at such works in the US) of “your taxes at work”.
A standard procedure during road repairs is to close one side of the road length, resulting in two way traffic on one side of the central median. While there is often a “diversion” sign at one end, there is no indication at all at the other end, catching drivers unawares as they unexpectedly face a vehicle heading straight at them on the wrong side of the road. Is it not obvious that there needs to be a warning sign at both ends of such a diversion?
One experiences hundreds of such “small” issues everyday, on which no authority seems to act. Yet, they irk the “aam aadmi” and affect not only the quality of life, but sometimes its very survival. Good governance is not only about big issues and major policies; it is equally – if not more – about the mundane details of daily life. Who, at what level of governance, will take care of these? The structures of governance today are such that responsibility is diffuse and buck-passing is, therefore, inevitable and easy. There have often been pleas to change structures so as to establish clear authority and responsibility. Such reforms are now overdue, at all three levels of constitutional governance. Given the inadequacy of existing mechanisms, is it time for a Ministry or mission for small issues?
CSOs: The New Power
A piece on “soft power” – in summary, the use of means, other than force, to achieve one’s goals – published in this newspaper (“India: Soft State to Soft Power, ET, 5 April 2011) drew a great deal of response. Most were skeptical; the view was that what really matters – especially between nations – is military strength, and it is this alone which determines the power equation. There was an acknowledgement, even if grudgingly, of the growing influence of the various elements of soft power; but this was seen as marginal, at best.
Towards the end of the last century, many felt that the nation-State was in terminal decline. Globalisation – driven and, often, caused by technology – and technology-catalysed empowerment of individuals, was effectively erasing national boundaries. This fed idealistic hopes about the birth of new trans-national global communities, and the demise of the nation-State. However, the scenario evolved rather differently. The new century, particularly post 9/11 concerns about terrorism, led to more intrusive and often oppressive measures by an increasingly “big brother” State. Patriotism transformed into jingoism, and hard power is back in fashion.
Yet, if one is looking for an example of the weight of soft power, it is right here, in India. The events of the last few months have brought home – figuratively and literally – the tremendous impact of soft power. What could be more demonstrative than the spectacle of Ministers trooping to the airport to receive a yoga teacher cum businessman? Or a government cajoled into creating a new committee to draft a Lok Pal Bill? The point is not whether these actions are right or wrong, good or bad, or even their outcome; rather, it is the reason behind these unprecedented moves. Clearly, governmental decision-makers felt pressured by the soft power implicit in the two cases.
Recent events around the world have thrown up interesting examples of the tension between soft and hard power. The undoubted effectiveness of the latter was seen in the US action against Obama. Violating all norms and riding roughshod over principles of sovereignty, it demonstrated how overwhelming military force has no answer in the short-run. Meanwhile, terrorists around the world continue to reinforce the force-of-arms doctrine through random strikes that have killed hundreds. On the other hand, the “Arab spring” – especially in Tunisia and Egypt – was an exhibition of the capabilities of soft power. However, it would be premature to claim its victory; for, the trend now – as seen in some of the other Arab countries – is to confront soft power with direct military force. It is far from clear as to which will finally prevail.
Irrespective of the outcome, there is little doubt about the growing role of soft power within a country, as witnessed in India, Tunisia and Egypt. The critical ingredients that power these “people’s movements” are community organizations – NGOs or civil society organizations (CSOs) – and media. In the latter, social media – technology-driven networking platforms like Facebook, Twitter and blogs – as also sms and mms, are growing in importance. The technological capability for an individual to be a “broadcaster” (reaching out to thousands through text, audio, video clips and photos) has changed the power equation. No longer are large organized entities – corporations or the State – able to control or manipulate information, or be its sole purveyors. Moreover, technology-facilitated networking can create, almost instantaneously, virtual organizations or mobilization of thousands as seen in Tahrir Square or (physically and virtually) Jantar Mantar. TV, and particularly 24×7 news channels, have a voracious appetite for material, and a reach that is now near-universal in cities and extremely wide-spread even in rural areas. When it decides to focus on any item, its impact is multiplied manifold. It is this combination of technology-driven mass mobilization (physical and virtual) and its coverage on TV that make for an explosive critical mass, further intensified by a positive feedback cycle between the two. It is not surprising, then, that the soft power implicit in this can put governments in a tizzy.
Technology, through its ability to instantaneously mobilize mass movements, has given immense clout to CSOs. Governments have woken up to this, sometimes through a rude jolt. CSOs themselves have yet to realize this immense power and need to think about how best to use it.
The corporate world too needs to comprehend this new force. For long, corporates have had a strange relationship with CSOs, varying between patronage and adversarial. Some have considered CSOs as merely the recipients of the largesse of their CSR budgets, an item to be included (with an appropriate photo) in the annual report. Others have looked at them with suspicion, as trouble-makers to be wary of. However, as the focus on inclusion and environment intensifies, as land and human rights become mainstream issues, corporates will need to include CSOs amongst their stakeholders. Companies have a senior-level professional to handle “government affairs”; now, they need one to interface with CSOs. This requires a change in mind-set. In the new scenario, companies must evolve new strategies to look at CSOs not as appendages or adversaries, but as partners.
For some years, terror groups have been the major non-State force, using hard power as their means of exerting pressure on governments. Now, CSOs have emerged as another key player, using soft power to wield influence. In years to come, this is certainly going to mean a change in the balance of power between State, business and civil society.
The Magic Bullet Mirage
It takes a whole range of initiatives to even minimise corruption, of which Lokpal is just one
Humans are complex beings: our physiology is complicated, our psychology even more so. The combination of such entities into a network — a society — raises the complexity by a few further notches. Each one of us knows this for a fact, since we experience it in our day-to-day lives. Yet, surprisingly, we look for single-point solutions — the magic bullet — to difficult problems. Religion is one such assumed cure-all, and a whole industry of god-men is built around this value proposition. Equally — and, again, despite our own experience to the contrary — many feel that the simple solution to intricate issues is simply greater force. The proverbial bully — individual, corporate giant or country — is convinced that all obstacles can be overcome merely by applying more or superior force. Thus, we see the use of force to “solve” complex religious issues (as in Ayodhya or — more recently and horrifyingly — Gujarat), or on stone-pelters in Kashmir or even on those dubbed ‘sympathisers’ in Naxalite areas. This, despite the experience that it is generally easier to open a package by untying a knot of the tough string, rather than pulling at its two ends — making the knot more difficult to untie — and trying to break it.
Yet, faced with the complex issue of corruption, many feel that a magic bullet (the Lokpal) will solve it, and that this will be ensured by giving the institution extraordinary power. The comparison with the “benevolent dictator” model is certainly unfair, but inescapable.
Many see corruption as the end-product of the system, and want to eradicate it through a strong, all-powerful Lokpal with full authority to investigate and punish. Some feel that the root cause is funds for elections, and so look at electoral reform as being the answer. Very few acknowledge that there are multiple causes, various drivers, different motivations and a variety of methods through which corruption originates and thrives. Tackling these requires correctives and interventions at various levels. However, even before that, there may be need for systemic changes — a re-engineering of policies and processes — so that the very scope for corruption is minimised.
An example of systemic changes which reduce corruption are policies that increase supply or introduce competition. These have reduced ‘retail corruption’ for items like cooking gas and telephone connections. Even in monopoly or government services, technology can be used to create ‘competition’. An illustration is the digitisation of land records and multiple points of delivery, which have reduced — if not eliminated — the bribes that farmers had to generally pay to get a copy of their land ownership certificate.
The impact of these systemic changes is reflected in a recent report by the Centre for Media Studies (CMS). This study — the seventh such since 2000 — indicates that the percentage of rural households which paid bribes has come down drastically, from 56% to 28%, between 2005 and 2010. However, in a crucial area like the public distribution system (PDS), the percentage of rural households paying a bribe almost tripled — from 8% to 22%. Bribes had to be paid mainly for getting a new ration card and to get the monthly ration, with amounts ranging from . 5 to . 800 for the former and . 5 to . 700 for the latter. The study also indicates massive leakages and diversion of foodgrains from PDS to the open market. There is no equivalent study of what one may call ‘wholesale corruption’.
In contrast to retail competition, which seems to have generally decreased at the overall level (as indicated in the CMS study), the liberalisation-privatisation model has spawned megacorruption on an unheard-of scale. This model has the dangers of crony capitalism inherent in it, as was seen in Russia in the 1990s. In India, top institutes produce MBAs who are known to get mind-boggling incomes; however, the new and bigger money-spinning MBA is the minister-businessmenadministrator nexus.
Are the solutions of reducing day-to-day bribe-taking — policy, competition, technology — applicable to more sophisticated, big-ticket corruption? One noteworthy point is that even for retail corruption, the reduction has required a slew of measures. For the more complex issue of highlevel mega-corruption, clearly there cannot be any single-point solution. Some — in keeping with the brute-force or “hang then from the nearest lamppost” paradigm — recommend strong action. A judge recently talked of castration as punishment for rape. Whether or not even such medieval forms of justice work will depend not just on the severity of the punishment, but its certainty and speed. These call for competent investigation and quick justice.
Among the more potent anticorruption weapons is the Right to Information (RTI) Act, which provides access to practically all governmental information and thus helps to exposure any wrongdoing. US Supreme Court Justice Louis Brandeis famously said, “Sunshine is the best disinfectant.”
This needs to be supplemented by strong whistleblower protection, the use of technology to bring transparency, and electoral and police reforms. The last is essential, if we are to see fair and fearless implementation of laws (rather than merely enacting more stringent ones or greater punishments) and professional investigation (instead of crude third-degree measures that often punish the innocent) to improve the dismal conviction rates. In addition, judicial changes that ensure speedy justice are essential, for it is only punishment that is speedy and certain that will deter wrongdoers. These and other multiple measures — including societal awareness, values and ethics — are the only hope of weeding out corruption; not some single magical silver bullet.
India has, for long, been regarded as a soft state. Gunnar Myrdal is credited with inventing this term, intended to mean a country where law enforcement and social discipline are low; by extension, one that is as timid and diffident in its dealings with other nations as with its own citizens.
Unlike tough and totalitarian states, or power-projecting countries like Israel, India was seen as mild and non-aggressive; preferring compromise to confrontation. A look at contemporary history may belie this: right from Hyderabad, immediately after Independence, to the liberation of Goa, the annexation of Sikkim, and interventions in Sri Lanka and Maldives. More recently, its muted and measured reaction to the Parliament attack and Kargil, and to China .s reported border incursions, have been lauded as signs of responsibility, as the maturity and confidence of an emerging power.
In fact, some have already anointed India as a potential or soon-to-be superpower. If the size and growth of the economy are a criterion, then India does f it the bill. Its impressive growth over the last two decades is but the prelude to even more acceleration in the next few years. In fact, the prognosis, as indicated in a recent Citi study, is that (in PPP terms) it will be the third-largest economy by 2015, overtake the US by 2040 and, around 2050, become even bigger than China.
Many welcome the move from the pejorative ‘soft state’ to macho ‘superpower’. The xenophobic brigade sees this as a fulfilment of India’s destiny, recapturing its ‘glorious past’. Yet, an objective assessment will hardly justify this appellation: India’s military capabilities are but a fraction of China’s, and its nuclear arsenal reportedly smaller than Pakistan’s. Relative to others, India’s coercive abilities in the region of its immediate interest are very limited.
How, then, can India influence developments in countries of interest to it? Relevant to this is the definition of brand India. Are its primary attributes related to military power: the fact that we are the biggest importer of armaments or have the third-largest army? It is unlikely that this will give us greater clout than competitors. Surely, it is not arms and armies, but culture and cuisine, democracy and diversity, spirituality and software that we would rather be known for.
It is these and similar facets of India that people elsewhere look up to; and, fortunately, in today’s world, it is these that are increasingly important. These have become the new currency of power, as countries realise that the battles of tomorrow are not about occupying land, but capturing hearts and minds.
Hard evidence of this is visible in the turmoil in north Africa and west Asia, as it was earlier in central and eastern Europe, where ideas and ideals are beginning to trump military force. Earlier waves had seen the triumph of other ideals, first nationalism and then religion – sweep many countries. Some had predicted a similar wave of market, or capitalist, democracy ousting all other ideals, but the last decade has not seen this materialising.
