Aam aadmi vs sab chor

Somebody has obviously got something very wrong somewhere. Three things,however,are clear. One,that while the top leaders of this cabinet and the Congress party are individually clean,they have failed to exercise adequate control over the system. Two,that for too long have they erred—and gravely so—in casually and lazily personalising the issue of corruption. So blame telecom on Raja (and use the alibi of that horrible expression,coalition dharma),CWG on Kalmadi and Adarsh on Chavan. Three,and this is the most serious one,that they have failed to keep pace with changes in a reform-charged economy. Consequently,politics,governance and regulation have fallen way behind business and the market,resulting in the rise of an entirely new system of rent-seeking. And a new generation of kleptocracy which has its roots in politics,bureaucracy and private enterprise.

The scams of today are fundamentally different from those of the past in that almost all have something to do with the government/private sector interface. In the past,scandals were all about government purchases and contracts and,as economic reform began,the stock market (which saw one each under Congress and BJP watch,Harshad Mehta and Ketan Parekh,respectively). Government purchases became less of a story because of reform. Even the key PSUs became listed companies and therefore had to become a lot more transparent. The reason we have run one of the cleanest stock markets in the world for a decade now is simply the correctives that followed the two scams,with the strengthening of SEBI as such a powerful and autonomous regulator and unrelenting prosecution of the scamsters. But the failure of the same reformers to prepare the system for challenges that would have inevitably followed is intellectual as well as one of a lack of political will.

Over the past few years,almost all scandals have involved misuse,or a widely believed allegation of misuse,of discretionary powers by the government,either for old-fashioned rent-seeking,or its new child,crony-capitalism. What has happened with telecom is only the most brazen example of both,and has given India a bad name globally,particularly because this is such a sunrise industry and one of the greatest post-reform success stories of India,along with IT,followed by automobiles and aviation. Whatever happens domestically,damage to India’s international reputation will be humongous as the scandal now takes some of the largest global telecom players in its sweep. Meanwhile,under the same dispensation,the government’s own telecom companies have been systematically destroyed. One of these (BSNL) has been denied a public listing on the most specious of arguments but understandably on the most obvious of motives (to keep the ministry’s grip over its contracts and largesse). Public listing brings transparency and diminishes discretion,and those are the last things you want when you so crave cronyism and rent. Kapil Sibal has thus been handed a challenge bigger,and more urgent,than even HRD. You would only hope the excuse of “coalition dharma” is not used again to hand this portfolio back to the DMK. No government can survive for three-and-a-half years after dumping so much credibility and,even if it does,it can forget about getting re-elected.

Let’s look beyond telecom. Each major scandal the UPA has faced has stemmed from misuse of discretionary powers by its ministers,either to make money,or to favour cronies or fellow travellers. From petroleum,to mining leases,coal linkages,almost all the major scandals that create today’s “sab chor hain” mood have resulted from the fact that impartial,autonomous and modern regulation has failed to keep pace with the reform and growth of our economy. Free markets cannot survive without equally free and wise regulators. That is where the UPA’s record has been so shoddy. Raja is not the only one to have undermined his (telecom) regulators. The petroleum ministry has systematically decimated its own. Civil aviation has only talked of a regulator for six years now without a step taken in that direction. For how long can higher education,which is becoming a big business now,be left to be “regulated” by the UGC and AICTE and MCI? There is so much discretion left with the environment ministry that in the past it was widely known that some of its residents pretty much had tariff cards for clearances. That,mercifully,is not the situation now. But this kind of discretionary power leaves scope for enormous whimsicality as well as corruption,and transparent,autonomous regulators,often talked about,are nowhere on the horizon. And where is the real estate regulator without which there is no protection of the rights of the emerging new middle class that is betting its future so bravely to borrow and buy its proud new homes,and without which the property business cannot come out in the transparent domain,with the emergence of modern price-discovery and liquidity mechanisms like REITs (Real Estate Investment Trusts)? You know why all politicians,particularly at the state level,love discretionary powers over land so much. But so was the case with industrial licensing and Manmohan Singh dismantled that. Why has he not been able to do so with property now?

These scandals could ruin this government,and,most unfortunately,the prime minister’s name. But he has been in that place before,and knows what needs to be done. He needs a new 100-day project now to institutionalise all these regulators and take away his key economic and resource ministries’ discretionary powers. They will protest,particularly those manning what can be aptly described as ATM ministries: you shove the card,cash starts dropping out of the slot. He also needs to abolish ministries which are built as pure ATMs,like Steel and Coal,as these are also anachronisms in a reformed economy. It won’t be easy,but it won’t be as tough as the nuclear deal,particularly when public support for a clean-up is guaranteed. If he doesn’t,he will see the clock firmly set back on his own reform under his own charge. Surely,that’s not the Manmohan Singh legacy that Manmohan Singh would like.

sg@expressindia.com