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Monday, January 27, 2020

How Things Fall Apart

The book misses the impact of corruption/scams on society — it leads to policy failure and to inefficiencies, which lower the rate of growth of the economy below its potential.

Written by Arun Kumar | Published: August 12, 2017 1:07:01 am
Per Ove Morberg (left), president, AB Bofors, and Lars Gothlin, chief jurist of Nobel Industries, at Parliament to depose before the Joint Parliamentary Committee that investigated the Bofors gun deal. Express Archive

Why Scams are Here to Say: Understanding Political Corruption in India
Author: N Ram
Publisher: Aleph Book Company
202 pages

Following demonetisation 2016, there has been heightened public interest in the black economy and corruption in India. The public thinks of scams as the big cases of corruption involving the high and mighty political and business leaders. The book under review largely analyses this linkage in both theoretical terms and with reference to some specific cases. The definitional aspects, links with media and the executive are explored.

The book comprises three sections divided into eight chapters. There is an introduction and a long conclusion where the author discusses what can be done. Section I, consisting of three chapters, presents the “story of corruption in India”. Section II provides the context by focussing on “historical, conceptual and theoretical issues”. Chapter 6 presents the author’s understanding, based on the Marxist view of political corruption, which is seen as an alternative to mainstream approaches. He critiques the “overly simplified moral” view underlying the “failed” JP and Anna Hazare movements.

Section III presents two important case studies which the author had directly dealt with, which give insights into the links between scams and politics in India. These two scams are Bofors and J Jayalaithaa’s disproportionate assets case. He hypothesises that “several Indian states have their own corruption systems”. So, there is a need for focussed empirical research to help find ways to combat corruption. The author states that the problem has become intractable without a change in India’s political economy. In the conclusion, he nonetheless presents suggestions under nine broad headings — “laws, enforcement capacity, policies, institutions, regulation, vigilance, corporate sector, journalism and politics”.

The author describes the “grand corruption that operates year-round with clockwork, “scientific precision.” However, this is true of most black income generation (and not just big corruption) and that is why in the literature it has been called “systemic and systematic”. The book points out that it is the joint product of politicians, bureaucrats and businessmen. In the literature, it has been called the “triad” and dismantling it is crucial to tackling black economy and corruption. This requires accountability, especially of the political class. While RTI can help in this, it is the public that has to act by not electing the corrupt. But, the public often has little choice since political parties put up the corrupt and the criminal in the belief that they can deliver.

In Chapter 3 and the conclusion, flawed laws and their weak enforcement are discussed. The author veers to the view that the government is overburdened compared to other countries. But, laws are laws in letter and spirit. If the spirit is weak, then howsoever good a law maybe, it can be circumvented by clever people to their advantage. That has been India’s experience, whether we think of the anti-defection laws, election financing law or the Income Tax Act.

The book misses the impact of corruption/scams on society — it leads to policy failure and to inefficiencies, which lower the rate of growth of the economy below its potential. In addition, it results in “social waste” so that welfare associated with growth diminishes. Consequently, even when incomes rise, poverty does not decline and inequality rises.

The book presents the historical context of corruption in India and mentions the idea of “Asiatic Corruption”. The author points out that the real scandal of the Empire was the loot of India and that was the bigger corruption. The idea that India was a corrupt country before British rule needs to be revisited. Corruption needs to be defined in relation to the laws of the land. If paying money to state officials for work to be done is customary or when the empire of a vanquished king is usurped by the victor, can it be called corruption? There is a fine line between legality and illegality, and this line shifts with changes in laws and the social understanding prevailing at that point of time.

In India, if the black economy is taken as a measure of the level of corruption, the size has grown from 4-5 per cent in 1955-56 to the present 62 per cent of GDP. If one extrapolates back, the level of corruption during colonial rule was low largely because most people had little to do with the state, which was small in size. Since the 1950s, the number of major scams in the country has been exploding in both number and the amount of money involved (See my Indian Economy since Independence: Persisting Colonial Disruption).

The book highlights the role of the private sector, especially MNCs (in spite of rules in advanced countries). In conclusion, the author says that “it would be irresponsible for citizens to stand aside”. The implication is clear: movements are crucial to the battle against corruption.

  Arun Kumar is the Malcolm Adisheshiah Chair Professor, Institute of Social Science

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