Opinion Mumbai Reclamation

Education,health,housing and water are still plagued by shortages. There is plenty of discretion floating around in land,real estate and building. The raja of all discretion is when licences or land is given to the private sector,or in defence and other forms of government procurement. Therefore,during the transitory period of reforms,it is possible for corruption to increase,especially if we increase public expenditure and provide more opportunities. From 2002 to 2007,TI scores exhibit improvement in India’s corruption record. But from 2007 to 2010,there has been marginal decline. Since this is about perceptions,no doubt 2011 will be worse,once CWG effects are factored in. Big-ticket corruption is linked to politics and elections. Politics is a profession and,like any other profession,if a certain sum of money has been expended,one expects returns. After all,tickets were bought. Stipulated percentages have to be passed on to the party. Corruption is built into the DNA of every political party,especially since the late-’60s. It is just that some parties have been around longer and are better organised. Contrary to what Gandhiji said and desired,corruption and hypocrisy have become inevitable products of democracy. Consequently,it is also a myth that political parties wish corruption to disappear.

At best,they want small-ticket corruption to decrease,while big-ticket corruption remains. (No government is going to sign the WTO’s plurilateral government procurement code in a hurry.) This is a bit like the Rudy Giuliani effect in New York. Notwithstanding RTIs,lok ayuktas,e-governance,whistleblowers,civil society,media and “Jaago Re” campaigns,we don’t except corruption to substantially decline. We don’t believe Ashok Chavan,or Suresh Kalmadi,or anyone important enough and part of the political classes,to be ever prosecuted and convicted. A few bureaucrats here and there are different. Elimination of corruption is Utopian and let’s not forget Thomas More,author of Utopia,was beheaded. At best,countervailing pressure can hope to make corruption more efficient. Cross-country studies float around,correlating measures of corruption with measures of growth and development. Lower corruption is correlated with higher growth and development. This is correlation. It isn’t causation. While lower levels of corruption may lead to higher growth and development,it is also possible higher income levels increase literacy and awareness of rights,and increase countervailing pressure for better governance. The loop can be both ways.

By most economic indicators,Maharashtra is one of India’s leading states,though it is a large state and Mumbai-Pune isn’t the same as Vidarbha. From a corruption perspective,it has never been regarded as an extremely corrupt state. For instance,the Centre for Media Studies (CMS) undertook a corruption survey in 2008,particularly directed at BPL households. States were divided into four categories — alarming,very high,high and moderate. Moderate was the best of the league and Maharashtra was there,unlike Bihar,which was in the alarming category. It is unlikely (because these are perceptions) Maharashtra will remain there today.

Beyond corruption,most perceptions are governance is deteriorating. So is growth. States like Maharashtra and Punjab ride on their past successes and post-1991 (more since 2003),backward states have begun to catch up. That’s easier for laggard states to do,since they have more slack in the system and even limited reforms can jack up growth enormously. However,this catching-up and plateauing doesn’t completely explain Maharashtra’s relatively muted growth performance. For instance,despite high bases,Gujarat and Haryana have grown fast. Whenever a state performs well,the cake grows and redistribution of a relatively static cake is less relevant. There is less protectionism floating around. Had the US economy performed well and unemployment not been high,President Obama wouldn’t have been worried about outsourcing leading to losses in American jobs. Had Maharashtra performed as well as it should have,there would have been less support for the MNS and less resentment about migrants. Around 5 per cent GSDP (gross state domestic product) growth is hardly respectable.

More specifically,decline set in around 1995-96 — with symptoms of fiscal imbalance,populism,high debt,slashing of capital and development expenditure,collapse of administrative delivery and mis-governance. Planning Commission reports and Maharashtra’s own Economic Survey have documented this. There is more than symbolism if Delhi overtakes Mumbai to become India’s busiest airport. Financial activity is also increasingly moving towards Delhi and there are several alternative destinations for manufacturing. Maharashtra is no longer an “adarsh” state and this is about more than a mere housing scam,though names of three other former CMs have also been dragged in. This is why discussion about the new CM must centre not on whether he is a party loyalist or his use in identity politics — it must be whether he will be able to reduce corruption and improve governance.

Ashok Chavan gave President Obama a book on Maharashtra and said,“When you return home and go through the book it will give you an idea about Maharashtra which is the leading state of India.” The past tense of “was” would have been more appropriate. But then,it was a coffee-table book and not meant to be taken seriously.

The writer is a Delhi-based economist express@expressindia.com