The road to hell is paved with good intentions

The government’s surrender to Anna Hazare’s threat of fast unto death opens up a multitude of issues. Anna Hazare is no doubt a man of highest integrity, social reformer of highest standards and quite unlike the current crop of politicians who seem to dip their hands in the till continuously.

April 19, 2011 7:10 IST | India Infoline News Service

The government’s surrender to Anna Hazare’s threat of fast unto death opens up a multitude of issues. Anna Hazare is no doubt a man of highest integrity, social reformer of highest standards and quite unlike the current crop of politicians who seem to dip their hands in the till continuously. His ethics and connect with general public who are sick of corruption at all levels gave him the moral high ground to take up such a fight. The government capitulated because they were afraid that he will actually fast unto death unlike other politicians who have made a tamasha of fasting from morning to evening sipping fruit juice and being catered to by a medical team. Not to mention the PR exercise which goes with it. The common man immediately decided to join the fight against corruption, which  is becoming endemic to India and slowly and steadily destroying the moral fabric of the country.

My question - is corruption actually shredding the moral fabric of the country?  There are other countries namely China with whom we are compared. There is rampant corruption in China also but the country is growing fast. Corruption has been in existence and will continue in future also but the levels have changed. Public may remember the Bofors scam which amounted to Rs64 crore  and we all know what it did to the Congress government in general and Rajiv Gandhi in particular. The 2G scam did not bring down the government but corruption levels have certainly outpaced inflation, a topic which is giving the FM sleepless nights. Jagan Mohan Reddy of Andhra Pradesh declared assets of Rs365 crore while filing his nomination for the Lok Sabha seat. He couldn’t have accumulated so much wealth had it not been for his father who was a Chief Minster. You cannot really get answers how his disclosed wealth has risen by Rs250 crore in just two years. Wish they could share their business model if there was any.  Money can be made in various areas but in the case of politicians there has to be some powerful external factor which is more or less known to all. Bill Gates made his billions with Microsoft Windows being the de facto standard for PC. Infosys made billions as it rightly caught on the IT –outsourcing biz.  Warren Buffet’s billions come from his smart investment approach in the stock markets. I am not sure which skill or competence Mr. Jagan Mohan Reddy really brings to the table apart from his family connections.  Chief economic adviser Mr. Kaushik Basu, rightly pointed out that corruption by itself is not bad and it would be a Utopian dream to think it can be eliminated. I understand that his recommendation is not being liked as he is in favour of legalizing payment of bribe for ration cards, income tax matters, railway ticket and getting done what you rightly ‘deserve to have in the first place.’

As long as the humans exist, the desire to use a person’s position or right to dole out favours and be compensated will remain. For example- The Ticket collector in the train –  will not be able to charge a premium or be corrupt on days when train seats are easily available. His fortunes change during the holiday season when the demand for seats outnumbers what is available and the lesser mortals who don’t have access to a minister’s quota are left at the mercy of the TC. It will be very rare for most TCs to miss this opportunity which enable them to derive economic benefits.

The other aspect of that is public servants (they should be called masters actually) in India are paid very low. Maybe it was factored  in that they would make money through other means or it was assumed that people will have the highest moral standards like Mahatma Gandhi and now Anna Hazare.

If the salary of a person in private sector is Rs 10,000, his counterpart in the public sector gets Rs 2000 apart from job security. Competent people get their experience in the PSUs and then jump to the private sector because they are confident that they will not lose their jobs. Earlier, jobs were very scarce but with new opportunities opening up, people are willing to take the risk. I was surprised to know that the salaries of the Ministers of Singapore Government run into million dollars. Obviously, there is less incentive for corruption or lack of performance.

Now coming to the actual issue of Lok Pal, I hope that they take a practical view and apply the materiality principle before deciding what battles to fight. I don’t think they should go after petty issues of speed money related to ration cards because that will generate so much of work for Lok Pal that it will collapse.

The areas they should focus on are where the government has the ability to dole favors in renting out public assets, for example in real estate and mining. Around a decade ago, telecom officials in MTNL and BSNL / DOT were used to receiving money as they had the ability to provide the scarce telephone connections. In the last 10 years, they have lost the monopoly because of the entry of private sector. A fallout was the 2G scam - corruption moved from lower levels to the highest level. The minister now could influence on who gets licences and spectrum and that gave the minister the ability to make speed money.  That is why telecom ministry was called the ATM ministry.  

The other potential pitfall of Lok Pal is that it will stop decision making. Not taking a decision is more often worse than taking a wrong decision because a wrong decision can be rectified. Managers, whether they are in public or private sector are paid to take decisions. Under threat of the Lok Pal Bill, public servants will avoid taking decisions. And that will have a deeper impact on our growth story. Let me illustrate this with a real life example. A certain gentleman used to work in a metals PSU and this incident took place sometime in the 80s. Somebody had put a complaint against him and questions were raised in the Parliament about the potential losses made by the PSU. The allegation was that certain customers of the PSU were profiteering. Now look at the issue from the PSU’s perspective. They call for bids in an all India open tender published in leading newspapers. The best buyers have to issue a DD before taking delivery of goods. Post receipt of funds, stocks are released from the factory gate. What can the manager do? A letter from the CBI resulted in decision making coming to a standstill for a month till the department made a representation to the Chairman. The Chairman took up the matter to the Prime Minister to ensure that harassment was stopped. Later it was found out that a disgruntled customer of the bulk buyer had triggered the entire investigation. My friend also tells me that at his level the biggest bribe at that time was a box of mangoes because even the buyers knew that in a PSU, middle management had limited powers to swing deals.

FREE Benefits Worth 5,000



Open Demat Account
  • 0

    Per Order for ETF & Mutual Funds Brokerage

  • 20

    Per Order for Delivery, Intraday, F&O, Currency & Commodity