What ails India

The state of affairs in India has suddenly deteriorated in the last two months. Prime Minister Manmohan Singh, who came to power a second time with an impressive electoral victory, was expected to dominate the Indian scene. The coalition that put him up seemed to be strong enough to carry his government along for the full term and those who were not fully with him seemed to have lost steam. Those who were against him, especially on the national scale, did not seem to know the ways of their

survival and Dr Singh was literally given a mandate to run the full show in order to let him implement his programmes.
Within a year, the situation seems to have changed. The rating of Dr Singh’s government has come down sharply so that if there is any national election it is totally unpredictable whether the PM will come back to his seat. Many things have happened, many events have occurred and it is not that all his detractors are against his position or his line of action. But still his position today has become much weaker than before and it is a fascinating subject for a social analyst trying to understand the situation and explain it properly. Let me try my hands on some of these issues to see if we can learn from the lessons from his rule of the last one year and whether the situation can be retrieved even at this stage with proper planning.
The main point that everybody is talking about responsible for the current situation is an unprecedented increase in the level of corruption in governance. There is no doubt that corruption has increased but it is difficult to ascertain that it is unprecedented. If it is not unprecedented it cannot be the explanation of the sudden change of the spirit of governance. Politicians in India have always made money for themselves and for the party. The methods of making money are also quite well-known — indiscriminate bribery, contracting projects and programmes and making payments to parties without much accountability. If the situation has deteriorated today, the question asked should be why and not how. Why should there be a sudden spate of corrupt methods which include allegations against the highest authorities? In democratic politics things do not depend on water-tight proofs but mainly on perception based on allegations, suspicions and the reported coalition of corrupt groups irrespective of caste, creed and ideology.
As perception is the most important determinant of the public opinion, the government has to see how that can be reduced or diverted. In present days’ governance, what is happening is that the perception of corruption is extending beyond particular groups and is in terms of corrupt practices. There is a little to choose between the United Progressive Alliance (UPA) and the National Democratic Alliance governments in the methods of practice of competition and the quantum of malpractice. In what way, can we say that Congress MP Suresh Kalmadi or former Jharkhand chief minister Madhu Koda were more partial to the UPA government? It is in this sense one has come to identify corruption today as a universal phenomenon, but that would not be enough to bring down the popularity of the UPA. For that, we must be able to identify at least some groups who are less corrupt and also efficient in the government. Otherwise, the question will always remain that if not the UPA, which party would be better suited to run this government.
I am raising these issues not to diminish the importance of corruption in Indian body politics today, all I am saying is that the increase in corruption cannot be held responsible for the certain deterioration in the quality of governance. We have to go beyond and what we can do is to hold an independent inquiry and I submit that it is not so much corruption as the inefficiency in the government that is drastically reducing its popularity. By efficiency, I mean the government’s ability to get things done within the existing system and with a clear objective or a road map to the government programmes in a cost-effective manner. The UPA-II government has formulated many such programmes. If some of them can be implemented, the results would be visible and instantaneously popular.
The question remains as to why there is such a phenomenal increase in inefficiency today. Any project with an initial finance provision goes up very high as the projects get implemented. It is essentially related to an all-round increase in the opportunity to indulge in financial activities with little accountability for the results. The system got adjusted to such a high level of inefficiency because (a) its scope has increased and (b) it goes unpunished in our financial system.
The last feature is the direct result of increased globalisation that has expanded the volume of market transactions when it becomes extremely difficult to hold the people responsible and accountable for their operations. If the size of the market had not extended so much, competition would have brought down the level of inefficiency. Surely we were not fully prepared to face the onslaught of expanding markets. Even if all the actors were honest and men of integrity, the expanding scope for making money without being fully accountable would have distorted our market transactions.
If my diagnosis of the problem is anywhere nearly correct, the answer to this problem is straightforward. The system must get itself prepared to deal with a high volume of financial transaction through the creation of institutions and the development of a vigilant civil society. If the legal system does not make the actors accountable, it is the civil society movement which will have to play the role of the market monitors.
In other words, the answers lie in the institutional changes, something similar to what happened in the West. Democracy is one major institutional monitor of changes but democracy then will have to be taken in its true sense, where the rule of law and of reprimanding the failures and impartial and equitable way of distributing the benefit of change are fully integrated. There will still be morally unjust transaction with enormous bounties accruing to the corrupt. But increased competition is an expanding market will be the check to bring the system back to a reasonable level of efficiency — a process which is directly related to increased volume of transaction. This is the irony of globalisation — a process which is responsible to increased volume of illegal transaction, but which can correct itself by relatively efficient market players to remove the creamy layer of market transactions.

Dr Arjun Sengupta is a Member of Parliament and former economic adviser to Prime Minister Indira Gandhi