Corruption, old & new

Just how much of a tricky animal “civil society” activism can be became apparent about 10 days ago, when a public meeting took place in New Delhi under the banner of the Coalition of Democratic Movements. Ostensibly called to discuss the issue of corruption and the need for a strong Lokpal law, the meeting soon descended into an attack on liberalisation.

Prashant Bhushan, a member of the committee that has been tasked with drafting a Lokpal Bill for Parliament to consider, compared India to Russia, which he called a “mafia state”. Mr Bhushan linked rising corruption to post-1991 economic policies: “In the name of privatisation and disinvestment, the government is now in a position to transfer thousands of crores of public money in public sector undertakings to private hands. A similar thing happens when the government gives away natural resources, like oil or gas, to private companies. This has led to the creation of a corporate mafia”.
Mr Bhushan also blamed “speculative” instruments, such as future trading and, presumably, the stock market, for corrupting India.
At the meeting, Mr Bhushan’s views were echoed by writer Arundhati Roy. “Twenty years ago”, she said, “when the era of liberalisation, privatisation and globalisation descended on us, we were told that public sector units and public infrastructure needed to be privatised because they were corrupt and inefficient… Now that nearly everything has been privatised… we find that corruption has grown exponentially”.
What we are seeing is a coalition of the New Left, which extends from Mr Bhushan and Ms Roy to members of the National Advisory Council, which is determined to paint economic reform as a villain. Some of its allegations are characteristically exaggerated. For example, when Ms Roy says “nearly everything has been privatised”, she can’t be serious. In India the government still runs even hotels and airlines, among other things. Indeed, the catastrophic state of Air India — a hotbed of corruption, aircraft purchase and lease swindles and numerous sweetheart deals — is precisely due to the fact that it has been ravaged by unaccountable civil servants and ministers.
More than that there is astonishing myth-making about the India of the 1980s and earlier. This was an era of shortages, when a plain-vanilla scooter had to be bought after paying a market premium (a euphemism for a bribe) or getting a cousin abroad to sign a cheque and get delivery under a special scheme for those who paid in dollars. True, there are still shortages in India, but these are often in areas where the state remains in a position to determine supply.
Take school seats in India’s cities. Setting up private schools is so difficult and so regulated by state governments and municipal authorities; there is always a supply-demand gap. This is because adequate liberalisation has not happened in the primary and secondary education sector; private initiative is not encouraged and facilitated and Indian schools are not allowed to be benchmarked against the best global models. This has transformed admissions into a lottery — or a matter of whom you know and which minister or high official can put in a word for your child.
This example is true of Indian schooling today. Before 1991, it was true of the ability to get even an LPG or telephone connection, or a bank loan.
The telephone example is an interesting one as one of the highlights of the current season of corruption is the telecom scandal. Is Indian telecom cleaner today than it was 30 years ago or dirtier? The question is worth pondering.
Corruption exists at two levels. Petty corruption affects the ordinary citizen in his interface with authority, whether a policeman on the street or a clerk responsible for the provision of public services or delivery of public goods. On the other hand, there is grand corruption. This involves, for instance, bribes for military hardware orders; or the tailoring of policy to suit specific interests: Indian will build X thousand miles of new rail tracks, but the tracks will be able to run only trains that use technology Y sourced from company Z.
Both forms of corruption need to be fought and condemned. Even so, there is a difference. Petty corruption implicates and angers the common person on a day-to-day basis. Grand corruption occurs away from the public gaze and is often found out second-hand, through a whistleblower or a media expose.
Before the late 1990s and the Indian telecom revolution, most Indians were cursed with never being able to own a phone. For those who did have a telephone, the instrument was a mixed blessing. Services were poor and the line went dead very often. The local linesman needed to be bribed regularly. To bring a dead phone back to life was a complex exercise; it often required cajoling petty officials in the neighbourhood or city telephone office. These are not overstated stories, but born of real-life examples.
Today, petty corruption has disappeared from the telecom industry. We don’t need to bribe landline technicians or petty clerks at our mobile service provider. Waiting lists have vanished too. Where an earlier generation had to wait 20 years — again, that is an example from my own family — for a telephone to come home, today phone connections chase consumers rather than the other way round.
Of course as the ease of connectivity has grown, so has the market and quantum of revenue. This has made getting into the telecom business attractive and licences and spectrum much sought after. The supply-demand asymmetry has moved to another level. Politicians such as former Union telecom minister A. Raja and Kanimozhi have exploited this. As is widely believed, they have converted issuing licences for telecom companies into a means of private income.
There is no doubt that a more transparent and rigorous system to allocate licences and transfer finite resources — whether air spectrum or coal mine concessions — is necessary. However, to suggest we were better off in the pre-1991 era of crony socialism — when all-powerful politicians simply handed these out to friendly businessmen, denied licenses to all but a chosen few and treated public sector companies as cash machines as well as employment agencies for the party faithful — is ridiculous. India needs to guard against such perverse logic.

Ashok Malik can be contacted at malikashok@gmail.com