Tainted system

Published : Dec 17, 2010 00:00 IST

Corruption has scaled unimaginable heights in the reforms era driven by private capital seeking to manipulate public policy.

in New Delhi

NOVEMBER 2010 could well go down in the history of independent India as a watershed month in terms of corruption exposes and the social and political impact they made. Revelations about multiple corruption scandals took in their sweep politicians, governments, the administrative and defence services as also national and international corporate houses and generated a sense of disquiet across the country.

In the process, political heavyweights such as Maharashtra Chief Minister Ashok Chavan of the Congress and Union Minister for Telecommunications A. Raja of the Dravida Munnetra Kazhagam (DMK) were forced to resign, while Karnataka Chief Minister B.S. Yeddyurappa of the Bharatiya Janata Party (BJP), the main opposition party at the Centre, fought a fierce tactical battle to continue in office.

The silence and inaction of Prime Minister Manmohan Singh in responding to allegations of corruption in 2G spectrum allocation involving A. Raja was questioned by the Supreme Court itself. Both Houses of Parliament came to a standstill from day one of the winter session, with the Opposition demanding a Joint Parliamentary Committee (JPC) probe into the allegations on 2G spectrum allocation.

In the midst of all this, several instances of corruption involving senior and middle-level bureaucrats and their illicit liaisons with corporate entities were alleged in the media along with the unravelling of scams in advancing housing loans, involving real estate corporations and public sector bankers and insurance companies. Meanwhile, investigations into dubious deals firmed up under the leadership of politicians and officials for the development of infrastructure for the Delhi Commonwealth Games and for other areas relating to the conduct of the Games also continued apace.

Questionable connections between sections of the media and corporate lobbyists were also in focus during these days. In short, it was as if the floodgates of corruption exposes had been opened.

These corruption scandals exposed were unprecedented in terms of scale, depth and hideousness. According to the report of the Comptroller and Auditor General (CAG), which went into the allegations on 2G spectrum allocation, the notional loss to the exchequer on account of manipulations and transgressions amounted to a whopping Rs.1.76 lakh crore.

The Adarsh Housing Society scam in Maharashtra not only exposed the nexus between politicians, the builders' lobby and defence officials but also showed that senior politicians and defence officials had no qualms in sullying the image of the Army and even ignoring its martyrs in their quest for greater affluence.

It may take a couple of months for the Central Bureau of Investigation (CBI) to unravel the concrete parameters of the housing loan scam involving public sector and banking officials and corporate entities, but there is little doubt this will run into several crores of rupees.

Among the several allegations against Yeddyurappa was the one that his sons B.Y. Raghavendra and B.Y. Vijayendra and his son-in-law R.N. Sohan Kumar received Rs.20 crore from a Bellary-based mining firm as part of a deal that involved the sale of a six-acre (one acre = 0.4 hectare) plot in a high-profile information technology park in Bangalore.

The money involved in the corruption allegations relating to the Commonwealth Games also runs into several crores of rupees. The allegations cover a wide variety of issues, ranging from the purchase of liquid soap dispensers and treadmills at highly inflated prices, the granting of broadcast rights without following norms, and the diversion of funds meant for the Scheduled Castes and the Scheduled Tribes to the questionable transfer of substantial amounts of money to a little-known British firm, about which the British government itself had raised questions.

This climate of all-pervasive corruption was highlighted further in a study published in November by the international advocacy group Global Financial Integrity (GFI). The most striking finding in the study was that corruption, tax evasion and trade mispricing have cost India hundreds of billions of dollars over the past several years.

The study, which was piloted by Dev Kar, a former Senior Economist at the International Monetary Fund (IMF) and Lead Economist at the GFI, also stressed that the cumulative processes of corruption, tax evasion and trade mispricing have increasingly resulted in illegal siphoning of money to destinations outside India.

Significantly, the GFI report pointed out that the process gathered greater momentum after India opened up its economy in 1991. According to the estimates in the report, 68 per cent of the total illegal siphoning of money from India since Independence happened after 1991. It pointed out that in real terms outflows of illicit capital accelerated from an average annual rate of 9.1 per cent before the economic reforms to 16.4 per cent in the period after they came into effect. The GFI report also estimated that between 2002 and 2006 India lost on an average $16 billion a year.

Commenting on the series of corruption exposes as well as the GFI report, S.P. Shukla, a former bureaucrat and member of the Planning Commission, said the explosion of corruption scams and the acceleration of illegal siphoning of funds, as stated in the GFI report, were hardly surprising. From my own experience as a bureaucrat first and later as an activist observer of society and government, I have seen how this process of corruption has evolved. The fundamental reason for the steady increase in corruption in the post-economic liberalisation period is that market has entered government. Corporate houses have started deciding policies and the price of government transactions. They are not only interacting and interfering with individual officers or politicians but with political parties and systems as a whole, he said.

As a case in point for interference with the system, Shukla pointed to the auction of mobile services before 2G. He said: The then BJP-led National Democratic Alliance (NDA) government had gone for auction initially and a number of corporate houses had bid for respective regions and won their bids. But once they found that they would not be able to make up the auction bid amount they came back to the government and forced it to revert to the licence fee system, which was much lower. Shukla further pointed out that the process of economic liberalisation has been hailed much by corporate houses and the big media as something that liberated India from a corrupt licence-permit raj, but a closer look would show that it had only changed the routes of corruption and heightened its scale and reach.

During the licence-permit raj, corrupt deals were necessarily under the table and there was always a sense of shame attached to it. But with liberalisation and corruption entering the very areas of policymaking, this character of underhand dealing and sense of shame have completely disappeared. In fact, corruption has become an acceptable thing with both the political class and the bureaucracy. They have just stopped short of formally legitimising it, Shukla told Frontline.

His observations are corroborated by the responses of the ruling Congress and the opposition BJP whenever they face allegations of corruption. The first reaction is to defend those who are at the receiving end of the allegations. Then follows a series of measures aimed at obfuscation. Punitive action comes only after evidence has mounted against those accused of corruption and even then it is only after ensuring that collateral political damage is minimised.

This sordid convention was once again on display in the course of the barrage of corruption scandals that hit the country in November. The Congress leadership, including Prime Minister Manmohan Singh, gave both A. Raja and Ashok Chavan a long rope. Both were forced to resign only when it became clear that there was no way of protecting them in positions of power anymore.

In fact, it was the extraordinary lenience shown to Raja, by way of delaying the probe against him for as long as 15 months, that impelled the Supreme Court to raise questions about the conduct of the Prime Minister. It is clear that the Congress and its government are persisting with the convention of obfuscation on issues relating to corruption charges. An affidavit filed for Manmohan Singh in the Supreme Court stated that the Prime Minister's Office (PMO) merely followed the advice from the Union Law Ministry to wait for the CBI to complete its investigation into the 2G spectrum allocation case before deciding on a request by Janata Party leader Subramanian Swamy for sanction to prosecute Raja.

The affidavit explained the Law Ministry's interpretation of Swamy's letter to the Prime Minister. According to the affidavit, the Law Ministry read Swamy's letter as one that agreed to let the CBI conclude its probe and then use the agency's evidence to collaborate and strengthen his own case against Raja.

The BJP's handling of the allegations against Yeddyurappa was no different. At one point of time, the party's national leadership had decided to ask the Chief Minister to quit and had summoned him to Delhi to convey this message. The primary consideration at that time was the fact that the Congress and the United Progressive Alliance (UPA) it leads were ahead in the probity and moral high ground game with the resignations of Raja and Chavan and that the BJP, too, had to elevate its probity quotient. The need to heighten this quotient was seen to be imperative because the party was engaged in a fierce battle in Parliament demanding nothing short of a JPC probe into the allegations against Raja.

But the Chief Minister fought back, employing the powerful Lingayat caste card and its wide-ranging influence in Karnataka's politics. Ultimately the national leadership was forced to give in to Yeddyurappa and confine its action to an internal inquiry into the charges against him.

The BJP also went soft on the allegations against Uttarakhand Chief Minister Ramesh Pokhriyal Nishank. They related to irregularities in as many as 56 hydro-electric projects as well as the underselling of a 15-acre industrial plot worth Rs.400 crore to a real estate developer for just Rs.3 crore.

Clearly, the major mainstream parties are on the same boat not only in their approach to economic liberalisation but also in the handling of corruption.

In an article in Hindustan Times, Sitaram Yechury, Polit Bureau member of the Communist Party of India (Marxist), wrote: Irrespective of how the current impasse in Parliament over the demand for a Joint Parliamentary Committee (JPC) to probe into the massive 2G spectrum scam unfolds, it is clear that the country is being pushed deeper into the murky morass of crony capitalism, notwithstanding the Prime Minister's declarations that India can ill-afford' crony capitalism.

Yechury further pointed out that capital in its urge to maximise profits invariably sought to bend, if not violate, all rules and regulations. He wrote: Nepotism in awarding contracts, sweetheart deals in disposing of public properties (like, for instance, the outrageous sale of the public sector unit Balco and Centaur Hotel, Mumbai, by the earlier NDA government) and creating illegal and new avenues for money laundering and looting public resources are some of the forms that crony capitalism takes. The capitalist state puts in place certain rules and institutionalises regulators to ensure adherence to these rules in order to provide a level playing field for the capitalists. However, given the fundamental nature of capitalism, where the big fish eat the small ones, these rules and regulations are pushed to the limits of violation. Capitalism inherently breeds cronyism.

Indeed, it is an affirmation of this observation that comes across from the series of corruption scandals that have been exposed in recent times and from the GFI report on the illegal siphoning of Indian resources. It is also clear that the mainstream political class as a whole does not have the moral or the political authority to counter effectively the march of crony capitalism.

As the late Prime Minister Viswanath Pratap Singh used to iterate during many of his unsuccessful struggles on specific issues of public probity, these questions need to be raised as forcefully as possible and fought for with the utmost vigour at one's command, whatever the net gain. For in some ways, he would say, this process too influences some people and thereby sections of society.

Sign in to Unlock member-only benefits!
  • Bookmark stories to read later.
  • Comment on stories to start conversations.
  • Subscribe to our newsletters.
  • Get notified about discounts and offers to our products.
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide to our community guidelines for posting your comment