Corrupt India


[Warning: Long Post. If you dont have patient. Just read the An Example section]

I had restrained myself from blogging over the hot topic of the season. Corruption. Looks like the time has come.

I did not support Anna Hazare and his circus neither do I support Ramdev Baba. I also pity the large number of Indians who are claiming to fight against corruption.

India is country where people continue to believe that performing a Yagnya can bring rain or make Indian cricket team win a world cup. This is country where millions consider a cheap trickster like Sathya Sai Baba to be a living God. It should not surprise us that many Indians believe that Anna Hazare and co. can end corruption by enacting a bill that’s gives almost unlimited powers to an individual. Ramdev Baba too finds audience to the claims such as he can “cure” homosexuals by breathing techniques or there should be death penalty to a person found guilty of corruption.

Corruption in India is not something new. The day India decided to go on the path of socialism where state would control everything, I think India had embarked on the journey where each institution would eventually acquire this corruption. Corruption is not an incident, but it is a cancer that eats individuals and system eventually leading to the complete destruction of the system.

What I find amusing about the ongoing fight against corruption is it’s portrayal as a straw-man. People seem to believe that corruption is something that needs to be fought against. This fight is through candle light vigils, slogans and sms. If at all a face needs to be given to this straw-man than it should be of an abstract politician.

I think the state we are into today is because of the wrong decisions taken by our policymakers in past. We can trace the roots of corruption to Chacha Nehru. We can trace it to the mistakes of Indira Gandhi. The policies the formed and enacted only paved a path for todays Sharad Pawar, Kalmadi and Sonia Gandhi. Fighting these people is not enough. Fighting an abstract phenomenon of corruption is even more useless. So in short both Baba Ramdev and Ana Hazare’s efforts are efforts in vain.

Today almost everyone is a beneficiary of corruption. An ordinary laborer in my village goes to gram-panchayat and registers for NREGS. He is given work for 100 days on paper. He actually works for 10 days, gets paid for 20 days. The remaining wages for 80 days  are divided between rest of the people above the pyramid. Imagine the number of people who are benefiting from corruption in short term. These people are likely to vote for a person who enable them to continue with this loot. Neither Anna nor Ramdev baba can make a difference to that. These corrupt people might even attend some rallies or criticize our political leaders in public but when it comes to their life, they are not very likely to change.

Corruption is not limited to the uneducated masses. Visit a chemist shop outside a TCS office in March and you will see the software donkeys standing in line to get fake medicine bills. These so called educated people have no sense of ethics or integrity and must be slapped hard on face when they talk against corruption.

Today the moral fabric of the society itself is torn apart. Sense of ethics and integrity are virtually absent among the masses. Our leaders are merely a reflection of that. As long people remain ignorant and corrupt good people will find it difficult to get elected.

In my opinion problem of corruption will not get elimination quickly. Certainly not by a special legislation or dedicated institution. It will not get killed by masses but it’s elimination will be caused by dedicated efforts of very few people.

We should take a few clues from Vajpeyi government. He appointed Arun Shourie to clean up telecom sector and we see the way it has grown leaps and bound. All he had to do was to reduce the government interference and the license quota raj. The unified licensing scheme would have cleaned up this sector even further but the government could not retain power for that long and as a result we saw the 2G scam. Today we don’t pay bribe to get a phone connection, but we call up and a representative comes to our home to give a new connection. Arun Shourie was appointed as a disinvestment minister who then got rid of several loss making government establishments. The companies that made heavy loss under government control are running in good profits today and it’s employees are enjoying higher wages and more stability than ever. Had he managed to disinvest Air India then Government of India could have saved a few lakh crore rupees by now.

The lesson is simple. Our government has created a large number of checkpoints in the system. If you want to start a restaurant you need to take over 300 permissions. You want to drive a rickshaw in city of Mumbai you need to take 20 permissions. You want to build a home in Panaji you need to take 100+ permissions. Each permission is like a Gate. People pay lakhs of rupees to become a gate-keeper. That is why to become a RTO officer people are ready to pay Rs 25 lakhs as bribe.

These gatekeepers only job then is to seek rent from everyone who wishes to get past the gate. The number of gates are so many that no sane individual will think of putting up a fight. The cost of fight will exceed the bribe by a very large margin.

This is a foolproof system especially when people have accepted it as a part of our life. The loss that it is causing to us is immense but hardly visible. This system prevents entrepreneurs from starting new business, it prevents innovators from innovating, all government systems become dysfunctional most important being the education system. All this is a like a big hurdle in the economic growth of the country.

I see many people buying Homes and Cars on E.M.I.s. Let us do some simple arithmetic.

An Example:

A software engineer on an average earns rupees 5 lakh a year for say next 30 years. Let us assume that increase in wages cancel out the inflation. He will earn merely 1 crore 50 lakh rupees in 30 years toling in a 4×4 cubicle.  1,50,00,000/- is a very small figure compared to what the corrupt people are making. It is insanely low compared to his counterpart in United States is making.

This software engineer is likely to buy a flat through some housing loan. Let us assume that the cost of this flat is Rs 50 lakh. While the builder builds that flat he has to pay several bribes. Guess what percentage of that 50 lakhs is dues to bribes ? Well the very reason why cost of real estate is so high in cities like mumbai is due to lack of good planing, lack of good and fast public transport and so on. All this can be traced to corruption but for simplicity we will ignore that.

A builder who knows his way through politicians will pay bribes worth 25% of the total cost of the project. He will recover all that from the software engineer and other customers. So the 50L that the software donkey is going to pay for that flat, it’s real worth is around Rs 37.5L.

So the point that he should keep in mind is that, every night when he is toiling in his cubicle, some politician, someone from PWD, some builder is getting richer by few rupees without giving him **anything** in return.

Same is true when you make every transaction. When you buy onions in market or when you buy a car. All these commodities are valued a little above their real value because many people take bribes to make it available for you.

If people are honest, their blood should boil over the fact that someone is stealing their hard earned money so easily. Unfortunately I dont see that is happening. Instead everyone is trying to become another gatekeeper to recover the lost wealth.

Solution:

To kill corruption we need to destroy the gates and the gatekeepers. For that to happen we need to get few good enlightened individuals in power. For that to happen such people should stand for elections and get elected. For that to happen people should be convinced to vote for them.

In my opinion, we should work hard for next 10 years to get such people elected. In case of Goa we only need 5 people like Manohar Parrikar to be in the assembly, at national level we need 50 MPs like Arun Shourie in the parliament.

Congress government has deep love for such gates. That is why it keeps building regulatory frameworks and meta-regulatory frameworks. The need of the hour is to undo it. We should demand more and more economic freedom.

These things are very simple. Consider the issue driving license. Everyone knows that getting a driving license and knowing to drive are two different things. Even expert drivers will find it difficult to drive on Munbai roads during peak hours. So why have this concept of driving trial, learning license and so on ?

Let a person post a sworn statement that he knows to drive to the RTO office with other documents and let the RTO office mail him his driving license within 15 days. Will that make any different to our roads ? I dont think so.

Today a person who wants to work as a bus driver needs a separate commercial license. Which he can get after paying a bribe irrespective of he knows to drive a bus or not. The bus operators will never trust his license and will independently verify if he really knows to drive. So why have such a license in first place?

You talk to an average voter for five minutes and you will realize why corruption is on rise. It is because the voters feel that what we need is actually more and more regulations. According to them government must regulate prices of vegetables and fuel. According to them government must decide prices of airfare. According to them government interference is the solution of corruption while the reality is exactly the opposite.

I hope things will change.

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2 thoughts on “Corrupt India

  1. At least people like Anna Hazare are doing /something/ about it to raise ‘awareness’ about corruption, which is omnipresent in india.

    What’s better – a billion ‘sachin rox’ facebook updates or a few thousand ones about the evils of corruption by our ’empowered youth’ .

    A bonus is the bloodthirsty way the govt is behaving , hopefully that is an eye-opener for a few people as well .

  2. Prateek,

    Here is a classic dialog from Yes Minister.

    “Something must be done. This is something, therefore we must do it.”

    Wait for few days and you will see Anna and his supporters going into oblivion without making any positive difference to the corruption scenario. Or even worse they will leave behind another institution of Lokpal taking orders from Sonia Gandhi.

    But honestly speaking, I am very very upset with the anti-liberalization stand taken by Anna’s team. They have been constantly asking for more and more government control, they have been criticizing post-92 reforms as cause of corruption and so on. Instead of even encouraging change through ballot Anna has been constantly vilifying entire political class.

    People can have different opinions, in my opinion the solution of corruption lies in breaking down centers of unlimited power and not by creating a new one.

    Whatever works, I hope we will leave behind a better country for our children.

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