Corruption in the era of liberalisation by N Ram - The Hindu

Posted on July 10, 2017 from Delhi ι Report #139388

With its tentacles spreading to every branch of the state, corruption’s salience has never been higher

In 1987-1988, without much forewarning, we at The Hindu found ourselves in the deep end, investigating grand corruption of a kind that India had not seen before,” writes N. Ram, chairman of Kasturi & Sons Ltd., and former editor-in-chief of The Hindu and Frontline, in his new book, Why Scams Are Here to Stay: Understanding Political Corruption in India. Drawing on the experience of investigating Bofors, modern India’s defining corruption scandal, he throws a spotlight on the intractability of corruption — in its pervasiveness, omnipresence, and multifariousness — under the prevailing circumstances in India, which is to say that without making deep-going and radical changes to India’s political economy it will not be possible to prevent and eliminate corruption. Yet, he argues counter-intuitively, combating corruption is decidedly a challenge of the here and now. An excerpt:

Gunnar Myrdal even came up with a ‘sketch’ of a theory of corruption in South Asia by offering some ‘reasonable, though quite tentative’ questions to be explored and hypotheses to be tested. These questions and hypotheses attempted to relate corruption in South Asian countries to general socio-economic conditions, to the stage of development, and especially to institutional and attitudinal problems. But Myrdal’s sketch of a theory of corruption in South Asia was ahistorical in one critical respect: it failed to acknowledge the extent to which the colonial power had participated in and nurtured the corruption, and the conditions engendering corruption, that free India inherited. Interestingly, while Myrdal saw the presence of corruption in South Asian countries in somewhat static terms, as a legacy from pre-capitalist, traditional society, he related the increase in corruption to the processes of dynamic change in the social system, offering the insight that many of the changes that had occurred afforded ‘greater incentives as well as greater opportunities for corruption’. Most significantly, he called attention to the active role of the business world in promoting corruption among politicians and administrators.

Socio-economically and politically, India is a very different country from the one Myrdal encountered during the decade he researched and wrote Asian Drama (1968). But his observation that many of the dynamic changes in the social system had enabled corruption on a bigger scale proved prophetic for the post-1991 era of economic liberalization and accelerated pursuit of neo-liberal policies. It is now well established that the facts of corruption, that is, its magnitude, spread, and effects in the polity and society, have increased exponentially over the past quarter century. While the folklore has kept in step, the anti-corruption arrangements and actions have been limping a long way behind.

The problem in India, where moralistic approaches to corruption are common and often dominate public discourse, is that the gap between what the anti-corruption campaigners, many of them ‘Gandhians’, demand and what the polity and the legal system are willing and able to do is enormous. When corruption is not conceptualized soundly, in relation to socio-economic, political, and cultural factors, but is presented in overly simplified moral terms, analysis of its causes and effects tends to go all over the place; and without accurate, theoretically sound and empirically backed analysis, prescription tends to be seriously flawed. The result is that anti-corruption institutional arrangements and actions habitually miss the mark; and mass campaigns against corruption, fuelled largely by moral outrage, make their contribution by raising the level of public awareness but are unable to sustain themselves beyond a point and fail to meet the lofty objectives they set themselves. The anti-corruption movements spearheaded by Jayaprakash Narayan in the 1970s and by Anna Hazare in 2011-2012 make the case strongly for the last point.

The past decade-and-a-half has seen a spectacular outbreak of corruption scandals, big-ticket, medium-sized, and relatively small. With its tentacles spreading to virtually every branch of the Indian state and to key sectors of the economy, and to the news media, corruption’s salience in India’s political economy and public policy discourse has never been higher.


28 scams and counting

For the period 2000-2013, Sandip Sukhtankar and Milan Vaishnav, researchers in political economy, have come up with a shortlist of twenty-eight scams, involving hundreds of billions of dollars, from the lists compiled by five news outlets. They calculate that for this list of early twenty-first century corruption scandals, ‘the mean scam “value” was Rs. 36,000 crore, and the median Rs. 12,000 crore. A major omission from this shortlist is Vyapam, the mega-scam in BJP-ruled Madhya Pradesh.

There was a time when the stock explanation for corruption in India was the ‘permit-licence-quota raj’— virtually everything could be attributed to it. The prediction offered by a legion of neo-liberal economists and political theorists was that deregulation and liberalization would lead to the prevention, containment, and eventual elimination of corruption. Precisely the opposite has happened: liberalization has ushered in corruption in a much greater variety of forms and on an unimaginably greater scale than anything seen under the so-called licence raj.

The interesting question is why and various answers have been put forward by scholars and policymakers. The essential neo-liberal answer is that many vestiges of the licence raj remain, enforcement capacity is still weak, and the reform process needs to be given more time to bring down the level of corruption. The evidence clearly and decisively goes against such ideologically led reasoning that often sounds like casuistry. The real explanation for the exponential increase in corruption in the era of liberalization and high economic growth must necessarily be complex and nuanced and, as we will see, it is to be found deep in the heart and entrails of India’s political economy as it has evolved over the past quarter century.

The short answer to the question is that with deregulation and liberalization, the state has played a different kind of role to the one it played earlier, providing access to scarce public resources as part of a process of promoting private sector-led growth at any cost and supporting without inhibition the omnipresence and play of private interests within the public sphere; and there is plenty of evidence to show that corruption tends to be greater when pro-business strategies of governments bring on or facilitate crony capitalism and ‘when there is a state-engineered redistribution of wealth in favour of a few and at the explicit or implicit expense of the many’.

A political reckoning over burgeoning levels of corruption was due and it took place with a certain inevitability. Given the unprecedented levels of corruption witnessed over the previous decade, it was no surprise that the issue figured prominently in the 2014 Lok Sabha elections and was responsible, in no small measure, for the rout of the Congress-led United Progressive Alliance.