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The Question of Corruption

June 7, 2011

A spate of scams unearthed by the media and civil society has seen the issue of corruption at the center of debate in the country. From the telecom scam to the Commonwealth games scam to Adarsh Society Kargil for profit scam the list is endless. The quantum is what baffles the common man. These are not small sums of money that are being talked about. The graft runs into millions and sometimes billions of dollars.

Corruption has always been an issue in India. From small time clerks who would charge a token chai-paani to move the file, to top bureaucrats who cannot do anything if it does not benefit them personally, graft Is an omnipresent phenomenon that refuses to go away. There is one bureaucrat in Chattisgarh who has amassed more than Rs 250 crores! People are watching news as they filter out of the system and are wondering as to where the country is headed. There was much jubilation that the country is now a trillion dollar economy, till someone pointed out that this is just the official data, the real Indian economy is at least four times as big, if not more. It was time to ruminate on this fact for many Indians including yours truly.

People have been talking about corruption and how it is eating away at the vitals of our society. There have been debates galore from time to time. One social activist from Maharashtra Anna Hazare thought something needs to be done. He came to Delhi and started a fast at Jantar Mantar. The news of his fast against corruption spread like wild fire and soon the whole nation was standing up against the menace. What started as a token demonstration against corruption soon spread all across the country and people from Chennai to Bangalore to Mumbai, Kolkota, Chandigarh, Guwahati, Ahmedabad, Bhopal and other places were organizing candle light marches and singing patriotic songs as a mark of protest against the devilish phenomenon called corruption.

Anna Hazare was not just raising his voice against corruption but he was also insisting that government pass a Jan Lokpal Bill that has been pending for long and which was one radical step against graft at the highest level. The Ombudsman Bill would cover not only the Parliament and the Legislature but also the Prime Minister’s office. What started as a movement against corruption soon turned into a hysterical demand for the passage of the Jan Lokpal Bill. What happened later and how it was stymied by the government I have elaborated in my earlier writings. Suffice to say that the movement started by Anna Hazare has caught the imagination of the people and they see Hazare as a crusader, a Gandhian who is fighting a system rotten to the core.

There is another maverick who has been talking about graft and the need to cleanse the system. He is also very vocal about the huge sums of monies stashed by unscrupulous Indians in tax havens abroad. I am talking about Yoga guru Baba Ramdev. The man’s commitment to the cause of getting back monies stashed abroad cannot be questioned. Baba Ramdev, however, has a list of demands among them the ban of the use of genetically modified seeds, farmers rights and discouragement to multi-national companies which he believes are taking money out of the country. But his main thrust is fight against corruption and getting back trillions of dollars stashed abroad. It is true that there are huge sums of illegal money stashed abroad and India and Indians have the dubious distinction of being the country that has the maximum amount of such monies stashed away in tax havens abroad. The case of Hasan Ali woke the nation up when it was revealed that the man owed more than Rs 70,000 crores as tax liabilities.

Baba Ramdev emulated Anna Hazare and started a Yoga camp as well as a fast against corruption  The government tried to pander to his demands. Grapevine has it that all methods of inducement, threat and anything else in between were used to make him call off his fast along with his more than 100,000 supporters at the Ramlila Grounds in New Delhi. When all methods failed the government used the police to evict the protesters. The method was brutal and the onslaught on the peaceful demonstrators who were sleeping saw a nation condemn the act in utter outrage. The Baba is back in Haridwar and vowing to continue the fight against corruption.

What Anna Hazare and Baba Ramdev are saying is largely true. The parallel economy is a big drain. Besides it does not help the nation at all as the money is concentrated in a few hands and is not distributed evenly. The gap between the rich and the poor is increasing and the reason for this is the huge sums that remain unutilized unproductively or are used  for conspicuous consumption. Monies stashed abroad are of no use to the economy and the poor of the nation. It sure is a source of income for the host countries that are benefitting. If the trillions of dollars that are stashed abroad do find their way back into the system and is used for the development of the nation this country could transform. The economy will expand exponentially, the resources will be used for purposes that benefit the poorest of the poor and the currency will become stronger. There is a strong case for getting the nations wealth back that is in tax haven abroad.

There is this oft heard grouse that it is impossible to get information from authorities in foreign countries where wealth of the nation has been locked. The case of Switzerland and other nations is oft repeated. There is something called a UN Convention against Corruption. India is a signatory to this Convention. There are some countries that have not signed this convention like Chad, North Korea and Somalia. India does not hold that dubious distinction. However India has ratified this treaty in May of this year after much procrastination. Although we have ratified the Convention I am not sure we have the systems in place to ensure the kind of transparency that is expected from a nation of India’s stature and democratic tradition. The one fundamental issue in political clean up is the question of funding of political parties. Where do political parties get their funds from? That is the question. The root of corruption is that political parties need funds to function and if there is no system to fund these political outfits they will resort to dubious means to raise money for their activities. That is one main source of graft. Even after ratification of the UN Convention against Corruption these issues remain and are one of the main sources from where graft finds sustenance.

There is an urgent need to pass a bill that will ensure political parties are funded by corporates legally and those corporates that do donate to political parties are given some tax exemption. This should be above board and the political parties need to have their books of accounts checked like any other business entity. Corporate funding must be through legal means and the political parties can have workers who are paid a salary like any other organization.

It is not as if such efforts are not being made. Tata Sons have this system where they have a corpus for political parties. All those political parties that are registered at the Election Commission are eligible for funds from the Tata Group. They are distributed funds through bank transactions according to the number of seats in the Assembly or in the Parliament. This is a precedent that can and must be followed by other corporate houses. I am sure there must be other corporate who must have devised similar means of political donations but the Tata example stands out for its simplicity and its effectiveness. A tax rebate for such political donations will make it attractive for companies to distribute money through the bank rather than in cash as they are wont to do.

It is not as if the political class relishes in rampant corruption that is prevalent. Defense Minister A.K. Antony said that the system is not ready for the kind of transparency that the people expect. It is a matter of getting a system in place. The UN Convention against Corruption encourages such systems be put in place which we have not though we may have signed and ratified it. It is a matter of political will and acknowledgement of the fact that India cannot afford to be lackadaisical about a thriving parallel economy that benefits only a few. This will also help in checking money laundering and will help us counter  terrorism that the country is battling with. If we need to see a prosperous India where the difference between the rich and the poor is not as wide as it is today we need to take the problem of black money head on.

While the government is getting its act together and putting the systems in place there is also a need to show some political will to trace black money stashed abroad. For starters the government would do well to make public the list of  names of individuals who have bank accounts in Liechtenstein that the Germen government has forwarded to us as a gesture of goodwill.

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