Archive for December, 2014

It’s a dog’s life or Why We Are Going To The Dogs

A relative of mine recently wanted to bring her 11 year old pet dog on her annual visit to her family in India. She came up against the latest instance of bureaucratic obduracy that is the hallmark of Bharat Sarkar. The regulations of April 2013 allow the entry into India of only those pets whose owners are shifting residence to India after a continuous stay of at least two years abroad. But the killer clauses came thereafter: no one on a tourist or business visa could bring their pets into India, regardless of the period of absence from India. What was dogging our policy makers became clear to me after searching the net and talking to the representative of an agency that handles import and export of pets into India. Apparently, breeders were using the tourist visa facility to merrily bring dogs into India, adding to an already huge canine population. The solution was the typical sarkari one of using a sledgehammer to kill a fly (sorry, dog!): you may enter the country with up to two pets, but only if you are relocating to India. When I brought to the agent’s notice the fact that the dog in question had been a regular visitor to India from 2003 to 2009 and had a valid certificate of export from India, she relented to the extent of saying that the dog could be imported via Bengaluru or Mumbai airports, but not Chennai, since the animal quarantine authorities in the latter had doggedly refused admission to even one pet ever since the 2013 government circular came into force. It was game, set and match to the animal quarantine authorities once it was established that my female relative could not bring the dog as accompanied baggage, since the name on the last export certificate was of her husband.

I thought thirty years in the Indian bureaucracy would have inured me to all its foibles and idiosyncrasies, but the latest example of masterly bureaucratese left me dumbfounded. Four years after leaving the hallowed portals of government, my own brushes with the bureaucracy have convinced me that it is a zero-sum game, zero for the citizen and all for the government. Take the KYC norms, termed “Know Your Customer” but which I interpret as “Keep You Confused”. Early in 2011, I was told that I had to fulfil KYC norms to be able to operate my bank account, demat account, etc. Then followed the tiresome routine of gathering documents to prove my existence and place of residence. Just when I thought I had finally laid this ghost to rest, my bank manager told me in 2013 once again that the KYC formality had to be gone through. Apparently, there is some lurking suspicion in Bharat Sarkar’s mind that I am operating ghost accounts under a fictitious name and address.

Let us take a third example: suppose you run a business with an income-tax permanent account number (PAN) and a service tax registration. These two taxes (one direct and the other indirect) are administered by two departments coming under the same Ministry of Finance. And yet the entire process from registration to payment and filing of returns is handled by two agencies, with two websites, separate processes and separate returns filing systems. Add to this the payment of state-level sales tax and local taxes on shops and establishments and you have a veritable nightmare of departments and offices, not to mention personnel, with which the businessman has to deal. With (hopefully!) the introduction of the goods and service tax (GST), the multiplicity of taxes will be reduced. But don’t bet on life becoming simpler: some taxes at state and local levels will continue and reporting requirements to multiple agencies may still be required.

The final icing on the bureaucratic banana peel is the eternal Aadhaar scheme. When there was already an identity card in the shape of the PAN card in place, was there really need to introduce another identity card? Votaries of Aadhaar will immediately point to the likely misuse of PAN cards and how the biometric identification of Aadhaar cards will eliminate duplication and false registration. But is this really so? We have instances where animals and inanimate objects have been vested with Aadhaar cards. What is to prevent an individual from registering for Aadhaar cards at four different locations? Is there a mechanism which will identify that the biometric identification has been duplicated on more than one Aadhaar card? In any case, could the biometric identification (presuming it is technologically fool proof) not have been built into the PAN card registration process itself to reduce the number of identity proofs that an individual has to carry? What will be the relevance of the Aadhaar card for those sections of the population that do not need to or wish to avail of any benefits from the government? I would be most happy if I received some enlightenment on these issues from a more-Aadhaar educated person.

The problem, I think, lies with our innately suspicious nature as Indians, particularly if we are required to deliver a public service benefit. We are convinced that the other party is, through some jugaad or the other, going to acquire some benefit. In the process of making the process foolproof, the bureaucracy builds in provisions that make it willy nilly impossible for the ordinary citizen to comply with. Two consequences result: either the scope for discretion (and, hence, corruption) increases, creating new markets for the ubiquitous Indian dalaal, or the citizen decides to simply ignore the irritating provision, probably one reason why service tax is evaded by large sections of professionals. Simplifying tax regimes and reporting requirements as well as making access to public services easier would encourage compliance and strengthen the case for more punitive actions against wilful evaders. There has been a lot of storm in recent days on the kissathon in different cities; what government agencies need is also a KISSathon, KISS standing here for the well-known “Keep It Simple, Stupid”.

The Indian Omertà: Corruption and the Code of Silence

It was Mario Puzo’s book “The Godfather” and related readings on the Sicilian Mafia that made familiar to me the term “Omertà“. It referred to the restriction imposed on any member of the Mafia on maintaining silence even in the face of third-degree interrogation by the police. Any infraction of this code was punishable with death. This practice, prevalent in the Sicilian gangs, spread to American shores when waves of Italian migrants landed up in the USA in the late nineteenth and early twentieth centuries, and frustrated efforts to get at the real “godfathers” of illicit operations ranging from bootlegging and prostitution to narcotics. As I reflect on the phenomenon of corruption in India, I am struck by the very similar code of silence that prevails in transactions in India which are mediated by corruption in its various forms.

Let us recognise that corruption in India is a “womb to tomb” cycle. It begins while the child is still in her mother’s womb. Just imagine — if the child, like the mythical Ashtavakra, were blessed with the gift of imbibing every conversation even before she was born, she would hear the medical personnel at the public hospital asking the mother and her relatives to part with money to avail of the maternity facilities in the hospital. Thereafter, the karmic cycle of corruption unfolds at every stage of her existence, from the bribe paid for getting the birth certificate to the “donation” extracted at the time of school and, subsequently, college admission. The lifetime investment in the corruption machine takes place when the person has to grease her way into a job in the public services. Thereafter, the public functionary is engaged in recovering her past costs as well as providing for her (and her future generations’) material comforts, through means, legal and illegal. Finally, the cycle is complete when corruption oversees the issue of the death certificate and the process of transfer of assets to the next of kin.

What is noteworthy of the “corruption chakra” is the spectrum of silence that covers its functioning. To paraphrase Portia in the Merchant of Venice —

“The quality of corruption is not strain’d,

It droppeth as the gentle rain from heaven

Upon the place beneath: it is twice blest;

It blesseth him that gives and him that takes…”

Both the bribe-giver and the bribe-taker are aiming to participate in a “win-win” situation. Let us take the example of admissions to the pre-primary class in any private school. Every school thrives on the anxiety of parents to secure admission to a good school for the next thirteen years by charging a hefty entrance fee. Since this is not permitted by the state education authorities, the practice is to pay most of or the entire amount in cash, often through a broker, to the school. Both parties are willing accomplices in this generation of black money. Or take the case of any real estate transaction in India. The quantum of “black money” payment outweighs by far the cheque or “white money” paid. Try to insist on full payment by cheque or bank transfer and you get either a polite shove-off from the other party or a reduced offer. In the case of public functionaries, the procedure can vary from a weekly payoff to the superior (hence the term “hafta“) to case by case transactions, as in bribes for procuring driving licences, either through touts (euphemistically called “driving schools“) or through direct payments, to even part payment with the promise of future revenue deliveries, as in the auctioning of government posts. At the highest level, the cornering of scarce natural resources (land, minerals, etc.) requires a continuous, smooth working relationship between the benefactor and the bidder. Implicit in all these transactions is the “honour among thieves“. Once the trust is violated, either party takes steps to get the other party implicated, either through an anti-corruption trap or through anonymous/third party applications/PILs highlighting misdeeds of the concerned offending party.

A simple formula has been devised by Klitgaard (1998)[1] to describe the extent of corruption in a system:

C = M+D-A, or Corruption equals  Monopoly plus Discretion minus Accountability.

A socialist economy will see the existence of monopolies in a wide range of activities, ranging from coal and steel to telephones and motor cars. Given the limited number of producers, there will inevitably be a mismatch between supply and demand. The person allocating the good then has the discretion to favour one person over another, generally for a monetary consideration, or even on the basis of caste and kin relationships. A hybrid “socialist” economy like India’s, with its entry barriers in various sectors, develops its own version of the applicability of this formula. Industrial licensing for the private sector in various areas from the 1950s onwards gave the bureaucrat (and politician) control over who got the licence. The more recent example is the mechanism for allocation of coal blocks to end-users, recently struck down by the Supreme Court. With the state having the exclusive right of disposal of coal blocks, there was considerable discretion in the allocation process. While there may or may not have been mala fide in the process, the arbitrariness of the procedure attracted judicial criticism. Monopolies can be reduced through the introduction of competitive processes. The telecom and automobile sectors in India are examples of how choice has empowered the consumer and removed influence peddling and gathering of economic rent in these sectors. Not that monopolies can be totally wished away. Just think of the police force or the natural resource extraction (coal, metals, petroleum, etc.) sectors. The checks on these monopolies operate through the limiting of discretionary powers through use of technology and transparent bidding processes. Enabling filing of criminal complaints online removes the discretionary power of the police officer to register (or not register) the complaint. Granting extraction rights through an impartial bidding process ensures that the party giving the greatest economic value to society wins the bid. Of course, no system can be immune. Just think of the goodwill money paid to the police constable who comes for the passport verification and the on-money paid to the person who delivers the cooking gas cylinders. But, to a considerable extent, the enforcement of accountability in actions and the increasing use of mobile/online payments (think mobile wallets) can curtail the scope for discretion even further.

In the final analysis, it is the enforcement of accountability that acts as the greatest check on corruption. But as long as there is complicit collusion in the act of bribery between the giver and taker, it will be difficult to reduce corruption. This requires action on three fronts:

  1. Procedures for service delivery have to be clear to the service recipient. She should be aware of the time within which the service is to be given, the exact cost of the service and the redressal mechanism available to her in the event of service delivery failure. Public agencies need to specify these procedures on their websites and use mass media to educate consumers on their rights.
  2. The consumer has to assert her right to timely service delivery at the officially approved cost. It is here that the code of silence has to be broken. Where there is overcharging for services or there are attempts to delay service provision in the absence of sweeteners, social media should be extensively used to highlight instances. Websites like com seek to provide a forum for publicising corruption in the delivery of different public services.
  3. Supervisory levels in public agencies need to monitor service delivery systematically. Any deviation from the set norms should be analysed and, where there is evidence of wilful, mischievous intent on the part of the service delivery provider, she should be penalised.





[1] Klitgaard, Robert — International Cooperation Against Corruption (Finance & Development,  March 1998)