It needs a multi-pronged strategy to fight corruption
By OP Gupta (IFS Retd)
Corruption in public life distorts investment, production and consumption patterns of capital and denies the most efficient use of capital for general good. Successful public awareness campaigns to eradicate corruption in India led by Baba Ramdev and Anna Hazare have forced all political parties to work together to get passed a Lokpal Bill the parliamentary procedure to become the law. A Standing Committee of the Parliament is working overtime on draft prepared by the Anna Hazare Team; the Lokpal Bill 2011 as drafted by the Manmohan Singh government and drafts and suggestions received from other concerned citizens and organisations.
Linear action is rarely sufficient to tackle any multi-dimensional problem. Howsoever strong the Lokpal Act may turn out to be it would not succeed in eliminating corruption in India as corruption is multi-dimensional germinating in almost all walks of public life so it has to be simultaneously attacked from all directions i.e. legislative, administrative, taxation laws, property transaction laws, public interest litigations through judicial procedures, etc. We are fortunate to have a pro-active Supreme Court in eradicating corruption at high places as seen in the 2G Spectrum Scam and public spirited citizens like Dr Subramanian Swami and Prashant Bhushan.
Unlike the President of India and the State Governors, the Indian Prime Minister is not exempt from operation of any Indian law; therefore, it would set a wrong precedent to exempt PM as has been proposed in the official Lokpal Bill. In fact an incumbent PM is better placed to defend himself in any Lokpal enquiry as he will have better access to official papers and will have a battery of government attorneys and senior civil servants to assist him free of cost while in the office. Further, if a PM is exempted, Chief Ministers and other VIPs may also ask for similar exemptions making a total mockery of Lokpal movement.
Section 4 of the official Lokpal Bill makes composition of the Selection Committee tilted in favour of the ruling party and is silent on composition of the Search Committee. It will be prudent to have in the Search Committee a retired Director of Intelligence Bureau, a retired Secretary of RAW, a former Foreign Service officer having at least ten years service as Head of Mission so that a Kim Philby does not enter into the Search Committee or into the bench of Lokpal. Both the Anna Hazare draft and the official Lokpal draft are silent on necessity of Security vetting of selectors of Lokpals and persons selected to be Lokpals. This loophole should be plugged in time. I have separately written to the Standing Committee about it.
Provisions of the official Lokpal Bill to bring NGOs and civil societies under the jurisdiction of Lokpal whether funded or not funded by governments should be supported. It is necessary from national security angle too as some NGOs receive funds from abroad, and who knows may be from front organisations of foreign intelligence agencies such as CIA, MI6, Inter Services Intelligence of Pakistan, China etc.
Higher judiciary must also be brought under the Lokpal Bill as judges too are public servants and it is only their non-judicial activities which will come under Lokpal. In-house mechanism within judiciary has clearly failed to stem corruption in judiciary, allegations against relations of former Chief Justice KG Balakrishanan is illustrative. Argument that corruption in judiciary will be effectively tackled in the proposed Judicial Accountability and Standards Bill does not carry conviction with people as popular public mood is to keep corruption in judiciary under the same Lokpal.
There should be no exemption from the Lokpal Bill for organisations created for religious purposes as firstly it is only their non-religious activity (giving/taking bribe) will fall under the purview of Lokpal, and, secondly, giving exemption to them may be misused to commit corruption or channel bribe money through such bodies making a big hole in the Lokpal system. So the third proviso after Section 17(1) (g) of the text of the official LokPal Bill 2011 should be deleted. .
On administrative side a civil servant, senior or junior must be suspended and should remain suspended till acquitted by a Court of law if he is caught red handed while accepting bribe or with bribe money or having disproportionate assets. In disproportionate asset cases purchase price of an asset should be the criteria. Generally such civil servants get reinstated after a few months of suspension either after paying bribes to senior officers or under pressure of politicians. The Government must give up its powers to administratively reinstate a public servant who has been caught red handed with bribe money or with disproportionate assets, he should be reinstated only where ordered to reinstate by a Court of Law.
A system of rewarding honest and efficient civil servants should be worked out and put in place.
Complaints are often received that police is reluctant to register FIRs without bribes. Administrative orders should be issued to the effect that complaints sent by registered post or by email to the District Superintendent of Police shall be treated as FIR. The SP office must acknowledge receipt of complaints giving FIR number.
Corruption feeds on discretionary powers vested in Chief Ministers, Ministers both Central as well as States and various executives, high rates of taxation, multiple points of taxation and absence of quick mechanism to identify and punish those civil servants who delay decision making so as to extort bribe. Discretionary powers of Chief Ministers and other Ministers should be abolished forthwith.
Property transactions involve black money. To discourage undervaluation Stamp duty should be cut by 50 per cent while conferring powers on the State Government to acquire a property by paying sale consideration plus 5 per cent within 120 days of registration if it feels that sale consideration was undervalued.
High taxes encourage people to conceal real income, real value and real production which result into creation of black money. A policy to plough back ‘black money’ into formal economy should be worked out. One way could be to encourage people to put their black money into ‘infrastructure bonds’ bearing nominal interest rate of 3 per cent with no questions asked about the source of money. Such bonds should be available to public for few years and funds should be used for infrastructure projects only.
Income Tax rates should be lowered to 10 per cent for income up to Rs 10 lakh per annum, and, to 15 per cent above Rs 10 lakh per annum with no exemptions and deductions. Pension component of income of all pensioners should be tax exempted. Reduced income tax rate will leave more rupees with people to boost demand and to buy food, petrol and diesel at higher prices.
Corporate taxes should be flat at 20 per cent without any special exemptions and deductions; only depreciation on capital assets would be allowed. Corporations will have more funds to expand and their modernisation to compete in the international market.
In early sixties Japan under Prime Minister Ichiro Hatoyama reduced taxation rate to find that tax yield increased paving the way for Japanese miracle. During Reagan’s presidency, US federal income tax rates were lowered significantly and federal Income Tax receipts increased from 1980 to 1989, rising from $308.7Bn to $549.0Bn. Reagan’s policies assumed that economic growth would rise when marginal tax rates were low enough to spur investment, which would then lead to increased economic growth, higher employment, higher wages and higher tax yields.
In India volume of subsidy has been rising Rs 1,29,708 crore in 2008-09; Rs 1,41,351 crore in 2009-10 and Rs 1,64,153 Cr in RE 2010-11. In RE 10-11 three main subsidies were: food (Rs 60,600 Cr), fertiliser (Rs 54,976 Cr) and petroleum (Rs 38,386 Cr).
To compensate revenue loss due to reduction in tax rates subsidy on food, fertilser, petrol, diesel, cooking gas (LPG) and kerosene should be abolished; those BPL families who use kerosene may be given monthly coupons to buy kerosene from open market. BPL coupons will have names of beneficiary printed so that these could not be misused in buying food and kerosene in the open market. BPL coupons will give freedom to consumers to buy items from shops of their choice. Farmers may be given fertiliser coupons with their names printed. Such a system would eliminate corruption prevalent in Public Distribution System (PDS), oil mafia, etc. Various subsidies and concessions given to industries except depreciations and those given for setting up units in backward areas should also be abolished.
At present needy people do not get ration of good quality in time and a substantial part of subsidised food is known to be smuggled across the international border. A significant share of the subsidised kerosene actually gets diverted to the black market and is used to adulterate petrol and diesel (NCAER, 2005).
(The writer served as Ambassador, High Commissioner to many countries. Views expressed are his personal).