Posted in India

Development? Governance?

After 75 posts on this blog, one may be forgiven for sitting back and letting readers explore whatever was said over the last three years. I am gratified that various search engines have serendipitously landed people from over 132 countries on this site, and many have bookmarked it and returned to browse from time to time. Thank you.

However, a WordPress notification wished me a happy anniversary, and I revisited the ABOUT page to check out my original motives for starting this blog: to explain the much misused terms of governance, corruption and development being arbitrarily thrown about in India’s political discourse at the time of the 2014 election, which brought to power a conservative, right-wing, market friendly party (the BJP) and routed the old establishment party – the INC, or Congress (please note this is not the legislative body it is in the US, but a political party in India.)

So let us indeed look at how these concepts have evolved and are understood, 42 months down the line:

Governance: I had covered the theory of Good Governance in one of my earliest posts, where I explain the relation between governance and government, and explain the globally accepted criteria for good governance: Good Governance

However, it has totally escaped this regime that government is subsumed within governance which has the empowered citizen at its heart. There is a similar ignorance of concepts like rule of law, consensus orientation, probity, code of ethics, freedom of information, conflict of interest, protocol, chain of command etc. As a result, the present government doesn’t score too well on providing either efficient and effective government, or participatory, accountable, responsive, transparent, inclusive or equitable governance.

The shortcomings of the ruling cabinet in terms of education, experience and exposure are very evident in the fact that almost ALL of the schemes and programmes of the previous government have been continued with NO substantive change except in their names. Never mind that most of these programmes had huge flaws which this cabinet of innocents continues to propagate. But if you throw out the baby (research, monitoring and evaluation wing) with the bath water (Planning Commission) who will point out these flaws and suggest ways to correct them? Instead, by farming out evaluation of important and costly schemes to private consultants, Indian data has lost a lot of its credibility among multilateral research organizations, and gained no real insights for future policy formulation.

Other institutions are also being undermined – whether the Reserve Bank of India, the Election Commission, or various federal and state investigative agencies. Further, the federal structure is itself under threat as decision making has become non-consultative and centralized (e.g. demonetization), and financial allocations to State Governments are becoming increasingly politicized – being used in election campaigns as threats or promises.

Corruption: The entire corruption narrative in India is limited to favours granted in return for bribes/cash. This is rather simplistic, and if it affects the common man then this type of corruption continues unabated among the petty bureaucracy no matter which party is in power. That is a fact of life in India. I had tried to broaden this debate by showing how capture and clientelism are equally detrimental to national interest (The 3 Cs- Corruption, Clientelism, Capture). Three years on, the great Indian people are at last getting to understand what is meant by ‘capture’ or crony capitalism as our social media prefer.

But clientelism remains more elusive – the best example of that is seen during elections in largely rural States like UP, where a village chief or mukhia can deliver an entire village’s vote for a promise of future personal benefit – like a share in a Central Government infrastructure project, or a ticket in the next State election. As this pattern of bottom up electoral victories is repeated, we will all get a better understanding of clientelism. It is noteworthy that virtually nobody has been brought to book, or even formally charged, in the various ‘scams’ the previous government and its coalition partners were allegedly guilty of – again clientelism in action: support us today and go scot free tomorrow. Simple.

Development: I had sarcastically hinted that development would be reduced to acquiring bullet trains, never dreaming how true this would be – literally! Never mind that the rest of the country’s infrastructure is among the poorest globally. Of course, this reduction of all ‘development’ to physical infrastructure, ignoring concepts of ‘human development’, will remain the most damaging legacy of the present government, as it will become the key deciding factor in 2019, as it was in 2014.

This tunnel vision is coupled with attitudes of climate change denial and loosening of ecological regulations in the sanctioning of megaprojects and it augurs ill for India’s achievement of the UNDP’s Sustainable Development Goals – which would be a tragedy, because India had done better than expected in the previous Millennium Development Goals. Interestingly, attempts to achieve the MDGs and thus governance in favour of the poor and disadvantaged, necessarily pushed the UPA Government and the Congress Party to the ideological Left and away from their 1991 image of pro-free market globalists. And in my humble opinion, this was the real cause for the Congress Government’s defeat in 2014.

The Indian electorate was not tuned to fashionable ideas like the Rights Approach to development…

You see, the disgruntled middle level ‘dominant castes’ in India have such a sense of entitlement that they see any action in favour of the poor, the disadvantaged and minorities as appeasement and will not allow rights-based programmes to succeed. Sadly, even in 21st Century India, your politics and opportunities continue to be decided by an accident of birth.

I had clarified in an earlier post (India an Aspirational Society? Not yet… ) that India would never be a truly ‘aspirational society’ without greater equality, better distribution of wealth, unity of purpose and civility. Sadly, all these ideals are in tatters just three and a half years down the line, and Indian society and polity have never been as divided, discriminatory and raucous as they are today.

One consequence of these attitudes has been the conscious marginalization of India’s poor, which now manifests itself in greater hunger, deprivation, malnutrition, higher school dropout rates, poorly educated human resources, increase in child and forced labour, distress migration, farmer suicides and ever greater informalisation of the economy, livelihoods, and urban housing. And frankly, nobody in power gives a damn. The Opposition too is patently moving from the Left to the Right of Centre, with the entire electoral focus shifting to businesses and the ‘entitled’ middle castes (as in Gujarat), with no mention at all of the poor…

Sadly, it is this disempowered but enfranchised section of the population who can even now deliver the votes needed (a mere 31%) to elect the next government. All that the incumbents have to do is use the standard right wing tools of diversion, emotion, commotion, coercion and subversion to ensure another term. These are the means which bring and retain the neocons in power from North to South America, to Israel to South East Asia…

But is this democracy, you may wonder… Of course it is. Because what else will give us the ‘moral’ high ground vis-à-vis autocratic China and Russia ? (I am sure this resonates a bit with my American readers too…)


Posted in Reports & Indices

WDR 2017: Revisiting Corruption, Capture and Clientelism

It was one of those cold misty mornings that you only get in North India in January, and I was being dropped to the airport at 5 a.m. by the hotel cabbie, and we were  lamenting the state of the world (ALL Indians always lament the state of the world when passing the time with total strangers…). Anyway, it emerged that despite working for a luxury hotel run by what is considered India’s most ethical business group, the driver is paid such a paltry salary that his family just makes it above the poverty line. And this despite being at the hotel’s beck and call 24/7. I am sure his father would have blamed his poverty on bad karma from an earlier life, and as a younger man, this gentleman would have ranted about discrimination (in arguably the world’s most discriminatory and unequal society), but in Modi’s India he blamed it on one single thing – corruption.

There is of course, a growing school of thought which believes that neo-conservative regimes like the current Indian government come to power by promising development, and blaming the preceding governments for holding the country back because of widespread corruption. Come elections, they promise to eradicate corruption through ‘good governance’. Their concept of governance (based on the classic World Bank model) is however, more like corporate governance with all emphasis on efficiency, grand announcements and fast but centralized decision-making, with the citizen-centric governance promoted by UNDP, totally forgotten along with effectiveness, participation, responsiveness, and accountability. Naturally, in this context, the entirely business-centric scales like Transparency International’s to measure corruption, or WEF’s ease of business are given far too much importance, and the UN reports on social indicators generally neglected. Consequently, wealth qua wealth is worshipped and accumulated, enterprise rewarded, bad debts incurred, and the informality and inequality in the country keep rising.

This is how the very core neocon agenda undermines itself, because as the social analyst Jong-Sung You argues in his latest book, inequality produces several causal mechanisms that serve to embed corruption within democratic structures and make them difficult to eradicate. Linking economic to political power, he explains how the ruling elite in an attempt to safeguard its own interests, buys political influence through both legal and illegal channels in order to ensure their interests are over-represented in the corridors of power. High rates of inequality thus compound the problem of state capture by powerful figures in politics, business and the media, with the result that democratic processes of accountability are undermined by corrupt practices.

Further, Dr You points out that an unequal state with enfeebled democratic infrastructure is ripe for persistent and prevalent clientelism, forcing the poor to become dependent on corrupt chains of patronage for the provision of particular benefits like medicine, education and nourishment, which would otherwise be considered entitlements in a functioning democracy. These chains of patronage on which the poor rely, are then mobilized during elections to buy votes and, in the bureaucracy, to buy favours. Importantly, this illustrates that the role elections should play as a mechanism for accountability ceases to function under high conditions of inequality; elections meant to fight corruption, become a means to legitimize a corrupt regime. And so we have come full circle.

Maybe it is the work of thinkers like Dr Jong-sung You which has begun to influence that bastion of free enterprise, the World Bank. Their latest World Development Report is a refreshing recant on their earlier version of governance and now considers governance as “… the process through which state and non-state actors interact to design and implement policies within a given set of formal and informal rules that shape and are shaped by power. This Report defines power as the ability of groups and individuals to make others act in the interest of those groups and individuals and to bring about specific outcomes.”

So there you have it: in the end, the institutions of governance do eventually subserve the demands of the most powerful in society. The WDR 2017 acknowledges that the power asymmetries in society can greatly undermine development and policy making and implementation because they lead to exclusion, capture, and clientelism. This in turn leads to the power of elite bargaining in a modern democracy, and its impact on policy-making and eventually, development.

As part of the World Development Report 2017, the World Bank, in collaboration with the V-Dem Institute, has conducted expert surveys to generate cross-national indicators that enable comparison of who holds bargaining power and how they wield this influence. The surveys cover more than 100 years of data in 12 countries across six regions and their findings are very interesting, as this graph shows:

WDR 2017 Elites.png

Some observations:

  • Power in Russia, Turkey (and Rwanda!) is apparently centralized totally to the exclusion of all other actors. So what happens when the mighty One is no more?
  • Do Brazilians really feel that the media there are such powerful players? Perhaps, especially after the media hounding of a democratically elected President…
  • Are foreign governments and international donor agencies really so powerful in Sri Lanka, or is there a defence angle India should worry about?
  • Local Governments, Organized Labour Unions and Civil Society Organizations seem to wield power only in Bolivia making it some sort of last refuge for the socialist idealist, and
  • Finally, India is true to the South Asian archetype, where power is centralized in the National Executive, National legislature, the Judiciary, national political parties and the All-India Civil Services – a permanent bureaucracy bequeathed by our erstwhile rulers to the entire sub-continent. Noticeable too is the absence of influence at the local or municipal level, despite the 74th Constitutional Amendment on decentralization, dating back to 1992, and that goes a long way in explaining the pathetic state of India’s burgeoning cities…
Posted in Accountability and Corruption

Costs of Corruption

B-school grads and non-resident Indians get very perturbed each year, when Transparency International publishes its Corruption Perception Index, with India lingering somewhere in the lower reaches, among the poor and corrupt of Africa and Asia. They feel that corruption and bribery dent India’s image abroad and prevent Foreign Direct Investment (FDI) by Multi-National Corporations (MNC), so necessary for its economic growth. (Really? I thought it was more for the economic growth of the MNCs, but never mind…)

What these advocates of ‘probity’ forget is that the Corruption Perception Index is just that – a set of ‘perceptions’ with all the in-built biases that the word implies. In fact, the 12 contributing organisations are all based in the US or Western Europe and are strong advocates of free market capitalism.

In 2013, Alex Cobham of the Centre for Global Development in Europe, went so far as to suggest that the CP Index embeds a ‘powerful and misleading elite bias’ in popular perceptions of corruption, and should be discontinued. What could be more biased than the fact that many of the highest scorers appear ‘clean’ simply because they have long ago institutionalised and legalised various forms of corruption – like old-fashioned bribery of politicians made kosher by re-naming it as a campaign fund-raiser!

Yet, if bribery continues to grow, then there must be someone somewhere profiting from it. At its most basic, a company’s shares are guaranteed to shoot up if it lands a big contract, and as the profit made by its share-holders far exceeds any bribes paid to procure that contract, corruption is justified! Take that to the level of natural resources and infrastructure, and we are really talking big money.

If like me, you believe that the hand which gives a bribe is as dirty as the one which takes it, it is very enlightening to look at the whole issue from the point of view of the bribe-givers – the large MNCs in a largely globalised world. I came across a very interesting graphic on, sourced from OECD, which is a kind of league table of industries where bribery flourishes the most. And here it is:


It stands to reason that the most laws and regulations in any country always safeguard an activity or commodity that is of greatest significance to that country, right? And the largest bribes would be demanded where the most laws and regulations need to be bent or broken, isn’t it? No wonder Multinationals are willing to pay the most bribes (OECD estimate 21%) for the extractive sectors like oil, gas and mining of coal, rare earths, uranium, gold or diamonds, because that’s where the largest profit margins are. Stands to reason.

For global corporates it’s a win-win situation, and only the host country is the loser – its most precious resource is gone forever; the profits have gone to another country; and the taxes thereon to another exchequer. RIP.

MNCs salve their guilt of profiteering by claiming to create jobs in the host country, but at what cost? The bribe culture lets them get away with paying pitiful wages, running sweatshops, employing child labour, and providing terrible work conditions with minimal regard for worker health and safety. These practices would be unthinkable in the MNC’s home countries, and would probably attract swift legal retribution as well.

And to add insult to injury, the same MNCs insist that the country they are stripping of its precious and irreplaceable resources should provide the necessary infrastructure and transport for the commodity extracted. And voila! A host of other MNCs step in to provide just that… No wonder construction and transport are the next two sectors in the bribery league table.

Furthermore, the development of infrastructure comes with strings attached – the host country is offered soft loans by various international bodies, and it is estimated that for every US$1 borrowed, some African countries have had to pay back as much as US$15! It is this debt repayment which has broken the back of half the countries in that region.

And at the end of the day, what are we left with – swinging 6-lane expressways to and from the larger cities, while 90% of the rural population is lucky to be able to afford a bicycle!

What intrigued me looking further down the chart, was the inclusion of storage with transportation as a high bribery industry. Until I had a eureka moment. Of course, we are talking about storage and subsequent disposal of e-waste, hazardous materials, radioactive waste, and other nice things.

For example, the UN’s Step Initiative says that the global volume of electronic waste is expected to grow by 33% in the next four years, and contains toxic substances such as lead, mercury, cadmium, arsenic and flame retardants. Once in landfill, these toxic materials seep out into the environment, contaminating land, water and the air. In addition, devices are often dismantled in primitive conditions. Those who work at these sites suffer frequent bouts of illness, and long-term diseases.

Evidence of the aftereffects of working with hazardous materials are near at hand in India – in fact in Mr Modi’s home State of Gujarat, at the ship-breaking yard at Alang, considered the largest graveyard for ships, salvaging 50% of the world’s old super-tankers, car ferries, container ships… The workers there have a joke that their fate is from ‘Alang to palang’ (from the Yard to the deathbed)…


A recent study by the Tata Institute of Social Sciences, Mumbai, discovered that the health services are so appalling and inadequate that injured workers have to wait for hours for the government ambulance, or the one provided by the ship breaking association, to get to Bhavnagar, 50 km away. And yet the officials in charge claim to have taken care of workers’ health and safety concerns! Bribery always makes the regulators look the other way…

I am sure there are thousands of such ‘honest, concerned and vigilant’ officials all over the developing world – because that’s where Western Europe is increasingly dumping its e-waste and hazardous materials, according to Interpol. “Much is falsely classified as ‘used goods’ although in reality it is non-functional. It is often diverted to the black market and disguised as used goods to avoid the costs associated with legitimate recycling,” said an Interpol spokesman to the Guardian newspaper. “A substantial proportion of e-waste exports go to countries outside Europe, including West African countries. Treatment in these countries usually occurs in the informal sector, causing significant environmental pollution and health risks for local populations,” he said.

So that explains the high rates of bribery in the transport and storage sectors.

It is nobody’s case that bribery and corruption does not harm a country. It’s just that I would put the onus of this damage more on the greed of the corporates, than on the misguided bribe taker, who is ready to sell out his country and the future of his children.

It is as though the colonial era never really ended…

Posted in Accountability and Corruption

The 3 Cs- Corruption, Clientelism, Capture

It is now universally acknowledged that in most developing countries, the hard-earned resources invested in welfare and development programmes have leached away, mainly because of the curse of the three Cs: Corruption, Clientelism, and Capture.

CORRUPTION is commonly understood as the use and abuse of legal authority to benefit oneself (embezzlement), or kith and kin (nepotism), or another (expediency, bribery).

In India, it has long been a way of life – an ordinary citizen makes allowances in his budget for corruption. To get one’s child admitted to this playgroup, or that school or a better college – everything requires some wheeling-dealing. Of course, bribery has become a fine art in local governments, where a series of agents act as brokers to procure every service (which you are in any case entitled to), like a power or water connection for a new house. The scale rises as one goes higher up the ladder to procurement of contracts, for example.

The underlying assumption is that a corrupt act or practice is always at the cost of the rights of another individual, group or organisation. Compounded over its entirety, corruption results in huge financial losses and social cost to any country.

Robert Klitgaard, economist and academic – considered the world expert on corruption – set forth the problem succinctly in his famous formula:

Corruption = Monopoly + Discretion – Accountability

Therefore, Governments with the willingness to seriously tackle corruption must minimise monopolistic structures, reduce discretion and enhance accountability.

They can take several immediate and concrete steps:

Monopoly: Where possible, the effects of monopoly can be reduced by allowing some private operators to provide the same services, but there must be a proper regulatory mechanism in place, right from the point of award of contracts, to avoid situations which have erupted in various ‘scams’ in India recently.

Where a service provider is monopolistic by its very nature (like a Municipal Corporation) we need to look at ways to mitigate the monopoly of decision-making. The most obvious way is widening the space for decision-making through regular and formalized public consultations and participation. Furthermore, outsourcing the basic services to workers’ collectives, NGOs and CBOs, will also soften the monolithic, monopolistic work culture of these places. Another way would be through the lateral induction of managers who have had corporate experience in the areas which the monopoly deals with.

Discretion: Most day-to-day bribery is a result of the enormous discretionary powers given to individuals. It is necessary to revisit some of the archaic laws, vestiges of British Rule, where the ruling class did not trust the natives, and all powers were vested in senior civil servants. Did you know that there is a major element of discretion in assessing the property taxes for your property? It is no secret that even middle level workers can make big sums of money by manipulating the area for commercial property in the bigger metros. The only way to outwit individual discretion is through e-Governance, where there are several layers of checks and balances; business processes have been re-engineered; and standardization has been put in place. Moreover, people’s access to information is much greater in an IT-enabled environment, allowing for greater vigilance by civil society.

Accountability can be increased by Access Legislation, like the Right to Information (RTI) Act of 2005, provided it is adhered to in letter and spirit by both sides. There are far too many instances of the misuse of RTI by vendors, contractors and losing sides in a tendering process. This results in a huge burden on the Government body – and sullen, half-baked replies, which help no one.

Much greater transparency and proactive disclosure in the procurement process and the award of contracts will greatly enhance accountability – especially at a time when we have put in power a Government that believes in running the country through Projects, rather than Policies.

Summarising: Governments that are serious about reducing corruption in public systems need to look earnestly at 5 key issues:

  • Building objective criteria and benchmarks for decision-making, thus reducing individual discretion and arbitrariness
  • De-bureaucratization or simplification of procedures so that expediency does not become a reason for corruption
  • Enunciating clearly the role of various agencies, provisions, conditionalities, benefits, monitoring and evaluation mechanisms of Government schemes
  • Putting in place mechanisms for social, financial, legal and political accountability at every level – local, regional and national
  • Creating public awareness of the mechanisms of redressal available to citizens when faced with corruption

Corruption and fraud it seems, is no longer a monopoly of the government machinery, but is growing with alarming rapidity in the private, non-government and professional sectors as well. Perhaps the time has come for better regulation of all transactions in the public domain.

CLIENTELISM: Early definitions of clientelism were confined to the exchange of votes for favours returned over a long period of time. However this rather simplistic ‘sale of votes for future favours’ is now recognised simply as corruption. The growing cost of fighting and winning an election – especially one as long-playing and complex as that of the President of the United States, say – has given clientelism a whole new meaning.

According to Federico Varese in the Oxford Political Dictionary, clientelism today usually involves rewarding clients with public office, contracts, appointments and the like not because of merit or qualifications, but because of their prior support. Given the nature of this exchange, the relationship between a politician and client tends to be both clandestine and long-term.

It is worth noting that Clientelism does not become ‘corruption’ if it remains on the right side of law and is socially acceptable.

In fact according to Varese, if the exchange goes counter to public sentiments, it still qualifies as clientelism and not corruption (although the public frowns upon it) because no laws have been contravened. As most clientelist transactions take place away from the public gaze, their vitiating influence is best countered with open public debate on the subject and bringing these transactions out into the light of public scrutiny.

The most prevalent form of clientelism thrives in India because of our ‘first past the post’ electoral system (yet another legacy of the British!). Where a small swing of 2-3% can win a seat, the local power-broker who can deliver such a swing, gets the assurance of a ticket in the next local or state election along with the organisational and financial support from the concerned political party to win his/her seat when the time comes. This is clientelism in action, and as no laws have been broken in coming to such an agreement, both the patron and client can argue that it is not corruption – merely the voice of an aspiring society!

The obvious way to reduce the impact of clientelism is to go in for ‘proportional representation’ a common practice in all the more mature democracies in Europe. However, it is unlikely that this change will ever happen in India as all parties are opposed to it. Have you ever wondered how certain leaders manage to win again and again in their home constituencies, cultivated over long years, no matter how badly their party performs elsewhere? Well that again is clientelism…

CAPTURE: The concept of state capture came into prominence with the break-up of the Soviet Union, and the emergence of powerful ‘oligarchs’ who shaped and controlled the economy and policy in most of the transition states.

‘Capture’ is understood as firms and businesses shaping and affecting formulation of the rules of business through private payments to public officials and politicians, or contributions to campaign funds at the time of elections.

Capture is also referred to as ‘crony capitalism’ and was considered one of the main reasons for the 1997 economic meltdown of the Asian Tigers. Many analysts blame these practices of the military-industrial complex in developed countries, for pushing those countries into unnecessary wars to make a profit.

So how does it work? If the land acquisition norms are disregarded to favour one businessman, that is capture. If the land laws are to be amended in favour of big business, that is capture. If the environmental norms are to be disregarded to expedite particular projects, that is capture. If a nationalised bank extends credit to a business for investment abroad (without any jobs being created in India!), that is capture. If Natural Resource companies in the Public sector are de-nationalised to enable private companies to pick up cheap shares, then that is capture. (In fact this was the favourite tool for enriching the oligarchs in Yeltsin’s Russia, and it took a massive re-nationalisation effort during Putin’s first term, to get the economy back on track.)

The proposed infusion of Private investors into infrastructure building is also a form of Capture, because, across the world, private firms are only interested in ‘cherry-picking’ and go only for profitable projects. This means that the social objectives of infrastructure are seldom met through private sector participation in infrastructure, and the country has to pick up the tab to service unprofitable sectors.

Again, capture by the business elite is not just a financial burden to the country but also entails heavy social costs, as the rich get richer, and social disparities increase exponentially. Capture economics can also demotivate smaller businesses and entrepreneurs.

The only way to counteract capture is to have a vigilant press; constant scrutiny and publicity of such instances; and a willingness of the opposition to take these issues head on in Parliament. But alas in the present Indian situation, it will perhaps become a case of ‘who will cast the first stone…”. And the less said about the ‘vigilance’ of our mainstream media, the better.

In my next few posts, I would like to look at urban poverty in its various dimensions, and try to understand issues of human development and sustainable livelihoods. Keep reading…