Are we trapped in a low-trust society?

By: |
Published: December 12, 2015 2:20:01 AM

Our complex rules, the corruption we face, as well as the adversarial relationships between the citizens and the bureaucracy that we have built over time are defining modern India

As the current government steps up its efforts to spur economic growth, it must realise that lack of social capital—or widespread distrust in the society—is as serious an impediment to development as lack of financial capital or physical infrastructure. I first noticed this 20 years ago when I strayed into the Central Vigilance Commission (CVC) as its additional secretary. Since then, I have often wondered why some bureaucracies outperform others. I joined the CVC in the aftermath of the Harshad Mehta scam. During my six-year tenure, I must have dealt with at least 15,000 disciplinary cases. What did this experience tell me about how our system works?

Very few of the cases we dealt with related to blatant corruption, defined simply as abuse of power for personal purposes. When such a case, involving dishonesty, acceptance of illegal gratification or bribery came to the CVC, it invariably advised prosecution. The bulk of all other cases involved various degrees of violation of rules, some involving simple negligence, some supervisory lapses of failing to exercise due diligence over the work of subordinates; still others, failure of an officer in the government or a manager in a public undertaking or a bank to follow norms and procedure. But there were very few cases of hardcore corruption, simply because the actors left absolutely no trace of their wrongdoings. The vigilance machinery was, to some extent, being used to settle personal scores; hardly ever to punish dishonesty. On anecdotal evidence, the situation has hardly changed over the years, and corruption continues unabated irrespective of which party is in power.

When asked why a particular lapse had occurred—for instance, why a loan was sanctioned without a proper appraisal?—the charged officers often admitted informally that they could not resist the pressure coming from various quarters. In all such cases, personal loyalties to superiors, caste, village, language, religion or region often trumped the charged officer’s loyalty to his organisation and its rules. This is the fault line where the western concept of bureaucracy—elaborately defined by Max Weber in terms of impersonal exercise of discretion in a rational and fair manner, in accordance with precedents—gets seriously eroded. The problem perhaps lies in the fact that we take our personal relationships much more seriously than westerners and often find it difficult to act impartially, when we have to deal with people we know or whose cases have been recommended to us.

From the point of view of the citizen, however, a friend or even a friend’s friend, with good contacts, is a valuable resource, and sometimes even a necessity, in negotiating the complex webs of rules, regulations and norms, and getting one’s point of view heard by people who matter.

One explanation for the complexity of our procedures lies in the manner in which the government has responded to the various corruption crises that have arisen with unfailing regularity from time to time since Independence. When a scandal breaks out and the pressure from Parliament, its Public Accounts Committee, the media or public opinion mounts, the department concerned responds by adding more checks and balances to the existing procedure. For example, when Jawaharlal Nehru found that certain ministers were packing their ministries with favourites, he instituted the Appointments Committee of the Cabinet (ACC), consisting of himself, the home minister and the minister concerned. This added three months to the appointments process, but irregularities in appointments still continued. The government then made consultation with the Union Public Service Commission mandatory for various senior appointments. The consequence was another addition of nine months to the appointments process. Is it any wonder, then, why many positions remain vacant for months altogether—an appointment which would take just a day or two to finalise in the early 1950s now takes nine months. Enormous efficiency losses are the inevitable consequence.

This complex system has other harmful effects as well. Accountability becomes difficult to determine simply because too many people are involved in the decision-making process. When it is determined, one customary defence of many charged officers is that the procedure was so complex, that no one was following it. If, indeed, no one was following it, he argues, why should he be singled out for punishment? Whether he succeeds with this argument or not would depend on the evidence he leads to support this claim and the view that his inquiry officer and the disciplinary authority take of this argument. But to an impartial observer, it does seem strange that informal conventions should often be seen to be superseding formal regulations. Yet that is how our system runs, because, with time, rules become archaic and are never updated to keep pace with changing ground realities.

The upshot is that whenever a scam breaks out, angry public opinion, fed by a 24×7 media, begins to demand accountability. That is the time some scapegoats have to be found and made sacrificial goats for vigilance action. If this person now being booked is otherwise well-regarded, the consequence is risk-aversion and policy-paralysis. The three Cs—CAG, CVC and CBI—created to fight corruption and ensure that officers remain on the straight and narrow path have hardly been able to ensure this objective. Ironically, often the action taken against officers, perceived to be honest and hard-working, has the opposite effect of driving others towards inaction. As a result, all kinds of perverse incentives are built up within organisations.

The crux of the problem, perhaps, lies in the fact that, over the years, we have become a low-trust society. Our complex rules, the corruption we face, as well as the adversarial relationships between the citizens and the bureaucracy that we have built up over time are all manifestations of such a society. However, we can hardly expect bureaucrats and governmental organisations to trust one another or us, when we ourselves hardly trust anyone outside our immediate circle of friends and relatives. Overbearing, complex decision-making structures are an inevitable consequence of this attitude. Suspicions also compel us to develop and pore over complex documentation even while concluding small contracts. This slows down decision-making and increases both transaction and project costs.

Perhaps the long-term answer to our woes lies in economic growth. The dynamics of development, along with the spread of literacy and education, are globally seen to have created the demand for fast and efficient transactions, based on arm’s length relationships. Demand for honesty, both as a factor of production as well as a consumer good, increases as people’s incomes grow. When such relationships become the norm for carrying out transactions, those who violate this principle tend get stigmatised, and find it difficult to carry on business. We have a long way to go before we reach this stage.

In the meantime, the government can continue with its efforts to simplify procedures and improve the ease of doing business—while doing so, it also needs to take concrete steps to build trust between itself and its citizens. This is because complex rules, corruption and lack of trust feed on one another in a cyclical relationship.

The author is a former chief commissioner of income-tax and ombudsman to the income-tax department, Mumbai

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition