Column: Lokpal is no panacea

Updated: March 13, 2015 11:26:50 AM

Better incomes, lesser income inequality and expansive e-governance would be more effective than a Lokpal

lokpal, lokpal bill, lokpal act, lokpal latest news, anna hazare, anna hazare lokpal, nation news‘While the institution of Lokpal is important, it will have marginal success in reducing corruption if other supporting measures are not in place.’- BK Chaturvedi

There has intense debate in the last three years on the Lokpal Act and appointment of a Lokpal. There is a strong view, shared by all those who believe in regulatory power of the state, that corruption will go down when the Lokpal is in place. This is an oversimplification of the problem. While the institution of Lokpal is important, it will have marginal success in reducing corruption if other supporting measures are not in place.

Global experience, as a recent study points out, has it that economic growth, particularly per capita incomes, are a major factor in controlling corruption. If incomes are low, all measures taken by the state are able to reduce corruption only to a very limited extent. There is a “drag effect” of low incomes on the ability of the state to control corruption and the society to respond to it. About 97% of low-income global economies are not able to reduce corruption to a level below five on the Transparency International index or a similar level in the World Bank index. Within this group, some perform better and are able to take stringent measures. Almost as an exception, there are countries which are effective in reducing corruption very significantly. These do not include any major global economy. With increase in income, the share of countries with high level of corruption goes down and, correspondingly, the share of lower corruption countries goes up. In lower-middle income countries, this share of high corruption countries goes down to 94% with higher proportion of countries in 3-5 index range. The next two higher income groups have a lower share in the high corruption countries grouping.

While per capita incomes play a very significant part and determine the country’s ability to develop a favourable environment, high levels of poverty and large inequalities in income, reduce a nation’s ability to fight corruption. Analysis of data from about 50 countries confirms this view. If a large part of the population of a country is living below the poverty line or there are major income inequalities in society, the incentive to be honest for large sections of its population is very low. The growth process has to be equitable to ensure lower corruption.

Systemic deficiencies in the governance structure lead to huge corruption. This is particularly true of petty corruption involved in delivering of routine services to citizens: electricity connection, driving licence, copy of land records, approval of building plans, birth certificate, registration of complaints by the police, registration of land transfer deed, transfer of subsidy under various government schemes like Indira Awaas Yojana, MGNREGA, and similar other services. Many approvals from government organisations are needed in the setting up of industries by private entrepreneurs. There is a strong correlation between a country’s ease of doing business rank and its corruption index. When countries were assigned to different decile groups for these two parameters, they fell in the same group in almost all cases. Petty corruption is a reflection of these systemic complexities which create opportunities for corruption. A different category of issues is involved when contracts or licences are awarded. In all such cases, use of a transparent mechanism like e-platform, as used in the recent coal auctions, is essential. All these need reforms through use of technology, Aadhaar seeding, procedures reflecting trust in citizens, and use of multiple delivery centres like common service centres and post offices. A lot is to happen at city, town or village level.

A major area of corruption is political corruption. Studies show that, globally, this is the most difficult to eliminate. While developed economies have been successful in eliminating petty corruption, the lure of large money and need for it to fight elections has thwarted all attempts to make a major dent in its size. While in countries like US, there are huge donations to political parties, even in the other developed economies like Japan, Germany, and Finland this persists. In India, all political parties have to fight election. Contributions are made by business houses to their coffers, some openly and other surreptitiously. There cannot be a free lunch. These contributions or favours are returned in various ways by the ruling party. Certain civil servants, who act as conduits for collecting such money for a party in power, sometime continue in the same capacity when new governments take over as they need this type of expertise. Electoral reforms need urgent attention. Government funding of elections is one good option.

Lokpal is most essential to handle large cases of corruption of powerful politicians and civil servants and promote a climate of honesty. Corruption by important political figure creates a climate of permissiveness. Corruption, however, cannot go down very significantly unless we focus on economic growth and undertake other systemic reforms.

By BK Chaturvedi

The author is a former member of the Planning Commission and a former Cabinet secretary. The analysis mentioned in the column is from his recent book Corruption and Economic Growth, published by Academic Foundation

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.