Playing I-spy with the petroleum ministry

By: |
Published: April 13, 2015 12:34:27 AM

The cocktail of an unhealthy government-business relationship, antediluvian government processes and a sluggish rule of law does not augur well for either democracy or for sustained economic growth

“The ship of state is the only ship that leaks from the top.” These words of Sir Humphrey Appleby in the Yes Minister series came to mind when the news broke that five people had been arrested for espionage in New Delhi’s Shastri Bhavan, home to many of the key ministries of the government of India. That the ship has sprung a number of leaks is becoming apparent as the power, coal and environment join the list of ministries from where secret information has allegedly been passed on to private companies. In the age of Edward Snowden and high-tech mechanisms for leaking secrets, it seems almost anachronistic that old-fashioned methods like photocopying are being employed to steal information. Be that as it may, the net widens daily to snare company executives and journalists, apart from the ministry moles. The action by the Delhi Police followed a period of intense surveillance; there are also indications that this “corporate espionage” had been going on for over a decade. At least three aspects emerge from this entire episode: (1) the implications for the Indian growth story; (2) the outdated, unchanged government processes and procedures that created the environment for what happened; and (3) the failure of the rule of law to enforce norms of ethical behaviour.

The government is patting itself on the back for detecting and taking action on what it perceives as a violation of law. What it needs to worry about is the impact on government-industry relations, never cordial at the best of times. For the first 40 years after Independence, it was assumed that the public sector would drive the engine of growth. After a brief honeymoon post-1991, the government and the private sector have had what can, at best, be termed an uneasy coexistence. If commentators on the left are fond of describing the last 20 years as the era of crony capitalism, we need to remember that the 60 years prior to that represent the age of crony socialism. The private sector thrived in a limited sphere, based on its proximity to the political elite. An inefficient public sector acted as the cash cow for the political elite, which disbursed contracts and jobs at will. The post-1991 years represent a lost opportunity to free the economy and the country from the stranglehold of the government. Governments, both at the central and state levels, still interfere too much in business and neglect their basic tasks of building up physical and human infrastructure. The last nine months have seen a lot of promises of action, but little on the actual ground. The current “Shastrigate” episode will only worsen investor sentiment; there is already talk that bureaucrats will not directly meet industrialists. In any case, it will be a very bold bureaucrat who interacts with businessmen to understand their point of view.

A second issue relates to government procedures and processes. Things don’t seem to have changed much since my days at the Shastri Bhavan 20 years ago. Despite all the hype about computerisation, the Indian government system is still far from the digital era. With every second file being marked “secret”, Shastri Bhavan would have run out of almirahs to store these files, more so if they are to be in the safe custody of a deputy secretary. Getting information from the government is extremely difficult, even with the Right to Information (RTI) Act. Section 4 of the RTI Act mandates online access to a vast body of departmental information. Not one department at the central or state level has complied with this legal requirement. When getting even routine information is such a laborious task, it is hardly surprising that individuals (and companies) resort to James Bond-like tactics to procure information. If 90% of material in government archives were readily accessible, bureaucrats could attempt to keep the remaining 10% in safe custody.

Finally, there is the question of application of the rule of law. Indian legal systems are notoriously slow: “Justice delayed is justice denied.” Anti-corruption cases move even more slowly: the access to lawyers well-versed in exploiting every legal loophole ensures that the corrupt are rarely punished in a timeframe that serves as a deterrent to would-be offenders. We should count ourselves lucky if the current case reaches closure by 2035. The Lokpal Bill went through its own tortuous legislative process; as of today, more than a year after the Act came into force, there is no Lokpal in place. India still has no law in place similar to the 1977 US Foreign Corrupt Practices Act, which penalises companies for underhand dealings in obtaining or retaining business. Even a stronger anti-corruption law in India remains mired in interminable discussions amongst Amartya Sen’s “argumentative Indians”.

The cocktail of an unhealthy government-business relationship, antediluvian government processes and a sluggish rule of law does not augur well for either democracy or for sustained economic growth. The government needs to act fast in all these three areas if India is to meet the challenges of an increasingly complex global economy. Otherwise, it faces the danger of a Luddite backlash from vested interests wishing to preserve the status quo.

The author, a retired IAS officer and Shastri Bhavan veteran, comments on public affairs and policy and matters of human interest

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.