Enforcement alone cannot fight the canker of corruption. Structural reforms are also vital
The biggest headwind in the process of India’s development has been corruption.
The relentless war against corruption by the Modi government since 2014 has upset the Opposition parties for reasons not hard to discern.
There are mainly two ways to fight against corruption. The first one is to strengthen enforcement and the second is to clean the system with suitable legislation, including structural reforms. Enforcement has its limitations, particularly in a democratic system.
Despite uniform criminal laws in India, sympathisers of anti-social elements are many. Sometimes their fundamental rights are considered more important than those of the common people.
Very often, even genuine CBI investigations against culprits are resisted/challenged in the court of law. The investigations by Narcotic Control Bureau against drug abuses are resisted by vested interest groups. We have an independent judiciary that is capable of preventing misuse of power by the government.
Besides the use of enforcement agencies, the central government has taken several initiatives since 2014 to clean the system; its second approach. Notable among them are demonetisation, tax reforms, closure of shell companies, agricultural reforms, weeding out of archaic laws, digitisation, IBC (insolvency and bankruptcy code) besides direct benefit transfers (DBT) to underprivileged people under several social security schemes.
There may be loopholes in the implementation of these structural reforms.
But one thing is common in these reforms — elimination of corruption and middlemen from the system. Faceless income tax assessment, online submission of application for government services like passport/driving licence, cashless goods and services tax, a transparent resolution mechanism under IBC, etc., have the potential to clean up the system to a great extent.
The structural reforms currently pursued in education, agriculture, cooperative banks are second-generation reforms that cannot be implemented without involving State governments.
That opportunities for corruption are lost in the new transparent system is why reforms are resisted in some quarters. Digitisation for example will leave an audit trail and thereby prevent corrupt practices. One nation, one ration card will remove duplicate ration cards.
Currently, there is a nationwide debate on cryptocurrencies. Many interest groups argue against the ban of such speculative assets. If a country like China can do this why not India?
The investors in cryptocurrencies are anyway not the poor people. Why should the state protect the interest of the great gamblers? Let us see how the government responds to this situation.
The so-called rentier class has been affected so badly that it not only opposes but disrupts the implementation of big-bang reforms.
Sometimes it creates social unrest and finances the movement with black money accumulated earlier from unlawful activities.
Implementation of structural reforms is not the responsibility of the central government alone, particularly when the subject is in the State list or concurrent list. Recent agricultural reforms are examples of failed endeavour in this regard.
Although the central government seems to have lost the battle on agricultural reforms for the time being the war against corruption shall continue.
The writer is former Principal Adviser and Head of the Monetary Policy Department, RBI. Views expressed are personal