The Modi government has set the cat among pigeons by demonetising two high-value currency notes. I am alive to the criticism that this ‘surgery’ could have been undertaken with greater finesse and after sustained preparation. There seems to be some merit in the argument, even after factoring for the need to keep the entire operation under wraps so as to protect its confidentiality. I am equally conscious of the assessment that the impact of the shock treatment might not last long. In such a case, the government could at best be accused of overestimating demonetisation as a weapon against black money, and not of malice or malevolence. If the objective was to shake up dishonest elements in the country — especially those ensconced in industry and the bureaucracy — I believe that it has been achieved. This flexing of muscle should more than convince the unscrupulous that the scope for dishonesty in the Government of India has considerably shrunk.
Demonetisation should go hand in hand with a merciless hounding of those who had either underpaid taxes or did not pay at all. Here, there are neither friends nor enemies. A majority of those affected by demonetisation are people outside government, either self-employed or in organised industry, who had prospered with the help of a conniving bureaucracy. This is why a well-coordinated post-demonetisation offensive has to tackle both the groups.
Go after the big fish
Black money is definitely generated through corruption. Having said this, I would advocate that the government should not — at least for a while — fritter away its valuable energy getting distracted by the petty corruption that is part and parcel of the cutting edge of the administration. This is somewhat of a reversal of my earlier stand that it is this phenomenon of lack of integrity at the level of a police constable or a lower division clerk at a government office that needs to be addressed first before we move up the hierarchy.
This change of perception is influenced by the rising graph of graft among Class I officers who are recruited through a stiff competitive examination conducted by the Union Public Service Commission and are well paid, after the last Pay Commission recommendations, even by private sector standards. Their lack of inhibition is abominable and is traceable mainly to the shameless and unforgivable greed in tune with the times in which we live. It is also due to a declining fear of the law arising from the tortuous judicial processes which take an enormous amount of time in establishing conclusive proof against the guilty. I am not pushing the case for making the existing penalties stiffer. I am only looking for plugging obvious loopholes in the procedure to discipline those who deviate from the law by making punishments certain over a reasonable period of time.
There needs to be evidence within government of an application of minds and a resolve to weed out corrupt elements swiftly without waiting for the wheels of the justice system which are notoriously slow to grind. There was a lot of criticism during the Emergency days in the mid-1970s of the misuse of the provision in the Conduct Rules for compulsory retirement of those civil servants who had either reached the age of 50 or had put in 25 years of service, and who had ceased to work effectively or whose integrity was suspect. Some complaints of arbitrariness and vindictiveness in those eminently forgettable times were unfortunately genuine. There is now an urgent need to resort to this rather draconian scheme to send down the message that neither sloth nor dishonesty would be permitted in the superior civil services.
Purge sloth and dishonesty
We have fortunately more than a handful of senior officials at the Centre who can be expected to be objective in drawing up the list of those who should be shown the door. The margin of error in identifying those who deserve to be axed is minimal if this list is vetted by a committee of officers known for their integrity. This should be followed by vetting by another group, before being agreed to by the Prime Minister and one or two of his senior Cabinet colleagues (such as the Home and Finance Ministers in the present dispensation). In a modified form such a drill is currently in place to make sure that there is no arbitrariness in empanelling officers to the rank of Secretary in the Government of India. Interestingly, this is being implemented with the assistance of retired officers who had earned a name for honesty and effectiveness.
Even at the risk of being considered brash, I would strongly urge that the process of purge should begin with key organisations such as Income Tax, Customs and Central Excise, Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI). In the wrong hands, these become instruments of harassment and torture. There have been several recent instances of officials from one or more of these organisations being hauled up by the CBI for direct receipt of bribes or accumulation of assets disproportionate to their known sources of income. The most shocking of these is the reported communication from the ED giving adverse information against two former CBI chiefs. If this report is true, nothing can be more damning to the pursuit of integrity in the higher echelons of government.
While the situation has vastly improved at the Centre following the arrival of the Modi government, the scene in the States remains appalling. It is tragic that there is no hope of a change as long as the authority to enforce honesty in state apparatuses remains with the State administration. State Anti-Corruption Bureaus (ACBs) are a joke in many States. In one southern State, a lady officer who had given new dimensions to corruption was appointed to head the ACB. If foreign investment in some States has lagged behind the others, it is directly attributable to the expectation of ‘speed money’ at the highest levels. Such money is invariably an astronomical figure that drives away a potential investor. There is an undeniable consensus over the need for a political will to transform this scenario. As long as political power remains in the hands of a dynasty or those who form an enduring clique, there is hardly hope for things to improve.
The need to stay the course
Who will be the change agent? These are undoubtedly crucial moments in Indian history, when faith in democracy as an effective and honest machinery to upgrade the lives of millions who live below the poverty line is under challenge. The government cannot therefore afford to lose the plot by succumbing to the machinations of those who already stand discredited for their unabashed corruption. The Modi government is under test and scrutiny by many commentators within the country and outside. A few of them are well meaning and would like him to succeed. There are also a substantial number of those who are not so well motivated. The situation is exacerbated by the critical comments of scholars and administrators like Larry Summers, former U.S. Treasury Secretary, who seem convinced that there is utter chaos in India, and corruption in the country is so deep that it is irreversible. In a recent co-written piece posted on his blog, Mr. Summers said: “Without new measures to combat corruption, we doubt that these currency reforms will have lasting benefits. Corruption will continue, albeit with slightly different arrangements.” The impulse therefore of some in government will be a desire to produce quick results through half-baked measures, just to score over detractors. An ad hoc approach, however, requires to be spurned if we are to place on ground a firm strategy to combat corruption. There is enough expertise in the country for seeing through this laudable scheme.
R.K. Raghavan is a former CBI Director.
