Siddharth Varadarajan

From fig leaf to banana republic

The Prime Minister and his advisors just don't get it. At a time when the public is looking for an end to the loot of public money, the last thing they want to hear from their government is a bunch of excuses and alibis.

In his interaction with a small group of editors on Wednesday, Dr. Manmohan Singh made a number of arguments to justify the half-hearted action that has been taken so far against the politicians, officials and businessmen suspected of corruption in the telecom, hydrocarbon and other sectors.

First he said the decisions which the media and the Comptroller and Auditor General (CAG) are citing as evidence of irregularities and graft were all taken in good faith under conditions of uncertainty. “If out of 10 decisions that I take, seven turn out to be right ex-post, that would be considered an excellent performance,” he said. “But if you have a system which is required to perform [in] 10 out of 10 cases, no system can be effective and satisfy that onerous condition.”

His second argument was to attack all bearers of bad tidings, accusing the CAG of going beyond the limits prescribed by Constitution and the media of being judge, jury and executioner rolled into one. The Prime Minister then invoked the spectre of India becoming a police state — a situation “where everybody is policing everybody else” and the entrepreneurial spirit of our businessmen is crushed — if the present atmosphere of “cynicism” about government decisions continued. Finally, he sought to puncture the popular demand for a strong and effective Lokpal, saying an ombudsman of that kind was not a panacea. Instead, he suggested the government's Unique ID programme might be the magic wand people are looking for: “If … [we] can give unique ID numbers to all our residents, we would have discovered a new pathway to eliminate the scope for corruption and leakages in the management and distribution of various subsidies.”

Taken together, these arguments tell us not only how far the government is from reality but also how divorced the Congress and its leaders are from the political pulse of the country.

2G spectrum issue

To begin with, it is doubtful whether any of the decisions which have proved this government's undoing were taken under conditions of uncertainty. Let us consider the 2G spectrum allocation issue. Dr. Singh knew the decision to auction spectrum was questionable. Like a risk-averse bureaucrat, however, he recorded his objections on paper before letting the Telecom Minister, A. Raja, have his way. What he forgot, of course, was that he was not a bureaucrat but a Prime Minister and a top-notch economist to boot. Economics teaches us that whether the government prices spectrum properly or not, the market will. Any scarce asset allocated preferentially is bound to change hands until its true value is realised. This, in essence, was what the 2G scam was all about. As an economist, Dr. Singh would surely have suspected that selling spectrum for less than its market value would generate rent seeking behaviour by both the Minister and the telecom industry. And as Prime Minister, he had the administrative and investigative wherewithal to nip this corruption in the bud. Dr. Singh now says he shouldn't be blamed for not acting on the basis of newspaper reports. But there was a context to those reports which he knew only too well, since he had already red-flagged Mr. Raja's decision to avoid an open auction. The minute the stories surfaced of the Telecom Ministry cherry-picking companies for the coveted licenses, alarm bells should have started ringing in his office. Dr. Singh should have gone, “Aha! I knew he was up to something.” But he kept his counsel. The Central Bureau of Investigation (CBI) eventually got around to raiding the Telecom Ministry but made no headway whatsoever for several months. It was only when the CAG report documented in cold print the theft which had taken place that the government realised inaction was no longer a viable political strategy. But even as the CBI moved finally to make arrests, the Congress party attacked the CAG for over-reaching itself. While Dr. Singh did well not to repeat the folly of Kapil Sibal's “zero loss” theory, he did accuse the constitutionally-mandated auditing watchdog of overstepping its mandate. Curiously, he also faulted the CAG for holding a press conference, even though it has done so in the past and there is a ruling of the Madras High Court upholding its right to speak directly to the public after a report has been tabled.


If his attack on the CAG was uncalled for, the Prime Minister's warning about corruption accusations turning the country into a virtual police state is likely to leave many people shaking their heads in disbelief. The police and intelligence agencies have snooped and spied and harassed innocent citizens and political activists throughout the country for decades without any one in authority ever worrying about the consequences. But the minute the voice of a Ratan Tata or a Mukesh Ambani is heard on a tapped telephone, or senior executives from some of India's biggest private companies are arrested for having paid bribes, the cry goes out that we are on the verge of becoming a “banana republic,” that we are bringing back the bad old days of the “license permit raj.” Dr. Singh's lament may go down well in corporate boardrooms but not with the crores of ordinary Indians who are demanding accountability and transparency in the functioning of their government.

Of course the Lokpal is not a panacea (nor indeed is the UID) but the government's aversion to accepting the proposals made by various civil society representatives would be more credible if it were backed by a clear will to tackle corruption. So far, that will is lacking. In his interaction with the editors, the Prime Minister said he was not a lame duck. Sadly, the excuses he trotted out on corruption were.

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Printable version | Nov 28, 2021 4:46:03 AM |

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