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The time equation for corruption

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  31 May 2015 12:00 AM GMT

WITH EYES WIDE OPEN

D. N. Bezboruah

Both Prime Minister rendra Modi and Assam Chief Minister Tarun Gogoi have done everything possible to attract foreign investment to their soil. rendra Modi has gone about with the slogan “Make in India”. Even so, nothing much seems to have happened to bring about any appreciable foreign investment in India. The stock complaint of overseas entrepreneurs is delay at the government level in getting the required clearances at every step (even when permission has been given) so that production can start speedily. In most cases, however, investors are unwilling to invest in any new industries because it is so difficult to secure formal permission to start a new industry even after the minister concerned or the Prime Minister may have cleared it. Such delays arise because officials down the line are very keen to do their bit in sustaining the largest vested interest in India, mely corruption, through orchestrated delays.

It is an accepted fact that the two most outstanding ingredients of corruption are shortages and government control of everything. What is often overlooked is that shortages are most often created to ensure the survival of sleaze. It is only too obvious is that shortages can always be created by inducting delay in the availability of certain things. Let there be an orchestrated delay in the supply of one component of any manufactured essential item, and the production of that item is bound to be interrupted, thus creating a temporary shortage. But there is a quicker and simpler way of creating a shortage of essential commodities. This is just to hoard the stuff in large warehouses and to release it to the market only in very small quantities so that the equation of demand and supply can do the rest of the work. Such measures work very well just before general elections when traders and manufacturers have to contribute huge sums to political parties. What they really do is create artificial shortages to hike prices in an unrealistic manner and to make up more than what they had doted to political parties. In fact, what actually happens is that the public pays the money they dote to political parties though the donors get all the credit and the benefits of such timely dotions.

However, when such corrupt practices hold up clearances for industries and manufacturing rights, it is the entrepreneur who pays for such delays. First, there is the bank interest on the loan taken for such industries. Then there is the tural cost escalation brought about by inflatiory pressures. So costs go up well beyond expected limits. Take the typical case of the Assam Gas Cracker project. When the project was first mooted in the early 1980s, its estimated cost was just about Rs 800 crore. By the 1990s, the estimate had risen to Rs 4,000 crore and then to Rs 5,000 crore. The cost of the project at Lepetkota that is due to be commissioned next month has exceeded Rs 10,000 crore. At one point of time the cost escalation for delay was about Rs 1 crore a day. Later on, it went up even further. I did not hear anyone weeping over all this because it was public money that was being wasted due to delays. Things would have been very different if a private party was setting up the gas cracker plant. All this makes it easier to appreciate that time is indeed money.

It is, therefore, tural that foreign investors should be unwilling to invest in new ventures in India. The licences and clearances are so slow in coming that a prospective investor could go bankrupt merely waiting for the consents and clearances to be signed. This is very different from the business culture of the United States where a new radio station can be launched in a day without waiting for any permissions. So what do they do instead? They invest in the equity market on blue-chip shares of existing Indian companies. There is no loss of time in waiting and very little risk with good shares. The overseas investment opportunities lost for India due to the delay of ministers and officials in making up their minds is not due to the fact that all Indians are painfully slow about taking decisions. This myth is easily exploded by the speed and alacrity evinced by Indians in arranging a family wedding reception at very short notice. It is also evinced by cooks and charwomen doing two morning and evening shifts of work in three households. It is amazing to watch how fast they can do their work. No, the delay is not because the minister or official is a painfully slow worker. The delay arises from the fact that they are very greedy. And when it comes to approving an application from an overseas company to make something in India, these worthies can be quite shameless about haggling for the size of the bribe they expect in order to sign on the dotted line. The process is slow because the bargaining for the size of the bribe can go on for months. Our heads of government who are ever ready to invite foreign investors to invest in India or Assam can do nothing to the bureaucrats who mage to sabotage many such possible investments and never get punished for sabotaging the possibilities of “make in India” investments.

In other words, one of the ways in which corruption works is to slow down the pace of development very drastically because files do not move unless people put on them the wheels of bribes. And then to make matters worse, when a perfectly legitimate and justified proposal is denied, the aggrieved person goes to court to seek justice. Does the government department concerned see reason and the kind of injustice it has perpetrated and make amends? No, it does not. A vindictive government officer delays the hearing of the case with vehemence for two very visible reasons. One is that instead of being paid what he considers his legitimate bribe (and this has kept rising faster than the rate of inflation for other items) someone has the temerity to take him to court. The other is that he knows the petitioner will have to pay all legal expenses from his own pocket, whereas the government will pay the legal costs of sustaining his vindictive stance. And such gratuitous legal action will merely serve to delay further something that has already got delayed due to the greed of a corrupt officer. So, one very visible effect of corruption on development initiatives is to slow down all initiatives geared to development to a pace that would be regarded as ludicrous in most developed countries. And given the fact that legal action is painfully slow in our country, the only thing that a corrupt officer has to do in order to sabotage development is to let things go to court and stew there for years.

What is most ironical, however, is that the same corrupt administrative machinery that can slow down progress due to the insatiable greed of some (there are ministers who demand a crore of rupees for a mere transfer and a sum of Rs 30 lakh every month from key officers for letting them function where they are) can also speed up the pace of action to what would be regarded as superfast in any country of the world. Sometimes this happens because good and efficient people are working in a way to be of help to others. I recall how my passport was once renewed within two hours flat because there was the prospect of my accompanying the Prime Minister to New York. The Regiol Passport Officer (whom I had never met before) said that was the least he could do in an emergency situation. I also recall how a lady at the Mauritius Embassy in New Delhi gave me my visa in just 15 minutes for similar reasons. None of them were breaking any laws to be kind to me. They were only using their discretiory powers to be exceptiolly swift and helpful. And there is no law against being helpful to others. What is ironical about our predicament is that the same officers who can sabotage development and delay positive action can also be extremely efficient in getting things cleared and pushing files through with commendable speed if the task has to be done for a minister or his cronies or if the bribe is adequate. So, corrupt practices can speed up action only on rare occasions and just for the select few. More often than not, the time equation for corrupt practices is that they can delay positive action to unbearable limits.

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