is time we got out of this perpetual déjà
vu sensation. Corruption in allocation of scarce commodities
patronage in awarding contracts and business opportunities
are as old as public sector. In our post-independence economy,
public enterprises are synonymous with private gain and
bureaucratic and political control. The old-fashioned notion
that public enterprise is for public good is not believed
any longer even by ardent socialists. Obviously the answer
lies in state getting out of business, and focusing on its
legitimate activities of rule of law, public order, justice,
education, health-care, infrastructure and natural resource
such linear logic of elimination of state monopoly as a
way of reducing corruption ignores two hard realities. First,
the obvious resistance of those in control of state apparatus
to any rational economic policies. Even now, the debate
is on who gets patronage, and not on how to ensure real
and fair competition. Many ministries are fiercely resisting
loosening of their hold or diluting state control, let alone
divesting their portfolios. We have the same time-worn cliches
and jaded arguments of national interest, strategic sectors,
core areas, cross subsidies, and so on. Essentially, those
who benefit from control of state monopolies are loath to
giving up the golden goose. That, despite the avowed objective
of rapid disinvestment, and creation of a ministry for disinvestment
under the charge of the capable, and committed Mr Arun Shourie.
If this scandal proves anything, it is that the state cannot
be trusted to manage oil companies, or any other enterprises.
Yes, there is plunder in private sector too. But public
money is not looted, only private investment. If bank loans
are swindled, such entrepreneurs ought to be jailed. It
is the failure of public sector banks to fund legitimate
economic activity, and their largesse to dubious enterprises
that created the problem of willful defaults in the first
place. And then the state's failure to enforce rule of law,
or create a regulatory mechanism for effective debt recovery
and a safety mechanism to allow safe landing for failed
businesses and bankruptcies is the major cause of the crisis.
The failure of state cannot be an argument against competitive
and fair markets. In any case, private sector has to compete
in the market in order to retain its market share and survive.
And with trade barriers crumbling, there is also external
competition. The public outrage at the shameless plunder
of public assets and rent-seeking should be channelized
towards ending state monopolies and encouraging real competition
in private sector.
as long as demand for illegitimate funds for political activity
and rent-seeking is not curbed, privatization will only
shift the burden of corruption from economic areas of decision-making
to non-economic, sovereign areas. Appointment and placement
of public servants, public order, justice, taxation and
revenue collection, crime investigation and execution of
public works are all sources of rent for the rapacious bureaucrat
and greedy politician. That cannot be curbed until two conditions
are met - rule of law must be reestablished, and there must
be greater certainty of detection and exemplary punishment
for corruption; comprehensive electoral reform should be
undertaken to make honesty compatible with public life.
The former requires reform of judiciary and crime investigation;
and the latter, political reforms. Both upset the status
quo, and are painful for incumbents and vested interests.
matter where we begin, the circle always ends with electoral,
political and governance reforms. Tehelka, telecom scam,
oil dealerships, Bofors, HDW, urea, and a host of other
scandals - all point in only one direction. As long as the
political class feigns collective amnesia and cultivated
blindness, such scandals will continue in some form or other.
Under current conditions, almost no government at any level
can afford to be honest. It is somewhat naïve to expect
politicians to give up public office at the drop of a hat.
The answer lies not in vilification of the political class,
but in comprehensive political reforms. Unsustainability
of status quo is certainly forcing reform. But if we wait
for such compulsions, then reform will be chaotic, and sometimes
traumatic. We need to take a hard look at our political
system and elections and bring about rapid changes in an
orderly manner. Until then we cannot escape the periodic
déjà vu and unending political soap operas.