Economics of Criminalisation and corruption
(November 05, 2004)

(The author is the
National Coordinator of Lok Satta movement and National Campaign for Electoral Reforms)

The recent election results in Maharashtra and byelections in states reinforce the disturbing trends in our political economy. In Maharashtra, India's leading industrial state with the highest per capita income among major states, neither of the major parties have shown the vision and sense of purpose to transform the economy and governance. With political process increasingly losing its legitimacy, a one-time mafia don, Arun Gawli, and a few others with notorious record of crime, have become law-makers. Arun Gawli did not even need a maj or party support - he was elected as an independent! In India's poorest state of Bihar too, Pappu Yadav, who strikes terror in the hearts of rival gangs and law-abiding citizens, won with massive majority and is now a Lok Sabha member, a privilege denied to Dr Manmohan Singh in 1999. And Pappu Yadav won against the combined opposition of Samata, BJP, Communists and Lok Janshakti!

Wringing our hands in despair at this increasing criminalization of politics, and politicization of crime will do no good. We need to understand the economic and institutional imperatives that increasingly legitimize crime and violence in society and public life. These criminals have not come out of a vacuum. Our malfunctioning governing institutions created fertile conditions for their rise. Any one who has an unresolved civil dispute with a business partner or customer understands how tough it is to run a business ethically in India. For instance, if an honest entrepreneur produces high quality products at competitive price, and if the government is the monopoly buyer of his product, the travails he faces are unbelievable. If he cooperates with the CBI or other anti-corruption agencies to trap the errant officials, then his troubles multiply. The whole organization suddenly gang up against him and makes his life miserable.

If such are the problems faced by asset-rich, resourceful and well-connected entrepreneurs, the pain and suffering inflicted on lesser mortals in getting civil contracts enforced, or receiving reparation for the damages sustained have to be seen to be believed. A house-owner who cannot get her property vacated even for self-occupation, and the owner of a small plot of land who cannot evict a land-shark have no realistic legal recourse in our society. With 25 million cases pending in courts, and with most litigations taking decades for resolution, people have no realistic hope of justice through formal mechanisms. As a result, millions of cases never reach the courts. Like 'missing' girl children on account of female foeticide, there are millions of such 'missing' cases in India every year. These missing cases, and not merely pending cases, reflect the appalling failure of due process and rule of law in our country. Most people prefer to swallow injustice and suffer silently. A few who have means, or are desperate, seek rough and ready justice through brutal methods. The neighborhood 'bhai', or the local mafia don is supplying his services to meet this unmet demand. In a civil court, even if you are lucky to get a decree in your favour after decades of struggle, your problems continue. To enforce a decree, an execution petition has to be filed, and another prolonged, excruciating process begins! But the local don will ensure settlement of dispute for a price within a few days, and his 'verdict' is enforced instantly. No wonder, many people see crime lords not as villains, but as saviours!

It is no secret that many banks and other financial institutions are now deploying musclemen to recover debts. If formal, organized businesses feel the need to resort to use of force to run legitimate businesses, it is no surprise that ordinary people treat criminals with deference. In such a twilight zone, the distinction between 'hero' and 'villain' is erased. Brute force becomes the only effective arbiter. We can set things right only when it is possible to do business or protect rights through peaceful and lawful means. Rise of criminals is a consequence, not the cause, of breakdown of rule of law. This is particularly true of urban India.

A similar process is at work in government too. The recent spectacle of helpless citizens, and at times influential persons and officials, queuing in front of the Maoist Communists ('Naxalites') petitioning for redressal of their grievances says it all. There is no greater indictment of the functioning of our governing institutions than the public display of faith in armed revolutionary groups in the midst of the peace negotiations with government. In general, people have lost faith in the system, and have come to believe that nothing is accomplished through peaceful efforts, or due process.

Is it a surprise then that voters have no qualms in electing notorious gangsters as their representatives? People do know the difference between right and wrong, and good and evil. But they have realized that an honest, peaceful representative cannot really deliver results in this unhappy milieu. That is why a Manmohan Singh, whose assumption of office as Prime Minister was universally hailed, is not elected as a mere MP in a Lok Sabha constituency. And the decent men and women who do get elected are helpless in getting things done. We have created a system of alibis in which authority is delinked from accountability, and stake-holding is divorced from power-wielding. In such a situation, honest legislators have very little capacity to influence events for public good. But a mafia don enforces iron discipline, and makes the bureaucracy comply. The very criminal reviled by the media and middle classes is perceived as a saviour by the common man! And once a gangster makes money, he spends lavishly for 'good causes', styles himself as the leader of his caste or religious group, and can muster the muscle power required to navigate through the political and bureaucratic minefield. Witness the rise of Arun Gawli!

Once a legislator gets elected by deploying illegitimate and unaccounted money power, he converts politics as business. While constituents are kept relatively happy by 'good' deeds and selective intervention, the legislator's influence is largely deployed for postings of pliable bureaucrats and transfers of inconvenient officials; distorting market forces and undermining fair competition in contracts, tenders and public procurements; and endless interference in crime investigation. This is the 'dangerously stable equilibrium' Robert Wade described in his authoritative studies 25 years ago.

The situation is even more complex in some ways now, but is by no means intractable. We need to unravel these strands and recognize the links between politics, economics, crime and rule of law. Then we can begin to set each sub-system of the governance machine right - justice system, electoral process, centralization, unchecked corruption, and lack of accountability. Isolated, well-meaning action is necessary, but not sufficient.

Prime Minister Manmohan Singh rightly emphasizes delivery of public services. But behind poor delivery and delegitimization of political and governance process, there are several vicious cycles at work. Some months ago, the PM wrote to chief ministers asking them to ensure that civil servants are not posted arbitrarily, the right persons are chosen for the right job, and once posted, they have a secure tenure of 4 to 5 years. These are fine sentiments; but in the absence of enabling institutional mechanisms and political processes, they will remain on paper. Many prime ministers wrote such letters, and many more will write in future. But real change cannot happen unless the roots of the problem are addressed. If a candidate spends several crores of rupees to become a legislator, and if his muscle men and caste supporters have to be satisfied in return for their support, he cannot afford to allow honest and competent officials to be selected for key posts. Nor can rule of law be enforced in such circumstances. Only favouritism, arbitrariness and corruption can sustain such a dysfunctional system.

Delivery must, and can, be improved. But it requires deeper understanding of the underlying cause of our malaise, and systemic solutions which will disrupt the vicious cycles operating in our political economy. This is the challenge before our parties, politicians and governments. Until that challenge is faced squarely by the political establishment, electoral outcomes have no real consequences in terms of fair competition, rule of law and better governance.

• July 2004
• August 2004
• September 2004
• October 2004