 Recently, some political leaders who caused enormous damage to India's reputation because of their involvement in scam-tainted projects were asked to step down by their party's high command. A probe panel, led by a distinguished former Comptroller and Auditor General, has been set up by the prime minister to investigate charges of widespread corruption and inordinate delays in organising the Commonwealth Games. This is in addition to several other agencies, including CAG, Central Vigilance Commission, Central Bureau of Investigation, Enforcement Directorate and Central Board of Direct Taxes, which are also looking into charges of corruption in the 2G spectrum allocation, the Adarsh Housing Society and CWG. These moves are certainly welcome. However, it is reasonable to ask ourselves: what will happen after the findings of investigative agencies have been submitted, and accepted by the government? If the past is any guide, the answer is likely to be that nothing much will happen. Yes, cases will be filed in different courts, some high-level organisers will be compelled to resign and move elsewhere with their illicitly acquired wealth, and some bureaucrats will be transferred. Similar examples of abuse of power are, however, an everyday occurrence. Investigations are carried out, guilt is established, appeals are filed -- but nothing much happens after that. Years pass; courts, people and the media soon move on to other cases. In view of prosecution delays and lack of deterrent punishment, demand and supply of corruption in India, in government as well as private sector, is pervasive. Last month, while hearing a case of corruption, the Supreme Court was reported to have expressed its outrage over growing corruption in government machinery and observed that "nothing moves without money anymore". Although the Hon'ble Court was quick to express its disgust, it has not been able to do much to settle a large number of long-pending cases of political and bureaucratic corruption. In respect of the rising supply and demand of corruption in politics, perhaps nothing more needs to be said after the recent Karnataka episode that saw extensive horse-trading and open bidding in the Legislative Assembly "of MLAs, by MLAs, for MLAs". No wonder politics has now emerged as a career of choice by persons with a criminal past. Political power also provides substantial opportunities for wealth accumulation. It is estimated that as many as 304 members of Lok Sabha, who contested the 2009 elections, had recorded an increase of assets by nearly 300 per cent during their previous term. It is not generally appreciated that the cost of corruption to the exchequer is substantially larger than gains to corrupt people. An important finding of empirical research is that high corruption is often associated with the wrong choice of public projects. Cost over-runs due to delays and a wrong choice of design or location, as in the case of CWG, are likely to have been several times higher than money diverted by those involved in organising it. In view of 2G spectrum, CWG, the political horse-trading in Karnataka and the Adarsh Housing scam happening in such quick succession, there is a public outcry that something decisive must be done to reduce corruption in India. Something can indeed be done, provided we are willing to tackle the problem at its source rather than deal only with outrageous cases of corruption that are brought to the surface by a vigilant media. First and foremost, it is necessary to reduce the immense powers available to ministers to allocate public resources (such as mines, spectrum, oil and land), control public enterprises, and grant case-by-case permissions and approvals to commercial enterprises. If an autonomous Election Commission, appointed by the government, can organise fair elections in the world's largest democracy, similar autonomous agencies can be established to allocate public resources under policy approved by the Cabinet. There is no good reason why ministers should have powers to decide which private entities or corporations should get allocations of spectrum or public land. Policy priorities may be decided by the Cabinet, but the execution must be left to statutorily empowered agencies. Second, there must be greater accountability of public servants for efficient discharge of their duties. Penalties for corruption, including dismissal from service, have to be swift so that they have a deterrent effect. The higher the level of a corrupt civil servant, the greater should be the penalty. Third, there is an urgent need to simplify 'rules' that government announces from time to time for granting permissions or licences to general public and corporations. The existing rules, many of which have been in force for several decades, are generally complex, involving multiple agencies. Nobody can be sure about what is permissible and what is not. A fully empowered Federal Commission should be set up to undertake a comprehensive review of all 'rules' in force at the Centre and in states, and suggest measures to simplify them. The recommendations of this Commission should be binding on the government, subject to legislative approvals only when required. Finally, there is a strong case for state funding of parliamentary elections through transparent and verifiable rules. A formula for state funding of permissible expenses of candidates and political parties, which ensures 'equity' in allocations among large and small parties, can easily be worked out. As I have elaborated elsewhere, the fiscal burden of state funding over a five-year period is likely to be a fraction of allocations to MPs for Local Area Development (MPLAD). These steps will reduce the effective demand for corruption, which, in turn, should help reduce its potential supply. The writer is former RBI governor and author of The Future of India: Politics, Economics and Governan
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