Thursday, September 8, 2011

Why Jan Lokpal law can slow India down..

We might all be cheering hard for Jan Lokpal which the Anna team has presented but are we aware that it can adversely affect the growth of the country. Following are the prominent reasons which might derail the good growth in India if very strong anti-corruption bills are passed.

1. Dis-incentive for Government machinery: The government machinery, banks, public institutions are so used to bribes that it has become a part of their compensation. Infact the salaries offered by government is so less that it barely makes up for their needs and reflect their experience and qualifications. These people are there on those roles just because  they are getting incentives from extra money they make. This also improves the speed in the system as they try to push the proposals. 99% of times wrong proposals are not passed by bribing, its just that the deserving proposal gets those extra legs and gets passed on priority. Time is money and the whole business suffers if the speed of transactions reduces.

2.  Fear of doing Wrong: Anyone and every one can do things wrong at times. Consider a bank manager working in a PSU, who passed 100 loans every day, he can get a few loans passed wrongly as people submit fake documents difficult to differentiate. Now if you will hang that person for doing wrong in 1% of those cases, he will never work efficiently. The fear of complaint, disrespect will make people take a lot of time in doing routine things and the speed of the whole value chain will be greatly reduced. For example, if I give a slap to Sehwag for getting out below 10 and no incentive for hitting a century, will he still like to play cricket. And everyone seems to know Cricket well and criticize Sehwag in this country

3. Change the draconian Laws first: The laws are required to be reformed before a strict anti-corruption law is in-acted. If you check out the rules of financing, rules of land acquisition etc. If the entrepreneur start following them as per the books, the business in India will come to a stand still. Rules might favor the established players as they have powerful lobbies and they also fund the political parties. The young entrepreneur will find it impossible to do business in India if he follows the draconian rules and not bribe his way through.

4. Crores of cases in Jan-Lokpal: If every person in India can simply write an application and get his complaint registered in Jan-lokpal how will you solve such crores of cases wnd who will monitor it ? How will you prevent people from filing wrong cases just to ridicule or blackmail the honest public servants ? The whole country is already struggling with so many pending cases in our courts. If things are pending in arbitration, it will adversely affect the growth of the country and velocity of money.

5. FDI in India: Most of the foreign direct Investment in India is nothing but the black money of Indians itself which is routed through tax heavens and is invested in fresh projects which create economic activity and employment opportunities.The tax laws in India are deterrent to a lot of growth. If people pay less tax and invest more in growth it provides compounded returns.

6. Law can not change people: Law can only create deterrent for people, it can not change people in a day.

7. Don't confuse corruption with Cop asking for money:The masses are mostly behind Jan Lokpal,specially the middle class as they feel that it will stop people in influential position abusing their power. How will you stop a cop asking for Rs 100 when actual fine is 500 and one has to wait for it in court for 5 days. You want to happily want to pay-off Rs 100 and get rid of it. If the cop is smart, you will be actually ready to pay even 500 to cop and still avoid the procedures. No law can change the way things are done in a civilized society. It takes generations to bring the change. If you change the system to no court hearing , pay 200 fine and leave. Will I have any problem in doing so ?

Everyone wants corruption free country but the question is you want anti-corruption over growth. Most honest countries might not be the most progressive or having the highest growth in the country. When India has almost half the population below poverty line, we need to ask our self, " do we need most honest country or do we need more people who are prosperous". Growth slowly tickles down and create opportunities for all. One white collar jobs lead to creation for 3 blue collar jobs. The thought is good but the timing is still a concern to me.


Hariharan Valady said...

Valid points; but we can not have weak laws. We need honest execution. Further we need suitable safeguards against fear of prosecution, etc.

Ankit said...

Yes, we should have stronger laws but Jan Lokpal is not that. Jan Lokpal is like creating a parallel structure for Judiciary. Whats makes us think that it will work ?

the mind behind the mindless lampoons said...

It is great reading a contra view point.The view point not withstanding, it would be worth remembering that convention has never created mass movements.While in theory you bring out why the jan lok pal will not hold water, how many of those points you have illustrated are pragmatic in the present day functioning of the government ? Draconian laws ,shadowing the government machinery,fear,larger perspective of the word corruption etc is precisely what the jan lok pal seeks to morph into a tangible reduction in corruption the words of Herodotus....change is permanent and hopefully the JLP will usher this change into our social fabric.

Ankit said...

The entire write up was about JanLokpal being not pragmatic, It takes generation to bring such changes and hence it should be seen carefully by general population and just raising the flag of Anti-corruption might not actually create any equitable and corruption free society.

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