Corrupt anti-corruption campaigns - Kaushik Basu

The Amazon rainforest has been burning for weeks. Yet Brazil’s president, Jair Bolsonaro, mobilized the armed forces to help contain the fires only in the last few days – in the face of European leaders’ threat to suspend a major trade deal and the possibility of a far-reaching boycott of Brazilian products. 

• Bolsonaro government’s weak enforcement of laws protecting the Amazon are root causes of the crisis, encouraging ranchers to set fires to clear land for agriculture.
• The crisis in the Amazon is a stark example of the damage that can be done when governments bow unequivocally to business interests. It also highlights the cynical manipulation of anti-corruption efforts to undermine democracy and advance an authoritarian political agenda.
• Some conservative economists argue that corruption can be beneficial, as it enables economic actors to bypass regulations, thereby enabling markets to function more effectively. The truth is that corruption corrodes markets, protects incumbents from competitive challenges by impeding the entry of new actors, destroys the moral fabric of society, and stunts economic development. There is a strong inverse correlation between development and corruption.
• The world’s least corrupt countries are Denmark and New Zealand. Both have achieved high standards of living. The world’s most corrupt countries are Somalia, South Sudan, and Syria – all poor and mired in conflict. Ranked from least to most corrupt, the United States is 22 of 180 and, India is 78th, China is 87th and Brazil is 105th.
• The connection between corruption management and democratic compromise is complex. This is the reason why many leaders who have come to power with a genuine interest in controlling corruption have ended up nurturing cronyism and damaging democracy instead.
• Some political leaders launch a corruption “purge” that targets rivals or critics for prosecution. In countries that are rife with high-level corruption, leaders can simply begin by taking aim at those who challenge their authority. What starts as an anti-corruption drive ends up as an instrument of cronyism and media control. And by creating a safe zone for loyalists, it often ends up exacerbating corruption.
• Corruption can implicate even those who would prefer to operate according to the law.

Kaushik Basu, former Chief Economist of the World Bank and former Chief Economic Adviser to the Government of India, is Professor of Economics at Cornell University and Nonresident Senior Fellow at the Brookings Institution.

Read the source article

AP Elections 2019 - Jagan trounces Naidu

In AP, Assembly seats won: YSRCP 151, TDP 23, Janasena 1
In AP, Lok Sabha seats won: YSRCP 22, TDP 3, Janasena 0.
In AP, Popular Assembly vote share: YSRCP 49.9%, TDP 39.2% and Janasena 6.8%.

Why Chandrababu Naidu (TDP) lost and how Jagan Mohan Reddy (YSRCP) won?

• Chandrababu Naidu had promised virtually the moon but delivered little, during 2014-19. 
• Massive anti-incumbency vote caused by Chandrababu Naidu’s falling credibility and his several political missteps.
• Chandrababu Naidu’s running battle with the BJP-Modi government for the past two years and his U-turns on the critical question of getting special category status had badly dented his credibility.
• Government employees turned hostile because of the use of modern tools such as biometric attendance etc.
• Chandrababu Naidu chose to ignore the corruption and misdeeds of his party legislators who had become unpopular. They had turned into mini-Chief Ministers in their constituencies, bullying officials and extending patronage to land mafias, sand mafias and illegal liquor networks. Chandrababu Naidu refused to drop the majority of siting MLAs.
• The incomplete flyover near the Kanaka Durga temple, Vijayawada, stuck out like a sore thumb. 
• Jagan's 3648 km padayatra. “Why not give him one chance” was the common refrain. Jagan’s direct contact with the people helped him to counter Chandrababu Naidu’s powerful outreach to the media or his media management.
• Jagan outsmarted Chandrababu Naidu by keeping up sustained pressure on the government for failing to get special category status and accusing Chandrababu Naidu that he had murdered democracy by luring 24 YSRCP MLAs into the TDP’s fold.
• Jagan's campaign and his slogans such as “nenu vinna” (I heard your woes) and “nenu vunna” (I am there) resonated with the people.
• Jagan's distasteful personal remarks about Pawan Kalyan, and accusing him of becoming a puppet in Chandrababu Naidu’s hands was unwise & untimely but was lucky at Pawan Kalyan's failure to garner Kapu’s (15.2% of AP population) support with his blurred agenda and the absence of a cohesive election strategy.
• Condescending attitude. Ridiculing Jagan at every  any opportunity on “having so many criminal cases”.
• Over projecting capital Amaravati's land pooling and construction with graphics.
• Chandrababu Naidu’s claims of having pushed the state to the top in the number one position in ease of doing business etc cut no ice with voters. Their anger went much deeper as the party drew a blank in Vizianagaram or the defeat of Nara Lokesh in Mangalagiri, the core capital area?
• Jagan managed to buck the negative image created by the CBI cases against him, often cited by Naidu. Naidu conveniently forgot that Jagan came very close to capturing power in 2014 Assembly elections losing by just 1.6% vote margin. 
• Failure to forge alliance with Pawan Kalyan's Jana Sena Party and Left parties. Naidu's last minute welfare schemes failed translate into vote bank.
• People’s expectations have gone up phenomenally. Prashant Kishore sharpened Jagan's style of campaigning and strategy. 

Jagan owes credit for his victory to Prashant Kishor, who have stayed with the YSRCP for nearly two years, guiding its strategy, conducting campaigns, training the cadres, handling social media and press releases etc. YSRCP's Ummareddy Venkateswarlu candidly said: “Naidu’s downfall began the day he brought his son into politics.”

The present model of politics and elections is very expensive and is heavily dependent on unlawful methods, mafia, liquor and yet attracts many people because of power and corruption money with return to investment exceeding 1,000% p.a. for next 5 years in return for compromising ethics and morals. The campaigning is so vulgar the people of character mutes their TV sets. Naidu's failure is due to over confidence, extravaganza in spending state money, over projecting small achievements, inability to avoid fight with Modi-BJP, failure to forge alliance with JSP, Left parties, impress upon other castes to stay put with TDP, failure to garner woman votes and above all state government employees feeling uneasy in his administration and so on. He virtually committed the identical mistakes as in 2004. If at least Naidu had roped in Pawan Kalyan in alliance with TDP, TDP+ would have got about respectable 70-80 seats or even a surprise victory with 90+ seats. Fighting with all in all fronts (Jagan, Pawan, KCR, Modi etc), there is hardly any way for Chandrababu Naidu led TDP to win these  elections. Hence the TDP's defeat is not a surprise at all but crushing defeat of 23 of 175 is totally unexpected and was easily avoidable.

Elite capture

Elite capture is a form of corruption whereby public resources are biased for the benefit of a few individuals of superior social status in detriment to the welfare of the larger population. 

• Elites are those who enjoy privileged status and exercise decisive control over society. Three-fold classification of elites are (a) knowledge elites, (b) entrepreneurial elites and (c) political elites. 
• Elites are groups of individuals with self-ratifying factors such as social class, asset ownership, religious affiliations, political power, etc have decision-making power in processes of public concern and uses public funds intended to be invested in services that benefit the larger population, to fund projects that would only benefit them. 
• Elite capture is related to information asymmetry, inefficient regulation or inefficient allocation of resources causing biased distribution of a public goods or a services, wherein certain segments of the population experience reduced access to these public goods. As long as there is elite capture, the welfare impact will not be Pareto Optimal* or equitable.*Pareto optimality is simply a statement of impossibility of improving one variable without harming other variables.
• When people have preferences about what other people do, the goal of Pareto efficiency can come into conflict with the goal of individual liberty.
• By yielding power to smaller units, money should be more efficiently distributed, but local governments are more vulnerable to pressure groups. Local governments are even more vulnerable to capture by local elites than national governments.
• Community-based development has inadequate understanding of power relationships at the local level, which leaves room for elite capture.
• An elite derives its status from its relationship to property, whether physical or human capital. While stable property rights are necessary for everyday business, unstable property rights may have a positive impact on economic development. Institutional changes have a positive impact on economic development when a country’s elite can manage them. 
• Counter-elite approach need not necessarily be effective in challenging elite domination, but the co-opt-elite approach risks legitimizing the authority of the elites and worsening poverty by implementing anti-poor policies. The success of dealing with elite capture lies in the flexible use of the counter-elite and co-opt-elite approaches together with the need to secure alternative livelihoods and to achieve empowerment with the poor.
• The role of elites in economic development have a disproportionate impact on development outcomes. While a country's endowments constitute the deep determinates of growth, the trajectory they follow is shaped by the actions of elites.
• Poverty is a problem for the rich in the sense that it generates negative externalities that they would like to reduce, and that the elite believe that there are effective remedies. While reducing poverty is a national priority, elites do not see it as their responsibility to do something about it. Elites feel that through education, poor will be able to take advantage of opportunities and resources and is a solution because everyone can supposedly get richer without the need for redistribution. Elites are failing to create a consciousness that makes them react more responsibly in supporting pro-poor policies.
• Evolution of welfare states inform us that elites’ prioritization of poverty reduction is driven by the extent to which elites and the poor are interdependent, such that the presence of the poor has a positive or negative impact on elite welfare. 

Believers in liberal freedom should worry whether they can prevail
against their own forms of institutional entropy:
elite capture, corruption, and inequality - Michael Ignatieff

Inequality

What political parties are fighting about, is how to achieve a more egalitarian society, where everyone has an equal opportunity of reaching the top. There are too many children without equal opportunities for success. World inequality continues to grow. In  the past three decades, 28% of the increase in real incomes in North America and Western Europe was captured by the top 1% of earners. The top 1% of India's population holds nearly three quarters of the nation's wealth.

• The majority view seems broadly to want to tax earners and owners more heavily; to take away from some so others can have more. It’s easy to convince people that this is the quickest, actually the only way.
• Inequality is not in itself unfair. We all know that rare skills possessed should be rewarded better. Building assets for poor people is extremely important. 
• The surest and quickest way to ameliorate inequality and diminish poverty is radical economic transformation at all levels of government, the entire bureaucracy and the state-owned companies, so that it would spend every single available rupee of taxpayer money on development and upliftment; that state organs’ efficiency and productivity are increased radically; and that corruption is eradicated.
• The middle class wealth reached its peak in the mid-1980s. But it’s been ravaged by stagnant incomes, unstable property & investment markets and growing consumer debt. 
• Many developing nations have targeted poverty alleviation. While China has achieved poverty alleviation on an historic scale, the obstacles - bureaucratic inefficiency and failed policy implementation remain. India has made progress in alleviating poverty, although it lags significantly behind China. 
• Inequality hampers growth by leaving human potential unrealised. The middle class provides market for consumer goods and services, which in turn creates jobs. The cycle is interrupted when profits are excessively retained, rather than reinvested into further capacity – such as health and education sectors. 
• More than 20% of  Indians are poor. India saw the fastest rise in inequality between 1980 and 2016, and 55% of the country’s income share is in the hands of the wealthiest 10%. Across the developing world, blunt policies are not only proving ineffective at reducing poverty, but also widening the wealth gap. 
• Most national level policies are either ham-fisted or intentionally ineffective. They tinker at the margins with transfer payments and social programmes, while failing to address structural causes such as gaps in educational achievement and public health. 
• Failure to improve basic services is one of the most glaring gaps in inequality policy. Private sector and philanthropic intervention, while helpful, is no substitute for equal access. India spends only 1% of GDP on health services, compared with the world average of 6%. 
• The policy ineptitude by the governments in the US and India are in thrall to discredited claims about “trickle-down economics” and have passed sweeping tax reforms that substantially favour corporations. 

The twin reforms of demonetization and a goods and services tax may have also stunted job growth by crippling the construction and informal sectors, that employs most migrant workers. Political will  is inexcusably weak. Both the economics and the ethics of inequality demand transformational thinking. But the voice of the poor continues to be drowned out by a global minority enjoying elite status and by the many who aspire to such status.

Epidemic of dishonesty

Entrepreneur, philanthropist and former New York City Mayor Michael R. Bloomberg discussed the importance of honor and honesty in bringing the country together as he addressed graduates at Rice University’s 105th commencement May 12, 2018 in the Academic Quad. 

The excerpts are:

• The concept of honor has taken on different meanings through the ages: chivalry, chastity, courage, strength. And when divorced from morality, or attached to prejudice, honor has been used to justify murder, and repression, and deceit. But the essence of honor has always been found in the word itself.
• The words ‘honor’ and ‘honest’ are two sides of the same coin. In fact, the Latin word ‘honestus’ can mean both ‘honest’ and ‘honorable.’
• To be honorable, you must be honest. And that means speaking honestly, and acting honestly, even when it requires you to admit wrongdoing -- and suffer the consequences.  The commitment to honesty is a responsibility that you accepted as an Owl.  It is also a patriotic responsibility.
• One of the first things, young children learn about American history is the story of George Washington and the fallen cherry tree.  ‘I cannot tell a lie,’ young George tells his father. ‘I cut it down.’ We’ve always lionized our two greatest presidents -- Washington and Lincoln -- not only for their accomplishments, but also for their honesty. We see their integrity and morals as a reflection of our honor as a nation. However, today when we look at the city that bears Washington's name, it's hard not to wonder: What the hell happened?
• In 2016, the Oxford English Dictionary's word of the year was ‘post-truth.’ And last year brought us the phrase, ‘alternative facts.’  In essence, they both mean: Up can be down. Black can be white. True can be false. Feelings can be facts.
• Pat Moynihan, once said: ‘People are entitled to their own opinions, but not their own facts.’ 
• Today, those in politics routinely dismiss any inconvenient information, no matter how factual, as fake -- and they routinely say things that are demonstrably false.  When authoritarian regimes around the world did this, we scoffed at them.  We thought the American people would never stand for that!
• For my generation, the plain truth about America -- the freedom, opportunity, and prosperity we enjoyed. The more communists had access to real news, the more they would demand freedom. We believed that -- and we were right.
• Today many of those at the highest levels of power see the plain truth as a threat. They fear it. They deny it. And they attack it -- just as the communists once did. And so here we are, in the midst of an epidemic of dishonesty, and an endless barrage of lies.
• The trend toward elected officials propagating alternate realities is one of the most serious dangers facing democracies. Free societies depend on citizens who recognize that deceit in government isn’t something to shrug your shoulders at. When elected officials speak as though they are above the truth, they will act as though they are above the law. And when we tolerate dishonesty, we get criminality. Sometimes, it's in the form of corruption. Sometimes, it's abuse of power. And sometimes, it's both. If left unchecked, these abuses can erode the institutions that preserve and protect our rights and freedoms -- and open the door to tyranny and fascism.
• There is now more tolerance for dishonesty in politics than I have seen in my lifetime, one-third of the time the United States has existed!  
• My generation can tell you: The only thing more dangerous than dishonest politicians who have no respect for the law, is a chorus of enablers who defend their every lie.
• Remember: The Honor Code here at Rice University just doesn’t require you to be honest. It requires you to say something if you saw others acting dishonestly. Now that might be the most difficult part of an honor code, but it may also be the most important, because violations affect the whole community. And the same is true in our country. If we want elected officials to be honest, we have to hold them accountable when they are not -- or else suffer the consequences. Honest people can disagree. That's what democracy is all about! But productive debate requires an acceptance of basic reality. 
• It's always good to be skeptical and ask questions.
• Scientific discovery permeates practically every aspect of our lives.
• Political leaders are being dishonest about facts and data, and too many people are letting them get away with it.
• So how did we get here?  How did we go from a president who could not tell a lie to politicians who can not tell the truth?  From a George Washington who embodied honesty, to a Washington, D.C. defined by deceit?
• It’s popular to blame social media for spreading false information. 
• It's the public's willingness -- even eagerness -- to believe anything that paints the other side in a bad light. That's extreme partisanship -- and that is what's fueling and excusing all this dishonesty. Extreme partisanship is like an infectious disease. But instead of crippling the body, it cripples the mind. It blocks us from understanding the other side. It blinds us from seeing the strengths in their ideas -- and the weaknesses of our own. And it leads us to defend or excuse lies and unethical actions when our own side commits them.
• For example: In the 1990s, leading Democrats spent the decade defending the occupant of the Oval Office against charges of lying and personal immorality, and attempting to silence and discredit the women who spoke out. At the same time, leading Republicans spent that decade attacking the lack of ethics and honesty in the White House. Today, the roles are exactly reversed -- not because the parties have changed their beliefs -- but because the party occupying the Oval Office has changed.
• When someone's judgment about an action depends on the party affiliation of the person who committed it, they're being dishonest with themselves and with the public. And yet many people -- in both parties -- don't even realize that they are making them.
• When people see the world as a battle between left and right, they become more loyal to their tribe than to our country. When power -- not progress -- becomes the object of the battle, truth and honesty become the first casualties.
• Honesty leads to trust and trust leads to freedom. In democracy, it's no different. If we aren't honest with one another, we don't trust one another, then we place limits on what we ourselves can do, and what we can do together as a country. It's a formula for gridlock and national decline.  It doesn't have to be that way.
• Arguments were won and lost on facts and data -- not parties and polls. 
• At the national level, in Washington today, partisanship is everything.  And I think the dishonesty that it produces is one of the greatest challenges that your generation will have to confront.
• Partisanship is not a new problem. George Washington warned against it in his Farewell Address. He referred to the ‘dangers of parties,’ and called the passion that people have for our parties, ‘worst enemy’ of democracy -- a precursor to tyranny.  Washington urged Americans to, ‘discourage and restrain’ partisanship.  In recent years, the opposite has happened.
• There is now unrestrained, rabid partisanship everywhere we look. It's in the communities where we live, which are becoming more deeply red or more deeply blue. It’s in the groups and associations and churches we join, which increasingly attract like-minded people. It’s even in the people we marry. 
• Fifty years ago, most parents didn't care whether their children married a member of another political party, but they didn't want them marrying outside their race or religion, or inside their gender. Today, polls show a strong majority support for inter-racial, inter-religious, and same-sex marriage and that is progress. 
• But the percentage of parents who don't want their children marrying outside of their political party has doubled and the more people segregate themselves by party, the harder it becomes to understand the other side, and the more extreme each party grows. The country is more divided by party than it has ever been since the Civil War.
• In like-minded groups, fringe ideas can gather momentum with dangerous speed.
• Bringing the country back together won't be easy. But it can be done -- and if we are to continue as a true democracy, it must be done.
• Americans are facing an "epidemic of dishonesty" in Washington that's more dangerous than terrorism or communism, also warned that "an endless barrage of lies" and a trend toward "alternate realities" in national politics pose a dire threat to U.S. democracy.
• The 76-year-old billionaire, did not call out any politician by name.
• Bloomberg evoked the legend of the nation's first president, George Washington, who as a boy said he could not tell a lie when asked if he cut down a cherry tree. "How did we go from a president who could not tell a lie to politicians who cannot tell the truth?" he asked.

Demonetisation - Much about nothing - RBI report

The Hindu Businessline | August 30, 2018

The RBI, its annual report released on Wed Aug 28, 2018, has revealed that only  ₹16,050 crore out of the  ₹15,44,000 lakh crore (1.04%) of the scrapped higher denomination notes have not returned back into the banking system and therefore remain missing or unaccounted for. This data has raised questions about the overall gains and the impact on the economy, especially the informal sector, because of the disruption 'Demonetization' has caused. 

• The Modi government had framed the dramatic announcement as a move to clamp down on corruption and black money, cut off terrorist financing and tackle fake notes. But with almost all the demonetised notes coming back, everyone wonders whether the stated purpose of demonetisation has been served.
• Modi's hidden objectives of demonetisation were (i) its perceived windfall in terms of an enhanced dividend for the government from the RBI as government expected at least 30% (~₹5,00,000 crores) of cash, black money stacked will not get back into banking system and (ii) disarming opposition parties with all their stacked cash becoming worthless and thus paving his way to win UP elections effortlessly.  
• The initial narrative by the government was that a large amount of demonetised currency will not find its way back into the system. This purported benefit did not materialise in any significant way. It cannot be said that significant losses have been inflicted upon those holding black money.  
• The claim that it would lead to an increase in tax collection, nothing can be anything with confidence.
• During the reporting financial year, 522,783 pieces of counterfeit notes were detected in the banking system, which was 31.4% lower than in the previous year.
• The cash-based terror and criminal activities may have been disrupted for some time, as did cash-based legitimate activity, it is not clear that there has been any significant disruption.
• The liquidity surge in the banking system that came about in the aftermath of demonetisation complicated the RBI's conduct of monetary policy.
• RBI had to introduce many instruments to absorb demonetisation induced liquidity from banks.
• The increase in CRR dented bank's earnings.
• The mopping up of liquidity eroded the RBI’s earnings. 
• RBI's expenditure on printing of currency doubled from the previous year. 
• RBI's income for the year decreased by 23.56% and its expenditure increased by 107.8% resulting in a sharp decline in the RBI’s surplus.
• Demonetisation served as a negative shock to the economy. GDP growth in the Jan-Mar 2017 quarter slowed to 6.1%, and to 5.7% in the next quarter (April-June 2017). 
• A number of small-scale businesses were adversely affected. The unorganised sector especially bore the brunt of the sudden shock. Economic activity shrinkage is over ₹300,000 crores & loss of jobs at over 2 million, this is the worst any PM could do to any nation. 
• The value of banknotes in circulation increased by 37.7% over the year to ₹18,03,700 crore as at end-March 2018. The volume of banknotes, however, increased by 2.1%.
• While there no benefits at all (all pain & no gain), the clear lesson is that tax reforms and effective monitoring of suspicious transactions are a better alternative for addressing the stated objectives. 

What India has done to its money is sickening and immoral - Steve Forbes ... In November 2016, India's government perpetrated an unprecedented act that is not only damaging its economy and threatening destitution to countless millions of its already poor citizens but also breathtaking in its immorality. Without any warning India abruptly scrapped 85% of its currency. It claims the move will fight corruption and tax evasion by allegedly flushing out illegal cash, crippling criminal enterprises and terrorists and force-marching India into a digitized credit system. Human nature hasn't changed since we began roaming this planet. People will always find ways to engage in wrongdoing. Terrorists aren't about to quit their evil acts because of a currency change. There's no misunderstanding what this is truly about: attacking your privacy and inflicting more government control over your life. What India has done is commit a massive theft of people's property without even the pretense of due process--a shocking move for a democratically elected government. (One expects such things in places like Venezuela.) Not surprisingly, the government is downplaying the fact that this move will give India a onetime windfall of perhaps tens of billions of dollars. By stealing property, further impoverishing the least fortunate among its population and undermining social trust, thereby poisoning politics and hurting future investment, India has immorally and unnecessarily harmed its people, while setting a dreadful example for the rest of the world. 

Economic freedom, informal economy, ethics and corruption

 

Austrian-British economist Frederick Hayek foresaw more than 60 years ago, economic freedom is required in all aspects of economic life in order for countries to improve their economic efficiency and the living standards of their people. 

• Corruption is a symptom of over regulation, lack of rule of law, a large public sector and not the root of the problem. 
• Morality and ethics are hard to measure. Economic freedom removes opportunities for corruption and promotes ethics not just for its moral implications, but also because of its economic value.
• Ethics is defined as 'rules of behavior based on ideas about what is morally good and bad'. In general, we call unethical those actions for which there is a social consensus that they are a bad thing. 
• Corruption has several meanings and for most people corruption is something unethical, something considered a wrongdoing. A closer look at human behavior in economic life suggests that corruption does not reflect lack of ethics as it reflects a lack of economic freedom.
• Economic freedom is defined as “the absence of government constraint or coercion on the production, distribution, or consumption of goods and services beyond the extent necessary for citizens to protect and maintain liberty itself.”
• The Index of economic freedom provides a framework for understanding how open countries are to competition; the degree of state intervention in the economy, whether through taxation, spending or over regulation; and the strength and independence of a country’s judiciary to enforce rules and protect private property. 
• Corruption does not always reflect inherent unethical behavior especially for those who are forced out of the formal economy into the informal economy through burdensome regulations, taxation, and weak property rights.
• As economic freedom vanishes, the informal economy takes a larger share of GDP. The size of the informal economy in economically unfree and repressed economies is almost three times the size of the informal economy in free economies.
• The economic repression has its perverse effects on the ethics of ordinary people and on the perpetuation of their poverty conditions. 
• In most developed countries, people have a better standard of living due to credit access.  In USA, without credit, most people would not have a house, a car, a TV, a vacation, or many of the products that add comfort and convenience to my life. Credit makes it possible for middle-class people, to improve standard of living in many ways.
• To have access to credit, you need to have income or property. To prove that you have income, you need a formal job, and to prove that you have property, you need a property title.
• The availability of formal jobs depends on ease for people to invest and do business. The friendlier the business environment, the more formal jobs will be available. In most low to middle income countries, it is extremely difficult for small and medium investors to operate, both because of the regulatory environment and because of the lack of a strong rule of law. 
• In developing economies, the problem with the legislation is that it assumes that all employees are equally good, equally responsible, and equally productive, which is not true. The burden of regulations compels small and medium businesses to create jobs in the informal sector, where the benefits are negotiable and tied to performance, and not forced by law.
• The rules of the state creates perceived unethical behavior by private employers and employees when what is really in question is the ethics of such a regulatory burden.
• If they do not have a formal job, poor people can still get access to credit if they have a property title to use as collateral. The poor own many things that they could use as collateral, but it is bureaucratically impossible for them to validate their property rights. As a result, they are unable to raise credit and their standard of living.
• In the developing world many of the poor people have property but the bureaucracy they have to go through in order to get a property title is huge. The poor own many things that they could use as collateral, but it is bureaucratically impossible for them to validate their property rights. As a result, they are unable to convert what they own into capital and, therefore, raise their standard of living. For example, in Peru, “to obtain legal authorization to build a house on state-owned land took six years and eleven months, requiring 207 administrative steps in 52 government offices. To obtain a legal title for that piece of land took 728 steps.”
• Informality is a response to economic repression, not to something inherently unethical in those who circumvent legislation. What is most unethical about informality is the condition in which the  government forces the poor to live. Informally employed people are condemned to a standard of living that is significantly lower than that of formally employed people, who have credit access. Informality creates a culture of contempt for the law and fosters corruption and bribery in the public sector as a necessary means to navigate the bureaucracy.
• As economic freedom vanishes, corruption flourishes. The level of perceived morality in economically free countries is almost four times the level of perceived morality in the public sector in most unfree or repressed economies.
• Weak rule of law adds to the level of corruption in the public sector as well as the amount of informal activity. A weak judiciary is a 'blind eye' on anything done outside the law. With a weak judiciary, corruption goes unpunished and informality flourishes.
• In 2003, 108 of the 161 countries received bad scores in both regulation and property rights, undermining the efforts to improve the living standards of the poorest.
• The unethical behavior stems from the environment and convoluted regulations and weak rule of law foster a culture of corruption and informality both in the private and public sectors.
• In the public sector, convoluted regulations and weak rule of law provide ample opportunities for public officials to accept bribes without punishment. In the private sector, those two factors push some people to do business informally as a means to survive and others to profit far more than they would if the possibility of bribery did not exist. Both result is an increasingly unequal society, in terms of the opportunity to create wealth and improve living standards.
• To fight corruption and informality, it is essential to understand that corruption is a symptom--of over regulation, lack of rule of law. A large public sector is not the root of the problem. The real problem is the government action/regulations causing undesired behavior of the private sector. The unethical/corrupt behavior of the private sector, leads to the government to press more on private-sector activities. The solution is to eliminate burdensome regulations so that unethical behavior does not occur.

Countries must advance economic freedom in all possible areas of the economy, with particular emphasis on regulations affecting small and medium business, in order for corruption and informality to decrease. Countries must also preserve the independence and effectiveness of the judiciary to punish corrupt actions. Economic freedom with a strong rule of law will foster a culture of investment, job creation, and institutional respect in massively improving the living standards of ordinary people.

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Read the original paper

Let no young man, choosing the law for a calling, for a moment 

yield to the popular belief  that lawyers are necessarily dishonest. 

Resolve to be honest at all events; and if, in your own judgment, you 

cannot be an honest lawyer, resolve to be honest without being a lawyer. 

Choose some other occupation, rather than one of which you do, 

in advance, consent to be a knave ... Abraham Lincoln

The observations in the article are highly theoretical but the reality in India is some what different. The most unethical, corrupt and tax evading people are rich, highly educated, well placed & well connected.  The poor people are ethical and law abiding. The middle classes are torch bearers of traditions although corrupt & unethical. The small bribe paid by a poor man for obtaining birth certificate etc is understandable, the corruption by businessmen in collusion with politicians & bureaucrats, escalating project costs siphoning of funds to tax havens etc burdening the whole nation is a criminal act and deserves harshest punishment. Corruption & lack of ethics is so rampant that today it hard to find and ideal person.

Four years: Modi's missed, wasted & abused opportunities

The 2014 mandate was fueled by hapless frustration with the Congress-led UPA regime and, more pertinently, the Gujarat development model as an alternative. The campaign, the slogans, the rhetoric were populated with words and sentiments that the people of India wanted to hear. The 50-plus page BJP election manifesto was as crisp as a promissory note, listing imperatives and solutions. After four years of Modi's histrionics, with one year to go for 2019 general elections, we Indians are again at cross roads filled with dilemma and uncertainty.

1. Fighting Corruption ⬆
2. Checking Price Rise ⬆
3. Ease of doing business ⬆
4. The Insolvency and Bankruptcy Code (IBC) for resolving NPA's ⬆
5. Rural electrification ⬆
6. Pace of road building ⬆
7. Jan Dhan Yojana ⬆
8. Mudra Yojana ⬆ 
9. Fiscal reforms ⬌
10. Bullet Trains ⬌
11. Swachch Bharat ⬌
12. Railways modernization ⬌
13. FDI In Multi-brand Retail ⬌
14. Triple Talaq ⬌
15. Surgical strikes ⬌
16. AIMS, IIT and IIM in every state ⬌
17. International diplomacy & PM's frequent foreign travel ⬌
18. Medical insurance cover of Rs 5 lakh to 500 million low-income Indians ⬌
19. Recapitalizing PS Banks ⬌
20. Defense preparedness ⬇
21. One crore jobs creation ⬇
22. Dipped education & healthcare spending ⬇
23. GDP growth rate ⬇
24. Demonetisation ⬇
25. GST ⬇
26. No Lokpal yet ⬇
27. Black money from Swiss banks. ⬇
28. Cashless society ⬇
29. Make in India ⬇
30. Skill development program  ⬇
31. Doubling farmers income ⬇
32. Empowering Women ⬇
33. Kashmiri Pandits ⬇
34. Abrogating Article 370 ⬇
35. Ram mandir at Ayodhya ⬇
36. Zero Tolerance on Terrorism ⬇
37. Persecution of Dalits, Muslims & Christians all over India ⬇
38. NPA's of PS Banks ⬇
39. Privatisation of Air India and other PSUs ⬇
40. Universal medical care ⬇
41. Administrative and civil service reforms ⬇
42. Ganga clean up ⬇
43. Smart cities ⬇
44. Aadhaar Card ⬇
45. Implementing uniform civil code ⬇
46. Corruption in deals like Rafale, Vedanta, Adani etc ⬇
47. Tax terrorism ⬇
48. Implementation of AP Reorganization Act 2014 ⬇
49. Development Packages announced for J&K, Bihar etc ⬇
50. Desertion of NDA by allies  ⬇
51. Federal Polity ⬇
52. Institutional autonomy ⬇

Overall, the Modi government has done seemingly well in patches, due to low oil prices between 2014-2017, but failed in significant areas. Its electoral machinery is formidable. The irony is that Modi instead of imposing himself on the bureaucracy, the bureaucracy has imposed itself on Modi, imprinting its views, values, and methods. It is the taming of Modi by the babus. But after four years, BJP faces anti-incumbency in Hindi heartland states. If opposition parties puts up united face, the Modi government would be voted out in 2019. Combined efforts of Rahul Gandhi, Mamata Banerjee and Sitaram Yechuri only can help the Modi - BJP escape defeat in 2019 General Elections.

By any reckoning, India is worse than it was in 2014 when Modi ascended to power. Modi squandered away the benefit of low oil price regime for 3 years, which was  God's gift to Modi & India to the tune Rs.10,00,000 crores, with his senseless adventures, shortsighted reforms with immature design & implementation. None of the constitutional office bearers today are worthy fellows including Modi himself. Modi doesn't deserve any more chances. Who ever succeeds him will be successful simply because of inheriting worst performance India ever had. Modi will be remembered as one of the worst prime ministers, even below the infamous VP Singh.

Justice and its delivery

Corruption is hampering the delivery of justice globally. People perceive the judiciary as the second most corrupt public service, after the police. We in India, have been living with less than efficient judicial remedy system. Some reasons are restraint of contempt notice threat, corruption prevailing in courts, incompetent level of delivery pattern of our judiciary and lack of awareness even after 70 years of self rule. 

• A transparent and accountable judiciary to deliver justice for all. The integrity, independence, and impartiality of the judiciary are preconditions for fair and effective access to justice and for the protection of human rights. Discrimination and corrupt practices often prevent citizens, especially the poor and marginalized, from equitable opportunities and protection of their rights.
• More than 75% of the Indians have never visited courts while near 100% have visited doctors  and huge majority have visited schools or temples / churches / mosques and little lesser to colleges and employment offices.
• Vast majority have never tested the efficacy of the judicial system. Our judges and judicial officers are crying for help as the work seems piling and becoming unmanageable, what will then be the case if litigation intensity rises?
• The bitter truth is that our courts are court of law and not a court of justice. Some may disagree because it is the law and order that justice is incidental to. If you get proof beyond reasonable doubt, about your innocence, the court shall provide you with justice.
• To achieve justice, to prove the truth, it takes time. The judge doesn’t know what has happened. He or she has to learn, listen to both sides, and with the corroboration of evidence beyond reasonable doubt, make a decision. Extreme justice is often injustice.
• Even though the power is in the hands of the bench, its members cannot unplug the Constitution.
• The truism, justice delayed is justice denied, is easy to cite. But to be in that chair surrounded by thousands of provisions and arguments, and eyes looking for justice, it is not easy to make decisions that are not just in favour of what is right, but also in the interest of the public at large.
• What if, in haste, an innocent person is punished — it would be the most horrendous crime. Instead, let the crime of the guilty go unpunished, than an innocent person being condemned.
• Our judicial system is so opaque and money centered. Even a simple bail and case settlement is often decided and determined based on the person's capacity in financial terms and political poweress.
• It is not a coincidence that all criminal and politically sensitive cases of those in power are always in the back burner and this happen without fail.

Corruption undermines justice in many parts of the world with the poor and vulnerable suffering most. We need justice delivery system that works round-the-year, speedy and free - like public hospitals. To achieve this the judiciary infrastructure must be modernized and upgraded. Judge-to-people ratio should be increased from the present 18 to at least 50 per million people. With the states failing to spend adequately on providing the required infrastructure and adequate number of trained personnel by way of judges and staff, the judiciary can hardly be blamed from the enormous backlog of cases that has been built up to whopping 28 million pending cases. The justice delivery system failure has led to mafia, musclemen, politicians and policemen settling the disputes and collecting hefty amounts from all the aggrieved parties.

How cronyism dictates Modi’s India

Gautam Adani & Narendra Modi

• Strategic litigations are being used by big corporates to curb free speech and discourage high-quality investigative journalism.
• While Prime Minister Narendra Modi claims that there’s not a single stain of corruption on his three-year tenure in the Centre, a barrage of attacks on media, creeping self-censorship and a belligerent government clamping down on those trying to do their job well and ask critical, uncomfortable questions about the state of the political economy.
• With 58% of India’s wealth owned by the top 1% of population, crony capitalism is thriving and under this government's regime. Despite PM Modi’s hard talk against corruption and claims of ending it altogether, there exists a concerted attempt to delete every mention of such collusions.
• The "collusions" of the alleged Modi-Adani nexus, whether in terms of bending of rules pertaining to special economic zones as to benefit the Adani Group per se, or helping the businessman deal with black money, give him undue loans from public sector banks on overseas projects that had run into troubles with local authorities there.
• It was SBI trying to extend a line of credit worth $ one billion to Adani Group for the Carmichael coal mining project in Australia, or helping the billionaire from Gujarat engage in "riskless capitalism" by tweaking SEZ rules, laying waste to India's environment, or saving Adani from green penalties, the collusion has been happening right before our eyes. 
• Of course, Gautam Adani* had reportedly poured money into Narendra Modi's Lok Sabha election campaign in 2013-14, making it the costliest ever in the history of India. The Gujarat-based businessman's proximity to the prime minister was flaunted in the politician flying all over India in Adani's private planes and choppers.
  *Adani is a college dropout, who spurned his father's textile shop to set up a commodities export firm in 1988. He survived the terrorist attack in Mumbai's Taj Mahal Palace Hotel in 2008.
• Adani Group allegedly took out over Rs 5,000 crore to tax havens abroad, using inflated bills for the import of power equipment from South Korea and China, and the SIT on black money was told by the Directorate of Revenue Intelligence (DRI) and the Enforcement Directorate (ED).
• Despite his anti-black money bluster, one of the biggest black money cases before the retired Supreme Court judge-led Special Investigation Team - a decision taken by PM Modi himself in the initial days of his taking office - has been that of the Adani Group of Industries. 
• What has happened to that investigation? No clue. Brutal clampdown on any mention of the alleged Modi-Adani nexus, strangling free press by using what in legal jargon has come to be known as a "SLAPP", or strategic litigation to avoid public participation.  
• Press freedom in India ranks at a dismal number 138.

Read the source article

Rule of the law essential for corruption elimination

• American civil society is 90% law and 10% politics. Indian civil society is 90% politics and 10% law. 
• India has chosen this political model that makes politics profitable to politicians. Indian politicians in power are among the richest in the category anywhere in the world. 
• In a dynamic society everything should be provided for by law and only a few things are left to politicians. The law should govern a nation where the judge, the police and the civil servant dispense justice to the citizen.
• Indian politics took enormous power in its hands in order to promote economic growth. But prosperity evolves by the laws of nature. 
• India has no legal vision that is why a million cases are pending in courts. Law and franchise are two sides of the same coin called democracy, one representing truth and the other popular will.  
• A government must be small. Then only rule of law can be implemented by the judiciary, the police and civil service.
• India is yet to write any document to keep the greedy politicians in check.
• Mass literacy will make the voter cast his vote to the right candidate. 
• Progress is indigenous; it cannot be imported from abroad.
• The main reason for India’s pervasive corruption is material greed. Some 15 million Indians have left India to seek monetary gains abroad. This basic moral defect can be kept under leash only by law. 
• Indian politics, instead of standing on the legal high ground, opted for huge state power. All-powerful ministers, MPs, MLAs and IAS officers amass wealth without any let or hindrance. Can India take a U-turn from politics to law, from money to moral rectitude? 
• Political change has always been difficult to effect. The true dimensions of the task of creating an ethical society must be borne in mind.
• Economic progress must have a firm legal and democratic foundation. The West too is suffering because of the excessive pursuit of wealth. The West ignored its policies and many are predicting even the demise of liberalism. If the West cannot afford immoral affluence, how can India afford it? 
• To seek to pursue growth on a shaky legal foundation is dangerous. The Indian polity is morally weak without any legal restraint. Economic growth in the absence of law has created the present corruption levels. 
• India must strengthen its judiciary. Then, without any fuss and public outcry corruption can be eliminated. The same judiciary and police will put an end to black money.
• The job of a minister is glamorous with power and pomp, whereas a judge and a police officer have to do their jobs in relative obscurity. A minister's job is largely decorative and that the job of the judge is constructive. Realising his true contribution, the politician must be humble. By a political awakening and a legal illumination corruption can be put to an end. 
• Citizens must become alert and create the right atmosphere for a lofty political leadership to emerge. A highly politicised society has to become a highly legalised society. Politics is partisan, law is unitary. Moving from politics to law is evolutionary progress.
• Politics is deep-rooted in the moral character of a society. Any politician who is willing to live on bread and water will not need any bribe. Economics is a zero-sum came. When the rich live in palaces the poor have to live on the streets. A voluntary tendency to lead a simple life by all will create the right atmosphere for economic probity.
• We cannot create a draconian state and end corruption. The moral transformation of civil society must be natural and based on persuasive leadership. A clear definition of a sustainable lifestyle must be voluntarily accepted. Only then the competitive urge to make more and more money will end. Money should become meaningful, moral and deeply satisfying. If true wealth is found in a rich heart, no one will want to touch money even with a barge pole.
• Law is the fulcrum of democracy and democracy is what holds the people together without force. Law and democracy can combine to form the life of politics to cleanse the country of corruption. Cheap politics has done enough damage to India. India needs Newtons and Einsteins in its politics to make it clean, pure and inspiring. Then the best and the brightest will come to politics to make it a haven of virtue and science.

Read the source article

Two things form the bedrock of any open society.

Freedom of expression and rule of law ...  Salman Rushdie

If citizens cannot trust that laws will be enforced in an evenhanded and honest fashion, 

they can be said to live under the rule of men corrupted by the law ... Dale Carpenter

Corruption arises out of discretionary powers vested upon politicians, civil servants and judiciary, without any accountability, which are being misused for amassing ill-gotten wealth. These must be replaced with robust merit based algorithms. Transparency & accountability must be established at all levels. All government expenditure must have prior legislative sanction. Executive sanctioning of schemes, expenditure or anything must be prohibited. Every process of law administration must have legislative approval prior to implementation. Citizen rights must be respected under all circumstances by every one. Courts must deliver judgments within six months. VIP culture must be abandoned. These are few things which must be adopted immediately and refined continuously for establishing a happy society.

Failed state

• Failed state is unable to project authority over its territory and peoples, and it cannot protect its national boundaries. 
• The governing capacity of a failed state is unable to fulfill the administrative and organizational tasks required to control people and resources and can provide only minimal public services. Its citizens no longer believe that their government is legitimate, and the state becomes illegitimate in the eyes of the international community.
• A failed state is composed of feeble and flawed institutions. Often, the executive barely functions, while the legislature, judiciary, bureaucracy, and armed forces have lost their capacity and professional independence. 
• A failed state suffers from crumbling infrastructures, faltering utility supplies and educational and health facilities, and deteriorating basic human-development indicators, such as infant mortality and literacy rates. 
• Failed states create an environment of flourishing corruption and negative growth rates, where honest economic activity cannot flourish.
• A strong state provides core guarantees to its citizens and others under its jurisdiction in the three interrelated realms of security, economics, and politics. State failure comes in degrees and is often a function of both the collapse of state institutions and societal collapse.
• A failed state cannot maintain a monopoly on the legitimate use of violence and minimize internal conflict. It cannot formulate or implement public policies to effectively build infrastructure and deliver services or effective and equitable economic policies. 
• It cannot provide for the representation and political empowerment of its citizens or protect civil liberties and fundamental human rights. State failure manifests itself when a state can no longer deliver physical security, a productive economic environment, and a stable political system for its people.
• The total collapse of the state marks the final, extreme phase of state failure, and very few states can be described as completely failed or collapsed. 
• Many states suffer from various degrees of weakness and are therefore potential candidates for failure. Weak states were failing with increasing frequency, most of them in Africa but also a handful in Asia and the Middle East, and failed states are known to be hospitable to dangerous warlords and groups that commit terrorist acts. 
• Somalia and Afghanistan under the Taliban regime, are examples of states failure completely.
• Understanding the dynamics of state failure and strengthening weak nation-states in the developing world assumes new urgency.
• 25 Most failed states in the world are:

Read the source article

India qualifies many aspects of 'failed state' but not yet failed. But if you look from view point of poorest man it is definitely a failed state.

Development and poverty

POVERTY

• Poverty is present everywhere. Manifestation of poverty is a challenge.
• Poverty and development are two sides to a coin. Where there is poverty, there may not be development.
• Poverty is not only a lack of money to take care of basic necessity of life it creates a picture of aimlessness, uncertainty and hopelessness in the mind of the poor. 
• An unhealthy or poor population produces less and may be forced into practices damaging the environment. It is the poor people who suffer most acutely from lack of development. 
• The poor are anxious about the future in regard to the national political life, degradation of the environment, the high rise of inequality among people coupled with mass unemployment.
• The high level of selfishness in the society with people looking only to their needs and fearful of others. Corruption is endemic. Crime rate is high and the future of generation yet unborn is clouded with uncertainty.

DEVELOPMENT

• Development is often socio-economic, political, science and technology biased. 
• The concept of development is a complex one. Its difficulty is not only in terms of definition or description but also in terms of measurement. 
• Lack of infrastructure, deep seated corruption, various forms of conflict, bad governance and poor healthcare facilities cannot promote a healthy population committed to work for progress and development.
• GDP as the measurement does not say anything about the distribution of total income of its country. It does not capture the totality of the development situation of the country.
• The people are both the means and the end of economic development.
• Human beings are at the center of concerns for sustainable development. 
• They are entitled to a healthy and productive life in harmony with nature.
• Development cannot be merely economic development or GDP as important as that may be. 
• Development must include the conditions of reality that allow people to take their destiny into their own hands, individually and collectively involving economic, social, political, psychological, environmental, cultural, religious and international dimensions. 
• Development is the ability and capability of the people to procure sufficient natural resources to meet the basic needs of all in a self-reliant manner.
• The situation of the bottom forty percent of society is often bypassed by development and government.
• Human welfare is the ultimate end of development not economic indices.
• The welfare of the human person in its totality is the good health of a person and his skills cultivated through educational programmes as his endeavours add to the wealth of his nation.
• Development strategy should be people centred and community participation must be evident. Any project that people/community cannot identify with will collapse. 

SUSTAINABLE DEVELOPMENT

• World Commission on the Environment and Development (WCED) defines sustainable development as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs.’
• WCED posits that the present generation has been reckless and wasteful both in its exploitation and use of natural resources by pursuing a series of socio-economic and industrial policies which endangers global environmental security. It condemned the inequalities with and among nations and called for a restructuring of contemporary economic relations to guarantee an equitable distribution of national and international wealth.
• The International Economic System (IES) is primarily profit orientated. Consequently, everything could be sacrificed on the altar of profit to the detriment of development of peoples and individuals, the often stated corporative responsibility of multinationals.
• Can accountability and transparency be found in their political intercourse?
• Poor countries are without development and citizens may not be able to compete with others because of lack of necessary capital, the technical-know-how and expertise. Symbiotically, without development poverty may not be eradicated. The solution to the dilemmatic situation is to confront the reality of poverty and challenges of development simultaneously, nationally and internationally.

There is no humiliation more abusive than hunger ... Pranab Mukherjee

Any kind of development that don't benefit bottom 40% of people, environmentally sustainable and generate mass employment is not a development at all. The trickle down theory, the standing rationale for our economic reforms, doesn't not address the aspirations of the poor people and eliminate poverty is unacceptable nonsense. Health, drinking water, sanitation, education, skill development and empowerment with adequate capital are essential for poverty eradication and meaningful development of poor people especially in rural India. Govt spending meager 2.27% on healthcare and 3.70% on education in the current budget against a minimum of 5-6% indicates empathy deficit towards the poor people of India. Even these meager allocations are towards high end spending rather than improving PHCs and schools. Hyped disruptive economic reforms Demonetisation & GST continuum have impacted poor most with loss of livelihoods and incomes and driven towards desperation and our rulers thought fit to turn a Nelson's eye.

The Struggle for Equality in India

By Myron Weiner 
Article in July 1962 issue of Foreign Affairs

Read the original article

The principle of equality is having a revolutionary effect on life in contemporary India. The impact is more dramatic there than elsewhere because perhaps no other major society in recent history has known inequalities so gross or so long preserved. In the traditional civilizations of Islam and China, the ideal if not always the practice of equality had an honorable and often commanding place in the culture. But in India the notion that men should remain in the same occupation and station of life as their forefathers was enshrined in religious precepts and social custom. While life was not as immobile as theory prescribed, and from time to time revolts against the dominance of particular social classes occurred, the idea of social equality never became as widespread in Hinduism as it did in other great traditions.

Even today, the visitor to India-whether from Europe or the Far East-is struck by the gross inequalities, not merely in material standards, but more profoundly in the attitudes of men toward each other. To be kissed on the foot by a beggar or by a supplicant for a job is, for one sensitive to the dignity of man, among the most degrading human acts imaginable. The stooped back, the outstretched hands of the groveling poor are in contrast with the stern and commanding voice and the fine carriage of the rich, the mighty and the highborn. Yet very recently the principle of equality has flowered in Indian life, and it is the changes that this has brought and its effects on other aspects of India's efforts at modernization that I shall try to describe here.

II

Remote roots of what social equality exists can be found in medieval Islam as it affected the subcontinent, and in the development of bakti or devotional tradition in medieval Hinduism, which sought to stress the notion of equality before God. But the concept became really influential with the appearance of anti-caste movements in the nineteenth century. The influence of Christianity and the rise of nationalism both contributed in their own way to its growth, as did the impact of socialist ideas among young nationalists in the 1920s and 1930s. But it is not our purpose to enter into any detailed historical examination of how the notion of an equalitarian society came to be accepted by the leaders of the Indian nationalist movement. Suffice it to say here that those who held it took power in 1947 and began to exercise the authority of the state to make it a reality.

With virtually no debate, the principle of political equality was enshrined in the constitution when all adults, literate or illiterate, were given the right to vote. The initial effect was the further extension and intensification of party political organization, especially in rural areas. The governing Congress Party, which enjoyed the legacy of the nationalist movement with its relatively well established mass base, clearly won the race-but not without unexpected results. Congress politicians, like those of other political parties, discovered that voters were moved more readily by appeals to their caste, religion, tribe and language than by appeals based on broad public policy. With a skill that would do credit to a New York or Chicago politician, Indian party leaders shrewdly sought "balanced" tickets. Lower castes, which are large, soon clamored for more seats in municipal bodies, state legislative assemblies and Parliament, as well as for more posts in the party organization. Century-old rivalries among communities burst forth. Local politicians made their own constituents aware of the benefits to be obtained from government and awakened them to the power which they could obtain as a result of universal adult suffrage.

Thus linguistic, caste and tribal organizations have multiplied, and throughout the country particularistic loyalties have been intensified. This was demonstrated in the general elections for Parliament and the state assemblies last February. Except in the much publicized North Bombay constituency, election issues rarely involved ideology or public policy. On the contrary, the electorate tended to vote in accordance with traditional loyalties; issues, such as they were, tended to be parochial.

Another related consequence of universal adult suffrage is that social classes which had hitherto been politically dormant have now come to play an increasingly important role in local politics. In many of the urban areas especially, the respectable, high-caste, prosperous and well educated leaders who guided the party in the past have been replaced by a less educated, status-hungry class of shopkeepers and minor clerks. Their drive for position and prestige has often led to bitter struggles for control of the local Congress Party organization, and especially for the position of local party president; for it is he, with the district collector and other high officials and respected citizens, who welcomes visiting ministers from the state and central government to the city. In the eyes of a lower middle- class politician, the post is a coveted one and it is no wonder that the struggle for this office has shattered many urban Congress Party organizations. Though many other factors have contributed, it is not surprising that the Congress Party has lost municipal elections in many cities in recent years, including Madras, Delhi, Madurai and Coimbatore. But regardless of who wins, municipal governments are increasingly falling under the control of men of lower social status.

In the rural areas, however, power is still in the hands of large landowners, prosperous rural businessmen and, in general, men of comparatively high social status, caste and education. But even here it is becoming difficult to generalize, for there is a growing struggle by the more populous lower classes to get control of the Congress Party organization and-particularly during the last few years-the newly constituted village and district councils.

In late 1959 two states, Andhra and Rajasthan, inaugurated what is known in India as panchayati raj, or democratic decentralization. Under this program, a three-tiered system of local government was established and is now being extended throughout India. At one level is the village panchayat, an elected council with enlarged powers of central government. At a second level is a samiti usually constituting the heads of village panchayats from an area of about 60,000 people (the number varies from state to state). At the third level there is a zilla parishad or district council made up of the samiti presidents. The area of the samiti coincides with the administrative units of the government-sponsored community development program, which was established during the First Five Year Plan to develop the country's rural areas. And the parishad has as its major responsibility the coördination of all development activities within the entire district, an area encompassing more than a million people. The samiti and the parishad thus constitute units not only of local self-government but also of rural development, with substantial budgets for primary and secondary schools, medical dispensaries, road construction, well digging and agricultural development, including minor irrigation works.

From the very beginning, these organizations of local government have been largely controlled by the high-caste landowners who dominate the countryside. But gradually, the numerically superior lower castes have become more active and in some areas they have gained control of the village panchayats, and even occasionally the samitis. While the spread of political participation may be desirable, it often means that power is taken by those who have had no experience in managing governmental bodies.

We can illustrate the consequences of this development by describing a village near Baroda in an area from which many of India's nationalist leaders (including Sardar Patel, India's first Home Minister) have come. In this region, the landowning patidars are the dominant caste in control of the Congress Party organization, local government bodies, credit institutions and coöperatives. As in most of the villages in this area the baraiyas, a caste of landless laborers and tenants, are the largest single caste. In 1951 a popularly elected panchayat was created and the dominant patidars won. But as a result of a controversy within the panchayat, the patidars resigned, leaving a handful of baraiyas in control. Once in power, they developed enough self-confidence to wish to retain control, and in subsequent elections they were successful.

Under baraiya control, the panchayat has been lenient in collecting taxes from the baraiya community while continuing to make collections from the patidars. When a new water works was established in the village, the panchayat at first refused to provide connections to the homes of patidars. The panchayat also meets infrequently, passes resolutions without discussions and is generally badly run. And within the local coöperative a conflict has developed between the landless baraiyas, eager to use the coöperative to purchase and store food grains at low prices, and the landowning patidars who want the coöperative to invest its limited funds in the purchase of cheap manures.

The growing participation of the baraiyas in the political life of this area can be further illustrated by the role they played in the February elections to the state assembly. In order to oppose the patidars effectively, the baraiyas joined the newly formed Swatantra (Freedom) Party, The result was that Swatantra candidates won in a number of constituencies in which the baraiyas are numerically large.

Elsewhere, the rise of lower castes into the panchayats and samitis is frequently accompanied by favoritism toward a particular community, a marked rise in the inefficiency of local government and an increase in corruption. These side effects of universal adult suffrage, as well as the intensification of class and caste conflict which we have noted, are widely decried by many educated Indians. The crass struggle for office seems to be far from the ideal of British democracy which the Indian intelligentsia holds dear. As a result, many intellectuals wish that they might call a halt to processes which they helped to set in motion. The cry grows for indirect elections, for outlawing political appeals to caste and religion, and for limiting tenure in a public office to a period of no more than ten years. One measure already taken by some states to reduce local conflicts is to award a bounty to villages which elect members of panchayats unanimously.

III

The application of equalitarian principles to education is also a matter of concern to many Indians. In an effort to improve the economic position of backward communities, state governments have passed legislation reserving a specified proportion of openings in the colleges and universities for particular castes declared by the government to be backward. For these same groups, a percentage-often a large percentage-of government jobs is also set aside. The principle of equality of opportunity, it is held, cannot be applied, because Brahmins and other high castes-by virtue of their head- start in education-would then be in a preferred position in obtaining both admission to college and, thereafter, one of the limited and coveted posts in the Civil Service.

The inevitable consequence of such a quota system, however, has been a marked decrease in standards. Examination marks for college admission and for securing government jobs have been lowered for the backward communities. High-caste leaders now argue, with some force, that the principle of appointment by merit has been almost eliminated. Since so many advantages accrue to a backward caste, there is great pressure on state governments to enlarge the list, and in some states as much as half the population has been declared backward. Many Indians point out that these policies have served to intensify caste loyalties and organization, but not necessarily to equalize the position of individuals, since many high castes have economically backward individuals and many low castes have wealthy families. If the lot of backward peoples is to be improved, it is argued, then the test of economic backwardness should be applied to individuals rather than entire communities.

The conflict between the goals of equalizing the position of individuals in society and of improving or at least maintaining educational standards has become most dramatically apparent with the enormous increase in higher education. State ministers of education have had to choose between mass education and high standards, no matter how much they may have hoped for both. Whereas there were 250,000 students in colleges and universities at the time of independence, the number is now rapidly approaching the million mark in less than 15 years. And since the First Five Year Plan was started in 1951, the number of colleges has been increased from 542 to over 1,000. Some of the older colleges such as St. Stephen's in Delhi, St. Xavier's in Bombay and the Presidency Colleges in Calcutta and Madras are still good- though one can start an argument with any educated Indian by asking whether they are as good as they used to be. But clearly the newer colleges and universities are, with a few notable exceptions, inferior.

The centrally sponsored University Grants Commission has cautioned state governments against precipitous mushrooming of colleges, against increasing admissions without a commensurate increase in teachers, and against hastily switching to more easily understood regional languages when adequate teaching materials are not available. But the political pressures at the state level have been enormous, and the number of students demanding entrance into college is probably still increasing more rapidly than new openings are being made available.

IV

The application of the principle of equality has probably slowed the pace of economic growth in some areas, quickened it in others. In the halls of Parliament and at dinner parties in Delhi, the most acrimonious subject for discussion is the matter of locating industries. The issue became dramatic in 1958, when the central government decided to build a refinery in the state of Bihar to refine the newly discovered oil of Assam. The Assamese launched a militant protest and the Indian Government finally agreed to build the refinery in Assam, and a second one later in Bihar. Two principles were involved. On the one hand, it was obviously desirable to develop industries in the most economic location. On the other, the Planning Commission has committed itself to the principle of giving special attention to the less developed areas of the country in an effort to equalize standards of living. The poorer areas like Assam have clamored for and received a larger share of public investment than they would have obtained if exclusively economic criteria had been applied. Similarly, the government has recently agreed to build a fertilizer plant in every state in India irrespective of economic costs and benefits.

The Third Five Year Plan explicitly states that "balanced development of different parts of the country, extension of the benefits of economic progress to the less developed regions and widespread diffusion of industry are among the major aims of planned development." But the report goes on to admit that "as resources are limited, frequently advantage lies in concentrating them at those points within the economy at which the returns are likely to be favourable." The planners have taken the position that the primary concern should be to increase national income and that "once a minimum in terms of national income and growth in different sectors is reached . . . it becomes possible to provide in many directions for a larger scale of development in the less developed regions." But in practice, the location of many factories within the public sector has been determined more by the persuasiveness of particular ministers in the central government and of chief ministers in the various states than by economic and technical considerations.

In agriculture, too, the political pressure for equalization in development has often been more effective than the arguments of agricultural economists. At the beginning of the First Five Year Plan a community development program was established as the instrument for rural development. Community development blocks were created and assigned agricultural, educational and social welfare officers who collectively were concerned with the all-around development of the villages within their blocks. Those who initially developed the program argued that the quality of the extension officers would be a critical factor in the success of the program, and that therefore the expansion of the program to encompass all of the country's villages should occur slowly. But this note of caution was effectively dismissed by those who argued that in the shortest possible time all villages should enjoy the advantages of the program. Within a brief nine years the program was extended to reach 370,000 villages, and by October 1963 it is expected that all of India's approximately half-million villages will be included in the program. Consequently, the quality of the development officers is understandably not as high as the planners had hoped, nor has the program fulfilled expectations.

In 1960 the Government of India agreed that an alternative method had to be found to increase the country's present rate of agricultural growth. This was estimated to be 17 percent in the first plan, and 16 percent in the second, which meant that over the past decade the growth rate in agriculture amounted to 3.3 percent annually compared to a population rise of about 2.1 percent per year-an increase of some 77,000,000 souls from 1951 to 1961. The Government decided to concentrate its agricultural experts and additional financial and administrative resources in seven selected districts where a combination of soils, availability of water and other resources was likely to bring the maximum increase in productivity. No sooner had the seven districts been selected than intense pressure was applied on the central government by states which had been overlooked. Recently the central government agreed to expand the program to include a district in every state.

While in some respects the application of the concept of equality in the development program has slowed the rate of growth, in other respects it has quickened the country's development. The beneficial effects are seen primarily in the private sector. As a result of the decision by state governments to give priority to the backward classes, many of the best- educated Indians, who used to enter the Civil Service as a matter of course, are now going into private business. Indeed, many social classes have taken to entrepreneurial activities for the first time on a large scale. The general effect of providing special benefits to lower castes has been to increase their self-awareness and arouse their expectations. As these classes increase their local political influence-an inevitable consequence of universal adult suffrage-they have also become more skilled at getting the licenses and permits from the government necessary to open shops, engage in the export-import trade and start small-scale industries. One can point to many communities now in private business which were not previously so engaged, at least at the present scale-the Nadars in Madras, Sikhs in the Punjab, Patidars in Gujarat and Marathas in Maharashtra.

V

It would be misleading to assume that all policy moves in the direction of greater equality in India. The social, political and economic gulf between those who have land and those who are landless is a vast one. The political equality permitted by "democratic decentralization" has helped to bridge that gap, but the sheer weight of economic inequalities in many areas makes it difficult for the poor to assert their claims. In most states land- reform legislation has been passed, but it is widely agreed that the landlords have evaded much of the legislation imposing ceilings on land by the simple expedient of distributing titles to other members of their family. None the less, two factors are at work which may serve to increase the power of the landless even when they do not obtain land. One is the growth of the powers of local government and the introduction of universal adult suffrage in local elections. And the second is the creation of compulsory primary education which is likely to be nearly universal throughout India by the end of the Third Five Year Plan in 1966.

India is now in the process of changing from a relatively rigid, hierarchical social system to a mass society in which the great psychological, social and economic gulfs between human beings are reduced. To achieve this objective Indians have been forced to make hard choices, for the goal of an equalitarian society often conflicts with other values which Indians cherish. But how committed the leadership is to this goal is indicated by the price which they have often, though uncomfortably, been willing to pay-an increase in particularistic loyalties, a diminution in educational standards and perhaps even a decrease in the rate of economic growth. How hard the doctrine of equality should be pushed and how heavy a price with respect to other values should be paid are obviously issues which each society must weigh for itself.