2017 The year ahead

Demonetise the Babus

WHEN THAT ICON of the Non-Aligned Movement, Fidel Castro, passed away recently, he was remembered fondly by an older generation of Cubans. Among them were people who had been illiterate adults when the revolution occurred in 1959. Two years later, when the government declared ‘the year of education’, the illiteracy rate fell from around 40 per cent to less than 4 per cent. Cuba went from being a poor country with low levels of rural literacy to universal literacy. It did this with few economic resources and without the steel frame of a permanent, well-functioning bureaucracy. Moreover, some of Cuba’s best educated people had fled and it was faced with a shortage of trained teachers and educators.

I invoke Cuba’s experience with radical change in order to put into context a plan like demonetisation. What might we learn from other governmentled plans that were actually successful in bringing about change in a short time? How did Cuba manage to eradicate illiteracy, especially adult illiteracy, so quickly? The secret was societal mobilisation. Hundreds of thousands of ordinary, literate people, from schoolchildren to teachers and workers, were motivated to act. Urban people, who otherwise had little contact with rural areas, learnt first-hand about the lives of their poor compatriots. Unlike many other initiatives of the Cuban government that relied on force or fear and did not leave an enduring legacy, this initiative called upon the idealism of its people to change the country forever. Reflecting on the literacy campaign 55 years later, it is clear that for many Cubans, this act alone gave Castro’s government life-long legitimacy. The political payoff of such an initiative is incalculable.

The Government of India has never mobilised the energies of its people to do something equivalent after Independence, although there is no shortage of movements in civil society, like the JP movement. After the success of the national movement in achieving Independence, the presumption was that the job of nation-building was done, rather than just begun. The idealism of India’s population, and of its youth in particular, has never been tapped by the government for a larger social purpose. For the most part, the Indian state has been content at preserving the status quo. When the state machinery has used mobilisation to tackle an important problem like population, the efforts have done more harm than good. The use of terror and repression during the Emergency arguably set back population control by many years.

This brings me to a second point of comparison with the Cuban experience. The very fact that rural people who were already adults at the time of the revolution are alive today speaks to Cuba’s extraordinary record in raising life expectancy. According to the World Bank, life expectancy in Cuba went up from 64 years in 1960 to 79 years today, equal to that of the United States. Unicef reports that Cuba’s under-5 mortality rate went from 47 in 1963 to 5.5 in 2015, a rate lower than the United States. For a relatively poor country, this is no mean feat. However, the raising of life expectancy and lowering of child mortality resulted from very different mechanisms than the reduction of illiteracy. It involved institution-building over a long period of time. This was not the kind of result that could be obtained by a campaign of mass mobilisation. It involved more equitable access to health, the provision of good primary healthcare, and the training of a large cadre of medical professionals.

SO HERE WE HAVE the example of two success stories but two very different paths to achieve them. One was obtained through mass mobilisation and nationalist energy; the other through institution-building and bureaucratic organisation. Both were achieved with very few resources: the Cuban government was never flush with funds.

What then can we learn from the Cuban example? India achieved Independence more than a decade before the Cuban revolution. At the time of Independence, India was a lot poorer than Cuba was at the time of the revolution. However, in terms of what we have been able to do in the past seven decades to improve the quality of the lives of poor people, the contrast between Cuba and India could not be greater. We are justifiably proud of having shrugged off anaemic rates of economic growth for the last three decades. But high rates of GDP growth have done little for India’s abysmal human development record. We are last among BRIC countries, and at par with Central American states that have been wracked with internal violence and dysfunctional governments.

What is to be done about it? How can India become a global superpower with one of the poorest, least well-educated populations on the planet, where the average adult has only five-and-a-half years of schooling? Education and health outcomes cannot be altered through one campaign; there has to be systematic bureaucratic transformation that makes a long-term difference. However, much like the cleanliness campaign, Swachh Bharat, it is possible to kickstart longterm bureaucratic changes in education and health with successful public mobilisation. But such a mobilisation must be accompanied by bureaucratic reform, otherwise it will come to naught.

This is where the current anti-corruption campaign through demonetisation falls short. People are putting up with the inconvenience of standing in queues, losing wages and falling sales because they want an end to petty corruption. If, at the end of the process, they do not see any payoff in terms of a palpable reduction in corruption, we might expect a backlash. Although seen primarily as a middle-class issue, petty corruption actually affects the poor more than any other segment of the population. It is safe to say that any politician who can significantly reduce the forms of corruption to which citizens are exposed on a daily basis will have bought the kind of political legitimacy that Castro obtained from his literacy campaign. Reducing corruption has the backing of all segments of the population, even some of those very bureaucrats who benefit from the system of corruption in their work lives.

Corruption cannot be tackled solely through public mobilisation, as the Aam Aadmi Party has discovered, nor solely through bureaucratic and political reform, but needs to combine all of those elements. Anticorruption reform needs to mobilise the widespread anger against corruption in the population with real changes in bureaucratic incentives to make corruption too risky for individuals. But it also fundamentally needs changes in the conduct of politicians and of political parties. Without that, the good intentions of even a surprise programme like demonetisation can be undercut by corruption among those responsible for implementing the programme.

When bureaucratically entrenched systems of corruption exist, where the problem lies not with a few bad apples, but where everybody shares in the spoils, then it is not enough simply to increase surveillance and conduct surprise raids. More often than not, this ends up implicating lower-level bureaucrats rather than their bosses who oversee the whole system. Punishing lower-level employees by suspending or transferring them does little to alter the structure of rent collection.

It is a truism that reforming the bureaucracy must begin with incentives in the form of high wages. But unless that is accompanied with stronger disincentives, bureaucrats have little to fear by accepting bribes. A transfer to a punishment post may be a terrible thing but it is only temporary, and can be reversed in due time by the payment of an appropriate bribe to a political overlord. There is no fear of imprisonment, little fear of public shaming and damage to reputations, and very little danger of losing one’s job. Judicial convictions for systematic corruption are rare, and seldom involve the heads of bureaucratic departments. Moreover, no party in a corrupt transaction has an incentive to report a bribe. This is where social mobilisation is important.

Attacking bureaucratic corruption leaves untouched the thorny question of political corruption. As long as political parties consider it acceptable for ministers to make demands of money from bureaucrats at the time of elections, or auction prized bureaucratic posts to the highest bidder, it is hard to blame the bureaucracy for corruption. The rot really begins with parties expecting that candidates who are given tickets for elections should pay for them. Naturally, once such candidates are elected, they use their newfound political power to earn back what they have paid. Even ‘result-oriented’ regimes tolerate corruption among their ministers as long as they get things done. The problem, of course, is that political corruption unleashes bureaucratic corruption because once it is deemed acceptable to squeeze bureaucrats for money, no actor in the system has an incentive to stop picking the public’s pocket. Political leaders can initiate vigorous anti-corruption campaigns only by stopping their own demands for payments from the bureaucracy.

ONE ANSWER TO political and bureaucratic corruption is to increase the power of investigating agencies. This, however, merely increases the discretionary and arbitrary power of those conducting the raids. As in Xi’s China, anti-corruption campaigns can become a mechanism to weed out enemies and jail competitors. Another problem that arises with this solution is that it increases the chance that the enforcers themselves become corrupt, because no one is watching them.

Anti-corruption vigilance has to be exercised by those who are subject to extractive rents on a daily basis, and not just by the vigilance department. Ultimately, anti-corruption measures will only succeed by making corruption morally reprehensible, and that is where social mobilisation is critical. However, if people see political elites benefiting from corruption while mouthing anti-corruption slogans, it will make the population even more cynical and despairing than it is today. In this regard, leadership has to come from the top and the bottom. No anti-corruption effort will succeed if it is limited to a top-down exercise, one that relies largely on repression and control, rather than involving the people in a central way.

Will 2017 be India’s year of the war on corruption? Is demonetisation the right instrument to achieve this goal? Will the sacrifice of common people for the past two months result in tangible change in their daily lives? It seems very unlikely unless demonetisation is the first step in a far-reaching transformation in the functioning of political parties and bureaucracies. There are much harder challenges ahead before the common person can live a life free of demands for corrupt payments.

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