Thursday, August 25, 2011

Vaulting Ambition, Sloppy Thinking: Why the Jan Lok Pal Bill is a Dud

Corruption is the central concern. It is almost a theological concept. It is also a term – along with the linked adjective, “corrupt” – that recurs at frequent intervals through the text of the Jan Lok Pal (JLP) bill.

This bill has gone through thirteen iterations and in its current form is, according to the social campaigner Anna Hazare and his core group of associates (Team Anna) ready for adoption by Parliament. As an elected body representing all the people, Parliament, says India Against Corruption (IAC) -- the larger civil society grouping that Team Anna takes its mandate from -- has the right to enact laws for all the country. But prolonged default on a matter of urgent public importance cannot be tolerated. Parliament has no option than the adoption of a bill cooked up by the IAC. This would be the first step, necessary, though not yet sufficient, towards dealing with the ongoing plague of corruption.

If the frequency with which a word is used indicates how serious is the intent, then the JLP draft, in its most recent variant, scores heavily over the Prevention of Corruption Act, 1988 (PCA) and the Central Vigilance Commission Act, 2003 (CVCA). These are the two most proximate enactments which share the objective of combating corruption. And they are both rather spare in their use of the two words. Maybe this indicates a far greater sense of focus and moral purpose in the JLP than in all earlier laws. Maybe it shows that the earlier enactments paid little attention, or chose willingly to be oblivious, to the magnitude of the task they were intended to address.

A moral dimension is apparent in other respects too. Through the text of the JLP draft, the word “integrity” occurs four times and “impeccable” twice. “Evil” is used once in the preamble, in a quote from a former Secretary-General of the United Nations, and “eminent” is the term of art chosen to characterise somebody who would have the credentials to be on the “search committee” for appointing the JLP.

Ordinary citizens who have tried to understand the arcane processes of the law may often wish that legal texts could show some sparks of life, that there was some way of rendering legalese into a comprehensible idiom. Terms such as “impeccable” and all the rest that the JLP draft scatters liberally around, may seem self-evident in terms of their import to all who suffer the daily scourge of corruption. “Impeccable” to most would be the opposite of what they see in their public servants. But then, to be “impeccable” and to possess “integrity” or “eminence” in the manner that the JLP requires, is beyond most citizens.

Team Anna holds out the promise that ordinary citizens’ lives will soon be governed by higher virtues, embodied in a chosen few who will assume the stewardship of the JLP, as an institution empowered to impose its will on legislature, executive and judiciary in any matter involving the suspicion of financial wrongdoing. In the steadfastness of their virtue, these individuals would transform lives steeped in the banality of just getting along, negotiating any which way through the thicket of a corrupt governance apparatus.

Morality lecture versus legal text
With this lofty mission before it, the JLP has necessarily to use language more appropriate to a morality lecture than a legal text. Indeed, the JLP is in the vision of its proponents a body born in immaculate conception, untouched by the politics that ordinary mortals are mired in. The origin of the JLP is in a construction of “virtue” that lies beyond ordinary politics. It is a transcendental attribute under siege in the mundaneness of ordinary politics.

It is this moral purpose that defines the central theme of the Anna Hazare campaign and determines its trajectory. Aside from “anti-corruption” which is a slogan even more vapid than “pro-motherhood”, the spirit of the movement is represented in the successive drafts of the bill that Team Anna and the IAC have put before the public.

Beginning with an early draft – themed around “men of virtue” – which spoke of empowering Nobel laureates of Indian origin, Bharat Ratna and Magsaysay awardees and five-star ranking military officers to appoint the Lok Pal, the JLP bill has gone through several modifications. It is fair to say though, that every version, despite seeking to achieve precision in terminology and a better fit with constitutional processes as currently practised, bears the imprint of the circumstances in which the bill was conceived.

Since the “men of virtue” draft was rubbished, a subsequent iteration by the IAC, labelled version 2.1 of the JLP bill, changed the appointment criteria. A studied reluctance to yield ground to representative institutions, or individuals chosen through direct elections, still remained manifest. In a selection committee comprising eleven members or more (since after the first round of selections, outgoing members of the JLP were expected to join the committee), only one qualified by virtue of being an elected representative of the people. And this was the Speaker of the Lok Sabha, who made the grade presumably by holding an office above partisan loyalties.

Unexplained twists in logic
Retained in the selection committee were all armed forces personnel of the five-star rank, of whom there have been three in the history of India, with the sole survivor now being well into his 90s. Also included were the two most senior among two categories: Supreme Court judges and high court chief justices.

In the next round, JLP version 2.2 changed the composition of the selection committee considerably. The total number on the body was brought down to ten, and the patently absurd requirement to have a military officer of five-star rank was deleted. The Prime Minister and Leader of the Opposition (LoP) in the Lok Sabha were allowed admission into the hallowed company of the "selection committee" that would pick the Lok Pal. But in the category of judicial representatives, the criterion of choice was changed from the most senior among Supreme Court judges and high court chief justices, to the youngest in both these categories.

The deliberations that led to these formulations have supposedly been open and transparent. But few reasons were advanced for these violent switches of loyalty, between seniority and its opposite. When an explanation was specifically sought, the answer remained unconvincing. Seniority was supposed to endow a judge with wide practical experience and knowledge, to enable informed choices of personnel for a high-powered body. But “seniority” also meant the imminence of retirement, and the likelihood that a judge -- irrespective of his value system -- would be susceptible to the lure of a post-retirement sinecure the government could place before him.

Younger judges in contrast, with the assurance of many years ahead on the bench, were likely to be immune to this inducement.

Mildly put, the logic is questionable. On the other side of the coin, the government and the higher judiciary are always in consultation in matters involving judicial appointments. When appointments to the JLP are imminent, ministers and senior (or junior) judges - both detested categories in the IAC's scale of values -- could connive in putting in place nominees in the higher judiciary, to ensure that between themselves, they have decisive influence over choices made to the JLP. This is a situation that is as probable as the dark scenario that Team Anna sketches.

Fundamentally, every formulation that has been put forward by the IAC has been deeply flawed. And these in turn emanate from an attitude of mind that trusts nobody and believes that a presumption of guilt is warranted in any matter involving a broadly defined notion of “corruption”.

The current version of the JLP Bill (numbered 2.3 on the IAC website) allows – with obvious reluctance -- for two elected representatives on the selection committee, the Prime Minister and Leader of the Opposition in the Lok Sabha (LoP). Two Supreme Court judges and two incumbent high court chiefs are also on the committee, without any further requirement of seniority or otherwise. In a major gesture of modesty, the IAC has unconditionally left that choice to a collegium of judges from the highest judicial bench.

Aside from the political and judicial members, the selection committee would also include the Chief Election Commissioner and the Comptroller and Auditor General of India. At the second and subsequent rounds of selection, all previous chairpersons of the JLP would join the committee.

Men of virtue and eminence to have first call
The concessions to the political and judicial establishments, though, are limited by a caveat: the selection process would now have to confine its choices to the names put forward by a ten member “search committee”. This is where the quality of “eminence” comes in. Five members of the “search” team would be chosen by the selection committee in accordance with the normative criterion of “eminence”, as also the other condition of “impeccable integrity”. And the rest of the “search committee” would be coopted by the five chosen in accordance with the original virtue of "eminence".

To take one aspect of the bill – the procedure of choice of the JLP – successive drafts have oscillated rather wildly in terms of applicable criteria. The “men of virtue” clause was removed at an early stage in the revisions. In a seemingly grudging concession to politics as practised – rather than its idealised vision – the Prime Minister and LoP were given a due role in the choice process. Since the JLP is envisaged to have a judicial function in some respects, there was no way that the men who people that arm of governance could be kept out.

Yet the trust deficit was difficult to dispel. And since the basic premise of Team Anna is "trust nobody", there was a wild oscillation between “most senior”, “youngest”, and finally, anybody who is proposed by a duly constituted “collegium” of judges.

Arvind Kejriwal, a former official of the Indian Revenue Service, now acknowledged strategist of the IAC and the main draftsman of the JLP bill, has often been on record with the view that powers envisaged for the anti-corruption body are no more than those vested in the Income-Tax (I-T) department. The point has a certain validity, though only superficially. The I-T department is authorised to perform the functions of investigation and prosecution. There is also a provision that hearings under a tribunal and a commission that could be set up under the I-T department, would enjoy the status of judicial proceedings.

Powers of judicial appointment and superintendence
The crucial difference here, is that the JLP conceives of trial in special courts. Rather confusingly, draft bill 2.3 prescribes two distinct procedures of trial. Under Chapter X, the JLP would put out an annual assessment of the number of special courts required for the swift trial of all the accused. The Government would set up the required number of special courts and Chief Justices of every High Court would constitute appellate benches to take up appeals and settle them within six months. Under Chapter XII, the JLP is empowered to appoint retired judges or civil servants as judicial officers for conducting trials once investigations are completed. A bench constituted in this fashion would determine the penalty and the punishment that could be imposed on the accused, subject to “approval by a higher authority prescribed” by the JLP.

The power of appointing judicial benches and stipulating deadlines for them is obviously far beyond anything that the Income-Tax authorities can imagine. Indeed, in seeking to gather under one body the powers of investigation, prosecution and trial, the JLP does considerable violence to the doctrine of the separation of powers, a fundamental principle of government by the rule of law.

As a further reality check on Kejriwal’s claim that the JLP bill proposes no greater powers or procedural prerogatives than the rather banal I-T Act, it would be appropriate to just consider one clause, article 7(5) of version 2.3, which reads:

“If during the course of investigation into a complaint, the Lokpal feels that continuance of a government servant in that position could adversely affect the course of investigations or that the said government servant is likely to destroy or tamper with the evidence or influence the witnesses or is likely to continue with corruption, the Lokpal may issue appropriate directions including transfer of that government servant from that position.”

The JLP’s definition of a “public servant” is the same as in the PCA. A “government servant” in turn, is a sub-category. Excluded from this sub-set are elected representatives and judicial officers. In other words, the JLP would have the authority to remove from office and quarantine anybody -- except an elected representative or a judicial officer -- for the duration of its inquiries. Here again is an extraordinary power that the I-T department could not conceive of ever claiming or deploying.

Much public contention has arisen out of the JLP bill’s determination that nobody – not even the highest political and judicial authorities – should be spared from its intrusive attentions. Version 2.3 tries to build in sufficient safeguards to deal with the sensitivities involved, by requiring prior approval of a seven-member bench of the JLP before any investigation or prosecution begins against the Prime Minister or a member of the Union Council of Ministers, any judge of the Supreme Court or a High Court, or any member of Parliament.

Sloppy draftsmanship omits an important point: is it sufficient for a majority of the seven-member bench or has this decision necessarily to be unanimous.

This should be regarded as a minor quibble in comparison to the larger issues. In the context of the extraordinary powers of removal of a public servant that the JLP assumes, it is worthwhile playing out a mind-game. Imagine a situation in which the Prime Minister is suspected of wrongdoing – since one of the issues on which Team Anna is most insistent and inflexible on, is having the PM under the jurisdiction of the JLP. The PM as head of government, in theory, controls every lever of the executive machinery. So by remaining in office while under investigation, he could conceivably, thoroughly subvert the course of inquiries. So then do we, by extending the logic applicable to a “public servant”, give the JLP the power to remove the PM?

Usurpation of parliamentary prerogative
With all the great fervour about, the slightest twinge of sympathy for M.K. Kanimozhi, a woman imprisoned now for over four months on corruption charges, would be considered a sign of moral frailty. Bail applications moved in ever higher judicial forums on her behalf have been turned down because investigations are underway into the “2G scam”. The Supreme Court worries that as a person of influence – and as member of a family that wields enormous political and financial clout despite its ignominious eviction from office in recent general elections to the Tamil Nadu state assembly – Kanimozhi might misuse a freedom provisionally granted, to fatally damage the investigations.

IAC’s credo is a radical formulation of the principle of equality before the law. It is impatient with suggestions that certain individuals (by virtue of occupying particular offices) could be exempted from scrutiny. The JLP as constructed in the IAC imagination, will have absolute authority over every institution and every office, however high. Neither the Chief Justice of India, nor even the Prime Minister, would be spared.

The proposition is infused with a sense of moral righteousness and purpose. And most political parties, anxious not to be out of step with the dominant public mood – as represented by loud and opinionated TV news anchors -- have signed on to the demand for a JLP that covers all.

A short pause to think over the implications of the proposition – using the legal standards applied in the Kanimozhi case -- would bring home its essential absurdity. A woman of very moderate power in comparison to an incumbent prime minister has to be taken into custody and repeatedly denied bail because she could influence the course of investigations for the worse. How then would the law deal with a person occupying the single most important position in the political executive, who quite possibly, could paralyse the investigations? The only credible answer, consistent with current practices, would be that PM against whom investigations are underway, should rightfully be in prison and ineligible for bail till investigations are completed and charges framed.

In a basic sense, the JLP proposals should be read as an intrusion into the sovereign domain of parliament, an unseemly power grab.

The affirmation of this principle – that the PM is answerable to parliament, which should hold him to the highest standard of probity – may occasion some bemusement, since it has long since been lost in Indian parliamentary practice. The clamour for a JLP that will have jurisdiction over the PM, effectively states that the loss of public faith is irretrievable. This inference would be consistent with the general mood afoot, of a complete loss of faith in elected institutions as embodiments of the popular will.

Precisely because of this, it is necessary to make one final attempt at retrieval. Because it allows no room for retrieval, Team Anna is prepared to trample all over another basic doctrine of constitutional governance. Article 50 of the Constitution, part of the Directive Principles, obliges a separation between executive and judiciary. This is a directive that the “State” has to abide by in its public services.

Fatal damage to doctrine of separation of powers
Team Anna conceives of a body that would be the final solution to all problems of misgovernance, and would have powers that straddle the realms of the executive and judiciary. The JLP proposed by the Anna Hazare cabal would have powers of investigation and prosecution in any matter involving the suspicion of corruption. It could impose fines and orders of dismissal from service, it could annul contracts solely at its discretion. Where it is compelled to go by the judicial route, it would have the powers to determine how many special courts should be appointed to deal with cases that it files and determine the composition of the judicial benches that would deal with these cases.

Kejriwal was on a talk-show hosted by Karan Thapar on CNN-IBN on August 20, where he argued frenetically that he had the right to represent his political point of view in any manner thought appropriate. When asked about the damage caused to the representative processes of democratic politics – in even the imperfect form practised in India – he repeatedly made the effort to distinguish between the “people” and parliament. Clearly, in his imagination, India's parliament is elected by aliens from outer space. And a gathering at Ramlila Maidan in Delhi, spectators to an uninformed old man’s decision to deny himself all nourishment for an indefinite length of time, counts for more than all the history and precedent that has gone into the construction of Indian democracy.

Worries about excessive concentration of powers are batted away by Team Anna. The process of judicial review enshrined in the Indian Constitution, they say, would be applicable in any matter decided by the JLP. This would be the final guarantee against an abuse of power by a monstrously empowered JLP. Yet it does not take too long to realise that this is simply begging the question. If it all finally comes down to the judiciary, that should be the focus of attention. Judicial reforms and the various means of making the institution more accountable, should really be where public attention is directed. And similarly with the agencies of the political executive and the legislature.

Anybody reasonably familiar with the history of India’s constitutional democracy, would realise that a JLP as conceived by Team Anna would be the worst possible response to its ills. Against the imperative of deepening representative processes and allowing greater room for the expression of opinions by all, the JLP draft conceives of a rigid, hierarchical structure, armed with extraordinary powers. It aims to create a body straddling the realms of the formation of law, its implementation and oversight, seeking a vantage point from which it would coerce and intimidate every other institution into compliance. It does not take more than one reading of the JLP draft -- and a basic familiarity with preceding variants -- to see that it is conceived in monumental ignorance of basic constitutional principles and processes. Fundamentally, the JLP draft is about a belief in messianic deliverance from the difficulties that ordinary people today face.

Waters will not part before this messiah

Investment in this messiah is almost guaranteed to fail, since the waters are not going to part before him. The trek to the promised land will likely be interrupted by basic constitutional difficulties. Legislative bodies will question the JLP's intrusive jurisdiction and seek a better way of codifying their privileges, rather than surrender to the powers of this newly minted constitutional body. Judicial benches will reject the conceits of the council of the wise that seeks to impose its frenetic moralism on established procedures. And the political executive will retain all the necessary means to thwart the JLP's quixotic tilting against windmills.

Team Anna's supposed revolution has laid the pathway towards a collapse of constitutionalism, since the response of its ardent flock to the reality of failure is unlikely to be either thoughtful or constructive. A JLP that performs in accordance with the Team Anna script would guarantee not salvation from corruption, but political gridlock. And that would be the most optimistic forecast, since the alternative could well be the worst form of political despotism.

Sunday, August 21, 2011

Unravelling the Media Gaze on Corruption

(Written August 11 for the September issue of Seminar magazine)

IN a commentary published on the editorial page of a leading daily newspaper (The Hindu, 30 June 2011), Anil Divan, a senior advocate who has done much to institute a credible regime of accountability in governance processes, argued the case for including the prime minister under the jurisdiction of a tough new law to curb corruption. As a preface to the main argument, Divan set out the basis for heightened public anxiety over corruption: inflation had pared off the equivalent of Rs 2,30,000 crore in value from household expenditures over the last year. Though considerably greater, this was of the same order of magnitude as the Rs 1,22,000 crore estimated to have been the loss to the public exchequer from the gross irregularities in the allocation of radio frequency spectrum slots for the second generation of telecom services (the ‘2G spectrum scam’ in media shorthand).

The direct link drawn between the distress caused by inflation and the money lost to illicit acts by those in authority is arresting, but would seem on closer examination, to be of doubtful validity. First, the estimate of the loss caused to the personal consumption of the Indian population refers to a period of time already past, while the putative losses from sale of the spectrum below its true worth are spread over a period of time stretching into the future. Second, the earnings from the sale of spectrum would not go into personal consumption, but the whole complex of expenditure commitments that the state undertakes, only a small fraction of which would ‘trickle down’ into the personal consumption basket. And third, even if revenue foregone leads, through deficit financing, to a spike in inflation, the precise impact is rather difficult to estimate.

Yet, the analogy bears further examination for what it reveals about the current mood of public anger and anxiety. Transparency in governance has been a hard-fought goal of public campaigns over the last decade and more, an object that seemed within grasp when the right to information (RTI) became law in 2005. The multiplying scale of corruption since then has shown that this was rather too optimistic an expectation. Economic policy was acquiring by this time new dimensions which evaded the scrutiny of even the most vigilant and public-spirited citizen. The financial sector had meanwhile become an ever widening domain involving players with strange and unrecognizable names and instruments that taxed the most robust commonsense. Its customary opacity was compounded several times over by the accelerated adoption of ‘global’ practices.

Information matters for the economy and for public welfare. But information does not offer itself spontaneously to all who seek answers to the questions that vex their daily existence. Not to the job-seeker under the national employment guarantee act, nor to the random individual seeking as a conscientious and civic-minded citizen, to understand – beyond the din of political partisanship – the criteria on which 2G spectrum was allocated.

There are certain quarters that are most unwilling to yield the information they secrete. There is moreover, no pristine source from which information would emanate in a manner that would register in the comprehension of ordinary citizens. Each source has its uniqueness, as too the channels through which the information is conveyed. Several of the big-ticket corruption items that have come to light in recent times, have originated in quarters where public scrutiny has not yet reached. In many cases they involved a nexus with other domains – such as the stockmarket or offshore banking entitities – which are not yet subject to the full rigours of information transparency.

Purely fortuitously, the 24-hour news channel has become an indispensable part of the social dialogue in the years since the RTI took effect. Competition between the media platforms that have emerged over recent boom years, has ensured that there is furious public commentary whenever the slightest hint of malfeasance is detected in the governance process. But the fervour dissipates rather fast in the festival of name-calling that is today called ‘prime-time’ news. And once the cordial insults conclude, there is no occasion to take stock and institute remedies, since the principals have moved on from one cutely-labelled ‘scam’ to another.

The media has not been particularly keen on using RTI to uncover facts that may be of public interest. The reasons really are not mysterious. A broadly invested right is of little interest to the media, which flourishes on privileged access to information. The basic rule of the media universe today is competition. And in the heat of competition, open sources of information – where all have (putatively) equal rights of access – are of little consequence. It is the exclusive that matters, drawn from a jealously protected source. Competitive advantage lies in securing privileged information, rather than using humdrum procedures established by law, to bring information into the public dialogue.

The seeming consensus that today’s government is the most corrupt of all time rests on a subjective judgment and is fostered in part by the media. Even without any credible, objective measure of corruption that reflects the damage it causes to ordinary lives, there is no denying that more acts of official malfeasance are now emerging into the public gaze than ever before.

Two competing narratives within civil society have in turn cropped up on the origins of the problem. One holds that corruption is an evil embedded in the system of politics as practised today, which can only be rooted out by investing an agency with transcendental powers, beyond all that mundane politics can conceive. The other looks at corruption as part of a broader matrix of economic policy, complex in its origins but invariably working in its most baleful effects, to the disadvantage of those at the bottom of the scale of income and wealth.

The former view has gained greater traction within the media, simply because simplicity is always a tempting prospect. For the media to invest in unravelling complexity would be contrary to its basic ethos. To tarry over the riddle of a scam today may come in the way of uncovering another tomorrow. And that would be competitive advantage lost, since in the media universe, every momentary concession to reflection is money squandered.

Brief spans of attention are a feature of the mass media everywhere. The issues that feature on media priorities between these attention lapses though are still of importance. And this is where the unique features of the Indian media need to be taken into account. Much of the fervour that is on display over corruption possibly originates in the nature of the beast that is the media, its commercial calculus and, in particular, the sources of its growth in recent years.

Media growth has obviously been linked with broader economic realities through the last two decades of liberalisation. There is fairly widespread agreement that the Indian economy moved onto a new growth path in the first decade of the millennium. The rebound from the devastatingly poor year of 2002, when the country went through a crippling drought, would in earlier years have been put down as just that – a rebound. But in the imagination of the media and the partisans of economic liberalisation, it was rendered as evidence of India having moved onto a new growth path. Media fortunes began looking up from around then and the figures here speak for themselves.

If the trajectory of the Indian media through the two decades of liberalisation were to be plotted: till upto the midway point and just beyond, the story is of significant developments in the entertainment sector, though not in news and current affairs. Ironically, though the number of satellite channels was rapidly increasing, not one among them had formal authority to broadcast from Indian soil. The first approval for a private broadcaster based in India was granted in fact in early-1998 and this was a venture launched under the deliberately obfuscatory title of an ‘election channel’, the outcome of assiduous lobbying by Rupert Murdoch, the world’s least favourite media baron today, but once considered the man who could make and unmake national governments.

Once granted Murdoch’s Star TV, there was no credible basis for denying other broadcast companies – especially those owned by Indian nationals – the right to uplink from Indian soil. Yet, it took another whole year for uplinking guidelines to be worked out. Incidentally, the number of broadcast channels that sought uplinking rights was, to begin with, rather modest. It took till 2004 and later, when the Indian economy seemed firmly embarked upon a new growth path, for the media as we know it today, to begin taking shape.

The figures say it all: in 2004 according to official data of the Ministry for Information and Broadcasting, there were a total of 130 channels registered in India. By 2011, the figure had increased almost five-fold, to 626. Half of these were registered for news broadcast and a large number of them (though this figure is not precisely known) were exclusive news and current affairs channels.

Before one leaps to the inference that this quantitative explosion led to an improvement in the quality of the public discourse, it is necessary to work out certain linkages. And this requires an understanding of the sources of media revenue. It is no breaking news that the main source of revenue for the Indian media is the advertiser. And in a reflection of the extra stimulus to growth, total advertising spending in the Indian economy (excluding the small, classified ads in the print media) is estimated to have doubled between 2003 and 2008.

Advertising spend figures have always been rather hard to come by, but clearly the record of growth through this five-year interval was a window of opportunity for the Indian media never seen before. A rarity till half-a-decade back, the 24 hours news channel in this time acquired a pervasive presence across all regions. And arguably, among these, the English channel assumed an influence disproportionate to its actual viewership for reasons of audience demographics. Since the English-language audience simply has more purchasing power, that was where all the advertising money tended to flow. And because it embodies the vanities, ambitions and anxieties of India’s globalising middle class, the English language media acquired a pronounced sway over matters of policy and public affairs.

Further light would be cast by a disaggregation of the nature of India’s recent growth process. The principal impetus to economic growth in the new millennium has come from an increase in capital formation rates. Total consumption expenditure as a proportion of GDP has fallen, but while the government’s contribution here has stayed at a relatively high level, the share of the household sector has shown important compositional shifts. The traditional staples of subsistence – food, clothing and shelter – have cumulatively shown a sharp fall in relation to the total. The growing segments of private final consumption have indeed been those of special interest to the upper and middle strata, such as transportation equipment (read automobiles), communication, health care and recreational, cultural and educational services.

Another notable change in the country’s economic profile in this period was the growing interest of foreign investors. After a decade-and-a-half of fairly indifferent or only sporadic interest in the Indian market – as a destination for both direct and portfolio investment – foreign capital began flowing into the Indian stockmarkets in significant magnitudes from about 2003-04. As interesting as the Indian growth story since then has been the huge appreciation in asset prices. Taking just one indicator: market capitalisation on the Bombay Stock Exchange, i.e., the total value of shares listed on this most active of India’s bourses, went up from just over 23% of GDP in 2002-03 to over 100% in 2007-08. Anecdotally, there is more than ample evidence of similar forces at play in the real estate market.

The years since 2003 were a period of easy credit availability, low interest rates and high liquidity in the economy. Conditions that could have resulted in galloping commodity prices, contributed instead, to an asset price inflation. This rise in asset prices beyond what the ‘fundamentals’ warranted, could have contributed in the short-term to the high rate of economic growth, by providing a stimulus to personal consumption by asset holders. This so-called ‘wealth effect’ has been a relatively under-researched aspect of the Indian growth story, but there is a credible case to be made that it has been a factor.

There was always the inherent danger that this growth story could implode. And as with the unhappy ending that most such growth stories suffer, inflation proved the villain. Prior to 2004, the unstated strategy of combating inflation was to impose a severe variety of fiscal austerity on those at the lower end of the scale of income and wealth. There was an enormous accretion to food stocks in the 1990s, despite a steep decline in the growth rate of agriculture. For those who chose not to be beguiled by neo-liberal babble about the Indian consumer diversifying her daily food intake as she ascended the income scale, the seeming embarrassment of riches in food supply, was clearly seen to be the consequence of suppressing demand for food amongst the poor. The low-inflation experience of the first half of the two decades of liberalization, in other words, was about the economic disenfranchisement of a vast part of the country through the ostensibly neutral and fair working of the market.

Add to this the increase in inequality through the two decades of economic liberalization, on which there is by now a fairly solid scholarly consensus, and we have all the ingredients of a pattern of disequalising growth. Media growth is a sub-plot within this broader story, propelled as it is by advertising expenditure which, as is almost invariably the case, outgrew increases in corporate profitability, but tended to mirror the underlying patterns of consumption of the middle and upper strata.

For evident reasons, the media discourse on corruption would reflect the unique universe of concerns of the middle and upper strata. In 2004 though, just as the Indian economy seemed to be launching itself onto a new growth path, a rather severe political inconvenience cropped up. The party that had run an election campaign on the ‘shining India’ plan came a cropper in nation-wide elections, leading to much muttered acknowledgment amongst the pundits of the media, that the growth momentum had left behind too many of India’s people in its onward rush. Yet, when the newly elected government in 2005 brought in an employment guarantee act to ensure that the poor did not continue being left out, there were dire predictions by media pundits about a fiscal catastrophe to come. The flood-tide of populism, they darkly warned, would sweep all before it, leaving in ruins the hard-fought structure of fiscal discipline erected over a decade-and-a-half of economic reforms.

It did not take long for inflation to reemerge, inducing a policy response of tightening interest rates and threatening the entire illusion of newly acquired middle class wealth. Media commentary has highlighted middle class anxieties over rapidly rising monthly instalments on housing and vehicle loan repayments. But at the two decade mark of the launch of the economic liberalisation programme that was in a sense, the moment of rebirth for the Indian middle class, media commentary was strangely subdued. The anchor of the global economy, the U.S. dollar, was threatened by the prospect of a U.S. government default on interest payments. And the pursuit of an alternate mooring in the Euro-zone was being formidably deterred by the mounting evidence of debt meltdown in some of its most significant economies.

The media chooses then to turn away from complexity and focus on visceral sentiment. The market had isolated an entire strata of the Indian population and made them distant observers of the economy with no power to influence its course. But politics had brought them right back as fully enfranchised participants in the economy with a guaranteed right to employment. A settled course of economic progress had been rudely disturbed as a consequence. It is entirely in character in the context for the media – and indeed for the classes that speak through it – to question the very process of democratic governance, which all too often sacrifices economic optimality for political expediency.

Stepping back from the fevered media commentary on the matter and taking a relatively detached view, ‘corruption’ would seem precisely the process through which established relations of power conspire to render economic justice a vacuous slogan. India has a formal system of law that guarantees the rights and entitlements of all. But this has been erected on a substratum of rampant inequalities, where a dynamic is at work to preserve, perpetuate and magnify these inequalities.

An elaborate apparatus of governance seemingly gives life to the formal system of law but in the real world, the formal system of law is constantly being subverted by processes that could broadly be characterised as ‘corruption’. These are processes that reflect the real power dynamics of a highly unequal society and remain for the most part unremarked. It is only when consensus breaks down within the dominant power groups and the sharing of the spoils becomes contentious, that a public din over corruption ensues. And the media does little to enlighten in the context, since it still sees little reward in seeking to outgrow its self-assigned role as the echo-chamber for elite perceptions.

August 11 2011