US-India Global Review

67 US-INDIA GLOBAL REVIEW JANUARY-MARCH 2018 those people provided money, muscle, and patronage networks that every party finds useful.38 Only institutional change can break the criminalization of poli- tics. Exposure of criminal cases is not enough. India needs a new law mandating that all cases against elected members of Parliament and members of the Legislative Assemblies will receive top priority and will be heard on a day-by-day basis until completed. That law will make electoral victo- ry a curse for criminals — it will expedite their trials instead of giv- ing them the political immunity they seek. If such a law is enact- ed, we may well see criminal leg- islators and ministers resigning in order to get off the priority trials list. Such a reform can truly trans- form the existing perverse incen- tives. Corruption has experienced a recent backlash. Corruption in countries often gallops upward with GDP, and India in the past 25 years has been no exception. In one sex scandal, the governor of a state had to resign after the madam of a brothel circulated photos of him with three naked girls. Why did she do so? Because the governor had promised her a mining license, and when he failed to deliver, she exposed him in revenge. Only in India is the supply of naked girls a potential qualification for getting a mining license.39 The comptroller and auditor general (CAG), who for decades had produced little-read audits of government finances, suddenly started calculating the possible revenue lost by the government by allocating spectrum on a “first come, first served basis” (in reality favoring friends who were tipped off on the deadline) instead of auctioning it. He estimated the loss at Rs 1.76 trillion ($26.2 bil- lion). Later, the CAG estimated the loss to the government from coal mines being “allotted” by min- isterial discretion instead of being auctioned at Rs 1.86 trillion ($27.8 billion). The Supreme Court joined the anticorruption party by castigating discretionary allotments of any natural resource and cancelling spectrum licenses for which for- eign companies had paid millions of dollars. The court also held indi- vidual bureaucrats responsible, sending a chill through the entire bureaucracy, which hitherto had assumed they were protected by the decisions of their ministers. An anticorruption crusade led by Anna Hazare, a veteran social activist, attracted massive public response. The anticorruption uproar led to complete paralysis in decisionmaking: no bureaucrat or minister wanted to sign any file for fear of being accused of corrup- tion. The stink of corruption led to the decimation of the Congress- led United Progressive Alliance government in the 2014 election, which brought Narendra Modi of the Bharatiya Janata Party to power.40 Critics claim that economic reforms brought in the massive corruption. In fact, areas that were comprehensively liberalized saw the disappearance of corruption. Before 1991, bribes were needed for industrial licenses, import licenses, foreign exchange allot- ments, credit allotments, and much else. But economic reform ended industrial and import licensing, and foreign exchange became freely available. Lower import and excise duties ended most smuggling and excise tax evasion. However, the economic boom hugely raised the value of all natural resources and the telecommunication spectrum, thus raising kickbacks for their allot- ments. Many infrastructure areas earli- er reserved for the government were opened to private-sector par- ticipation, often in public-private partnerships, and many of them were bedeviled by crony capital- ism. Businesspeople said most areas became cleaner after liber- alization, but some areas wors- ened — namely, natural resources, real estate (which was always highly corrupt and highly regulated), and government con- tracts. Transparency International’s Corruption Perception Index rated India 34th of 41 countries in its first report in 1995, improving to 45th of 52 countries in 1997. Its position fur- ther improved to 84th of 168 countries in 2015 and stood at 76th of 168 countries in 2016. So India has moved from being in the bottom quintile of countries to the top half. Extensive corruption in recent years in some sectors cloaks a general improvement in the fully liberalized sectors.41 Narendra Modi was elected on an anticorruption platform, and businesspeople say extensive cor- ruption has largely ended in New Delhi. But it continues in state capitals that control 62 percent of all government spending. And for the average person, the worst cor- ruption is that of low-level govern- ment functionaries. Even as liberalization has abol- ished regulations and associated corruption in traditional areas, it has seen the rise of hundreds of new controls related to the envi- ronment, health, safety, forests, tribal areas, and land acquisition. Every year, the central and state legislatures enact more laws and regulations without abolishing thousands of obsolete ones. Many