SYSTEM CHANGE

India's Parliament BuildingM M Singh, Prime Minister of IndiaIndia Supreme Court Building

THE PLAN

BACKGROUND: Enacting a complete system change will require dramatic changes not only in all three branches of the central government but also state and local governments. The National government has taken on roles and responsibilities that rightly belong to state governments and, by extension, to local jurisdictions. Keeping that aside, change has to start at the centre. The task becomes immensely complicated because in the British style parliamentary form of government, demarcation between the legislative branch and the executive is blurred. The comingling of the executive with the legislature has created its own mess. Nearly everyone in the legislature want to be part of the executive i.e. a “minister.” The MPs do not do their primary job i.e. being a legislator. Politically speaking just being an MP is a diminished status. MPs are counted as nothing until you are “awarded” a “ministership.” This run for “ministries” has eroded the quality of the legislative branch. Some parliamentary democracies have realized this problem and have taken steps to distinguish the executive from the legislative branch. Although polity problems require attention the attempt here is to suggest viable solutions within the existing political structure. Legally only the Lok Sabha can institute proposed reformatory changes. It will require leadership and pressure from public to start changing the system before it completely breaks down.

Developing a comprehensive plan will require  a comprehensive effort.  There are, however, four core systems of government that must be modernized.  These FOUR systems — Records, Accounting-Budgeting, Procurement, and Personnel — are absolutely essential and required in all branches of government.  Installing, overhauling, modernizing these four core systems is essential to any meaningful reform to curb corruption.  Changing personalities and punishing a few is not going to end corruption unless systemic change is initiated to modernize these core areas.  Below is a general discussion which will elaborate the impact of not having these four core systems and the reason why corruption runs amok when the four core systems are inadequate, outdated and dysfunctional.

As was proposed elsewhere on this site creating a Ministry of Justice, with Chief Prosecutor as its head, is a good place to start because of the the support the Jan Lokpal bill of Anna Hazare has received from the general public. As pointed out, the proposal for a Jan Lokpal in essence is a demand for a robust, independent office of the Chief Prosecutor or Attorney General. I also suggested that, in honor of Anna Hazare, let the future Chief prosecutor/Attorney General of India be called Jan Lokpal! As in other successful models, Jan Lokpal of India will be the Chief Law Enforcement Officer of the Central Government with delegated authority to other deputies (Lokyukts) at the state and district levels. The Lokpals will be persons with professional legal qualifications and will not have to be elected to the Parliament. The guidelines for appointment and term will have to be decided. Some of the proposed guidelines for the appointment and term of Jan Lokpal can be used here.

Justice Statue with balance

Although the creation of a newly constituted Justice Ministry headed by a Jan Lokpal can be the first step to reformation, it in itself will not be enough. As stated in Myth number 1 ending corruption requires a system change. Systemic Change will require a multi-faceted effort to cover core systems of government i.e. records, accounting-budgeting, procurement, and personnel. Personnel is going to be a big challenge, because the only professionals the government has been churning out are British style “baboos” who in contemporary terminology are called “general administrators.” Whereas, for example, just to run the office of the Chief Prosecutor alone hundreds of trained investigators, forensic experts, knowledgeable lawyers and para legals will be needed. Not to mention professionals to run incarceration and detention facilities. It will also require substantial investment in facilities as additional and special courts will have to be found or built

CORE GOVERNMENT SYSTEMS THAT NEED CHANGE AND MODERNIZATION

RECORDS This is a core system that has been neglected mainly because the Central Government of India, blindly followed the British Raaj model (and perhaps later the Soviet Union) wherein everything was governed by the Central Government. Keeping personnel and property records ought to be the responsibility of the State governments. Issuance of tax payer numbers should be the responsibility of the central government.

The British did not install a personal (birth, marriage, death) records system for India. Guess what? Jawaharlal Nehru, the first Prime Minister, did not think it was important either. It is only until very recently that people have been able to obtain birth certificates. Even now it unclear as to who exactly is maintaining vital records for the largest population in the world?

Not having proper vital records and consequent personal identification numbers have allowed people to evade taxes, hold property under different identification, and most of all have legal bank accounts. Absence of a proper personal and related property records system has on the one hand opened the doors to massive fraud, on the other it created enormous hardships for people.

The hazards of not having reliable records management systems for people and property are so many that hey need not be enumerated here. To get this problem solved this is what need to be done:

Make states responsible for person and property records. This means proper technology and professional assistance be provided to all states to be responsible for such record management. Technology is readily available. Indian companies can do the job. A National ID number is not necessary if the States can have proper birth records and an identification number is issued based on the birth record. People who do not have birth certificates ought to issued a tax identification number by the Central Government. Anyway, it is not for this website to provide all the details that go into a successful records system.

The point is you cannot stamp out corruption where people (who include people who are giving and taking bribes) cannot be either identified properly or can hide behind fake or multiple identifications.

Here is the most important reason why without a proper records management system corruption cannot be stamped out. All money transactions including, in particular, cash deposits are today virtually untraceable. So a “Minister” is able to deposit and keep money in Banks. If it becomes hazardous money from India is easily moveable and deposited in Swiss banks! There is no way the government can really prove the money is illegal without a proper records system. When this system is modernized the Banks will not be able to open accounts without proper tax identification number.

You can now see why Jan Lokpal cannot stop corruption as long as money is allowed to flow freely from the bribe giver to the bribe taker via the present banking and other institutions.

Not having a proper property registration creates similar, if not worse, problems as stated above.  It is negatively impacting ownership of property and current land development priorities.

ACCOUNTING AND BUDGETING: Shall be very brief here. People keep telling me, “O India has an accounting and budgeting system.” Sure it does. It, however, is the same what perhaps the British installed at least two centuries ago.  Sure some changes might have been done after independence.  But you can tell a system is not working when no waste, fraud and abuse is discovered by the auditors.  Where are the Government of India (GOI) Accounting Standards?  Where are the auditors?  How much fraud, waste, and abuse been discovered?  What steps were taken? Who was ever held responsible?  Where are the annual reports to the Parliament?  How many certified accountants does the GOI employ? How many certified auditors?

The importance of accounting for every rupee that the government collects need no explanation. A good accounting system is a core system without which no organization can survive. The public has a right to know if every rupee they give by way of taxes is actually deposited in the treasury.  Budgeting is a the process that authorizes use of public money to be spent as authorized. Can we today say with confidence that actually is happening?

Before you demand that politicians be punished make sure we have full accounting and proof that rupees were stolen, As far as I know the GOI has failed to modernize accounting and budgeting systems. So much so we today do not know how much money is actually collected and more importantly if the money is actually and legally goes to the programs it is meant to.

TAXATION: This system is related to accounting/budgeting because the government collects revenues through taxes.  We know how the taxation systems be it Income Tax, sales taxes, or any other continue to be riddled with corruption. How much an individual will pay in taxes in particular companies and the rich depends not on a fair and uniform application of tax laws but on Income Tax or Excise Officers.  That alone should tell us that unless the system of taxation is overhauled to make it automated and standardized, corruption cannot stop. It is relatively easy to plug holes in this system and modernize it. To modernize the system the Executive does not need permission from the Parliament.  Why has Prime Minister Man Mohan Singh not made earnest attempts to professionalize the whole taxation system?  We know how the present “system” works.  The Income Tax officers or the Excise Officers are paid bribes on the side so that they can give illegal “tax-breaks” to tax payers.  Why has this not been done is what we should be asking. Worse, the taxmen use taxation to harass honest citizens who want to pay their fair share and move on.

Taxation Policy: Do not want to digress.  Tax policy is a mess and need changing. The government has the authority to tax. It does not have the power to extort.  There is a line between reasonable taxation and unreasonable extortion.  Extortion is crime. A tax policy that deters economic activity and encourages businesses to cheat is extortion not taxation.

PROCUREMENT:  Nothing lags as much behind as the procurement system of governments in India. We all know that this is where major theft has been occurring.  From Bofors scandal to the Commonwealth games scandal, it is procurement that is responsible for the stealing of public money.

Once again, no need to reinvent the wheel.  In the U.S., for example, the Federal Government is the biggest buyer of goods and services. But they also have the cleanest procurement system as does Canada and New Zealand, just to give examples big and small. When was the Central Government’s system of purchases and procurement modernized?  The answer is NEVER.  Once again, it is the same old, same old. No attempt has been made to modernize this system both on the civil and the defence side.

You may change the Defence Minister. You may even prosecute him/her and send him/her to jail.  All that will not end corruption in the Ministry of Defence.  The tragedy here is a corrupt procurement system particularly on the defence side makes a country National defences weak.  Thus corruption in defence procurement is a national security issue.  A corrupt defence department is unable to modernize it’s combat units and is unable to fully defend the country.

On the civil side a lack of modern system creates a mess.  It is not being suggested that defence and civil procurement systems are different. No, they are not. The same procedures are required.  It is, however, about time that the procurement system be modernized. It will take a real effort because the GOI has failed to train professionals in this area.  That is a problem we will encounter in all areas not just procurement.

Any movement to end corruption that does not include overhaul of the procurement system is not going to stop corruption.

PERSONNEL: It is hard to understand why the GOI has failed to modernize it’s Personnel System.  The British instituted the prestigious Civil Service of India.  All that Jawaharlal Nehru did was rename it to Indian Administrative Service (IAS).  Because India was free, it needed foreign service officers so Indian Foreign Service (IFS) was created. So much so that under the Indian constitution the “Foreign Secretary” has to be a career IFS officer and not the “Foreign” Minister. First, such a provision does not belong in the constitution. Second, the hiring process for IFS is the same as for IAS .  No idea when and why the Indian Police Service (IPS) was established. Off all the three professional services, the IPS is the worse because it perpetuates the colonial mentality wherein administrators (who used to be the British) are supposed to be appointed from the “educated elite.”  That might be true for the two other services. It is certainly not true of the police services. A future police officer ought to start among the “ranks” on the street and then work his/her way up. Plus, a democracy should not establish a centralized police force.  The law enforcement should be as decentralizes and as local as possible.

So what is wrong with this system?  A modern government is not run centrally by a handful of elite “officers.”  This was clearly the old British colonial model that was never changed. The colonial government had limited functions. It needed administrators (officers) to do limited functions which were mainly to collect revenues for the Crown and maintain law and order. The colonial government had no other obligations.  It did not care about education, health, environment, energy and economic development. The colonial government just needed a very limited and rudimentary law enforcement structure that enabled it to collect revenues. The “Collector” thus used to be the most important government official during the colonial rule.

Unfortunately, these systems of hiring, training and development of a modern work force did not happen in post-independent India. A recent and salient example is the Environment. The British had no need for environmental scientists, environmental engineers, and so forth. To be fair, the need for protecting the environment did not manifest itself until the late sixties. However, the GOI was not ready until the nineties to establish a Ministry of the Environment.

Another example is training of police or law enforcement. Here, not only is the structure wrong (officers with zero street experience being appointed to top positions) but other than the “training institute” in Mussourie, no Police training academies were made. The results are before our eyes. The real police officers on the street are ill-trained, barely literate, and know nothing about modern law enforcement in a democracy.

Once again the wheel need not be reinvented. Decentralization with simultaneous modernization of governments at all levels is how corruption will have to be dealt with

As stated this is by no means an exhaustive list of things that need to be changed. The main purpose was to illustrate that merely punishing a few is not what ends corruption. What is needed is systems change. We can start by changing and modernizing the four core systems as listed above. Modernization of these systems should happen in all three branches.

In addition to the four core systems, political changes are required. The most important one is the flow of money to politicians and political parties. This needs immediate reform. People have a right to know where political parties are getting their money from and how that money is spent. Otherwise, it will leave an open loophole for immense corruption.

The above should give a good idea for all those who today are rightly demanding change in politics and want to end the menace of public corruption. Without a fundamental system change true reform is not possible.