Rebuilding India’s honesty quotient

Live mint By Anil Padmanabhan Mon, Jan 15 2018. 01 21 AM IST

Since the majority of people are honest, they are ready to embrace a rules-based regime

Rebuilding India’s honesty quotient

GST is an example of a transparent indirect tax regime which not only economically unifies the country but also creates economic efficiency. Photo: PTI

Last week, there was a message doing the rounds of dark social media, citing the recent 2G scam verdict delivered by the special court of the Central Bureau of Investigation (CBI) absolving all accused of criminal guilt. It argued that the entire episode involving corruption in public office that left us all in shock (and even spawned an anti-corruption movement and the launch of the Aam Aadmi Party) was just plain fiction and merely part of a political conspiracy to destabilize the then government.

Given that now most people take their cue from the unverified news/views circulated on dark social media, it wouldn’t be surprising if a section of us have begun to buy into this argument. And this is ignoring the fact that an indictment has been delivered in a similar allegation, on the allocation of coal blocks, and the steady flow of news reports on frequent scandals should however weigh against this preposterous claim.

Greater clarity on the 2G scandal will emerge once the CBI appeals the verdict. For now, it is important to clarify that there is no doubt (as the Supreme Court verdict in 2012 showed) that due process was not followed in the allocation of a national asset like spectrum. While the error of omission has been established, the CBI has been unable to prove the alleged error of commission and consequently the accused stand absolved.

Seemingly unrelated, I came across a recent study conducted by the Reader’s Digest to test the global honesty quotient through a fascinating experiment—12 wallets containing $50 equivalent of local cash and contact details were deliberately lost in 16 cities across the world, including Mumbai. India (where nine out of 12 wallets were returned) ranked second behind Helsinki (returning 11 out of 12 wallets). If Mumbai can be assumed to be the base metric for India, then the experiment suggests that average people or what is fashionably referred to as the ‘Aam Aadmi’ in the country are not dishonest.

Connect the dots and what do you have. A nexus of people seeking to subvert the system and forcing the majority of India to bear the opportunity cost of corruption—probably why few government policies have made any headway in the last 70 years, particularly in the social sphere such that we still have 400 million poor, diarrhoea is still the single largest killer disease, severe malnutrition in children in the 0-5 years age group and 600 million (last estimated) engaging in open defecation.

But the good news is that since the majority are honest, they are ready to embrace a rules-based regime. Over the last few years, the foundations of such a regime are slowly being put in place, despite substantive push-back from vested quarters.

A good example is Aadhaar. India’s ambitious project to award a unique identity to all residents in the country has survived two diverse political regimes and thereby gained acceptability—the privacy warriors can be accused of trying to trip it, but should also be acknowledged for pressuring the government to accept the need for stricter privacy rules.

Its use in delivering government services and subsidies, despite some real warts, have not only injected better efficiency in delivery but also saved the exchequer considerable money (the elimination of duplicates and ghost connections resulted in savings of Rs12,000 crore in LPG subsidy; and as Mint recently reported it led to the elimination of 130,000 ghost college lecturers).

Similarly, the introduction of the goods and services tax (GST) is another example of a transparent indirect tax regime which not only economically unifies the country employing the principle of the idea of ‘One Nation, One Tax’, but also creates economic efficiency. It is premised on the idea of self-assessment (which, thanks to the operational handicaps in the last eight months leading to the suspension of the operational safeguards, has been interpreted by some businessmen as a means to bypass the tax system; the loss in revenue is estimated at a staggering Rs30,000 crore).

Indeed, the transition to a rules-based regime is a work in progress and it will take some years to achieve a mindset-reset of the entire nation. But as the old adage goes, anything well begun is half done.

Anil Padmanabhan is executive editor of Mint and writes every week on the intersection of politics and economics. His Twitter handle is @capitalcalculus.

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