CHINU’S BANKING AND HR NOTES: DISCIPLINE AND ITS QUALITIES Part 2 INTEGRITY IN PUBLIC LIFE & SERVICES Text of the Background Note at the CFCI Conference Submitted by Central Vigilance Commissioner Shri N.Vittal, Mr.Vittal is a visionary and a dedicated bureaucrat. He has assumed office as, Chief Vigilance Commissioner, at a critical juncture in the history of our country, coinciding with the heralding of the new economy. His relentless effort to bring out the hidden glory of our country, by restoring purity and integrity in our Public Life is inspiring. But on our part, how each one of us can bring about a CLEAN INDIA? Let us the community of Bank officers start first with working for CLEAN SBI, CLEAN CBI, CLEAN PNB etc. as a right beginning in a small step and integrate ourselves into CLEAN INDIA automatically The Pledge We, the Public Servants of India, do hereby solemnly pledge that we shall continuously strive to bring about integrity and transparency in all spheres of our activities. We also pledge that we shall work unstintingly for eradication of our corruption in all spheres of life. We shall remain vigilant and work, towards the Growth and reputation of our organisation. Through our collective efforts, we shall bring pride to our organization and provide value-based service to our countrymen. We shall do our duty conscientiously and without fear or favour. - - - : ( o0o ) : - - - India is a corrupt country rated at 69 out of 90 countries in the Corruption Perception Index by Transparency International for the year 2000. The Council for a Clean India is based on the premise that India need not continue to be a corrupt country. It can become a far cleaner country and probity in public life can be vastly improved. It has been estimated that if Indias corruption level comes down to that of Scandinavian countries, Indias GDP will grow by 1.5% and the foreign direct investment will go up 12%. Other countries have shown that it is possible to improve probity in public life. Till the 19th century, Britain was also a corrupt country. William Gladstone as Prime Minister, four times between 1868 to 1894, was able to introduce system changes to improve the situation. Lee Kwan Yew in Singapore over a period of three decades was able to reshape Singapore into one of the cleanest countries in the world. Botswana, a developing country in Africa has also shown that it is possible to have greater probity in public life. India has perhaps become more corrupt after independence because our democracy is based on corruption. Every political party collects funds and this is mostly in the form of cash or black money. Black money is the oxygen for corruption; corruption is the oxygen for black money. Political corruption leads to a vicious cycle of bureaucratic corruption, business corruption and criminalisation of politics. This vicious cycle can be and must be broken. Here we find that we are a catch 22 situation. The corrupt system benefits a lot of people in sectors of society including politics, business and bureaucracy. It is the people in power who can bring about a change. If they are benefiting from the present system, why should they try to bring a change? The CVC Bill which was referred to the Joint Select Committee, in its recommendation tried to dilute the powers of the CVC. One of the Members of Parliament explaining the position in a TV programme said, Kyon hum apne haath se apni gardan katenge? (Why should we cut our own head with our own hands?). This probably reflects the reality. Is there a way out? There is a silver lining in the cloud of corruption. At the gut level, we find that ultimately nobody wants corruption. Even those who are convicted of corruption, when they come to power talk about providing a corruption free society. Corruption is an important issue of debate in the media and elsewhere because we seem to be having a scam a week if not a scam a day. This year alone we have seen the series of scams starting with the Tehalka followed by the Ketan Mehta scam and the arrest of the Chairman of the Central Board of Excise & Customs by CBI. Out of the 100 crore people of the country perhaps five crore may be corrupt because they may be in a position of power. The remaining 95 crore people are not corrupt or from the cynics point of view not in a position to be corrupt. Corruption is use of public office for private gain. Only those in power can be corrupt. While the five crore corrupt are organized and in positions of power, the 95 crore non-corrupt are not organised. The silent majority, as appears in the main defect, it is silent. The challenge before us is whether the power of this 95 crore people can be mobilised to fight corruption. The CFCI is an attempt to see whether this silent majority can be organised and made more articulate. Our focus must therefore be to see how we can get effective results in the form of checking corruption and bring greater probity in public life. We should therefore focus on agencies which can get results and the technique that can bring out the desired outcome in the form of a less corrupt India. The first agency in the fight against corruption is the judiciary. In fact, the present position of the CVC, which has been entrusted with certain powers of supervision of the CBI or Enforcement Directorate is directly related to the Supreme Court Judgement in the Vineet Narains case. Public Interest Litigation and the judicial activism constitute one source, which can help to bring changes. The second set-of agencies include CVC, Vigilance Commissioners, Lok Ayuktas and Ombudsmen entrusted with the work of vigilance. These agencies can try to leverage whatever powers they have to see how changes can be brought out. The third agency is public opinion. Public opinion can be shaped by the media both print and electronic and also by activist NGOs. NGOs can play an important role in sensitising the people about the dangers of corruption and also help in taking effective action to check corruption. Major changes can come only if there is political will. Political will in our country gets exercised only under two conditions: a. when there is a TINA factor (there is no alternative) or b. when there is an advantage of a vote bank. One element of the effort for mobilising the political will may be to see how the issue of checking corruption and bringing better probity in public life can be projected in terms of the TINA factor or the vote bank advantage. In the Council for a Clean India we are trying to bring together all those who can play a role in implementing the above strategy for fighting corruption which could result in a clean India. We may now focus on the agenda for action. So far as the CVC itself is concerned, our primary responsibility is in checking corruption at the bureaucratic level in the Government of India and its organisations. We are following a three-point strategy: i. Simplification of rules and procedures so that the scope of corruption is reduced ii. Bringing greater transparency and empowering the public, and iii. Effective punishment by chasing prosecution and more effectively departmental inquiry cases. It is said that war is too dangerous a matter to be left to the Generals. Fighting corruption is too important to be left only to the CVC or CBI. Looking to the dynamics of corruption, it is necessary also to mobilise opinion and resources in other sections of the society to fight corruption. Political corruption can be overcome only if we are able to bring greater transparency in our politics especially relating to raising of funds. The root cause is black money. The removal of black money should be an important point to eliminate political corruption. I had brought to the notice of the Prime Minister the following strategy in this context. A Black money, which is at the root of corruption, in politics business and bureaucracy, should be effectively eliminated. This can be done in a three-phased programme. Phase I Three months i. Implement the Benami Transaction Prohibition Act 1988 ii. Amend the Prevention of Money Laundering Bill to cover Income Tax, Customs, Excise and Sales Tax iii. Enact Corrupt Public Servants (Forfeiture of Property) Act as suggested by the Law Commission and pending with the government from 4.2.1999 iv. Amend the Income Tax Act on the principle of zero exemption. Exempt all incomes upto Rs.2 lakhs per annum. Levy a flat tax rate of 20% on all incomes above Rs.2 lakhs. v. Amend the Customs and Excise Acts on the principle of zero discretion. Phase II Three months Introduce an amnesty scheme under which within a period of three months, all those who have black money can declare the same and regularize the same by paying an income tax of 21%. Phase III Effect the steps as under in the final phase a. Effectively implement the laws passed in Phase I & II, so that the amount of black money is practically eliminated. b. Hold the National Convention on Ethics in Government on the lines suggested by Dr C P Srivastava in his book Corruption - Indias Enemy Within c. Enact the CVC Bill after taking into account the comments of the CVC on the Parliamentary Committee d. Amend the Representation of Peoples Act so that the candidates against whom serious criminal charges have been framed in a court of law are prohibited from contesting the elections till their name is cleared in the courts of law. e. For all sensitive posts in Government and sensitive organizations like banks, PSEs etc., introduce the pattern, which is now prevailing for selecting the Director CBI. This will mean that neutral committees of experts will select the panels for filling up the sensitive posts. The government will appoint candidates to the sensitive posts from these panels. Once a person is appointed to a post, he will have a fixed tenure for three years The strategy for removal of black money from the economy needs some elaboration. Black money in India is like God. It is everywhere. I do not know why black money is also called the parallel economy because in geometry parallel lines do not meet whereas black money intersects with practically all sectors of our life. Recently there was great excitement about the Mumbai polices initiative to nab the underworld and cut its link with film world. Underlying this whole nexus will be the cementing influence of black money. Black money probably is very dominant in certain sectors like real estate, politics or the film world. Nevertheless, it is practically present in every sector of our life. Every corrupt public servant also in some way or the other hoards black money. Government has made valiant efforts in the past to tackle the problem of black money mostly in the form of amnesty schemes. The net result of governments effort has been more like trying to use petrol to put out fire. The latest was the VDIS scheme which added insult to injury by providing for the black money hoarders, a soft 30% rate of taxation (which in effect was only 10% according to knowledgeable experts), as against the 40% which honest tax payers had paid. No wonder black money flourishes in our system. Even when laws are made, they are not implemented like the little known Benami Transaction Prohibition Act passed in September 1988. This Act has not been implemented all these twelve years inspite of the CVC requesting government to empower the CVC under this Act and prescribe the rules for implementation. The advantages of removal of black money are obvious. The economy will become cleaner. As corruption goes down, economic development takes place. If Indias corruption level goes down to that of Scandinavian countries, according to the 1999 UNDP report for South Asia, GDP will go up by 1.5% and FDI by 12%. Now that the budget exercises are on, here are some ideas which government can consider for getting rid of black money substantially by an integrated approach. This approach involves three phases. In the first phase, government empowers itself with legal measures to tackle the problem of black money and also cut at the root of generation of black money. In the second phase which will last for three months, an amnesty is provided to all holders of black money to come out into the open and join the mainstream. The third phase is the stage where after the amnesty period is over, stringent action is taken to rid the economy of the menace of black money once for all. The first phase which can be completed in three months involves the following: i. Prescribing rules for implementing Benami Transaction Prohibition Act 1988 which is already on the statute book ii. Enacting the Corrupt Public Servants (Forfeiture of Property) Act which empowers CVC to confiscate ill-gotten wealth of corrupt public servants. The Law Commissions proposal is pending with government from 4.2.1999 iii. Adding Income Tax, Customs and Excise, in the schedule for Prevention of Money Laundering Bill which is before the Rajya Sabha, so that if the black money generated by evasion of these taxes is sought to be laundered within the country or abroad, strict action could be taken. iv. The main source of black money is evasion of Income Tax, Customs and Excise. So far as income tax is concerned, we should move over to a zero exemption, simplified flat tax rate system. Incomes up to Rs.2 lakh per annum should not be taxed. Any income above this limit should be uniformly taxed at a flat rate of 20% whether assessees are individuals, HUF, companies, partnership or any other type. This removal of discretion in one stroke will eliminate the scope of corruption. Incidentally, this will also enhance the income to the government because at present government hardly realises 17% as the effective rate for collection of income tax v. The Customs and Excise Act provide excellent opportunities for corruption because of the ambiguity and discretion at different levels to decide what should be the applicable rate. It will be much simpler if there is an approach of zero discretion by precisely indicating the rate that is applicable for a particular product or services. In fact advance ruling must become a regular part of the system so that well before industrialists import, export or move goods out of the factory, the precise rate is known. For instance, if we take a product like KitKat, is it a chocolate or a biscuit? Many would say it is a chocolate. I am told it has been adjudicated to be a biscuit whereby there is considerable saving for industry and government loses revenue. Once these laws are in place, the government should give a three-month window of opportunity to all holders of black money to come out into the open and pay a flat rate of 21%. The one percent extra tax is a token levy to show that the government would any day encourage honest tax payers who have paid 20% and not reward black money hoarders as was done in the VDIS. This is the second phase In the third phase, once the amnesty period is over, government should systematically utilise all the laws that are available especially those mentioned above so that black money is seized and brought into the main stream of the economy. If government were to take the initiative, it will be very difficult for people to oppose. What we have seen over the last five decades, especially in customs, excise and income tax is a whole culture built on the pressures, pulls and counter-pulls of vested interests seeking exemptions and special treatment. Once this culture of evasion of taxes is overcome, we would have entered a much better era. What better opportunity than the beginning of the real millennium to place India on the path away from the intersecting parallel economy? So far as the NGOs and other sections of society are concerned, the following specific action plan can be considered. Corruption Perception Index studies Robert McNamara pointed out in the Global Forum-II held on 28th to 31st May 2001 at The Hague, Netherlands that if any problem has to be tackled, it has to be first measured and then studied. The Corruption Perception Index published annually by the Transparency International, the Berlin based NGO has significantly contributed in focussing attention on the issue of corruption from a pragmatic point of view. All NGOs connected with fighting corruption can undertake to the extent of their resources publication of an annual, if not at least periodic reports about corruption perception index. The more such data are published throughout the country the more we would have built a tangible database which could be the basis for serious discussion and evolution of policy options. The Corruption Perception Index can be published annually covering - i. All the Government of India ministries / departments / organisations, public sector enterprises and banks to the departments ii. Organisations / public sector enterprises belonging to the State Governments and Union Territories. iii. Corruption Perception Index ranking State Governments / Union Territories iv. Corruption Perception Index of organisations located in a particular district or a city on the model of the report card brought out by the Public Affairs Centre at Bangalore by Dr. Samuel Paul. Sensitisation of the public about corruption While general sensitisation about the dangers of corruption is possible through nation wide observation of Vigilance Awareness Week from 31st October every year, which is the birthday of Sardar Patel, there could be special studies made to educate the public about the damaging impact of corruption. In practically every election, corrupt politicians get reelected because the voter considers every politician to be corrupt and this factor is discounted. Corruption may not figure as an issue in many elections. Issues like drinking water availability or employment or rise in prices may figure as prominent issues. If there could be continuous education through objective studies made showing how corruption is at the root of all other issues, which generally figure in elections, perhaps in course of time, the voters can be educated. This task may be undertaken by the NGOs. On the lines of the Corruption Perception Index a database on such lines can be also built up. Simplification of rules and procedures and elimination of Inspector Raj The simplification of rules and procedures can be recommended so that the scope for corruption is reduced. There are specific success cases, which can be replicated nation wide. For example, the Bangalore Municipal Corporation came up with the self-assessment of property tax when Shri K. Jayaraj, IAS was the Municipal Commissioner. Perhaps every other city can also follow the similar model so far as property assessment is concerned and thereby the scope for corruption could be reduced. Ms. Madhu Kishwar has come up with a study of how the five lakh vendors and cycle rikshaw pullers pay a bribe between them of 40 to 50 crores per month to various authorities including the police and the municipal authorities because of the licensing regime. The CVC has taken up the matter with the Chief Minister of Delhi, Union Urban Development Minister as well as the Chief Secretary of Delhi, Municipal Commissioner, MCD and Chairman, NDMC. Studies like that by Ms. Madhu Kishwar can be undertaken and systematic campaigns can be launched in different states and especially cities to eliminate the permit licence raj. What is needed is to highlight how a licensing system leads to massive corruption in which the sufferers are the urban poor. Application of IT Transparency and accessibility of information is one of the best antidotes for corruption. It should be possible for the NGOs to organise information kiosks and on the lines of MKSS, take up the issue of publicising sensitive information to check corruption at different levels. Trapping of Corrupt Public Servants The CVC, so far as its jurisdiction is concerned, has issued an order on 1st December 1999 about trapping of corrupt public servants. The NGOs can help in trapping of corrupt public servants so far as the organisations under the jurisdiction of CVC are concerned. If the Vigilance Commissioners also follow a similar strategy, such practices can be adopted in the State Governments also. Benami Black Money Scheme All citizens can participate in the Benami Black Money Scheme of CVC dated 12th July 2000 which may be seen in. Innovative use of the media TV, radio and the print media must be utilised extensively for the continuous debate about issues of corruption. Generally the media is quick to point out scams and this should be fully exploited. There is also a need for bringing in an imaginative touch and make the message more entertaining also. Smt. Pamela Bhandari, CVO, Engineers India Ltd. Has shown a particular talent for this. Perhaps EIL sources can be tapped to see how such innovative and informative educational programmes can be launched in the media. Contracting out government functions Contracting out government functions can be another method of checking corruption. I had explored this possibility of outsourcing of government in an Economic Times article which may be seen in. This strategy can also be tried in suitable places. Use of the Internet and continuous networking of anti-corruption agencies The CVC network can be utilised for continuously networking with all agencies which would like to come into the Council for a Clean India. The minimum service that could be done is to exchange information about the various studies of Corruption Perception Index, successful case of trapping, innovative methods adopted for publicising the anti-corruption activities and so on. Victor Hugo said that nothing is more powerful than an idea whose time has come. Perhaps the idea that we should have better governance and corruption must be checked is an idea whose time has come. The World Bank has realised especially after the collapse of the South East Asian economies in mid-97 that if a country is perceived to be corrupt, it gets less foreign direct investment. After the end of the Cold War, the earlier approach of the developed countries that even if country which is receiving the international aid is corrupt, so long as it was in the right camp, it did not matter (He may be a SOB but he is however SOB) no longer applies. The Global Forum for Fighting Corruption and Safeguarding Integrity was launched in February 1999 in Washington by the United States through its then Vice-President, Al Gore. This was followed by the Global Forum-II at The Hague, Netherlands from 28th to 31st May 2001. Robert McNamara who addressed the forum on 31.5.2001 pointed out: once the quantitative assessment about the level of corruption could be made by an agency like the Transparency International, the issue got focussed. There is now a move towards the issue of corruption becoming a part of the United Nations declaration and part of the global agenda. In this context, the comments made by Shri Ninan, Editor of Business Standard who also participated in the Global Forum-II are worth recalling. The wisecrack goes that everyone complains about the weather but no one does anything about it. I suppose the same thing could be said about corruption, on which Indira Gandhi famously explained away her own inaction: it was a global phenomenon, she said. Well that turns out to be true. Except that something is in fact being done about it - on a global scale. Conferences are being held in quick succession to discuss the issue: one at The Hague earlier this week, which 1800 people attended; another soon in Prague and then two more in South Korea before the end of the year. After working up remarkable steam on the environment and human rights, the global conferencing community has discovered corruption as an issue on which corrective action is urgently required. Dont laugh and turn the page. This is serious business. It may take a while before the conference leads to measurable action, but it seems pretty clear that well get there. Remember that that the first major international conference on environment was held in Stockholm in 1972. From there to Kyoto was just over a quarter century. The human rights movement has gone from agenda item to action item in a much shorter period, and I suspect that this will be true of corruption as well. Though what kind of action, and how effective it will be, remain unclear. The CFCI provides a forum for brainstorming and coming up with concrete and specific steps which can be taken to achieve the goal of a cleaner India. After all, as the Chandokya Upanishad says, if we are able to apply our knowledge with faith and also deep thinking, our actions become stronger and we can succeed. Yadaiva Vidyaya Karoti Tadeva Viryavattaram Bhavati! Shradhaya Upanishada TO BE CONTINUED..
Posted on: Tue, 20 Jan 2015 05:41:59 +0000