Corrupting the movement

The day opened to a very strange piece of news: the megastar yogastar Baba Ramdev has refused to call off his `fast unto death’ on the issue of black money. Ok, it’s not very strange if we simply view this as a publicity stunt. But is it only for publicity or does he have deeper reasons for this fast? Some think that he is doing this at the behest of his political masters to derail the Jan Lokpal Bill. I think the bill is a bad idea, and I think Ramdev has other, more personal reasons to go on this fast. The trusts that he is associated with are enormously wealthy, and little is known about the source of their income, or the source of income of people who donate to these trusts. One politician did ask for an investigation into the source of his assets, but nothing else has been heard about it since. My feeling is that Ramdev is trying to establish himself as a leader of the anti-corruption lobby in order to avoid any serious charge of corruption for himself or his financial backers. Right now, any investigation into his amassed wealth, or even of his followers, can be projected as an underhanded scheme by the government to undermine his credibility. So all his financial dealings remain unseen by the probing eyes of the Income Tax department — and I think he is only the face of an organisation, not the brains — there are others behind the financial dealings of his organization.

Someone really should go on a fast unto death for investigating the finances of Ramdev.

Government obstructing justice

The Supreme Court has come down hard on the government for not disclosing the names of Indian depositors of black money in Swiss banks, and for talking about only Hassan Ali whenever the issue of black money comes up. It has further scolded the government for not taking action about black money despite having the necessary information. Clearly, the government is trying to avoid prosecuting such people, and does not want the court to take any steps either. In other words, the government is obstructing the course of justice by not disclosing information and often by misleading the court.

Is it really sufficient for the court to rap the Solicitor General? If the decision to obstruct justice has been taken at ministerial levels, shouldn’t the court try to find a way to bring those responsible to justice? Even ministers are not above the law. Really.

Thoughts on the Jan Lokpal Bill

Everybody seems to have an opinion about the Jan Lokpal bill (draft available here) these days — after Anna Hazare threatened to starve himself to death if the government didn’t agree to put up the bill in the parliament’s next session. Thousands of people waved little flags and wore the white Gandhi caps worn by Anna Hazare and associated with followers of the Mahatma, including Nehru and almost every leader of Congress (but most probably never worn by the great soul himself). It is perhaps a bit ironic that the anti-corruption marches had so many people wearing the Gandhi caps, when those caps are associated with the picture of corrupt politicians. Shiv Visvanathan’s description of the events as a simulacrum is not without merit.

There are now several articles in the blogosphere spelling out problems with the Jan Lokpal bill, for example by Shuddhabrata Sengupta here and Mihir Sharma here. The criticisms focus on the powers of the Lokpal, which appear to be unbridled, and the mechanisms of appointing or removing the said authority. The comments on Tarunabh Khaitan’s post at Law and Other Things seem to be quite well-reasoned, although restricted to a small group of people.

I have another problem with the `movement’. The movement originates in the failure of our justice system — there would be no such movement if the courts did not allow the rich and the powerful to delay or alter the course of justice, often through official mechanisms. The police is completely controlled by the government, which translates to politicians, and the investigations against politicians are often cursory to nonexistent as a result. And this neglect of duty often extends to those in business and industry who fund politicians.

By mobilising in favour of yet another office — that of the Lokpal — the public is reaffirming its loss of faith in the judiciary, the police, the legislature, and in fact the existing laws. So why do they expect this other office to function any better? If there is no one in all these other offices who can be relied upon, or if there is so much corruption in all courts, all law-enforcement agencies and among all politicians that it smothers all efforts to bring the corrupt officials and politicians to justice, how will the office of the Lokpal remain free of it?

My feeling is that one bill or one office will not serve the purpose of preventing or removing corruption from public offices and officials. The only way that will happen is if the existing laws are enforced properly, justice is served quickly, and action is taken quickly against those who protect politicians or rich people. Some new laws may be needed as well, but those must be easily enforceable.

For example, one way of restricting the movement of cash is to prevent the withdrawal of more than Rs.25000 cash per day from any bank account. There was a proposal by the finance ministry under Chidambaram in 2005 to impose a 0.1% tax on cash withdrawals above Rs.10000. Savings bank accounts were exempted from this soon afterwards. I cannot help but think that the pressure to exempt savings accounts must have come from the beneficiaries of such withdrawals, businesses in the real estate in particular, who ask buyers to provide a significant percentage of the price in cash.

Another way of preventing `official corruption’ — i.e. the kind of corruption which grants contracts at inflated prices — is to ensure that whenever such a case comes before the court, all files concerning the government decisions should be provided to the court without delay. I find it very strange when the government asks a court for time to prepare its defense of its own decision, and even stranger that the courts allow such petitions.

Anyway, the Jan Lokpal bill may be passed, with or without modifications. Some actions will result soon after, but in the long run I think it will undermine the functioning of all other offices of law enforcement, thus creating an effect opposite to what it was supposed to.

So what was the problem with the JPC?

I wonder if anyone else finds it curious that the government agreed to the JPC (joint parliamentary committee) even before the Parliament opened for the budget session, after the entire winter session was lost due to the logjam over scams, in particular the Rs. 1.7 lakh crore (that’s 1.7 x 10^12 = 1.7 trillion) 2G scam. The logjam was caused by the government refusing to accept a JPC, and the opposition trying to force one. And now, with a recess intervening, the government has agreed to the formation of JPC, and the opposition is muted in their jubilation. So why didn’t they accept one earlier?

Certain things have happened in the meanwhile, CBI has arrested Raja, the Supreme Court has goaded the CBI into questioning Anil Ambani, whose ADAG group is supposed to have benefited immensely from Raja’s policy of allocating 2G spectrum without an auction, CBI has filed an appeal in the Supreme Court against Advani (on the Babri Masjid demolition case), and Advani has apologised to Sonia Gandhi for saying that her family has huge undisclosed sums of money in Swiss bank accounts.

Make one wonder, were backroom deals done between the government and the opposition to ensure that only a few scapegoats are punished? Will we ever see a report on how much was paid as bribe by various people?  Will we ever see a return of the crores that went into these bribes? Will the nation regain more than a small fraction of the loss incurred to the exchequer? We have to wait and see.

The CWG billions

Although I normally tend to disagree with almost anything said by Nitin Gadkari, I cannot help but agree with what he has said now. I don’t mean the thing about having `proof’ that all are indeed culpable, but the question that must have been on everyone’s mind since the announcement that the `Group of Ministers’ was going to discuss corruption in organising the commonwealth games. Kalmadi had a budget of only Rs.1600 crores (16 billion), while the total expenditure for the games, including all the construction work, was supposedly Rs.70,000 cr (700 billion). So why not probe where the rest of the money went? Why focus on only a tiny fraction? Anyone except those with unreasonable trust in the Congress party would wonder.

I also agree with Gadkari that the money siphoned out of these 700 billion went out by the Mauritius and similar routes. But I don’t agree that it is lying in Swiss banks. I expect it saw its way back to India as `Foreign Institutional Investor’ (FII) money, which flooded the stock market over last month. The figure for that is already $10 billion, i.e. about Rs.450 billion, which sounds like it could be the amount stolen from the CWG organisation kitty by the corrupt politicians and industrialists.

Corruption at this scale will probably never be fully exposed, since anyone who wants to probe this can be silenced, either by a gift of a few crores, or simply `silenced’.

Grading Indian education

Some sort of a global ranking of universities has come out, and it seems that Indian universities have done rather badly. The highest ranked Indian institution is Bombay IIT at 187th in the list and IIT Delhi at the 202nd place.

Among Asian universities alone, the picture is not much better — IIT Bombay is at the 36th place, followed by the IITs. The regular universities are further behind — the University of Calcutta coming at the 99th place.

To those of us making a living out of education, this does not come as a surprise. Politicians have long controlled all aspects of higher education, with mainly two goals in mind. One is the goal of creating influence, which is perhaps the primary goal of politicians. Universities provide a fertile breeding ground for their lieutenants — colleges provide the foot soldiers. So the students’ union elections get the big parties involved. Often government machinery, including the police, is brought out to influence the students’ election.The university administration, appointed by the government, often takes sides in these elections. The result is an atmosphere of distrust and fear,  and a sense in the campus that the administration exists only for a part of the university population.

The goal of creating influence and following is also behind various laws regarding reservations in the student and faculty populations. Reservations ensure that a large section of the students often do not meet the same criteria for admission as others. And perhaps more importantly, many of the faculty are downright incompetent. This last is not only a result of official reservation policies, but also because `unofficial quotas’ lead to hiring/promotion of incompetent people simply because they are close to some politician, either by birth, or by stated political affiliation.

The other goal for the politicians is of course money. Education has a lot of money in it,  both government and private. Nearly all private colleges and universities, mushrooming around the country, have the sole aim of making money for their `owners’ who usually double as principals or rectors. The promise of a degree, usually not much better than a vocational diploma, nets a huge `capitation fee’ in addition to the usual admission and tuition fees. Since the supreme court put a cap on such fees, these are taken in cash, usually without a receipt. This leads to several million rupees of unaccounted money for a small college, to much more for the `universities’. The big owners are themselves politicians, but many more colleges simply provide a cut to the politician who arranged for the land and necessary permits. This of course does not directly affect the IITs or the government  universities, unlike the other kind of interference, but this does create an overall atmosphere of corruption and a lack of faith in the education system. Anyone with a lot of money can  get into one of those private colleges even if they qualify for the government colleges, and once they are in, they must be granted a degree, since the colleges have taken much more money for their admission than they are legally allowed to take, and much more than is really required for a good education.

Everyone suffers as a result, as we can see from the university rankings.Is there a way out? Sure, but it requires political will, judicial action (or perhaps judicial activism) and perhaps a lot more activism from the people.

Perhaps I will compile a short list of people in the faculty of various universities who have close relationships with political parties or politicians. Interested readers can then supply more names and/or submit RTI queries to the universities in question regarding educational qualifications of such people. And of course there are other reasons for the decline of education in India, in particular in the IITs, some of which I can also discuss. All in another post.

Taxing the doctors

As this news report from the BBC shows, doctors in Greece have been guilty of the same sort of practices as I mentioned in an earlier post, of not giving a receipt. And as the Greek economy has crashed and the people have started rioting in protest of the `austerity measures’, the government has fined a few doctors for underreporting their income. Surely our government can do something similar, after all, the Indian economy is in a worse shape than Greece’s — at least in terms of a much higher percentage of people being without food, water, clothing, education or medical services.

Gifts to the rich

Thanks to Paranjoy Guha Thakurta for writing what must be in the minds of many — the government gets nothing by way of service taxes from doctors and lawyers, and could have gained an additional Rs. 10000 crores from taxing these two professions alone! And what he does not ask has been on my mind for a while — many doctors and lawyers with a private practice, i.e. outside a hospital or a firm, do not offer a receipt unless asked. Of course they always provide a receipt when asked, but many clients do not bother to ask for a receipt, especially if they are not reimbursed for the bills. Lawyers’ bills are not reimbursed in general anyway.

Guha Thakurta also mentions that `revenue foregone’, i.e. the revenue given up by the government by way of exemptions and concessions (and `incentives’ I suppose) to companies rose from Rs 4,58,516 crore in 2008-09 to Rs 5,40,269 crore in 2009-10. I wonder how much revenue is lost through not auditing the accounts of doctors and lawyers.

A possible RTI question would be how much income — outside salaries, if any — is declared by these professionals, and how many doctors and lawyers have been investigated by the Income Tax dept for lifestyles not appropriate to declared incomes.

Unreal Estate

To anyone looking for a flat in Calcutta and surroundings it must seem that real estate prices in the city have gone through the roof over the last couple of years. Residex, the new real estate index confirms this. Rs. 100 invested in real estate in 2007 would have been Rs. 159 at the end of June, 2009, a bigger growth than in any other Indian city. In comparison, real estate worth Rs. 100 in 2007 would have been worth Rs. 58 in Bangalore, Rs. 71 in Jaipur, and Rs. 65 in Hyderabad.

The area-wise growth in real estate prices in is also quite instructive. Places like Alipur and Bhawanipur are always considered expensive to live in, and price increases there have stayed ahead of the average. On the other hand, far-flung places like Thakurpukur or Sonarpur show more than a 70% increase in prices, while the very thickly populated, almost slummy area of Jadavpur has seen a near doubling of prices in that year and a half. Not to mention the astounding trebling of real estate prices in Barrackpore, which is  a suburb of Calcutta more in principle than in practice.

So what is the explanation behind this extreme growth in real estate prices? Several big players entered the Calcutta real estate market around the year 2000, and they have been pushing the prices up all along. Not all the flats built by these builders get sold immediately. Half or more of the flats remain empty to begin with and are sold over time, either directly by the builders themselves or by real estate investors. I have met some of these `investors’, and thought they were proxies of the same builders or banks, helping to drive up real estate prices.

In any case, this helped keep prices high for branded real estate. But now small builders and their agents have started to raise prices to very high levels, about 60-70% of the prices demanded by the top builders. I doubt if they are selling all their flats either. So how are these prices sustained? My guess is the following. The big builders got in because the CPI-M acquired land through less than legal means and gave it away at rockbottom prices. Or because the government allowed various laws, including environmental ones, to be circumvented by the builders. Or allowed industrial land to be converted into residential land. All in return of fat bribes, one presumes. But in any case, the initial investments for the builders at that time were substantially less than what is normal for any city of this size. So the builders could take time to sell the flats and still make a profit. That was for the big builders. But more recently, small builders have started charging exorbitant rates. It is not clear if small builders can afford to leave unsold flats lying around, but medium sized builders certainly can. That suggests that they are probably getting similar `facilities’ as the big builders. Not only the CPI-M, which is trying to make as much cash as possible before it is inevitably ousted from power in another year or so, but also the TMC, some of whose area bosses are notorious for their corruption, are helping the landsharks.

And there is another reason for the price hike. Many flats are bought by people who do not intend to live there. Such buyers also include corporate houses and banks. Even in buildings as old as 30 years, about 10% of the flats are unoccupied, owned by corporate entities and banks. And in many cases, flats are a way to park unreported cash. With various economic bubbles bursting of late, banks and corporate houses can be expected to wake up to the fact that they have very large non-performing assets in the form of unoccupied flats. And if the government follows its own rules and demands a tax return of everyone who has a flat in the city, it will find a lot of hidden treasures. And then the real estate bubble of Calcutta will burst again, like in many other cities across the country.