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Don’t reduce the fight against corruption to a morality play 2

India slips two places on corruption index 4

Why Bapu remains relevant 6

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Source : www.livemint.com Date : 2020-01-22

DON’T REDUCE THE FIGHT AGAINST CORRUPTION TOA MORALITY PLAY

Relevant for: Ethics | Topic: Challenges of corruption

A failure to consider the economic dimension of the problem may be a factor in India’s slowdown

The ongoing slowdown in growth has many underlying causes, both domestic and external.However, if one were forced to choose just one domestic cause, it might well be an intangibleone. The key causal factor connecting all other contributory factors to the slowdown is probablythe Narendra Modi government’s decision to treat corruption, black money and tax avoidance asa purely moral problem and not an economic one. When corruption is painted in such black-and-white terms, the solutions also tend to be driven by morality concerns. But systemic corruption isseldom a purely moral issue. It is embedded in long-term practices that may be ingrained in thesocial fabric. Trying to eliminate these practices too quickly may lead to negative economicoutcomes. This is what we may be witnessing right now.

It may not be entirely the government’s doing, for the anti-corruption hysteria started building upafter the unearthing of the 2G and coal block allocation scams, which saw a popular movementled by Anna Hazare, Arvind Kejriwal and Kiran Bedi capture our collective consciousness. In thefire-and-fury of the movement, all businessmen were painted as crooks. Post-2014, theCongress party tried to pin the same label on the Modi government, with Rahul Gandhi makinghis (in)famous “suit-boot-ki-sarkar" jibe in Parliament.

Given this backdrop, it is hardly surprising that the government saw corruption and taxcompliance as some kind of moral “dharma yudh" and not an economic issue that neededsensible and steady long-term measures.

We saw the impact of this moral attitude in the anti-corruption schemes that followed. First, wehad an amnesty scheme for foreign assets and incomes, where the penalties were soextortionate that almost no disclosures were made. This was followed by two domestic blackmoney disclosure schemes; one before demonetization and the other in the midst of it, wheretoo the penal taxation rates were too high. The failure of these schemes to garner adequatedisclosures and tax revenues testifies to the reality that even crooks weigh the need forcompliance based on calculations of costs and benefits: the costs of disclosing black money andpaying high taxes against the benefits of keeping the money with them. Then we also had thebenami transactions prohibition law, which probably impacted real estate transactions, too.

The decision to pursue the extradition of Vijay Mallya in UK courts for his Kingfisher loandefaults (as opposed to recovering what was possible through negotiations), the fraudinvestigations launched against many private and public sector bankers, and the aggressiveattempts to enforce tax compliance in general could not but have had a negative impact oneconomic sentiment.

The net effect of all these developments would have been the following: Illegal wealth, whetherheld abroad or at home, would have got frozen substantially in tax havens and unproductiveassets, instead of freely flowing through the economy. Any major clampdown on corruption andblack money will dampen economic activity in the short to medium term, for it crimps decision-making, consumption and investment. If you have hoards of cash, and the climate is that ofsuspicion, it is more than likely that you would slow down ostentatious or even regular spending.

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This climate of suspicion prevents bankers from lending and regulators from making sensibledecisions (for example, on reducing high spectrum prices). Even the government is paralysed byfear of being labelled “pro-business" in case concessions are offered to any beleaguered sector.

Put another way, reducing corruption to a morality play has impeded the government’s ability toquickly fix the telecom, coal and real estate sectors.

Now, consider a counter-factual. We know that last September, the government drastically cutcorporate taxes to 15% (plus surcharges) for new manufacturing units, and to 25% for therest—something that was promised as far back as the 2015 budget, which preceded those blackmoney amnesty schemes. Consider what kind of schemes would have been framed if theserates had been cut in 2015 instead of 2019. At the very least, it would have enabled thegovernment to bring down the penal provisions in those amnesty schemes, enabling a largerinflow of disclosures and taxes paid.

If we assume that high tax rates lead to higher evasion, it follows that keeping tax rates highmakes crooks out of businessmen who might otherwise have complied. By implication, we aresaying that tax evasion is a function of what we define as crookery.

The assumption that tax evasion must be punished heavily is driven by our moral sense thatthey must not be seen as benefiting from their efforts to diddle the taxman. But if we keep thethreshold for defining an economic act as a crime too low, too many people will become crooksand tax evaders for minor offences.

The purpose of law is to try and keep the definition of an economic crime at a threshold levelwhere most people will accept that it is a crime, and not at a level where evasion is seen asnecessary to make an economic activity viable and profitable.

R. Jagannathan is editorial director, ‘Swarajya’ magazine

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Source : www.thehindu.com Date : 2020-01-24

INDIA SLIPS TWO PLACES ON CORRUPTION INDEXRelevant for: Ethics | Topic: Challenges of corruption

The 2019 CPI draws on 13 surveys and expert assessments to measure public sector corruptionin 180 countries and territories, giving each a score from zero (highly corrupt) to 100 (veryclean).

In the Asia Pacific region, the average score is 45, after many consecutive years of an averagescore of 44, which “illustrates general stagnation” across the region. China has improved itsposition from 87 to 80 with a score of 41 out of 100, a two-point jump.

“Despite the presence of high performers like New Zealand (87), Singapore (85), Australia (77),Hong Kong (76) and Japan (73), the Asia Pacific region hasn’t witnessed substantial progress inanti-corruption efforts or results. In addition, low performers like Afghanistan (16), North Korea(17) and Cambodia (20) continue to highlight serious challenges in the region,” the report said.

According to Transparency International, while often seen as an engine of the global economy,in terms of political integrity and governance, the region performs only marginally better than theglobal average.

“Many countries see economic openness as a way forward, however, governments across theregion, from China to Cambodia to Vietnam, continue to restrict participation in public affairs,silence dissenting voices and keep decision-making out of public scrutiny,” it said.

Given these issues, it comes as no surprise that vibrant economic powers like China (41),Indonesia (40), Vietnam (37), the Philippines (34) and others continue to struggle to tacklecorruption, according to the report. The top ranked countries are New Zealand and Denmark,with scores of 87 each, followed by Finland (86), Singapore (85), Sweden (85) and Switzerland(85). The countries ranked at the bottom of the list are Somalia, South Sudan and Syria withscores of 9, 12 and 13. These countries are closely followed by Yemen (15), Venezuela (16),Sudan (16), Equatorial Guinea (16) and Afghanistan (16).

In the last eight years, only 22 countries significantly improved their CPI scores, includingGreece, Guyana and Estonia. In the same period, among the 21 countries that saw asignificantly fall in their scores are Canada, Australia and Nicaragua. In the remaining 137countries, the levels of corruption show little to no change, the report said.

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Source : www.hindustantimes.com Date : 2020-01-30

WHY BAPU REMAINS RELEVANTRelevant for: Ethics | Topic: Human Values - Lessons from the lives and teachings of great Leaders, Reformers

and Administrators

Jan 30, 2020-Thursday-°C

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The greatest Indian ever, Mahatma Gandhi, was killed exactly 72 years ago today. The contoursof his remarkable life are well known. From his early years in Gujarat and England to theinitiation into law to activism in South Africa where he pioneered the idea of non-violentresistance; from his return to India to his leadership in converting the Indian National Congressinto a mass-based political formation; from the Khilafat and Non-Cooperation struggle to theDandi March, Civil Disobedience and the Quit India movements which gave a new character tothe Indian freedom struggle; from his engagement with the question of caste and battlinguntouchability to cementing Hindu-Muslim unity; and from his unequivocal, firm commitment totruth to his political pragmatism, Gandhi’s contribution truly makes him the father of the nation.As Albert Einstein said, “Generations to come will scarce believe that such a one as this ever inflesh and blood walked upon this earth.”

It was both in life, and death, that Gandhi offered lessons for contemporary India. Two stand out.The first was his commitment to peaceful modes of struggle. Politics involves conflicts. Societyhas contradictions. Ideologies differ. And citizens feel strongly about issues. But there is one —and only one — way to express it, which is non-violent political mobilisation. Gandhi took on theworld’s biggest imperial power with sheer moral authority and political skills. And he defeatedthis mighty military machine with no arms. At a time when sections of citizens feel aggrieved, forreal or perceived reasons, at the government’s steps, they must abide by this Gandhian dictum.The lesson extends to the State too, which must exercise restraint in how it deals with dissent.

The second lesson was the importance of religious harmony and battling extremism. All his life,Gandhi worked for Hindu-Muslim unity. He was devastated at Partition and opposed it till thevery end. One of his finest moments was stopping violence and mayhem in the wake of thecountry’s division in Bengal and, at the end, in Delhi. But it was precisely this commitment tounity that led to his assassination. Nathuram Godse was a Hindu fanatic, inspired by a worldview which saw the country’s minorities as enemies and traitors. At a time when India stares at agrowing divide between religious communities, and extremism and fundamentalism appear to beon the rise, it must recall what Gandhi stood for and believed and emulate it.

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