Former Chief Economic Advisor Kaushik Basu’s suggestion led to instant outrage followed by serious debate.
· Today · 08:30 am
contentious the law can be, I learned by fire, when I was chief
economic adviser in India. Corruption has been a long-standing problem
in India that successive regimes and governments have battled or given
the impression of battling and mostly failed. One can sense the despair
in the classical master of statecraft, Kautilya, when in his magnum
opus, Arthashastra, written nearly three centuries before the Christian
era, he observed: “Just as it is impossible to know when a fish moving
in water is drinking it, so it is impossible to find out when government
servants in charge of undertakings misappropriate money.”
two thousand three hundred years after those lines were penned the
nation was being traumatised by one corruption scandal breaking after
another… Anna Hazare’s call to eradicate corruption struck a chord and
brought thousands out to protest.
well-intentioned individuals in government looked at the vastness of the
problem in despair, I spent a lot of time thinking about what we,
sitting in the North Block, could do to curb this dreadful menace that
inflicts harm on people and, in my view, damages economic development.
simple idea struck me about one particular kind of corruption, which I
went on to call “harassment bribery,” and how it could be reduced. I
felt convinced that the idea was morally and theoretically well founded
enough to at least merit debate and discussion. Let me present the gist
of this idea. In India ordinary citizens and, at times, even large
corporations are asked to pay a bribe for something to which they have
legal entitlement. I had called these “harassment bribes.”
a woman has filed her tax return properly and it turns out that the
Income Tax Department owes her some money. It is not uncommon for a
critical employee of the department to ask for some money before he
releases the reimbursement.
To give another example: a
person has imported some cargo, done all the required paper work, and
paid the requisite taxes; he is nevertheless asked to pay some money in
cash before he can get all the papers that he needs to take the cargo
out. These are examples of harassment bribes.
One advantage of getting a senior government job is that one is never asked to pay a harassment bribe.
it is genuinely easy for those high up in government to forget that the
crime of bribery is ubiquitous. Plaintive calls for help from relatives
and friends being harassed for bribes act as a reminder that all is
well in the underworld and not all is well for the common citizen. This
also raises a question: are these ordinary folks who pay bribes culpable
given they are virtually compelled to do so?
to India’s main anti-bribery law, the Prevention of Corruption Act,
1988, bribe-taking and bribe-giving are equally wrong. In the event of
conviction, both the taker (usually a public servant) and the giver are
equally punishable. As section 12 of the law states, “Whoever abets any
offence [pertaining to bribery], whether or not that offence is
committed in consequence of the abetment, shall be punishable with
imprisonment for a term which shall be not less than six months but
which may extend up to five years and shall also be liable to fine.”
may be added here that the giving of a bribe is treated under the
Indian law as abetment to the crime of bribery, and so bribe-giving is
covered under this section. I want to point out that there is,
allegedly, an exception to the law on bribe giving in the form of
section 24 of the Prevention of Corruption Act, 1988, which says:
“Notwithstanding anything contained in any law for the time being in
force, a statement made by a person in any proceeding against a public
servant for an offence under sections 7 to 11 or under section 13 or
section 15, that he offered or agreed to offer any gratification (other
than legal remuneration) or any valuable thing to the public servant,
shall not subject such person to a prosecution under section 12.”
However, section 24 has a lot of ambiguity. In a 2008 case, Bhupinder
Singh Patel v. CBI, 2008 (3) CCR 247 at p. 261 (Del): 2008 Cri LJ 4396,
it was ruled that this exemption would apply only if the bribe giver
could establish that the bribe was given unwillingly and in order to
trap the public servant. The word “unwillingly” is so ambiguous that the
use of this judgment as precedence is not easy.
consequence, section 24 has effectively become a clause meant
exclusively for those wanting to carry out a sting operation to trap a
public servant in the act of bribe taking, and seeking protection from
the law. Consequently, section 12, which suggests that bribe-giving and
-taking should both be treated as equally punishable, has come to
dominate the Indian anti-bribery legal system. This, in the case of
harassment bribes, seemed to me to be wrong. In situations where a civil
servant asks for a bribe from a person who is legally entitled to a
particular service, it is important to distinguish between the
perpetrator of a crime and the victim.
But over and
above this moral position, there is an interesting strategic argument
that one can put forward to distinguish between the bribe-giver and
Note that under the current law, once a bribe
has been paid, the interests of the bribe giver and the taker become
fully aligned. If this criminal act gets exposed, both will be in
trouble. Hence, they tend to collude to keep the act of bribery hidden.
And even if they do not actively collude, each has a level of comfort in
the knowledge that it is not in the interest of the other to reveal any
It is not surprising that while all
Indians know of the widespread prevalence of bribery and, behind closed
doors, people will tell you how they had to pay a bribe, this is seldom
revealed in the courts and a vast majority of bribery incidents go
unpunished. It seemed to me that this could be changed by making the
following simple amendment to the Prevention of Corruption Act.
all cases of this kind of bribery, declare the act of giving a bribe
legal while continuing to hold the act of taking a bribe illegal. If
needs be, we could double up the punishment for taking a bribe, so that
the total magnitude of punishment remains the same. Further, once the
bribery has been proven, the bribe taker will be required to return the
bribe to the giver.
Now think of a civil servant trying
to take a bribe. He will know that, once he has taken the bribe, he can
no longer rely on help from the giver in keeping this fact a secret.
Unlike under the existing law, after the bribery, the interests of the
giver and the taker are diametrically opposed to each other. Knowing
that this will happen, the bribe taker will be much more hesitant to
take the bribe in the first place. Hence, if the law were amended, as is
being suggested here, the incidence of bribery would drop sharply...
idea seemed sufficiently compelling and of practical value that I
quickly wrote and put it up on the website of the Ministry of Finance as
a working paper.
There was a rancorous debate going on
in India on corruption at that time. Much of the debate, while founded
in genuine passion and concern, generated few practical ideas of what
could be done.
Most of the popular talk was of creating
a layer of special bureaucracy to catch and punish corruption. Little
thought was given to what David Hume recognised some 250 years ago –
that with each such layer of bureaucracy, there would be a tendency for a
new layer of corruption to arise. This was the fundamental question of
who would police the policeman. Indeed, one factor behind the high
incidence of corruption in India was the complex layers of laws and
inspectorates that we had built up over time in order to curb
I felt pleased with the idea. I knew I was
addressing only a segment of the problem – namely, corruption that took
the form of harassment bribery – but this segment was not negligible by
any means. If we could bring this down drastically through a small
change in the law without adding to the size of the bureaucracy, that
seemed to be worthwhile. What I did not anticipate was the level of
anger (and misreporting) that my note would generate. It began with
small mentions of my paper in the newspapers, followed by lacerating
editorials and op-eds. Some of them stemmed from the mistaken view that I
was somehow condoning corruption and saying that bribery should be made
legal. I may add that I myself would be upset if someone made such an
argument (even though I must admit I could never quite follow what
making bribery legal means).
Soon there were some
Members of Parliament (MPs) writing to various leaders in government
protesting against the floating of this idea. Two MPs, members of the
Communist Party of India, wrote letters to the prime minister and the
finance minister, asking that action be taken against such an immoral
idea on a government website and insisting that it be taken down. Then
the television channels picked this up and there were some screaming
matches debating the idea.
Some individuals, including
some prominent industrialists, called me up to support this kind of an
amendment to the law. Narayana Murthy, the founder of Infosys and one of
the pivotal figures in India’s takeoff in the information technology
sector, publicly stated that it deserved serious consideration and was
roundly subjected to criticism himself. I knew that, at least for the
next two or three years, my idea was dead. No politician would want to
be associated with it. Not openly.
Yet, curiously, it
revealed a side of Indian politics which gave me hope. At the peak of
this debate, when protest letters were sent to the finance minister and
others and the political leaders had to write back and explain the
government’s position on this, I thought I would be asked to take the
working paper down from the Ministry of Finance website. That did not
Moreover, no politician in the ruling party,
not one, asked me either to relent or told me off for causing
embarrassment to the government.
On April 23, 2011, a
Saturday evening, the prominent TV journalist Barkha Dutt phoned me
requesting me to appear on her show We the People the following evening.
Having an instinctive taste for such discussions but not knowing
whether this would churn up the debate more or dampen it, I decided to
do something which I rarely did – ask the finance minister or the prime
minister whether I should risk stoking the fires by participating in the
The finance minister was away in Vietnam so I
phoned the prime minister at his residence. When he called me back, I
told him I enjoyed these debates and, left to myself, I would love to
explain my idea to the public, but since I had caused grief enough to
the government, I was wondering whether or not I should go on the Barkha
Dutt show. This was the first time I was speaking to Prime Minister
Singh on this subject. There was a moment’s pause, and then the prime
minister said that he had heard about my idea on how to control
corruption, but he had to say he did not agree with me on this. Fearing
that he had heard one of the many misstatements that were floating
around, I explained briefly what my argument was. I doubt I would have
succeeded in persuading him so quickly. But anyway, what he went on to
say was very heartening to me.
He said he was leaving
the decision on whether or not to appear on this particular programme to
me, but since it was my job as chief economic adviser to bring ideas to
the table, I should feel free to articulate my ideas in public and
discuss them. Eventually, I, on my own, decided not to appear on We the
People, but I participated in many subsequent debates and felt strangely
good about India.
There are not too many developing
countries, and not that many industrialised nations either, that would
give this kind of space not just to the nation’s writers, intellectuals,
and journalists, but also to its professional and technical advisers to
air new ideas that may be unpopular and perhaps not even in keeping
with the government’s own position, but are potentially useful in the
This strategy creates short-term turbulence,
but by enriching the quality of a nation’s public discourse it
contributes to a more robust development.
Excerpted with permission from An Economist In The Real World: The Art Of Policymaking In India, Kaushik Basu, Penguin Viking.
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