How the Left aids corruption

As the tail that wags the UPA dog, the Left has a powerful influence on policy direction. But so far this power has been used more to delay reforms than to achieve its own broader social agenda. Judged by its positions on various issues, there’s little doubt in my mind that the Left has become a reactionary force in Indian politics.

Consider a few examples: The Left wants the public sector strengthened, but all it has managed to do is send the most profitable among them hurtling towards bankruptcy (oil companies, for example). The Leftist heart bleeds for the unemployed; but it opposes the one reform that will make manufacturing companies hire big again: flexible labour laws, contract labour and temping. The Left is against the perpetuation of caste, but its equivocal stand in the quota debate has helped entrench caste even further. The Left is exploring the idea of a Third Front but who makes up this Front? The Lalus, Mulayams, DMKs and Gowdas of the world — almost all caste-based forces. Can you abolish caste by joining hands with casteist forces?

The Left’s ideological predilections are doing maximum damage in one area that concerns us all — corruption in daily life. Its policies actually help institutionalise corruption everywhere. For example, when the Left opposes rationalisation of petrol, diesel, kerosene and cooking gas prices, it is effectively making sure that public sector units will fall sick or walk on crutches. With little resources to invest, these companies are losing marketshare to rivals. When ONGC makes less money because it has to subsidise kerosene and cooking gas prices, it cannot invest much in securing energy assets for India abroad, thus compromising national energy security. On the other hand, by keeping kerosene prices far below economic levels, the government is effectively encouraging adulteration of fuel with cheap kerosene. Enter corruption.

The same goes for reservations. Given the huge demand for higher education, it’s obvious that we need an expansion of seats in technical education. This calls for the creation of more for-profit private educational institutions, which will, over time, cater to excess demand from the better off sections of society. But this expansion of capacity will not happen if the government insists on quotas even in private institutions. By backing quotas, the Left is fomenting a shortage psychosis and a fight over spoils, leading to further corruption.

More recently, in the wake of the market crash, the Left has been drumming up sentiment against foreign institutional investors (FIIs) on the assumption that they are destabilising the stockmarkets. This is one of the stupidest arguments I have heard. The FIIs may be selling, but does anybody buy shares only to sit on them? On the other hand, the sharp improvement in corporate governance levels can directly be attributed to FII investments in India’s blue-chip companies.

Why is no one buying when the FIIs are selling? Because there is no domestic institution big enough to offer a counterweight to the FIIs. Only long-term pension funds can afford to buy when the markets are falling. So who’s holding up pension fund investments in stocks? Surely, it’s the Left?

The Leftists have a stock answer to the problem of corruption — better enforcement, policing, etc. That is a perfect recipe for disaster. The story of Indian corruption is closely related to the amount of discretionary power in the hands of inspectors, policemen and bureaucrats. So more policing and regulation cannot be the main answer to the problem. With fairly clean personal records, Left politicians ought to be at the forefront of the fight against corruption. But their achievements are nothing to write home about.

Most major policy changes in the post-1980 period have been linked to corruption — delicensing, the opening up of telecoms and aviation, import liberalisation, the special economic zones policy, and the clearance of mill land for property development, to name just a few. Every one of these involved backroom skulduggery of some kind. But, equally, they have consistently reduced the power of babus to exhibit rent-seeking behaviour.

When one takes a close look at the history of corruption in India, one counter-intuitive conclusion seems possible: the corrupt have probably done more to reduce corruption than the supposedly incorruptible Left.

Email: r_jagannathan@dnaindia.net