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Cornell Professor Seeks to Legalize Bribe-Giving in India

Kaushik Basu is Carl Marks Professor of International Studies and Professor of Economics,  Cornell University. He is currently on leave from Cornell, as the arts website there tells us importantly. For now,  he is chief economic adviser, ministry of finance, government of India.

Let’s get this right. The Chief Economic Adviser to the Ministry of Finance, Government of India, wants a certain class of bribes legalised? He says so in a paper titled “Why, for a Class of Bribes, the Act of Giving a Bribe Should be Treated as Legal.” The paper is up on the Finance Ministry’s website. Kaushik Basu, modestly describes his contribution as “a small but novel idea.” And again, as “a small but fairly radical idea.”

The timing is radical. Something like a plan to make sailing less risky issued by the Chief Officer of the Titanic between the first and the second icebergs. (The Skipper being too busy trying to stay afloat in all that gushing floodwater from CWG, CVC, CAG, 2G, DB, Radia, cash-for-votes, WikiLeaks, illicit funds overseas, Supreme Court censures and more.) And with the country sick of corruption — a giant issue in the polls in States like Tamil Nadu.

There are “harassment bribes” and there are “non-harassment bribes,” says Dr. Basu. He is mainly concerned with the former. Consider an exporter who has fulfilled all formalities but “is asked to make an illegal payment before getting a customs clearance.” Or the bribe someone gives an income tax officer to get one’s tax refund cleared. All these are “harassment bribes.”

Dr. Basu’s solution? “The central message of this paper is that we should declare the act of giving a bribe in all such cases as legitimate activity. In other words, the giver of a harassment bribe should have full immunity from any punitive action by the state.” He does clarify that the “act of bribery is still being considered illegal.” But he is suggesting a change in law. He argues that the “entire punishment should be heaped on the bribe taker and the bribe giver should not be penalized at all, at least not for the act of offering or giving the bribe.”

The Chief Economic Adviser even says where bribery is proved in court, the bribe should be returned to the giver. At present, the bribe giver and taker share a “collusive bond” since both have violated the law. Giving the former immunity, he says, will break that nexus. In his view, the changed law would incentivize the bribe giver to rat on the bribe taker, since he himself faces no punishment. Presto! A ‘dramatic drop in the incidence of bribery.’ As Dr. Basu proudly says: “The reasoning is simple.”

Actually, it is simple-minded.

The Chief Economic Adviser dresses up these arguments for middle classes forced to make payoffs. For instance when a person allotted subsidized government land “goes to get her paperwork done … she is asked to pay a hefty bribe.” Yet, his law will in no way curb bribery where scarcity exists. For instance putting a child into school where seats are hard to get. Or even getting that apartment or the land he speaks of, allotted. Raising the stakes

Dr. Basu’s way could mean the victims face heavier demands. After all, the bribe taker needs to be compensated for the higher risk he now runs. And there is no focus at all on government failures that lead to scarcity. Nor on priorities that gift the corporate sector over $103 billion in write-offs in just this budget. Nor on spending policies that cut food subsidies and punish the poor.

The idea of legitimizing this culture is an obscene one. Basu is no stranger to such legitimation.  Back in 1994 he wrote in New York magazine , “Some time ago in New Delhi, we had a 13-year-old, Lalita, who came to work in our house. After a few weeks, in an effort to banish child labor from our household, we gave her notice and offered to pay her a little not to work. She came back the next day with her father, a rickshaw puller. It was immediately evident that he loved her. He begged us to take her back because the family would perish otherwise. We decided to listen to him.”

Bribery is systemic. To ask a people burdened with it to accept bribe-giving as legal is to demand they accept both corruption and the existing structures of power and inequity it flows from. This is a perverse idea. And it is nowhere as “novel” as he makes it out to be. As early as the 1960s, Gunnar Myrdal trashed such claptrap for seeking to create “resignation and fatalism” amongst the poor and less privileged, also for projecting such “asocial behavior” as normal.

Decades ago, debates on this idea ended up acknowledging how morally corroding such practices were. But I guess with a government as embroiled in corruption as the one he advises, there’s a need to exhume the corpse of that argument and dress it up as “novel.” Dr. Basu dolls up corruption — for that is what bribery is — at precisely the time the Indian people are showing their revulsion to it. , Dr. Basu’s “small but fairly radical idea” suits those who can pay and devastates those who cannot. Those who can and do make payoffs are unlikely to upset a system that works for them. Where bribery is systemic, the “collusive bond” of giver and taker will strengthen if this dishonest idea becomes a law.

Take this assumption: “Under the new law, when a person gives a bribe, she will try to keep evidence of the act of bribery — a secret photo or jotting of the numbers on the currency notes handed over and so on — so that immediately after the bribery she can turn informer and get the bribe taker caught.” Poor people taking secret photos with hidden cameras (available at the nearest malls) and subtle pens which mark notes so the bribe taker won’t know? How dumb an idea is that? The assumption that bribe givers will ring the bell after the bribe ignores the realities of power equations in our society and assumes access to legal recourse. Where the giver is poor, Dr. Basu’s law will favor the taker. Where the giver is rich, it will favor the system of bribery.

Consider these situations:

The perpetrators of the cash-for-votes scam that corruptly kept this government in power would walk scot free under Dr. Basu’s law. (Maybe that’s the intention?) Can you see them saying, ‘hey, these are the MPs who took our cash?’

What if a 2G scamster says he felt legitimately entitled to spectrum and paid “harassment bribes?”

It would be fine for candidates to buy off voters during elections. After all, it is the takers who are to be punished, even if they turn out to be a few million.

Will a person offering a bribe to a judge be punished if the latter reports it? If the judge accepts the payoff, will the giver report it?

A bribe giver exploits the drug-abuse habit of an official. The drug peddler has full immunity from any punitive action by the state?

An Indian agent of a foreign intelligence outfit successfully bribes Defense Ministry officials. Would that agency then say ‘Aha! They accepted kickbacks?’ Great! We lynch the officials and congratulate the espionage ring — which is also entitled to its money back.

These situations would be brushed off by Dr. Basu as “non-harassment bribes.” He asks: “Should the bribe giver be given full immunity in such cases? The simple answer to this is a — no.” Dr. Basu says, “A full answer to how the law should treat such cases will have to await further analysis.” However, he is “inclined to believe that even in such [non-harassment] bribery cases … the punishment meted out to the bribe taker should be substantially greater than on the giver.”

Is he wanting a certain “class of bribes” to be legalized or is he really asking for the bribes of a certain class to be okayed? It seems the latter. The companies behind the 2G kickbacks will do fine in Dr. Basu’s law. Their conduct will have to “await further analysis.” Dr. Basu half admits his scheme could leave public servants “vulnerable to blackmail and false charges of bribe-taking.”

Interestingly, about half the references listed at the end of the paper hark back either to other papers by the author himself; to papers co-authored by Dr. Basu with others, to those by still others in books he has edited: or to papers by yet others citing him in the title. Modesty would surely be a small but novel idea here.

Other, clever ideas from Dr. Basu:

This year’s Economic Survey of India (referred to by cloying TV commentators as ‘Kaushik’s Survey’) links inflationary pressures to financial inclusion of the poor. “This must not deter us from pursuing financial inclusion …” but we “need to be aware of all its fallouts.”

In the middle of 2010, he favored decontrol of fuel prices — which would, he argued, help tackle the price rise, even if it “might raise inflation in the short-term.” (The Hindu, June 14, 2010). Again, this came at a time when food price inflation was pushing past the 15 per cent mark and even as the FAO was warning against rising food prices worldwide and the immense hardship they would bring. (In December 2010, the FAO’s food price index touched a record high.) And India since 2005-06 has seen possibly its worst five-year period in terms of food price increases.

Much earlier, Dr. Basu wrote a piece in The New York Times (November 29, 1994) titled “The Poor Need Child Labour.” In it he explained, among other things, why he had once continued to employ a 13-year-old at his home. (Another small but novel idea?) “Some time ago in New Delhi,” Dr Basu write we had a 13-year-old, Lalita, who came to work in our house. After a few weeks, in an effort to banish child labour from our household, we gave her notice and offered to pay her a little not to work. She came back the next day with her father, a rickshaw puller. It was immediately evident that he loved her. He begged us to take her back because the family would perish otherwise. We decided to listen to him…”

Dr. Basu is also an expert on ‘development’ who has long argued against banning child labor.

A ‘small but fairly radical idea’ for this government: can we get somebody who talks sense

P. SAINATH is the rural affairs editor of The Hindu, where this piece appears, and is the author of Everybody Loves a Good Drought: Stories From India’s Poorest Districts. He can be reached at: psainath@vsnl.com.

 

 

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P Sainath is the founder and editor of the People’s Archive of Rural India. He has been a rural reporter for decades and is the author of ‘Everybody Loves a Good Drought.’ You can contact the author here: @PSainath_org

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