Aday after Indian polity bowed to people power, it is a little difficult to tear one’s self away from the heady feeling and look ahead. Tough while it may be, it is nonetheless important, especially if the battle against graft has to be won.
Central to this premise is the proposed Lokpal legislation, which is important, but is only an element in the matrix of measures that are needed to be in place to ensure transparency and accountability in economic transactions.
To put it another way, the absence of supporting measures will most certainly ensure a less than satisfactory outcome for the Lokpal legislation.
In other words, the failure to incorporate the accompanying measures can be catastrophic—undoubtedly, a victory for the cynical polity that has sneered at the recent display of people’s power and a body blow to the efforts of anti-graft warriors, who braved government threats and rebuke, cynicism, and last, but not the least, the oppressive Delhi weather. And, given the fact that the present momentum in the nation favours radical change, this may be the best opportunity.
Even better is the fact that most of the desired changes—reforms in electoral finance, judiciary (especially in clearing the backlog of pending cases; justice delayed is justice denied), tax laws and land acquisition—are already in the public domain. Political gamesmanship has ensured that these largely remain on the drawing board.
In this context, the belated intervention of Rahul Gandhi, Congress party general secretary and considered by virtually everybody as the prime minister in waiting, is significant, especially since the Congress leads the coalition—the United Progressive Alliance (UPA)—and Gandhi’s actions are always taken as a cue for action.
Abandoning his zero-risk approach to politics for the moment, Gandhi intervened during zero hour in Parliament on the Hazare phenomenon. Making a case for a constitutional status to the Lokpal, along the lines of the Election Commission, he argued this would work only if it was accompanied by reforms in electoral finance, judiciary and current tax structures.
Almost all of it is in the public domain, either in the recent reports of the Administrative Reforms Commission put together by the present minister for corporate affairs M. Veerappa Moily when he was not part of the cabinet, or in pending legislations.
In his new charge, the minister is also overseeing the overhaul of the antiquated Companies Act, which, among other things, would ensure better corporate governance—a crucial key to combat fraud (remember Satyam) and graft.
In the case of tax reforms, Parliament is already debating the direct taxes code, which, among other things, would remove discretionary powers of the government in according concessions. Similarly, a monumental reform of indirect taxes would be achieved when the UPA takes the lead in shepherding the move to create a single goods and services tax (GST)— which, among several things, will eschew discretionary tax powers (read: stop offering sops to special interest groups and lobbies) and also for the first time economically unify the country.
For most of the past one year, the UPA has been primarily responsible for the delay in implementing GST, though there is fresh hope now after Bihar’s finance minister Sushil Modi took over as the chairman of the empowered group of state finance ministers overseeing the process.
The importance of GST can be understood from the fact that it will also leave an audit trail and thereby reduce opportunities for generating below-the-line transactions, which generates black money and creates the basis for corruption.
At the moment, politicians and some lobbies are striving to ensure that real estate is kept outside the purview of GST. Imagine the situation if their efforts were defeated (if need be by another Hazare-inspired wave of protest).
Since every leg of the transaction will be taxed, there is no scope for wrongful invoicing. Not only will the state exchequer benefit, providing sufficient funds for poverty alleviation, it will be a powerful disincentive for generation of black money.
Closely linked to the parallel illegal economy is the business of electoral finance. At present, election spending is escalating and making a mockery of the spending ceilings laid down by the Election Commission.
There are countless examples of abuse; not only is the frequency of these infractions growing, their scale is also rapidly expanding, just suffice to say that it is crying for reform.
All of the above require serious legislative change. The Lokpal episode has demonstrated that, given a nudge, the politicians can rise above their lot to vote in change that fundamentally challenges status quo to their disadvantage.
It would be tempting for them to scuttle further efforts. While they have the power and the cunning to do so, it would be a big mistake. A Hazare phenomenon can be an exception but not the rule to inspire the much-needed change in the country.
So, watch what you wish for.
Anil Padmanabhan is a deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at firstname.lastname@example.org