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Business News/ Opinion / The Maggi and Modi affair
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The Maggi and Modi affair

Without a sound regulatory framework that runs itself, individuals will falter, and everyone will suffer. That is the simple lesson

Photo: AFP Premium
Photo: AFP

Different as the Maggi and Lalit Modi affairs are—although one is tempted to observe that external affairs minister Sushma Swaraj and Rajasthan chief minister Vasundhara Raje have landed in a large proverbial pot of instant soup, or that Maggi is in a spot that calls for fixing—they both point to a more basic, structural weakness of the Indian polity. That weakness is the absence, across the board, of sound and sensible institutions which operate in a rule-bound, fair and transparent manner, which allow systems to work as they should and remove the necessity—or the temptation—for individual politicians or officials to intervene in particular cases, whether for good or ill. In other words, we are witnessing systematic regulatory failure.

In the Maggi case, a nationwide recall and eventual ban of the ubiquitous two-minute noodles resulted from tests conducted on a few dozen samples by the Uttar Pradesh food regulator—even though tests elsewhere, including at testing facilities abroad, in importing countries such as Singapore and Hong Kong, and in other Indian states, have since found Maggi noodles to be safe. As reported recently, further tests in Uttar Pradesh itself failed to turn up more than the allowable levels of lead; meanwhile, states such as Bihar and Rajasthan did not even have the necessary equipment to conduct their own tests.

What is more, that both the central and various state government food regulators are under-staffed and failure-prone is hardly a secret; the same holds true for regulators in many other sectors, who are prone either to intrinsic failure—due, for instance, to lack of equipment or expertise—or to deliberate failure—due to corruption or capture by those whom they are supposed to regulate.

It is difficult to escape the conclusion that the Maggi noodles ban is a perfect instance of regulatory ineptitude and caprice, rather than a beacon of regulatory success. The implication—that an overzealous regulator jumped the gun and pounced on a foreign multinational, an appetizing target—will only be reinforced if the ban is eventually lifted—as seems likely at this juncture.

The regulatory failure in the Lalit Modi affair is subtler. The sorts of consular services that India’s ministry of external affairs offers Indians abroad ought to be adumbrated in an official memorandum and be publicly available on the ministry’s website. There are, indeed, instances in which it is appropriate for ministry officials to intervene on behalf of an Indian citizen with their counterparts abroad; a situation in which, say, an Indian has been convicted and jailed abroad on flimsy or trumped up charges could well be such an instance.

Assuming, for the sake of argument, that Modi merited such special intervention, then the appropriate procedure ought to have been that he seek the assistance of the Indian high commission in London. Were he unaware of that procedure, then any request for assistance made directly to the minister herself ought to have been redirected to the high commissioner. Any further steps and follow-up, if warranted, should have involved relevant ministry officials, moving up the chain of command to wind up on the desk of the foreign secretary, assuming that proper procedure so demanded. If, hypothetically, the foreign secretary determined that the matter required political, rather than merely diplomatic, intervention, and the file made its way to the desk of the external affairs minister, she ought immediately to have recused herself, citing as a reason her personal friendship with the subject of the request for assistance, and turned the file over to a minister of state.

I tax the reader’s patience to outline the steps that would have been appropriate, in order to articulate clearly the evident impropriety in Swaraj’s actions, as widely reported and implicitly acknowledged by her in her tweets on the subject. Impropriety or poor judgement that is made possible by the lack of a set of norms for proper procedure that are fair, transparent, and do not discriminate between those with connections in high places and those without is, indeed, its own species of regulatory failure.

More broadly, whenever there is even the merest hint of a conflict of interest arising, a good regulatory culture would require a minister to recuse himself or herself from the relevant file. Indeed, finance minister Arun Jaitley did exactly this when the tax dispute concerning Vodafone, a former client, might otherwise have crossed his desk—this, even though Vodafone had ceased to be a client when Jaitley became a cabinet minister of the Union. This is the correct standard, one that Swaraj, it appears, has failed to live up to.

At a post-budget conclave organized earlier this year by Mint, power minister Piyush Goyal explained that he had set up fair and transparent procedures within his ministry to ensure that no one individual file needed to, or ever in fact did, land on his desk. Proper procedure took its course, and he did not wish to, nor need to, get personally involved. This is the right benchmark, and should be the norm across government. Yet, regrettably, it is the exception rather than the rule.

Without a sound regulatory framework that runs itself, individuals will falter, and everyone will suffer. That is the simple lesson.

Every fortnight, In the Margins explores the intersection of economics, politics and public policy to help cast light on current affairs.

Comments are welcome at views@livemint.com. To read Vivek Dehejia’s previous columns, go to www.livemint.com/vivekdehejia

Follow Mint Opinion on Twitter at https://twitter.com/Mint_Opinion

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Published: 21 Jun 2015, 06:34 PM IST
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