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Deep-seated graft and related crime has been a subject matter for many Hindi movies. Many of these end with a bunch of intrepid fighters of the system exposing the incumbent club of the powerful—politicians, police and bureaucrats are the usual suspects—resulting in either incarceration, or a public killing while the public applauds. The events of the past 10 days look almost like a movie script playing out as the government cracks down on a network of government officials, middlemen and companies that traffics information. But as those suspected were led away, there was no crowd of applauding public. I wonder if the missing applause is because the cynical public thinks that these guys will get away or is it because it finds its own moral fibre stretched?

I wrote about our stretched moral fibre (http://bit.ly/10lbL20) in the context of individual choices impacting the final outcome of society, two years back. The average Indian morality has got fuzzy over time as the payback for honesty has been ridicule rather than reward. But it does look as if the current government is serious about its clean India initiative—both physically and in terms of reducing corruption. And if indeed it is serious, then each of us will have to re-examine our own moral fibre that has been stretched over time. We need to examine it in the backdrop of obvious political corruption which seems to have validated the feeling that this is how it works in India.

We live in a country that has made an honest person following the law feel like a fool. Want to buy real estate with no “black" money? Pay more. Pay more because there are very few deals for “cheque-only" transactions. Pay more because the seller will make you give his capital gains tax to him in the form of a higher price. Pay more on registration of the property, while your neighbour, who gave 70% cash, pays a fraction. This is not to say that honesty is dead; in fact, every organization will have 10-15% of people who are honest no matter what, and 10-15% are corrupt no matter what. It is the large majority in the middle—the 70-80%—that looks at the organization leader to decide which way to swing. The manifest corruption of the central government gave the signal to make graft the new normal.

Not surprisingly, graft has spread to a category of people who have traditionally seen themselves as “honest". The educated, professional, urban mass affluent Indian, who has traditionally pointed fingers at others, will have to look in the mirror and point at himself, because corruption is not just money under the table; it is also profiting from subtle things such as information asymmetry. The banker, the lawyer, the journalist, the doctor, the teacher—we’ll all have to think about what is right and wrong if the superstructure of how we think about corruption changes in India. Take, for example, doctors who work in corporate hospitals. Privately they share stories of the broken morality of profits-before-life that is practised in hospitals. How dengue patients are refused beds and those undergoing knee surgery are admitted. Dengue patients can be billed only so much, whereas a knee replacement costs a packet. How the highest MRP drug is prescribed and not a cheaper alternative. How stents are put in when there is just a bad meal giving reflux. How caesarian section is the norm over normal deliveries. The doctors who work there know it is wrong, but say with a shrug: that’s how it works.

Or, take the example of the average banker in India being turned into a criminal by the way the incentive structure is constructed. To sell the highest commission product, no matter what the customer walks in for, without remorse. A shrug, and, the all-absolving-line: that is how it works if you want to stay in the job.

We’ll all have to introspect and not simply point at the other, if, as a country, we want to move to a cleaner country—both physically and metaphorically.

End note: What’s the budget going to do for us as individuals? I believe that the government would be looking to do two things. One, put more money in people’s pockets to trigger consumption. Two, give more tax sops to rescue the sinking household saving number. A higher tax threshold will free up more income for the household. Some of it will be spent and to incentivize some savings, tax breaks on medical insurance premiums and long-term pension-oriented savings seem to be the obvious choices for the government. Here’s a suggestion: why not push all pension-oriented products into one bucket and give them a tax break so that the individual can choose which pension product works for her? But the government will need to work with individual regulators so that the incentive skew across similar products comes to an end. And here’s hoping that the tax skew that has favoured life insurance over better investment products such as mutual funds and the National Pension System gets hacked in this budget. Another way to gather more long-term funds will be through tax sops on long-term infra-linked bonds for the retail market. And if the government is really serious about long-term money, then it needs to put out an intelligent inflation-plus bond and make it easy to buy.

Monika Halan works in the area of financial literacy and financial intermediation policy and is a certified financial planner. She is editor, Mint Money, Yale World Fellow 2011 and on the board of FPSB India. She can be reached at expenseaccount@livemint.com

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