Home / Opinion / In search of rule of law. But who will make the new laws?

An average middle class family in an Indian metro runs its own mini infrastructure to maintain the bubble created to run mass affluent lives. To get clean water we use reverse osmosis machines or trust that the bottles of branded water that we stick upside down on a water dispenser are actually not just tap water. We run inverters for power back-up. We don’t like the government schools so we send our kids to private schools. We don’t trust the government medical services so we use the private ones. Public transport is yet not fully connecting all the dots so we have our own cars. We can safely add at least 10-15% to our monthly budgets as maintenance cost for the bubble existence.

We created the bubble because we gave up on the system—we exited. Those who could physically do so, migrated, those of us who chose not to, exited mentally since the system does not work for even the average middle-class person who sits comfortably in the top 10% of the Indian population. It works for the tiny slice of the elite Indians—the cosy club of incumbent families. The power of the incumbents over state resources made them good to have as friends for those outside the magic circle of power. Call your friend who knows somebody, who will call the head of something and get your drain cleared. Or get the bulb changed on the pole outside your home. Or get the municipal corporation off your back. Or get the police beat constable to stop harassing you. “Do you know who I know" is the most often heard phrase spat out at a traffic cop by a red-light jumping car driver.

But as the size of the middle class burgeons, the bubbles are colliding with each other (fights over car parking and road rage is just one example of the collision) leading to frustration and anger. There aren’t enough elite families to befriend as the number of people seeking favours has increased exponentially in the past 20 years on the back of partial economic liberalization. So, despite earning high salaries, an average metro citizen finds himself powerless against the state and its dysfunction. Some of this frustration spilled over into increased middle-class voting in the last general election, causing a change in the government. But as the post-election dust settles, the realization that there is no silver bullet to governance issues despite having a government in which a single party has a majority, is sinking in. We need to understand why the police are dysfunctional or the courts have more than 30 million pending cases or why despite being extremely well-paid, school teachers don’t turn up in villages and cause Indian children to have poor reading and writing skills after being in school for over 10 years, why government doctors give the wrong diagnosis most of the time in their jobs but manage to get it right in their private clinics in the evening, in the same location. Or why as investors, average Indians either get negative real returns or get scammed through ponzi schemes.

The system is undeniably broken, and the obvious next step is to get it to work. But the minute you want to do that, you run into a huge problem. An aspirant $2 trillion economy is running on rules formed 150-200 years ago. Worse, they were laid down by a colonial power with the express aim of suppressing locals and extracting value from the average household. The Indian Police Act is of 1861 (promulgated in the aftermath of the 1857 Mutiny) vintage and has the express aim of consolidating and perpetuating British rule; is it any surprise that an average policeman believes that he is powerful enough to rape and plunder the poor, or extract money from the urban middle class over whom he has lesser control, but still has nuisance value? The Indian Insurance Act still draws its basic philosophy from the Insurance Act of 1938 whose intent was to extract household savings to buy British bonds as a means of carrying out financial repression.

I attended the Indian Economic Policy Strategy Conference organized by the NIPFP-DEA Research Programme (http://goo.gl/jggh8Q ) last week, where two days of deliberations across topics, including land, labour, capital, and state capacity, made one thing clear—India needs to move to a system that runs on rule of law rather than the whims and interests of the 1,000 elite incumbent families that have run the country so far. Defining ‘rule of law’ as the principle that no one is exempt from the law, even those who are in a position of power, is the easy part, but deciding who writes the new rules and how to break down the incumbent powers that are against the rule of law are tougher questions. There are no easy answers but as professionals and educated Indians we will see many such debates in the public domain in the next few years. Many more draft regulations and rules will be up on government websites for comments. Each of us must engage with our own areas of expertise without worrying about the final outcome or whether this is a wasted effort since nothing will happen anyway. For change to come about, the base level requirement is political will. We are seeing signs of a government that means business and the jury will be out in a few years to see if it has worked or not. Two additional things are needed at the individual level. One, I need to be the one willing to change. Two, I need to be willing to engage better than I have with issues of governance.

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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