Home >Opinion >Views >Opinion | There’s no fair play without an independent referee

This is perhaps the first time in the history of independent India that regard for independent institutions has plumbed the depths of despair. The fact is that erosion of institutional autonomy has always been a work-in-progress under various political regimes, but the process seems to have accelerated in the past few years. The larger fear is that circumscribed individual rights will be the collateral damage.

Let’s start with the most recent incident. A brilliant exposé by Mint on 8 May revealed the flaws in the new national accounting system, which gives reason to suspect the validity of the quarterly gross domestic product (GDP) figures released by the government. The new methodology for calculating GDP depends on, among other things, a database of companies (MCA-21) maintained by the ministry of corporate affairs. A survey conducted by the National Sample Survey Office (NSSO), a department in the ministry of statistics and programme implementation, found more than one-third of the companies in MCA-21 either do not exist or have dodgy credentials. While this may or may not have led to over-estimation of GDP numbers—only further studies and investigation can confirm that—it has certainly dealt a blow to the sanctity of government data. This also harms the credibility of India’s statistical institutions, which have earned global acclaim over the decades.

Economists have been complaining about the mismatch between GDP growth and the overall lack of economic activity or flagging aggregate demand. This has come on the back of another recent controversy in December, when an NSSO report on jobs was suppressed because it confirmed suspicions that unemployment was at a record high. A petition signed by over 100 economists and social scientists to restore the autonomy of statistical institutions was, astonishingly, countered by another letter from a bunch of chartered accountants; even if one is willing to overlook their lack of domain expertise, their inability to address the core complaint comes as a surprise.

What is even more shocking is that members of India’s bureaucratic services—tasked with watching over the republic’s functioning and protecting citizens’ rights from excesses of the executive—have turned into political apparatchiks by abetting the deliberate fudging of data and propagating contaminated numbers to generate a false sense of well-being. The systematic attenuation of institutional autonomy and individual rights is also finding resonance in the financial system, which also suffers from bureaucratic capture.

The Securities and Exchange Board of India (Sebi), mandated to protect the retail investor, has failed to act decisively after fund houses lent money to businessmen (against the security of their shareholding in these businesses). Worse, when the businessmen failed to repay loans, fund houses delayed redemption of investor money. Ideally, Sebi should have pulled up the fund house management, the board members of the asset management company and the trustees for jointly failing in their fiduciary duty. Even a few months ago, when it had transpired that mutual funds figured among the largest lenders to business house promoters against the security of their shareholding, Sebi failed to step in and put together a viable risk mitigation framework.

Even the Reserve Bank of India (RBI) has not been spared. An ugly and public spat with the government has left many visible scars: a board diminished by the nomination of a political appointee, a governor who resigned prematurely, an inconsequential and ill-timed debate over the right size of the central bank’s reserves. It did not help matters when the central bank was pulled up by the Supreme Court for straying too far from its designated path on the issue of recovering banks’ bad loans. And then, it was reprimanded once again for being too opaque and not sharing information with the public, especially the findings of its annual bank audits. RBI has often been criticized for not spotting the warning signs when banks have failed or suddenly chanced upon lunar-scale craters in their balance sheets. Activists have for many years asked whether RBI’s fealty is to banks or to the public.

The credibility gauge at another independent institution run by former bureaucrats—the Election Commission of India—is looking close to empty. While it might be too early to jump to conclusions about allegations of bias and partisanship levelled against the institution, which has over the years successfully conducted the world’s largest democratic exercise, questions of transparency and fair play are emerging from within the institution. This, when seen in the background of loud complaints about tampering of electronic voting machines, does chip away at the commission’s hard-earned reputation. Pivot to the Supreme Court and two recent events—clerks rewriting judicial orders allegedly at the behest of corporate patrons and allegations of harassment against the Chief Justice of India—again don’t exactly improve the apex court’s credibility quotient.

All this seems to leave the ordinary citizen helpless, without any belief in the fairness of the system. Whatever little faith existed is also disintegrating slowly. There are no guardians of last resort, no untarnished protectors of individual rights. The nation is instead consumed with the spectacle of an election that has only two main issues: war games and muscular religiosity.

Rajrishi Singhal is consulting editor of Mint. His twitter handle is @rajrishisinghal

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