In May 2014, when Narendra Modi’s National Democratic Alliance (NDA) ran and won against the incumbent United Progressive Alliance (UPA) Government on a platform of anticorruption and growth, very few were surprised. UPA’s second term was paralyzed by a string of mega-corruption scandals, including the 2G scam and Coal–Gate, pointing to entrenched crony capitalism and raising public fury. A country that had had enough with lackluster economic performance and widespread corruption kicked into survival mode and set aside its deep misgivings about a man with a troubling past. India was desperate for an efficient administrator and an uncorrupted leader—and Modi promised both.
After Modi became Prime Minister, many Indian businessmen grumbled that they had lost access to the Government—a fact hailed by the Indian media as evidence that he was finally cleaning house and cracking down on crony capitalism. However, more recent reports suggest that the Cronyism of Many has simply been replaced by the Cronyism of One. The Indian media is rife with reports hinting at a troublingly close relationship between the Prime Minister and a Gujarat-based industrialist who is one of the latest entrants to the Indian billionaire’s club (See reports here, here, here and here).
To be clear, such allegations do not necessarily imply that the PM himself is corrupt. Nonetheless, in this context even the appearance of corruption can be damaging. High officeholders in a country like India, where endemic corruption and crony capitalism have historically prevented the nation from achieving its full potential, ought to be held to much higher standards of probity.
The PM may be flirting within the permissible boundaries of business-government collaboration and may even get away with it using personal charisma, strong economic performance, and the lack of clarity in laws governing such relations. However, in the interest of keeping the high offices of the country beyond reproach, it is time to have a relook at the laws governing business-government relations in India. A good place to start will be the Conflict of Interest (COI) provisions for India’s Executive and Legislative branches. Unfortunately, the current COI regime for Indian public office holders is weak and ineffectual:
- Vague definition: The term “conflict of interest” does not have a clear definition in the rules and procedures governing the Indian Parliament. Precedents from previous court cases suggest that “reasonable public perception of fairness” should be the deciding factor. Articles 102(1) and 191(1) of the Indian Constitution only provide for disqualification of Members of Parliament or State Legislatures for simultaneously holding an “office of profit,” a term which is not defined and has been open to multiple interpretations and legal disputes.
- Weak or absent regulations: While there are separate codes of conduct for Ministers and for members of the Rajya Sabha (Upper House) that broadly require them to declare their assets and liabilities, sever all business connections, and refrain from accepting gifts, there are no penalties outlined for breach of such codes. While the Lok Sabha (House of the People) Members of Parliament (MPs) are required to declare their interests and, and the Lok Sabha has a regulation on acceptable gifts, there is no formal code of conduct for MPs, nor does there appear to be a code of conduct for the office of Prime Minister himself.
- Feeble enforcement: COI has been wielded as a convenient stick by incumbent governments to exclude members of the opposition from important posts, or to strike back-door deals with the opposition (see here and here for COI allegations during the UPA regime). Yet genuine enforcement of COI rules remains weak. Many examples could be used to illustrate this sad fact; one of the most glaring is the fact that an MP of the ruling government who owns a tobacco factory continues to serve as a member of the parliamentary committee setting the rules for tobacco sale–even after this MP made statements denying he link between tobacco and cancer.
- Neglect of systemic issues: Even a tighter definition of COI and dogged pursuit of direct financial conflicts would fail to capture the complexity of interconnected and insidious relationships that characterizes Indian polity. Arising from (among other things) the immutable loyalties of family-friendship ties (see here for a related report on India’s External Affairs Minister) and the inevitable pressures of election financing, these relationships are long-term investments. The returns could be intermittent – seemingly harmless and stubbornly untraceable: a favor for a friend here or an acquaintance there. Or they could be end-of-the-term blockbuster dividends – suspicious, improper, and unethical but not illegal – such as favorable media (see here and here) and election funding, another black box of Indian politics.
There is clearly, then, a need for more demanding standards of conduct and vigorous enforcement. What should a stricter COI regime look like?
Drawing upon international examples and the authors who have discussed this issue in Indian context, the key elements of a basic COI framework for public service in India could include:
- Appropriate definition of COI: Countries like South Korea, Hong Kong, and Canada that have established robust COI frameworks have broadly similar, workable definitions for COI. For example, as per Canada’s COI act, “a public office holder is in a conflict of interest when he or she exercises an official power, duty or function that provides an opportunity to further his or her private interests or those of his or her relatives or friends or to improperly further another person’s private interests.” While this definition is still broad, a host of publications by OECD countries elaborate such definitions and even list all possible situations involving COIs. India, with its plethora of what its Central Bank Governor calls patronage networks, may find application of some of these situations untenable. Hence, it may help to kick-start a broad based consultation for a COI framework most suitable for India, all the while remembering that it may be too late to pick and choose; India will be expected to integrate international standards as an aspiring political and economic global power.
- Institutional mechanism: In most countries, COI frameworks work through the national anticorruption body, implying the perceived link between COI and corruption. However, countries like Canada and the UK have either an independent ethics commission or the National Audit Office (NAO) overseeing these issues. Given the low legitimacy currently enjoyed by anticorruption institutions in India, a more suitable institution would be the Comptroller and Auditor General of India (CAG), which has functions similar to UK’s NAO. CAG’s constitutional status, relative independence from the Government, institutional capacity for monitoring and tracking public spending, and high public legitimacy makes it the most suitable institution for housing COI activities.
- Awareness generation and activism: Countries with robust COI regimes place emphasis on awareness generation and training programs for members of the executive and civil servants on COI-related issues. Equally important is the role of civil society watchdogs in tracking and sustaining pressure through data gathering, reporting and advocacy on COI issues. While it is evident that it is not ignorance of COI but its casual disregard that drives most instances of COI in India, it is possible that frequent reminders through training and a heightened spotlight on one’s actions can act as a deterrent if coupled with strong enforcement.
- Addressing systemic issues: The above steps will be merely cosmetic if India fails to address the four big elephants in its closet: informal kinship ties, patronage networks, media cross-ownership, and election funding. Addressing these mammoth issues require tremendous political will, personal integrity, skillfulness, popular legitimacy, and bi-partisan support. Prime Minister Modi is known to have the first three, acquired the fourth in 2014 election, and is capable of achieving the fifth.
Instances of conflict of interests are but symptoms of deeper systemic issues plaguing the political system. If the PM is serious about addressing corruption and ushering in good governance, he will have to notice the symptoms and treat the root causes. This is where maintaining his own personal legitimacy through transparency in disclosing his own interests and that of his team and rising above suspicion becomes important. After all, the pot can’t afford to call the kettle black!