Tag Archives: Narendra Modi

Curbing Corruption in India’s Healthcare System

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The Indian healthcare system is rife with corruption, and much of this corruption arises from the way that healthcare is regulated (or not). Because healthcare in India is inexpensive, at least by Western standards, private health insurance is relatively rare, and a sizeable majority of total health expenditures are made out-of-pocket. With little regulation, and without much meaningful price negotiation by either the government or private insurance companies, India’s healthcare system has become a vast “network of unregulated private sector hospitals.” This lack of regulation, coupled with intense competition, encourages doctors (who are often under substantial financial pressure) “to enter a happy axis of corruption where they routinely prescribe expensive investigations and perform operations which a patient might not need” in order to increase their profit margins. Doctors have also been known to take bribes from other healthcare entities in return for patient referrals, or to accept kickbacks from pharmaceutical companies disguised as “professional fees” in order to outcompete other private hospitals. As a recent WHO-Eurohealth publication concluded, health sector corruption in India includes not only “collusion, bribes and kickbacks in procurement which may result in overpayment for goods and contracted services” and doctors’ willingness to accept “payments in exchange for special privileges or treatment,” but also “distort[ions in] medical professionals’ prescribing practices.” 

Prime Minister Narendra Modi’s government has sought to address some of these concerns through a healthcare initiative known as PMJAY. The main objective of this program is to increase access to healthcare for the poorest 50% of the population—approximately 700 million people—who are given biometric government “smart cards” to purchase eligible inpatient healthcare services at both private and public hospitals. But while PMJAY is principally designed as a system for subsidizing healthcare for low-income people, it also serves as an anticorruption tool by bringing under government oversight millions of previously unregulated out-of-pocket healthcare transactions, requiring enrolled physicians to acquire digital pre-authorization before administering nonemergency services to PMJAY beneficiaries, and giving the government more power to negotiate with private hospitals participating in the program over healthcare rates. PMJAY’s computerized billing platform also serves a surprising secondary role as an AI-powered “comprehensive fraud analytics solution” for millions of transactions that were previously beyond the government’s reach. The program has already detected over 18,000 fraudulent insurance transactions, leading to penalties against hundreds of healthcare entities so far. The government has even made a list of “corrupt” hospitals available on the PMJAY website. Given PMJAY’s early successes, the government should expand the program. Not only would this increase healthcare access in general—a worthy aim in its own right—but it would further reduce corruption in the healthcare system. This is more easily said than done, however, in light of several practical obstacles to further expansions.

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Tackling Corruption While Preserving Judicial Independence: Lessons from India’s Supreme Court 

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In India, Justices of the Supreme Court and judges of India’s 25 regional High Courts are appointed through a process known as the Collegium System. Although the Constitution vests the appointment power in the President of India, the President may only appoint a Supreme Court or High Court nominee recommended by a body called the Collegium, which consists of the Chief Justice, the four other senior-most Supreme Court Justices, and, in the case of High Court nominees, the senior-most judge on the High Court of the prospective appointee.

This system, which developed over the 1980s and 1990s as part of a decades-long tug-of-war between the branches of government, is controversial. Some critics have argued that the Collegium, which operates largely as a black box, leads to the selection of judges based on cronyism and quid pro quos, regardless of a nominee’s merit or scruples. Notably, critics contend, the Collegium System allows for the appointment of corrupt judges because the secrecy of the Collegium’s deliberations prevents accusations of impropriety against those nominees from becoming public. In buttressing this claim, critics point to instances of High Court judges who have been credibly accused of corruption, including one who was formally charged at the end of last year for taking a bribe in exchange for a favorable verdict. Critics also contend that the Collegium System exacerbates judicial corruption through another, more indirect channel: The Collegium’s slow pace has left hundreds of High Court seats vacant, which exacerbates the Indian court system’s extreme case backlog. That backlog, in turn, encourages petty bribery, as many frustrated litigants would prefer to bribe a judge or court official to jump the line or get a case dismissed rather than wait years for a final resolution. Even former Chief Justice V.N. Khare acknowledged that bribes for bail are rampant in the lower courts given the delays litigants may face down the line.

In response to these concerns, the Indian Parliament, led by Prime Minister Narendra Modi, voted overwhelmingly in 2014 to amend the Indian Constitution to replace the Collegium with a National Judicial Appointments Commission (NJAC) composed of representatives from all three branches. But before the law could go into effect, the Supreme Court ruled it an unconstitutional threat to judicial independence. While calls for reform temporarily abated, just last December a member of Modi’s cabinet expressed support for reintroducing the NJAC amendment to replace the Collegium System.

Any such attempt, however, would be misguided. Anti-Collegium reforms like the NJAC would undermine India’s hard-won judicial independence, and the corruption problem these reforms would purport to solve has been greatly exaggerated.

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From the Permit Raj to the Billionaire Raj: Corruption, Liberalization, and Income Inequality in India

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For over a year, tens of thousands of Indian farmers camped on the highways of New Delhi in protest of three new agricultural laws heralded by Prime Minister Narendra Modi. Those laws proposed a national framework for liberalizing the country’s heavily-regulated agricultural markets, allowing farmers to sell their crop yields on the private market rather than selling at fixed prices in government-regulated wholesale markets. While Modi and other proponents of the laws argued that these regulated markets failed to improve farmers’ livelihoods and were rife with corruption, opponents feared that the laws would create an unregulated free market dominated by large, exploitative corporations. On September 5, the protests against the laws culminated in a mass rally of over half a million farmers. Two months later, Modi announced that he would be repealing the laws, a stunning public reversal that few had expected from the ordinarily unyielding Prime Minister. 

To put these most recent developments in a broader context, the dispute over the farm laws showcases a debate over liberalization and deregulation in India that has been raging for more than half a century. It is a story not only of competing visions for the country’s economy, but also of the deep interrelation between corruption and income inequality. As the agriculture fight demonstrates, liberalization has been offered as a mechanism to solve both problems. But a closer look at India’s experience with liberalization complicates this theory. Liberalization may have helped fuel the country’s precipitous economic rise, but it only further exacerbated income inequality while further entrenching the systems of corruption that favor the country’s wealthy elite. At best, unchecked liberalization in India has simply repackaged corruption in new forms; at worst, it has allowed corruption to flourish.

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Corruption at the Heart of India’s Coronavirus Crisis? Prime Minister Modi Must Answer for the PM Cares Fund

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India’s unfathomable Covid tragedy has left the country gasping for breath, and no oxygen can be found. Hospitals are overrun, and are often unable to help even those lucky enough to be admitted. Desperate relatives are turning to social media and the black market for help, as beleaguered crematoriums shift from unprecedented 24/7 hours to the horrors of mass cremation to keep up with demand. In the midst of this appalling tragedy looms the question: Why was the government so unprepared? And, more specifically, whatever happened to the billions of dollars raised last year through the Prime Minister’s Citizen Assistance and Relief in Emergency Situations (known as the “PM Cares Fund”)? 

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India’s Demonetization One Year Later: A Failed Tool to Combat Corruption

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One year ago, in an unscheduled live televised address, India’s Prime Minister Narendra Modi announced that within weeks the ₹500 and ₹1000 banknotes would become worthless. Prime Minister Modi framed this so-called “demonetization” policy as part of the battle against corruption and illicitly-obtained “black money,” which had “spread their tentacles” through the India economy. The Prime Minister identified two ways that demonetization would combat corruption. First, the surprise devaluing of currency would leave criminals, including corrupt officials, with millions of rupees’ worth of currency that would suddenly become worthless, and those holding large stashes of black money would be unwilling or unable to exchange it without having to explain where the money came from. Second, going forward, demonetization would make it more difficult to hold, transport, or exchange large quantities of cash (particularly since the Indian government was demonetizing the two largest notes in circulation); as the Prime Minister emphasized, “[t]he magnitude of cash in circulation is directly linked to the level of corruption.”

One year out, it is increasingly clear that India’s demonetization experiment imposed tremendous social and economic costs but failed to achieve either of these objectives (see here, here, and here). A closer examination of the reasons for this failure may help us understand both the potential and limits of demonetization as a tool to combat corruption and the underground economy.

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Cash Crunch: How Will India’s Supreme Court Respond to Modi’s Radical Move?

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Last November 8th, the same day the United States elected a kleptocrat to its highest office, an executive on the other side of the world—Indian Prime Minister Narendra Modi—launched what Larry Summers called “the most sweeping change in currency policy that has occurred anywhere in the world for decades.” Prime Minister Modi’s surprise “demonetization” drive gave citizens fifty days to exchange all 500 and 1000 rupee notes (valued at about 8 and 15 USD respectively). Modi’s radical move, which will remove approximately 86% of all currency in circulation, is an attempt to combat endemic petty corruption, money laundering, terrorist financing, and tax   evasion (only 2% of Indians pay income tax). Prime Minister Modi was elected on an anticorruption platform in 2014, and pledged during his campaign to target hidden cash (so-called “black money”). Yet the demonetization campaign came as a surprise. Indeed, it probably had to be a surprise, lest those hiding fortunes in cash would have been able to prepare for the policy change.

While the Indian public generally supports aggressive anticorruption efforts, it would be hard to exaggerate the disruption resulting from demonetization. The real estate and wedding industries run largely on cash, as do most small businesses. And the demonetization program has hit regular citizens hard: People have been waiting in lines for hours to exchange their cash, which can be especially difficult for the four-fifths of women who don’t have a bank account. In the short term, consumption, the stock market, and growth forecasts have all plummeted and the agricultural sector is expected to suffer as well. Prime Minister Modi acknowledged the campaign would cause pain for many honest people, but believed it was worth it, stating that black money and “corruption are the biggest obstacles in eradicating poverty.” (Since then, the official justification for the campaign appears to have shifted to an attack on the cash economy as a whole, rather than a campaign against black money specifically.)

The fate of the demonetization program now lies with India’s judiciary: Continue reading →

NGOs, Like Ceasar’s Wife, Should Be Above Suspicion: Why Indian Nonprofits Need To Take Transparency More Seriously

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Soon after India’s new government assumed power in May 2014 under the leadership of Prime Minister Narendra Modi, the Central Bureau of Investigation (CBI) sought permission for arrest and custodial interrogation of journalist and human rights activist Teesta Setalvad for alleged mismanagement of $576,000 by her organization. In October 2014, the Ministry of Home Affairs (MHA) issued show-cause notices to 10,343 non-profits for not furnishing annual returns, and subsequently cancelled FCRA registrations for around 9,000 of these non-profits, citing “non-response within the stipulated time period.” India’s Foreign Contribution Regulation Act (FCRA) regulates the inflow of foreign contributions to charitable organizations and is expanding its tentacles and grip under each successive government (see here and here). In April 2015, Ford Foundation, the philanthropic organization whose work in India dates back to 1952, was put on a national security watch list and removed from the prior-permission list in January 2016, constraining its funding capacity. Ford is being targeted primarily for channeling funds to Ms. Setalvad’s NGO that was apparently ineligible to receive funds under FCRA.

As many in the Indian media have pointed out, the government’s aggressive actions against non-profits seems selective—more like a political vendetta than a principled stand against misappropriation of funds. It’s hard to ignore the fact that Ms. Setalvad had sought the conviction of Narendra Modi for alleged human rights abuses during his tenure as the Chief Minister of Gujarat, or that the case against Ford is linked to its funding for her non-profit. Moreover, in the same month that MHA canceled the FCRA licenses of 9,000 non-profits, an access-to-information query revealed that 401 of the 545 Members of the Parliament’s Upper House had not declared their assets and liabilities – including the Minister of Home Affairs himself. And the government’s tenacious pursuit of non-profits contrasts awkwardly with the practical impunity of those accused of perpetrating India’s three biggest scams (the $27.8 billion coal scam of 2012, the $26.3 billion 2G spectrum scam of 2013, and multi-million Vyapam scam of 2015).

So, when nonprofits, activists, and their supporters accuse the government of applying a double standard, they have a point. Yet, even as we rightly protest the government’s politically motivated vendetta against civil society, it is equally important for India’s non-profits to take a good hard look in the mirror. India has witnessed an unprecedented civil society mobilization against corruption in 2011 and non-profits have spearheaded numerous successful anticorruption initiatives, such as social audits, citizen report cards, and crowdsourcing platforms like I-Paid-a-Bribe.com. Yet the members of India’s vibrant non-profit sector must be sure that they are applying to themselves the same high standards of transparency and accountability that they advocate in the public sphere. Too often, they fall short. Indeed, the accountability practices within India’s non-profits are alarmingly sketchy. Continue reading →

Not Corrupt, Not a Thief, But Not the Answer: Jimmy Morales and Corruption in Guatemala

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Last month, Guatemalans went to the presidential runoff polls and elected former comedian Jimmy Morales in a landslide over former first lady Sandra Torres. Morales ran as an anticorruption candidate; his slogan, “not corrupt, not a thief,” says it all. Not being a thief might seem like a low bar for a presidential candidate, but Morales’s election shows that such qualifications are apparently and alarmingly sufficient in Guatemala. Despite never having held public office or having been involved much in politics as a private citizen (unless racism and cultural insensitivity count), Morales was a well-known and available outsider in the right place at the right time. Indeed, Morales seems to have gotten elected not despite but rather because of his lack of experience and prior political involvement—characteristics that were valuable assets against the backdrop of widespread public outcry against corruption in Guatemala over the last several months, culminating in the resignations and arrests of President Otto Perez Molina and Vice President Roxana Baldetti in September.

Many hail Morales’s victory as an indication that the anticorruption movement reached a tipping point and created change in Guatemala. But there are at least three reasons to worry that far from an anticorruption success, electing Morales may be a setback or at least a non-event for anti-corruption and democracy in Guatemala. Continue reading →

Friends with Benefits: India’s Crony Capitalism and Conflict of Interest Regulations

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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: Continue reading →