Editorial 1:To abide or not

Introduction

Corruption charges need credible probe, not actions tainted by politics. The decision of Karnataka Governor Thaawarchand Gehlot to grant approval to a private complainant to open an investigation and prosecute Chief Minister Siddaramaiah on corruption charges raises familiar politico-legal questions.

What are the key questions?

• The constitutional question: Whether a Governor can use his role as a sanctioning authority for prosecution against a serving Chief Minister in a manner contrary to the advice of the Council of Ministers.
• The political terms: Whether the Governor’s action against a Chief Minister is desirable in a time of increasing conflict between the two offices.
• The writ petition challenging the order: Mr. Siddaramaiah has sought to highlight that the Governor was bound to abide by the advice given to him — to refuse sanction in this case.
• Judicial precedents: A Governor may arrive at an independent conclusion if the Council demonstrates bias or fails to consider relevant material.
• The political realities: Would suggest the possibility of Governors being selective in pursuing this course of action.
• Karnataka High court asked: the trial court to defer any precipitate action until it hears his challenge to the Governor’s order.
• Investigation needed: The allotment of sites by the Mysore Urban Development Authority to landowners who had lost their land in the course of acquisition may or may not involve corruption, it needs a thorough investigation.
• The State government: believes that the judicial inquiry it has ordered is enough for now, a step the Governor thinks is inadequate.
• The case: Chief Minister’s wife was given 38,284 square feet of land in lieu of an extent of 1,48,104 sq.ft she had lost. However, whether it amounts to any illegality would depend on whether Mr. Siddaramaiah had anything to do with the decision.

Conclusion

Private complainants have obtained sanction for prosecution of public servants in the past, but whether it can be given to them after the Prevention of Corruption Act was amended in 2018 has to be considered. Section 17A was introduced then as a filtering mechanism to deter vexatious complaints. It bars police officers from opening a probe without approval from the appropriate authority, making it reasonable to suggest that private parties cannot be given such approval. Public discourse on corruption in the last few decades has hovered between a hankering for punishing political leaders involved in it and deep suspicion over the motives of regimes and agencies that seek to prosecute them. Any criminal process must be credible and independent, yet recent politically charged events show little evidence of either independence or credibility.

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Editorial 2:The tyranny of inequality

Introduction

Income/wealth accumulation also breeds serious offences/crimes. Arguments based are on an analysis of the Gallup World Poll (GWP) Survey for India (2019-23) and the Centre for Monitoring Indian Economy (CMIE)’s Consumer Pyramid Household Survey.

Aspects of the Survey

• Corruption and Income: Income inequality breeds corruption in the intersection of government and business — for example, in the approval of contracts by public officials of mega infrastructure projects (highways, bridges, ports) to be built by rich and influential private investors.
• Legacy of corruption: Once rich, the greed for more wealth negates moral qualms in pursuing corrupt strategies.
• Wealth accumulation: becomes easier; for example, through share market manipulation, political lobbying to secure contracts for big infrastructure projects, and investments in off-shore funds.

Recent studies on wealth and income inequality

• Thomas Piketty et al have drawn attention to an astounding escalation of wealth and income inequality in India over the last few decades, especially between 2014 and 2022.
• The top 1% control more than 40% of total wealth in India today, up from 12.5% in 1980.
• The top 1% of income earners made 22.6% of the total pre-tax income, up from 7.3% in 1980.
• India is now among the most unequal countries in the world, yet few studies in recent times analyse the perverse effects of rising economic inequality.

The methodology

• Income inequality-Corruption relationship: To find out whether higher income inequality fed corruption between government and business in the 2014-22 period.
• Utility of  National Sample Survey (NSS): Of rounds of household expenditure for 2018 and 2022 are not directly comparable to the NSS round for 2012, GWP and CMIE data are the fallback options.
• India’s diverse sample size: As the GWP has a small sample, its representativeness of a country as large and diverse as India cannot be taken at face value. But it has several merits, including data on variables such as corruption which are not easy to measure.

What is Piketty measure

• Piketty measure of income inequality: It is defined as the ratio of the share of top 1 % to that of the bottom 50% of the population in total income.
• Reliability: Although inequality in consumption expenditure distribution is usually lower than that of income distribution, we have preferred the former because of its greater reliability.
• Definition of Corruption: Corruption is generally defined as the use of public office for private gain and thus leaves out corruption within businesses (for example, insider trading). So, a broader and more comprehensive definition is the use of public resources by executives in both public and private sectors for private gain without, of course, overlooking the role of politicians.
• Metrics of Piketty: The GWP asks the question whether corruption is widespread and if the answer is yes, it is taken as 1. By adding these up, we obtain a measure of corruption. Thus the measure of corruption is based on individual perception.
• Three manifestations of corruption: In government, businesses, and the intersection between government and businesses. We focus on the relationship between inequality and corruption in this intersection — for example, whether award of contracts by the government to build ports is influenced by bribes offered by rich investors.
• Corruption and globalisation: Corruption rose  as natural resources have become more valuable, and regulatory agencies licensing their allocation are more subservient to powerful business interests and corrupt public officials.
• Success of the ‘Make in India’ scheme: Has been elusive so far as none of the macro-economic indicators such as manufacturing, FDI, exports, and employment have registered an increase.

What are the findings?

• Rent-seeking by rich and influential investors: It is defined as the use of resources to capture an unwarranted monetary gain from external elements, such as government/public agencies, be it directly or indirectly, without giving anything in return to them or society.
• Concerns with economic rent: It causes dissipation of resources that is potentially more serious than the waste associated with the rent itself. Groups struggling for the rents invest time and money in the transfer of wealth rather than in the creation of wealth.

Conclusion

Since corruption in the intersection of government and business remained high between 2014 and 2022, it is not unlikely that rent-seeking persisted at a high level too. We find that income inequality was fuelled largely by speculative investments (such as mutual funds), while savings in FDs and post offices curbed it. Trust in the judiciary was driven by the conviction rate and moderated by its square, implying that trust rose but at a diminishing rate. We find that higher income inequality causes widespread corruption, while greater confidence in the judiciary curbs it. While the Budget missed the opportunity to tax the rich at a higher rate, greater transparency and accountability of regulatory agencies remains a chimera. Both a more competitive political system and the growth of private businesses present significant challenges, yet their potential to create a more prosperous India is undeniable.