Lokpal - good start, but neither sufficient nor indeed necessary

Here is an interesting study recently done. Establishes, through a fairly intensive empirical exercise, the effectiveness of RTI as a tool against corruption. In this case, the public service being "tested" was issuance of ration cards. The results are illuminating. Shows out clearly that using RTI as a tool is as good as paying a bribe! Ergo, there is no material marginal cost to the poor in not giving a bribe, as he has a policy tool at his disposal.

Which is where the current India Against Corruption frenzy misses. We have a dearth of good policies that lead to corruption. And again, inadequate policies lead of generation of black money.

One, the two are linked in some ways, but not the same...Black money is simply income generated on which no tax has been paid..Primarily, it arises becase of 3 reasons

1. Tax levels are too high - people dont want to pay tax
2. Tax regime is too complicated - its too messy, hence people look to take the easy way out
3. Tax regime is full of loopholes, encouraging people to evade taxes

In India, we have had massive movement in #1 sicne reforms - our rates are in line with rest of Asia...But 2 and 3 are largely pending..the GST and DTC are the big bang reforms to adress both those issues..Unfortunately the GST has been hanging fire for 2-3 years now, thanks to the cussedness of a few state govts...Once done, these should substantially make the tax regime simpler and better monitorable...The amount of black money generated through normal "business" should automatically reduce (we have seen that with reduction in tax rates as well)..Which is what Ila Patnaik said in an IE column..

Corruption on the other hand is a 100% criminal activity, but the really large part of it is due to one reason - very large residuary (or discretionary) powers with the govt..Reforms was supposed to take discretionary powers out of govt hands...Unfortunately, due tovaious reasons, there are still too much discretion left with the govt..Primarily because regulatory regimes have not kept pace with increased demand for various things, esp natural resources and changes in technology...There is a large pending agenda on this...Mining Rights laws, strengthening regulators in various natural resources sectors - this is a vast area, this is what is sometimes described as "2nd gen reforms"...This givt has been singularly criminal in not acting on the above, despite its mandate...

Unfortunately, the "I am Anna" movement misses the big picture - Nandan Nilekani was right!