We read several news stories of the war on corruption. Recent ones include news reports that the Sasikala clan invested ₹1,430 crore in realty, the rejection by the IT Dept of the claim by Abhishek Singhvi that termites ate his vouchers, resulting in a penalty of ₹56 crore, and the probe by Enforcement Directorate of over 3,700 cases of laundering and hawala cases.

In the last one, the ED found that 43 per cent of the frauds committed on financial institutions were done using shell companies. The government has stopped over two lakh shell companies from operating.

Yet, there are several cases of fraud on individual investors deliberately committed by scamsters, using shell companies. In such cases (including Ponzi schemes) the government takes a more lenient view, probably because its own money is not stolen. In fact, such shell companies take the stand that the corporate veil should not be lifted, and both the judiciary as well as a lot of the media, agree! Yet, in cases of blatant fraud, as many of them are, it becomes imperative that the scamsters do not get the leeway to hide their nefarious acts behind the guise of corporate veil. To put it pointedly, it is a corporate veil, not a corporate armour, that is impenetrable.

Several other high profile cases have been probed by various departments, including ED, CBI, EOW, and others. Rarely do these cases come to a satisfactory closure despite investigating agencies claiming they are in possession of hard evidence against the criminals. The tax evaders/corrupt accused also find ways to ‘influence’ the investigative probe and to delay the judicial process. So, if the war on corruption is to result in something, there must be a conclusion. If Pakistan’s judiciary can give a verdict finding Nawaz Sharif guilty, and deny him political access, why can’t India?

The main root of corruption is at the local, or State levels; subjective powers given to officers lead to such corruption. India’s ranking in Ease of Doing Business is worst in four areas, in all of which it is in the bottom 20 percentile. These are Dealing with Construction Permits (181/190), Enforcing Contracts (166), Starting a Business (156) and Registering Property (151). All of these require local permissions and are the hotspring of corruption. Tackle these strictly.

Today, the giving of bribe is punished equally as the taking of it. If the taking of bribes is punished more severely, as it should be, people would come forward to report it.

Green shoots

Early green shoots for an economic revival are in the form of a 2.5 per cent y-o-y rise in net profit for a sample of 1,455 companies (they were 14.6 per cent lower, y-o-y, after June quarter results).

Yet, there are worries. Global headwinds are unfavourable. The rise in crude oil prices has manifested itself in a trade deficit of $14 billion for October — a three-year high. The woes in the telecom sector can result in two problems — a rise in NPAs for banks (Reliance Communications has defaulted in one instrument) and job losses, expected to be a whopping 75,000. Bad portends.

So, lots of governance-related issues remain, especially in finding closure to corruption cases. These should not become a political bargaining chip to trade.

(The writer is India Head — Finance Asia/Haymarket. The views are personal.)

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