A political party based on the plank of anti corruption must first have a strong economic policy backing it. Any amount of crusades against corruption without a fundamentally strong economic policy will not help bring down the root cause of corruption. Fighting the symptoms rather than the cause usually leads to a haphazard cure, which may not work in the long run.
It is fine for Anna Hazare to campaign for a Lok Pal Bill, and all credits to him that it was passed. It is also a great achievement for the Aam Aadmi party to take up the government in Delhi in a short span of time since it was formed. However while decibel levels of corruption are high, there has been no concerted move towards crusading for corruption through economic policies. The reason could be that the Aam Aadmi does not really understand the logic behind economic policies rooting out corruption from the system.
Why are the right economic policies the strongest antidote to corruption? The reason is that the biggest cause of corruption is licensing system of the government and the budget deficit run by the government. The biggest scams in India in the last five years running into tens of thousands of crores are the 2G spectrum telecom scam and the coal block allocation scam.
Telecom spectrum and coal are assets of the government and are licensed out to private players. Given the sums involved, it is no wonder that everybody from the politician to the bureaucrat to the businessman were involved in the scams. How does the government prevent corruption in licensing out its resources without losing revenues?
The answer lies in the privatization of the whole process. The government should float out the licenses like a company floats its offer on the stock exchanges. There is public scrutiny of its licensing process, there is enough number of participants willing to participate in the book building process and there is transparency in arriving at the right price for the licenses.
The government should also look to do away with many unwanted licensing regime that leads to improved efficiencies in the use of resources and takes away the cause of corruption in the system.
The budget deficit run by the government, whether its central or state fuels corruption, as everyone wants a pie of the government spending. The biggest cause of deficits of the government is the subsidies that are over 2% of GDP. Consistent deficits lead to interest costs of the government shooting up leading to more deficits. A self fulfilling cycle that does not stop.
Subsidies involve the governments taking up the bill for usage of goods and services by the people. Food, fuel and fertilizer subsidies are the three primary areas of subsidies in the country. Food, fuel and fertilizer are causes of huge corruption at the distribution level and needless to say it does not benefit the people it is supposed to benefit.
Power subsidies cause losses to state electricity boards that in turn cause losses to banks that lend to them. Cost of power rises and there is increase in theft leading to high T&D losses leading to higher cost of power. A self-fulfilling cycle that can be only plugged by removing subsidies. Similar is the case for removing subsidies on usage of public resources including public transport.
The Indian Railways and Air India would be able to run profitably with strong sense of user satisfaction if prices are rationalized and productivity of labor takes precedence over its employment generation capabilities.
The list can go on and on. It is high time political parties use economic planks to win elections rather than so called social planks.