The standoff between the government and the civil society over the proposed Lokpal showed reluctance of the ruling establishment to design effective institutional mechanism to rein in corruption in the country. The recent discourses in development economics emphasise upon the importance of a good institutional environment that promotes transparency and accountability in administration, businesses and all economic activities. Institutions play a critical role in the process of economic development by ensuring protection of individual property rights, enforcement of contracts and creating equal opportunities for all in the society. The varied performance of economies across the world is often explained by the differential quality of institutional environment. Our economist prime minister, who spearheaded economic reforms in the 1990s as finance minister, certainly does not need any lesson on this. What is worrisome is the lacklustre attitude of the government led by him to bring in the required institutional reform to curb corruption. Though several institutional reforms complemented the economic reforms, the country still needs more reforms in several other spheres for improved governance outcomes.

Noble prize-winning economist Douglas North defined institutions as constraints and rules, both formal and informal devised by human beings to structure and regulate human interactions. These institutions define the incentives that determine the individual and collectives choices which in turn shape the performance of economies and societies over time. Formal rules can be enacted or amended through legislative changes whereas the informal constraints that constitute norms and conventions change gradually with time. The way these constraints and rules are devised and change varies across countries. In a democratic country, the formal rules are designed by the representatives of its citizens or citizens directly. North also distinguishes ‘institution’ from ‘organisation’ by referring to institutions as the ‘rules of the game’ and organisations as the ‘players of the game’. For example, the constitution of our country is an institution whereas bodies like judiciary, executives, parliament, civil society, etc, are organisations. Institutions create opportunities and organisations capitalise on these opportunities for greater common or individual benefits.

The process of institutional change is mostly incremental for the economies of scope and institutional complementarities associated with the institutional reforms. However, revolutionary change occurs when the rulers and rule makers fail to understand this or simply don’t act to serve the vested interests. Such instances lead to systemic collapse or massive public outcry that compels institutional reform. The need for any institutional change arises when the existing set of institutions fail to function efficiently to achieve its desired objectives either due to its faulty design or lack of adequate provisions to meet the emerging challenges with time. What else then does explain the persistence of inefficient and under-performing institutions for decades?

Let’s discuss the case of corruption and the institutional mechanisms of corruption prevention in our country. Corruption is nothing new to our society though its nature and extent has expanded enormously in recent times. I heard someone saying in a public meeting a few years ago that corruption by public servants was ‘need’-based initially and was limited to lower ranks of officials for their lower perks. This has transformed subsequently to ‘deed’-based and ‘greed’-based unfortunately. Political corruption also followed the same trajectory. The mega scams of recent years bear the testimony to this structural change in corruption patterns. Apart from these mega scams which get the attention of our vigil media, civil society and also the opposition parties in centre and states, there are thousands of micro-scams which hardly figured in the public discourse. Noted ecologist Madhav Gadgil reported in one of his studies that the forest fringe villagers pay on an average '1,000 per year to the forest officials in the form of cash, grain, chicken, liquor or forced labour as bribes. There are around 2 crore households in our country living close to forests which make these micro-grafts to a whopping '2,000 crore annually.

With administrative decentralisation, corruption also got decentralised. There are several such instances which can be called mirco-grafts but in totality they contribute significantly to the underground economy. This is also pervasive in government offices that award works and service contracts to private contractors though the graft volume is a bit high to be called mirco-grafts. This probably could be categorised as meso-grafts. The businesses concerning natural resources like land lease for mining and quarrying permits, allocation of water for industries, environmental clearances involve huge unaccounted and under-table transactions across levels of government.
We all have a ‘chalta hai’ response towards such mirco-grafts. The economic analysis of bribing suggests that it increases efficiency. This is understandable from the greasing capacity of bribes which enable the files to move faster. Bribes are omnipotent and can often make impossible happen.

So as individuals we are beneficiaries of corruption, though corruption victimises us collectively. Maybe that’s why all these micro, meso and mega grafts persist and flourish in spite of a range of corruption prevention agencies at different levels. We not only performed poorly in preventing corruption but also have a pitiable record of conviction in corruption cases.
If the institutions of corruption prevention are not efficient enough to curb all corruptions, then how these institutions have been persisting all these years? This could be due to the patronisation of inefficient institutions by the ruling establishments which get the larger pie of the benefits. On the other hand, it also could be due to the inability of the victims to get organised for usual collective action and lobby for the institutional change. The inability to get organised also could be due to information gap. Unfortunately, there is not much competition among the political parties to bring reforms for efficient institutions to curb corruption. There has been demand for Lokpal from various quarters of the civil society since the recommendation of such an institution by the first administrative reform commission in 1966.

Gandhian activist SD Sharma has threatened several times for the last two decades to sit on an indefinite fast for a Lokpal bill and has been persuaded by successive governments to defer the agitation on the pretext that the bill was in its final stages and would be introduced in parliament soon. The campaign and agitation by Team Anna for the last few months for Lokpal bill has caught the attention of the whole country and a significant number of people across regions seem to be organised to lobby for a change. There has been usual resistance for this change from the successive governments. The ruling establishment also put its best effort to subvert the proposed anti-corruption institution while drafting the Lokpal bill. Other political parties also maintained ambiguous stand on the bill before the country was in the grip of Anna fervour.

It’s heartening that parliament has passed a resolution to institute a strong and effective Lokpal and let’s hope that the parliament will live up to its commitment. The Lokpal may not be the panacea for corruption, but will certainly be a deterrent by instituting accountability among the higher-ups. The prosecution of offenders at higher level will have a positive and spiralling effect on corruption at lower levels as well as in society. Now it’s time for the change. The ruling establishment as well as the opposition must show statesmanship in spearheading the change that their fellow citizens aspire. In this age of participatory governance, involving citizens or civil society groups in policymaking is rather a strength than a weakness of our legislative bodies. Our legislators should cease this opportunity to institute a stronger and effective Lokpal to rein in corruption.
 
(This article had been written before the new Lokpal bill was introduced in parliament. It appears in the 'Readers' Space' section of the latest issue of Governance Now.)