Scams Cram the Country

There have been lots of scams in the news lately… some of them capable of making even the least-concerned man downright indignant. Before anyone even attempts to figure out the reason for so many appalling scams rocking the country and how they can be stopped, one has to know a lot about them. In other words, one has to do homework and that’s exactly what I’ve been doing… No matter how unforgivably shameful these scams are, I can’t deny that it has been rather interesting to read about them… and even more fascinating to write about them… mainly because these scams [in my opinion] are not diseases in themselves. They are just symptoms of a greater ailment called CORRUPTION.

The most buzzing news is about the former telecom minister A. Raja’s resignation. Contrary to the popular misconception, the former union minister did not stash away all the lost cash [1.7 lakh crore] in some Swiss Bank account. He had actually allocated the 2G spectrum to companies for a very low cost, which resulted in a loss of about Rs. 1, 70, 000 crores [that’s about the total expenditure that had been planned in the Union Budget for the years 2008-2009] for the Government [technically the loss of tax-payers’ money].

This is what one website had to say:

Stating that the 2G spectrum allocation process lacked transparency, the report said Raja's decision had cost the exchequer Rs 1,39,652 crore and that 85 of the 125 licences issued were found to be given to companies which did not satisfy basic eligibility criteria.

[http://www.moneycontrol.com/news/current-affairs/2g-scam-raja-bentrules-says-cag_499685.html]

It is clear how the scam had come about. The 2G spectrum allocation process starts. The former telecom minister gets a huge amount from some companies, bends the rules here and there, ignores other ministries’ reports/suggestions/recommendations and allocates the spectrum to the companies on a first-come, first-serve basis. The outcome is history.

The mere resignation of the Union minister is not enough. Like someone pointed out, if a thief caught red-handed, accepted his crime and promised not to do it again, will the law just set him free? Anyone guilty of the law should be suitably penalized, and when it’s someone whose duty it is to make and protect laws, the retribution should only be more… not less. But it’s not right to stop there. Taking pills to stop the pain will never stop the heart attack [sorry for the dim-witted example]. The point I’m trying to make is the one I’ve already made – the scams are just symptoms. A. Raja is just one among the many in the Parliament and the bureaucracy. Getting him to resign doesn’t change much, because the one who’ll fill his place will probably be no more honest that he was.

But then, what’s the solution? Some say RTIs can really help make the situation more transparent. But why should one apply an RTI to get information, if it’s our right to get it? I feel that the systems should be more transparent without anyone having to spend time and energy to make it so. But I guess that will happen only when many people start using RTIs and a stage comes when officials give information, fearing action if they didn’t do so.

Another solution is to reduce the Government’s control over the economy. Because the politicians and bureaucrats have immense power in their hands, they feel free to demand bribes. Licensing is still required for various industries and companies in India, something that gives way to more corruption. Some of the licenses required are partially [if not completely] baseless.

But of course, I know little about the economy. So I guess it's better to hear from an economist. An article in deeshaa.org on this subject explains it in a better way:

Now suppose that if somehow only a few firms — two or three — were supplying to the market. The market would have limited competition and therefore the firms will have the power to set prices, and therefore make above-normal profits. It will be good to be a supplier to a market with little competition in the market. Which implies that firms could be made to compete for the right to be a supplier in the limited competition market. That’s competition for the market.

So if you have the power to restrict entry into a market, you have the power to shift the firms’ competition in the market (which is a good thing for the consumers because it leads to low prices) to the firms’ competition for the market (which is not good for consumers because of high prices.) Why would you make firms compete for the market, instead of competing in the market? Because if you have that power, you can auction off the license to operate in the market and thus extract some of the profits that the firms expect to make in the market...........

Imagine if the government was limited to being a referee and prohibited from becoming a player in the economic game. That is, it did not have the power to influence the outcome but only to judge if players were following the rules, and to punish those who broke the rules. In that case, being in the government would not be financially rewarding. Lacking that incentive, criminals would find it pointless to be in the government.

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