Blog Post Year: 2019

In my last blog, I wrote about Klitgaard’s formula, C=M+D-A, in which the pathway to eliminate corruption becomes evident. If Monopolies are dismantled and discretion is reduced, while increasing accountability, corruption will come down. But in practical terms, even if such moves are made through policy, if citizens do not seek recourse to them and insist upon their rights to obtain corruption free services, corruption will persist.

A few years back, while working with ipaidabribe.com, I led a team that undertook research into corruption prone government processes. One of the most corruption prone was the registration of flats and land sales. Sub-Registrar offices in Bengaluru city were cited by citizens through their experiences filed on ipaidabribe.com, as a place where corruption was inevitable. This happened in spite of these offices being digitised through a software suite known as ‘Kaveri’. The problem was that the software digitised the functioning of the sub-Registrar’s offices, but did not take away either the monopoly character of these offices nor reduce the discretion of the officers to deal with the public.

Sub-Registrar offices were service area monopolies; with each office having a footprint jurisdiction. All owners of properties within each such area had to come to the sub-Registrar having the jurisdiction over it, in order to register sale deeds. In spite of this dismal picture, the department had undertaken some reforms to put it on the path to reducing and finally eliminating corruption, even if milestones and targets for the implementation of these reforms were not met. The details of the reforms that aimed to reduce the scope for corruption were:

• A reduction of the registration fee to 6 per cent along with the introduction of fixed area wise guidance values – which means that regardless of the value on the sale deed, one has to pay the stamp duty as per the guidance value (or the sale deed value, whichever is higher). This, at least on paper, diminished the discretion of the sub-Registrar to refuse a registration on the ground of undervaluation.

• E-stamping of stamp papers which enabled selected Bank outlets to stamp the appropriate  stamp  value  on  any  plain  paper,  while  collecting  the  stamp  fee, reduced the scope for delays in registration because payments of stamp fee through cheque had to wait for the cheque to be cleared.

• Increase in the number of sub-Registrar’s offices (in Bengaluru from just 12, to more than 50) reduced the pressure and rush in these offices; while also decentralised corruption, perhaps.

• Bringing registration services under the Right to Services Act brought in a legal obligation upon the sub-Registrar to complete any sale transaction in 2 hours 20 minutes; i.e., 20 minutes to verify the market value of property, 1 hour for preliminary scrutiny of documents and 1 hour for admission of documents and recording signatures.

Yet corruption happened, because in practice citizens were still overawed and submissive when they went to the sub-Registrar’s office. Many of them passively submitted to corruption out of nervousness and a misplaced sense of fear. Purchase of immovable properties is for most people, a once-in-a-lifetime activity and therefore they do not want any ‘trouble’.  They  blindly  take  the  advice  of  touts  and  middlemen  and  are  willing  to  pay  a ‘facilitation charge’ rather than fight corruption. To cure these, ipaidabribe.com made a few suggestions, based upon a practical application of Klitgaard’s formula.

Also read: Brokering Public Service Delivery in Delhi

We first suggested that the department introduce the system of ‘Anytime-Anywhere’ registration. Under this system, a citizen should be able to go to any location in the city to register a property. This will reduce the service area monopoly of the offices and give a choice to all citizens to go to more efficient offices. We also felt that such an approach would incentivise officials to improve the service delivered  by  their  offices  and  bring  about  a  sense  of  competition  amongst  them.  In other words, we aimed to reduce the value of ‘M’, in Klitgaard’s formula.

We also suggested that there should be no discretion given to the department to make citizens wait. Every day, each office should make available clear time slots for registration of properties. Citizens should be able to go onto the website and choose the time slots on their own. Once the time slot is chosen by the citizen and he/she turns up at the given time in the sub-Registrar’s office, they must have no discretion. They must register the property. If there is any hurry for some reason, then there should be a tatkal system by which citizens can jump the queue (like in the passports and railway ticketing systems). In other words, we aimed to reduce the value of ‘D’ in Klitgaard’s formula.

Corruption happened, because in practice citizens were still overawed and submissive when they went to the sub-Registrar’s office.

As to increasing accountability, we felt that in spite of the stipulations in the Right to Services Act to complete registration within a specified, committed period of time, this by itself does not make registration  any less complex,  time  consuming  and  cumbersome than before. We suggested that some of the processes that are now done in the sub-Registrar’s office can be done online, prior to the actual registration. For instance, standard sale formats can be made available on the website, which  people can  download and use to prepare their sale deeds themselves. Second, photographs of the parties can be taken in advance and sent online to the office, at the stage of taking the appointment for the registration.  The preparation of the sale deed and photography online will reduce the time spent by citizens in the registration office. The less time an individual spends in a government office, the less the chance of corruption, we felt.

We also suggested other measures for increasing transparency, such as displaying the guidance values on maps so that citizens can understand   them easily and make use of them while calculating the stamp duty to be  paid, and proper signage and displays.

However, these suggestions, even if implemented would not have worked, in retrospect. We discovered another pernicious problem that went beyond the simple edict of the Klitgaard formula; a private-public partnership in corruption. More on that in my next blog.

This blog is part of a series. The first blog can be found here.

One of the best known simple remedies for corruption has been provided by Robert Klitgaard, an academic and researcher who familiarised himself with how corruption operates in a variety of environments. He made the observation that corruption follows a formula – C equals M plus D, minus A; Corruption equals Monopoly plus Discretion, minus Accountability.

A look at the Klitgaard formula shows that the strategies for reducing corruption are self-evident. Reduce monopoly and discretion, increase accountability, and corruption will decrease.

Do these strategies work in real life? Perhaps in a text-book fashion, when it comes to over the counter or service delivery corruption. While many of the services offered by the government look at first sight to be natural monopolies, it is not beyond the realm of possibility that they can be demonopolised. For instance, telephony services used to be for long a natural monopoly. Only the government offered it. There were long waiting periods and bribery, even though it was of a low order, was widespread. Influence was used for people to jump the queue and linemen were tipped generously to keep the lines in order. Then came the technology revolution of mobile telephony and the monopoly of the government service provider was blown away.

Today, corruption is unknown in the interphase between the citizen and the mobile service provider. The relationship is ruthlessly market driven; citizens have a choice between service providers and that change in the relationship makes corruption impossible at the citizen interphase.

In contrast, one has to only look at the electricity supply or water supply system, which is both networked services that are not yet fully demonopolised. While in the power sector, it is possible for consumers, particularly bulk consumers to have private power supply contracts with generators, the wires that transmit this power is in the hands of a natural monopoly. Most private consumers of power have no choice but to obtain power from the distribution company, which, even if privatised, is a service area monopoly.

Accountability is strengthened only when citizens have stronger rights to demand services and appeal to authorities higher up, in case the service provider does not deliver.

The service area monopoly characteristic of the water supply system is even more markedly a natural monopoly. One does not have a choice of buying water from multiple suppliers, unless one orders water supply by tanker. The pipeline and the water source are both controlled and operated by the same natural monopoly; the water utility concerned. It is therefore no accident that both the electricity supply and water supply systems are corruption prone at the citizens’ interphase. One has to pay bribes for obtaining connections, converting the connection from a temporary one to a permanent one, transferring a connection to another consumer, closing a connection, or increasing the authorised load attached to a connection.

Can such natural monopolies be demonopolised? Yes, of course. If tomorrow technological advances enable electricity to be produced at the consuming point, say by highly decentralised methods such as solar generation, fuel cells or wind energy, then there will be no need for transmission wires. All the corruption associated with the running of the natural monopoly of the wires, will wither away.

Yet, not all service delivery monopolies can be demonopolised. In such cases, doing away with the wide discretion that is available with service delivery providers can reduce corruption dramatically. Ticketing is one area where this approach has worked. Prior to online ticketing being the norm, buying a railway ticket, particularly for long distance travel was a harrowing experience. People hired agents and paid them a commission to have their tickets booked, because they saw the convenience in this approach. The agent knew how to handle the clerk at the counter, or her boss, in order to ensure that tickets were available. Now, with online booking, there is no need for an agent, or the necessity to meet and deal with a clerk who has the discretion to deny or delay your ticket.

Examples abound of services that have rapidly become relatively corruption free, due to the reduction of discretion vested in government officials. Taxation is an area where there has been a great deal of reforms. For the ordinary citizen at least, online filing of returns and supporting documents, followed by automatic examination and refunds if any, flowing directly to their accounts, has reduced the possibility of corruption to a great extent by eliminating interaction with officials, with respect to these transactions.

However, there are many services where neither is it possible for the monopoly character to be reduced, nor is it advisable for discretion vested in an official to be removed completely. In such cases, the best way to reduce corruption is greater vigilance, transparency and oversight. Accountability systems work effectively only when there is a modicum of punishment that befalls the one who transgresses the rules. Furthermore, accountability is strengthened only when citizens have stronger rights to demand services and appeal to authorities higher up, in case the service provider does not deliver.

There are many reforms that have been introduced to increase accountability; they range from making the entitlements of citizens to receive services in a timely fashion legally enforceable, through right to services laws, to mandating transparency with respect to where the service application is pending in the government. The appointment of higher level bodies tasked with dealing with public grievances is also a way of ensuring that accountability systems become stronger.

Do these strategies work automatically, once they are put in place? Obviously they don’t. The onus is still on citizens to make use of these instruments to demand their right to receiving over the counter services without corruption.

In next week’s blog, I will examine case studies where corruption was reduced through intelligent application of Klitgaard’s formula. I will also look at systems where efforts to reduce over the counter corruption did not bear fruit, and other problems were thrown up, as a result.

This blog is part of a series. The first blog can be found here.

The daily experiences of corruption that people suffer in their transactions with the government, is often termed ‘Petty’ corruption. It is anything but that. While each bribe, in relative terms may be a small amount, the multitude of such transactions that happen daily results in a huge transfer of financial resources to a few frontline service providers who are the face of the government, as far as the large majority of the people are concerned.

Many departments offer government services ranging from certification, licencing, collection of bills, disbursal of subsidies, registering of complaints, redressal of grievances and so on, to ordinary people. Many of these services are in the nature of natural monopolies, none other than the government is authorised to deliver them. Many of these services are based on convoluted rules that mandate multiple back end transactions, each one of which is an alibi for the demanding and collection of bribes.

The table below gives a list, by no means a comprehensive one, of bribe prone services and transactions pertaining to a list of typical departments that operate in a city. The nature of the reason for the collection of a bribe are also listed.

Click for table

Why do these bribes get paid? It ultimately boils down to citizen subjugation. When citizens do not demand public services as their entitlements and look upon them as favours dispensed from above, the tendency is for such forms of corruption to persist.

Considering the persistent nature of such forms of corruption, there is a strong school of thought that believes not only that such corruption is incurable, but that it is even beneficial in the short run, because it enables a modicum of service delivery to continue and flourish. That is a fallacy.

Pernicious petty corruption destroys the national character. As citizens face corruption at every step in their daily lives, they cultivate passive acceptance as a survival strategy. This even evolves into a perverted justification of corruption as an essential thing; something necessary to keep the wheels of the economy moving. This attitude destroys the quality of citizenship. People who tolerate corruption also tolerate injustice. They accept bad quality of government services. They look away when their environment is plundered. They tolerate, even collaborate, in the debilitating of a nation.

Thus the tackling of petty corruption is not merely a way of making services cheaper in real terms to citizens, it is a very important step in building our national character. How can citizens, both as a group and as individuals become intolerant of corruption and be able to successfully resist demands for bribes? More of that, in my next blog.

The first part of this blog series can be found here.

Like diseases and pathogens, it is essential that various types of corruption are identified and classified, based on their characteristics. The analogy with medical care goes further, because different types of corruption require different strategies – medications – for being effectively curbed and controlled, if not eliminated altogether. Several authorities have classified corruption based on appropriate criteria, such as who they impact, what processes they affect and how they may be best tackled. A simple classification is based upon a combination of these criteria and a good place to start is to separate acts of corruption into those that primarily affect state actions and those that affect the private sector. Of course, this is not a neat, water tight separation – plenty of corruption involves the interphase between the government and private corporate or professional entities; I shall explore these in greater detail in future blogs.

Let us look at public sector corruption at first. The most common experiences of corruption are those that concern the daily transactions that a citizen may engage with the government. For example, certification and identification services and licencing. The ordinary citizen requires several certifications at different stages in their lives. Birth, death and life certificates come readily to mind. Then there are others too, like caste certificates, residence certificates and domicile certificates, those that certify that a person is not insolvent such as income certificates, insolvency certificates, or that properties are not subject to any encumbrances or that a particular individual has a greater claim to properties, through a succession certificate.

The variety of certificates that an individual may require, certainly in a procedure gridlocked country such as India, may exceed more than 50, over any individual’s life span ranging from those that certify a certain status or identity, like a driving licence, a passport, a ration card, to licencing services concern the permissions that an individual may require to undertake certain actions, such as constructing a house, or commencing a business.

Clearances may be required from various departments, such as the Pollution Control Board, the Municipality, power utility, water utility and so on, before someone starts a new business venture. Government also delivers many services, such as food rations at subsidised prices, education, nutrition and protection. Accessing these services, say, to obtain admission in a school run by the government, or filing a police complaint or reporting a crime is a transaction that can be prone to corruption.

The second kind of corruption touches the procurement actions of the government. The government is typically the largest buyer in the market; procuring a spectrum of products and services ranging from paper clips to dam building contracts, from fighter aircraft to road laying contracts. Typically, these transactions, if corrupt, can increase the burden on the taxpayer’s money, but this is not something that an individual will experience first hand, unlike say the obtaining of a certificate or the issue of a licence. Procurement corruption requires an entirely different strategy on their control.

The third kind of transaction that may be corruption prone is the converse of procurement transactions; namely, when the government sells goods and services. These also cover a wide range of scale and value. The government sells waste paper for recycling and also bandwidth on the airwaves for mobile telephony. Mining rights are sold, so also electricity, tourist locations, government land, and such like. Again, corruption related to these transactions do not affect citizens directly, but short selling by the government of assets such as mineral resources, or air waves, can seriously compromise citizen interest.

The fourth kind of corruption involves the regulatory activities of the government. Gone are the days when only the judicial arm of the government dealt with the settlement of disputes. A plethora of generalist and specialist regulatory authorities now adjudicate in issues and disputes relating to various transactions, whether it is delay in obtaining a service, filing an application for admission to a school under the Right to Education Act, disputes relating to tariff fixation for power supply, insurance related disputes, house dwelling related conflicts, and matters of domestic relevance such as marriage, divorce, inheritance and succession.

A fifth kind of corruption concerns the political arena. These do not necessarily fall squarely in the domain of the public sphere, but nevertheless, in a democracy, can seriously undermine the setting and execution of policy. That in turn leads to corruption that is so large, overarching and yet nebulous – the corruption that relates to matters concerning the nation as a whole, a kind of corruption that is a mélange of all other forms of corruption; namely, Policy Corruption and State Capture.

Each one of these forms of corruption requires a different approach to be tackled effectively. In my next blog I attempt to explore the phenomenon of over the counter corruption, which touches many aspects of service delivery. This is what citizens see the most, and tackling this form of corruption is often what sets citizens perceptions on how best corruption can be controlled.

The first part of this blog series can be found here.