The new Insolvency and Bankruptcy Code (IBC) reform is creating much excitement. I favour the reform but I suspect its implementation will have problems primarily because there has not been a reform of the law and order system. Indian policy problem is aggravated because of the lack of proper law and order mechanism.
Take the case of demonetisation. Its implementation was botched by corrupt bankers and black money owners conspiring to launder the money. They could do it because they did not fear retribution from criminal investigations. In case of good and service tax (GST), the issue is corruption of tax authorities that creates hurdles and inefficiencies, which in addition to software deficiency crippled the implementation.
The Indian bureaucracy is riddled with corruption. So is the judiciary. Politicians have been a lost cause for four decades now. I hear Prime Minister Narendra Modi and his team is not corrupt. But their mechanism for rooting out corruption is quite ineffective. If PM Modi is using the anti-corruption playbook he used in Gujarat, it will not work. The mechanisms of corruption have increased manifold and the system has become well entrenched.
True reform will come if you set right the law and order machinery and then take on all these contentious issues.
Judicial Reform has to start from Supreme Court, filter to High Courts and then right to the lowest judicial level. For start, we need a Supreme Court that is clean without doubt. This reform will be quite tricky and will have to be undertaken by the apex court itself, first by asking declare criteria for selection of judges at High Courts and the Supreme Court. Further, their criteria must include a procedure to remove the judges who are found to be corrupt. For this investigation, Courts needs its own investigative corps. At present this system is being run through remarks made on confidential file using grapevine and other such techniques. Either formalise this system and make the system transparent or improve it.
A caution must be exercised by Government so as not to intervene in the process. Government should allow the Supreme Court to arrive at its own system. The Supreme Court must table its report on effectiveness of this system every year to the President.
At the same time, we need police reform as well - both at centre and the states.
At the centre, we need reorganisation of Central Bureau of Investigation (CBI). We should just dump it totally and start afresh. Recruit fresh people, pay them well and watch them against corruption. The states should clean the police force in the same manner. Concurrently start rationalising the criminal laws of the country. We have too many laws and too little justice.
1. Enact law allowing States to raise "Special Police Corps" or SPC at state level. This SPC will sign a document disclosing their personal wealth and confiscation of all extra wealth if found guilty of corruption. They will also be liable to be jailed for at least five years and up 20 years for each offense and none of these sentences can be suffered concurrently.
2. Raise such SPC at each state. They should have separate structure with no sharing with present police.
3. The SPC should include traffic beat, criminal investigation, anti-corruption, fraud investigation arms, technology cell, anti-terror squad, and quick response units. It is very important that this group has its own legal prosecution unit that is not hired from present set of practicing lawyers.
4. Replace standard police district by district (or zone by zone) with SPC.
5. Fire the all the present branches of police and give them salary and pension benefits. [That will cost less than the economic cost of letting them work]. All including anti-corruption bureau (ACBs), Indian Police Service (IPS) cadre, criminal investigations, traffic, and state reserve police force (SRPF), all should be fired.
6. Start investigating and prosecuting corruption cases against police and other government servants including government officers (central, state and local), bank officers, tax officials, bureaucrats and all employees of public sector units (PSUs).
Concurrently we need to reform the police infrastructure as well. Following is taken from election manifesto I designed for a political party…
1. Police Reform is starting point of law and Order reform. And it starts with a healthy, able and equipped police force. No force will be empowered if appropriate conditions do not exists at work and at home.
2. We intend to focus our energy on police housing, police station improvements, equipment improvements, recruitment, bringing sanity to duty hours among other things.
3. Women protection, children protection and old-age help will form essential items on the agenda. We intend to strengthen protection against domestic violence.
4. Crimes, their nature and impact has changed greatly. We need to beef up investigations on financial crimes, technology based crimes including ID thefts, social media based defamation, inappropriate use of technology circulating doctored images to ruin the reputations of parties etc.
5. With these will come additional responsibilities. Improved training and fitness regimen.
Needless to say, this part was ignored in toto. So, I do not have much confidence in political parties improving police. But that does not diminish the impact of this reform. Once this reform is in progress, you will see dramatic improvement in confidence of the people and it will improve the anti-corruption ranking and improve confidence in the economy.
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Rahul Prakash Deodhar is a lawyer, investor and author with experience spanning manufacturing, consulting, investment banking firms. He has advised Fortune 500 companies, public and private sector banks, hedge funds and private equity funds. He has developed econometric models for demand forecasting in real estate, metals, airlines, and shipping. He designed MIS and planning and budgeting systems, sales networks, and operations for large corporates. He has worked with Aditya Birla Group, CRISIL and Morgan Stanley. He is author of two books – Subverting Capitalism and Democracy and Understanding Firms. He can be reached at [email protected] or at his website www.rahuldeodhar.com.)
