'Only a reduced state interference will curb corruption'

OneIndia: There is a view in India that a nation's infrastructure-building activity should be concentrated in the hand of the government and not private players. But if FDI in retail is allowed, then foreign forces are expected to boost the local facilities including infrastructure. Often, we see poor communication and transportation impede economic activities in rural and semi-rural areas of India. If foreign players help in improving roads, cold storage facilities and distribution networks of a remote member of the economy, then it is always welcome. Isn't it?

Dr Lingle: Many of China's initial big projects in physical infrastructure development involved private actors. For example, private developers provided motorways in Guangzhou under a build-operate-transfer (BOT) scheme. However, there is a tragic likelihood that the mental trap about markets and privately-owned, foreign capital continues to retard India's economic performance.

OneIndia: Will the landless and marginal farmers be affected by FDI in retail? Should FDI be allowed in various sectors gradually or at one go?

Dr Lingle: Whether or not FDI in retail occurs is not the biggest problem for landless, marginal farmers. As it is, their interests might be best addressed if they were granted title on unused or under-utilised land presently owned by the State. They can also benefit from having improved physical infrastructure, something that the State has failed to provide.

OneIndia: The days of the closed economy encouraged corruption in India. Today, several state-run projects breed corruption. Even liberalisation has seen some serious scams surfacing. Are these post-liberalisation scams a jerking impact seen in the first generation of the post-opening days or corruption has been permanently institutionalised in India, thanks to the old-day statist economy?

Dr Lingle: Corruption seems to have become embedded in the political DNA of India. It is like a cancer that will only spread once it is established. The only way to reduce corruption is to reduce bureaucratic interferences and legislative giveaways that provide opportunities for graft, theft and waste.

It is a matter of incentives, not individuals. Even honest people will be corrupted by incentives that provide them with payoffs by cheating the system and when there is limited likelihood of either being caught or being punished.

OneIndia: Do you think that the situation in India would have been different had it chosen a market economy in the days just after Independence? There is a Leftist orientation in Indian politico-intellectual mind and a distrust of foreign capital. As you said, we tend to equate colonialism with capitalism. This is clearly a lack of vision until our back touched the wall in 1991. We had the institutions to reap benefits of liberalisation of both economy and mind. Your thoughts.

Dr Lingle: Given the global climate at the time of Independence, it is unlikely that India's leaders would have chosen a Liberal path. But the problem arising from State involvements in the economy have been compounded over time, creating an entrenched sense of entitlement for certain groups, including the civil service.

It is tragic that India's democratic institutions create incentives to keep people poor so that they must depend on political parties to provide them with handouts. As such, vote banks depend upon continued poverty.

OneIndia: Countries like Mexico and Chile have led the way in economic deregulation but in states like the USA, the government is taking up more social responsibilities. Do you think it is an interesting global economic trend and India should learn from the Latin American countries?

Dr Lingle: India's leaders should heed the mistakes of Latin American countries whereby populist-democracy lead to utter destruction of their economies. India's should also look to the successes of Brazil and Chile from liberalisation and reforms that have moved their economies onto higher growth trajectories.

OneIndia: Will the GAAR (General Anti-Avoidance Rules) rule be helpful in evading corrupt practices as far as liberalisation in India is concerned? There is an uproar that the GAAR is not being adopted by the govt for it feels that it will lower confidence of the investors. What's your take on this?

Dr Lingle: The only way to reduce corruption is to reduce the politicisation of the economy and to end social or other privileges. More opportunities for bureaucrats or politicians to get in the way of what citizens wish to do breeds more corruption. Fewer opportunities will lead to less corruption.