Every year during the time of the budget, there is a great deal of discussion on government’s policies and what it should and will be doing in the year to come. Many look at the Finance Minister to see if his magic wand, as it were, will help revive the economy.
While it is necessary to discuss the merits of what has been done, what should have been done, and what should not have been done to improve the economy, promote growth, reduce poverty, I believe there is one very big issue that is so essential to all progress we wish to make, that without addressing ourselves to it, everything else will fail.
The issue is the Rule of Law.
For any civilised society to function normally, the law should prevail supreme. In India, everything but the law works. In our daily business and personal lives, too.
Let us take a few examples.
You want to sell your property. You enter into an agreement to sell it to someone for a consideration. He pays you 10% of the agreed amount down and enters into a written agreement. The property remains in your possession. He violates the agreement and does not pay you the next installment or any money thereafter. What do you do? You enforce the penalty clauses in the agreement and cancel it. Do you think it is the end of the story as far as this buyer is concerned? Not in India. The agreement you entered into will have become a punishment for you. It will result in endless suffering for you. With unscrupulous buyers, sitting on an agreement to purchase property is a business by itself. They make money on rights to buy property. Your canceling the agreement does not help you. There are various ways in which the buyer can ensure that you are not able to sell the property to someone else including obtaining an injunction against you from a court!
For instance, one enters in to a contract with a property developer, but at the end of the contract period one finds that less than half the specifications are met. You are cheated and do not get what was promised.
Here is another live example of one of my clients. This lady gave on lease 4000 square yards of land and a house on it to a polished, suave gentleman who started running a school on the property. From the fourth month, however, the person stopped paying rent. And he continues to be in possession today - after four years - without a valid lease deed, without paying rent and without allowing the lady to enter into the premises even to inspect it! The icing on the cake is that to vacate the premises, the gentleman has now demanded a huge sum of money forget what he owes her for rent and expenses and harassment!
Every criminal knows that you can commit any crime in this peace loving country of ours - including murder - with impunity. There are bleak chances of your being found out, holed up in jail, or being punished. If you are crooked enough and with some money, virtually everything is manageable.
India has today truly become a functioning anarchy. In India, we understand the rule of law by its absence. A great judge once said: howsoever high you are, the law is above you. Not in India. And that is India’s scourge. How does not being able to enforce an agreement to sell property become so important? Most fundamental concepts are indivisible. The rule of law is one such concept. You cannot have the rule of law prevailing in one area and not in another.
Our inability and unwillingness to enforce agreements eventually resulted in Punjab, Kashmir, North East, Naxalites, LTTE and, not the least, Bihar. Once we started treating law with indifference, everyone started taking law for granted. Including law enforcers. At the end of half a century, we have total lawlessness. The results in pure economic terms are mind boggling: lakhs of crores of rupees spent, lost and not earned because of lawlessness every where. To top it all, we have a totally torn social and moral fabric.
Another half century of such growing anarchy and India will not be a country that shall be recognisable as it is today. Imagine what a different country it would have been if only law was allowed to remain supreme. Where every contract was enforced, every crime punished. It would have been utopia, heaven on earth.
Government need not have worried or done anything about the economy, growth and business - it was not created for such things and is incapable to indulge in it. If only it had put premium on law and kept out of business, everything else would have taken care of itself.
But that was not to be. And we have lost the opportunity
to be the world leader.
Can anything be done about it now? Most certainly. There
are hundreds of mundane, and a few radical, things that can be done for
an about turn on this matter. The solutions are not far to seek. What is
required are qualities lacking in our leaders today: vision. And will.
The day a leader with these qualities emerges, our budgets and policies will be different.
(Ajay Gandhi is a chartered accountant based in Hyderabad. His columns can be found on the internet at: <www.taxnyou.com>)
(C) Liberty Institute, New Delhi, 1999
