Modi’s War on Corruption

IN HIS SPEECH on Independence Day, Prime Minister Narendra Modi once again highlighted the issue of corruption. But in the same breath, he linked it to nepo­tism and what he called the “dynasty system”. But unlike the usual political carping about corruption, his claim was expansive. These injurious tendencies have now spread deep roots in Indian society and public life.

He said, “In a democracy like India where people are struggling with poverty and do not have a place to live, there are people who do not have a place to keep their ill-gotten money. This is not an ideal situation.”

This idea has widespread resonance with the electorate, the vast bulk of which is either poor or manages to get along by working very hard. Even the smallest touch of corruption cripples the life of such people. And if one goes by widespread anecdotal evidence, the poor and the “unconnected” bear the brunt of low-level corruption.

But on August 15, the prime minister was hinting at a far more pernicious phenomenon in whose shade low-level cor­ruption thrives: its prevalence among the powerful and the well-connected. His linkage of corruption to the “dynasty system” was self-explanatory: the acquisition of political power among select political families throughout the length and breadth of India has a corrosive effect on democracy. These effects feed into each other.

The speech was criticised by the prime minister’s political rivals, as was to be expected. But if anything, the fight against corruption enjoys widespread support, both electoral and institutional. In this context, the Supreme Court’s recent upholding of the Prevention of Money Laundering Act (PMLA), 2002, and its re-elabo­ration of the powers of the Enforce­ment Directorate (ED), the agency that operates the law, is worth noting. But just like the prime minister, the court too was not spared criticism for its upholding of the allegedly draco­nian law. It says something about the intellectual and political cul de sac India finds itself in that even acting against the corrupt is decried as anti-democratic.

PMLA is not an ordinary law. It does not deal with petty offences like theft or with some traffic offence involving vehicles. By its very nature, it is a special law that prescribes special procedures and punishments. This is necessary as money laundering is not the province of an everyday criminal. Even then, the 2002 law had sufficient loopholes that criminals and their lawyers ‘gamed’ over time. An amendment in 2019 tightens procedural and substantive features of the law. The amendment’s elaboration of “proceeds of crime” allows greater leeway and power to the ED that was otherwise hamstrung in the absence of this specific change.

None of this has gone down well with the intellectual auxiliaries who, willy-nilly, end up supporting the powerful and the corrupt in the name of safeguarding democracy. They are wrong on almost all counts.

Consider one key allegation that the number of raids con­ducted by ED has gone up manifold since 2014 when the Modi government came to power. By the government’s own account, this number has gone up by 27 times in 2014-22 as compared to 2004-14. This number is contrasted with the number of convic­tions under PMLA, which is much lower (just 23).

The innuendo is clear: the new dispensation has abused the law against its political rivals. Given that PMLA is “draconian”, the “process is the punishment”.

But much is left unsaid in these claims. For one, there was no convic­tion from 2004-05 to 2013-14. One can debate the reasons for this but it is clear that either the law itself or those who were to enforce it, lacked teeth. Then there is the fact that only `5,346.1 crore was attached as pro­ceeds of crime in the first nine years of PMLA. This figure jumped to a whop­ping `99,356 crore from 2014-22.

Clearly, only one side of the law’s operation—its conviction rate—has been highlighted to score a point. The other aspect, attach­ment of the proceeds of crime, is conveniently ignored. It is also forgotten that most PMLA cases are in the judicial pipeline and the rate of conviction, which ought to be measured against the actual number of trials that have been completed, is never looked at in the proper perspective.

If one steps aside from this ‘political’ argument, what has changed since 2014 that has led to a dramatic increase in the attachment of ill-gotten assets and proceeds of crime? One— counter-political—claim can be that ED has been un-muzzled by a government that is serious about controlling corruption. Even if one disagrees with this line of reasoning, given the opprobrium about ED being used against political rivals, there are sound reasons why the number of cases and attachments of money have risen dramatically.

Since 2014, the linking of databases—income tax, travel, financial transactions, banking, criminal records, and more—makes it much more difficult to move illegally acquired money in formal channels. In this situation, it is not surprising that those accused of financial and other crimes prefer to deal in cash instead of formal channels, such as banking

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Since 2014, the linking of databases—income tax, travel, financial transactions, banking, criminal records, and more— makes it much more difficult to move illegally acquired money in formal channels. In the past few years, the use of sophis­ticated data mining techniques has afforded valuable clues for ED and other law enforcement agencies to follow. In this situation, it is not surprising that those accused of financial and other crimes prefer to deal in cash instead of formal channels, such as banking. The discovery of ‘mountains of cash’ becomes much easier through other means. Law enforcers are quick to pick up clues about such brazen hoarding of cash through their informant networks.

The overall result is for everyone to see.

Another argument against the necessary powers of ED is that innocent persons, once they are caught in a web of investiga­tion, have no way out of the maze. This is not even an excuse. It is worth asking how many innocent people, who have no link with criminals or are in any way associated with the proceeds of crime, have ever been hauled up by ED. The answer is zero.

What remains at the end of all the accusations against ED is intellectual slime. Anyone familiar with the functioning of ED knows that the number of cases the agency can handle has stretched its organisational limits. In terms of personnel and re­sources, the agency is in much better shape than even a decade ago, but such are the tentacles of financial crimes driven by the powerful that the agency will always be in catch-up mode.

Corruption and democracy have evolved together since Independence. For many decades, top leaders of the country and those in states were virtually unaccountable when it came to corruption. Institutions like the Lokayukta either lacked teeth or had so many ‘safeguards’ built into them that they were toothless. But more than anything else, corruption was like a game: one party waited patiently for its turn to loot while the other one carried on merrily while in power. The brunt of this was borne by India’s poor and ‘unconnected’ citizens who had to shell out money for goods and services that were theirs legally. That order of pelf is probably nearing its end even if the fight against corruption in its manifold forms will have to go on for much longer.

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Siddharth Singh

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