Rapid and equitable economic growth requires the formulation and implementation of good policy, which in turn involves both ministers and civil servants. There is a widely held perception, both within the civil service and among outsiders who interact with government, that civil servants have in recent times become increasingly reluctant to decide issues quickly and firmly. This has consequences for the economy.
The problems with civil service decision-making stem from multiple sources. Firstly, there are gaps in capacity, training and specialised knowledge in dealing with certain kinds of economic issues.
Secondly, the increasing number and rigour of external oversight mechanisms may have unintended effects. External monitoring in the public sector tends to be skewed towards bad decisions that were taken rather than good decisions that were not taken (i.e. opportunities that were missed). This promotes a culture where avoidance of mistakes is more important than the pursuit of opportunities.
The third and possibly most important reason which may also be the easiest to remedy: certain provisions of the anti-corruption law and the way they have been used in recent years.
Good public administration and sound policy making requires that public servants take decisions in public interest and, in particular, without ‘fear or favour’ (a phrase which finds place in the oath of office for ministers).
There is a credible perception that well-intentioned but draconian legal provisions seeking to prevent decision making with favour, seem to be resulting in decision taking with fear. Some provisions of anti-corruption law seem to scare the honest without deterring the corrupt.
The Prevention of Corruption Act
In a bid to tighten anti-corruption law, the new Prevention of Corruption Act of 198813 (PCA) added a provision in Section 13(1)(d)(iii) according to which:
A public servant is said to commit the offence of criminal misconduct if he, while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest.
Because the definition does not include words like ‘corruptly’ or ‘wrongfully’, this offence has no requirement of mens rea or guilty intent – it is an ‘absolute offence’. Since the law does not require the public servant to have had any improper motive, even a benefit conferred inadvertently is sufficient to be prosecuted.
For example, suppose an honest public servant makes, in good faith, an error of judgment and undervalues an asset which is being disinvested. Obviously that undervaluation causes a pecuniary gain to the buyer of the asset and is not in public interest, but it was not a corrupt or deliberate undervaluation. Indeed it may not even have been appeared at the time of the decision to be an error of judgment.
An error (with no benefit to the public servant), or something regarded with hindsight as an error, can constitute a crime punishable by imprisonment and, during the trial stage, the stigma of corruption. No such section appears to exist in other democracies, where it is the duty of the investigating agencies to establish corruption including evidence of motive and thus mens rea.
Is public interest served by this approach?
Wrongdoing by public servants can fall in a continuum ranging from receiving minor non-monetary benefits to outright bribery. The purpose behind Section 13(1)(d)(iii) was to provide a catch-all offence to deal with difficult cases where a public servant could confer favours without leaving any trail.
Since other provisions of law specifically deal with a wide range of corruption offences covering every form of ‘illicit gratification’, Section 13 (1)(d)(iii) essentially targets minor forms of corruption (by diluting the standard of proof). It is meant to make it easier for Indian investigative agencies to prosecute for corruption without having to establish any direct benefit to the decision-taker or participant in a decision.
In tackling corruption, two kinds of error may arise- Type I error where the corrupt may escape, and Type II error where an innocent person may be falsely accused of corruption. An extremist approach to reducing Type I errors by preventing the escape of those who may have received minor or non-monetary favours, or against whom proof of illicit gratification cannot be found, increases the chance of a Type II error where an innocent person (who took decisions with no ulterior motives) is prosecuted.
From an economic point of view, the loss to the public from the Type II error and the policy and implementation paralysis it promotes, is far larger. This draconian section therefore appears to be hurting the public more than it has helped it.
There is considerable and very credible evidence that many serious governance problems–the reluctance of government to accept responsibility for its own delays in projects, the penchant for departments to appeal even fair and reasonable arbitration awards or lower court judgements, the tendency to raise tax disputes based on audit objections even if the tax authority disagrees with the auditor, the reluctance of civil servants to sell land or divest public enterprises–are traceable in large part to the fear of ‘causing pecuniary gain’ to the other side.
1. Amendments to the PCA
The Prevention of Corruption (Amendment) Bill 201314 , which is pending in the Rajya Sabha, seeks to carry out major improvements to the PCA and in general strengthen the anti-corruption law by bringing it into conformity the United Nations Convention against Corruption.
It proposes to replace the provisions of Section 13(1) with new wording in conformity with international norms that is fairer and would prevent prosecution for mere administrative errors. The Kelkar Committee on Public Private Partnerships too has strongly recommended amendment of the law to protect bona fide decision-making.
2. Commission to recommend a new prosecutorial approach
The combination of Section 13(1)(d)(iii) PCA and Section 120A of the Indian Penal Code may have rendered prosecuting agencies ‘lazy’ in the figurative sense of not needing to do the painstaking forensic and investigative work needed to trace the money flow of bribes and establish pecuniary gain.
Experience with successful prosecution of white collar crime in developed countries suggests that Indian investigative agencies may need to change their approach and modernize their investigative techniques. Many staff of the investigative agencies do not have the tools, skills or training to do a proper investigation of modern day financial crime and corruption.
It would be desirable for the Government to set up a Commission to recommend a new prosecutorial policy for the offence of corruption which balances the need for probity with the need for bona fide decisions to be taken without fear of false allegations of corruption. The Commission should also recommend measures to improving the capacity of both the investigative agencies and the public prosecutors. It is crucial that the Commission have the resources needed to access international expertise.
3. Re-assess the relevance of the Vigilance machinery
The Government and public sector are dotted with a large number of ‘Vigilance Officers’. Quantitative evidence and public perception both suggest that this has not been accompanied by any reduction in levels of corruption, and if anything the problem is perceived to have worsened.
The Vigilance Officer system is widely felt to be ineffective and in some cases even counter-productive. It may be time to consider whether the costs of this elaborate, but apparently ineffective, system are worthwhile.