INTRODUCTION TO DEVELOPMENTAL STUDIES

ASSIGNMENT 1

Instructor: Solano Da Silva

Team members:
1. Raghav Prasad- 2017A7PS0297G
2. Chinmay Gokhale- 2017A4PS0906G
3. Atharva Joshi- 2017A1PS0801G
4. Hardik Kothari- 2017B3A71011G
5. Prem Patel- 2017A4PS0353G
6. Onkar Randad- 2017A4PS0636G

Topic:
What kind of lack of trust exists between the citizens and national institutions
and what measures could be established such that the government is truly
accountable to the citizens?

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INTRODUCTION:

This essay seeks to explore the issue of the lack of transparency and trust amongst the
citizens of India and various national institutions and how it proves to be an
impediment to the development of the nation. Following this, we wish to suggest
potential solutions to tackle this problem.

Fig. I – Effective Trust of citizens on Indian Institutions

From the above illustration, it is quite evident that there exists a significant amount of
distrust between the people and Indian institutions. Also, most of the mentioned
institutions are directly or indirectly linked to development of the nation, which
further calls for realisation and correction of this gap.

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In order to achieve our objective, we will begin by introducing and defining the
notion of social capital and social trust. Furthermore, we will elaborate on the
relationship between social capital and development, thus reinforcing the idea of how
closely related social trust and development are.

Next, we will study a few cases of institutions where there is a lack of transparency
and deconstruct the reasons and the mechanics behind the issue. It will enable us to
answer the questions, “why?” and “how?” there is a lack of transparency in these
institutions and how does this affect development.

It must be noted here that we will be limited in our exploration of the issue of lack of
transparency, to the case studies we will present. This is because this issue manifests
itself in a large number of ways, which is not possible to study. Thus, we will not be
able to generalize the problem, and hence our treatment of the subject and the
solutions we suggest to counter the problem will be specific and limited to the case
studies.

Finally, we will suggest solutions to the problem, based on the case studies of the
different institutions.

Social Capital

In this section, we wish to define social capital and social trust as it will help us (with
the rest of the paper).

Michael Woolcock in his paper, “Social Capital: Implications for Development

Theory, Research, and Policy”, defines social capital as “the norms and networks that
enable people to act collectively”. This definition serves two main purposes that
concern us. First, it highlights different dimensions of social capital and how
communities can have more or less of them. Second, it establishes the fact that trust
and reciprocity are close consequences of social capital.

Robert Putnam, in his paper, “Social Capital: Measurement and Consequences",

concurs with the aforementioned second feature of the definition of social capital and

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goes ahead and says that social trust can be used as a proxy for social capital. Note
that we may now use the terms, 'social capital' and 'social trust' interchangeably.

Now we are ready to use social capital to explore its effects on development.

Putnam also states that the networks that constitute social capital have both, value for
the people in them and also visible externalities. The externalities we are concerned
with are related to development. The following self-explanatory figure displays the
relationship between social capital and development:

Fig II. – Relation between social capital and the state of development

Note the significant dip during the Great Depression. Thus, there is a direct relation
between social capital and development.

Woolcock, in his paper, proposes four perspectives on social capital and economic
development. We shall briefly look at the two perspectives that are more pertinent to
our purpose, namely, the Networks view and the Institutional view.

The Networks view accounts for both the positive and negative externalities of social
capital by "stressing the importance of vertical as well as horizontal associations
between people and of relations within and among such organizational entities as

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community groups and firms". Thus, in the context of India, associations between the
citizens and the government organizations are critical and have tangible externalities.
We shall explore this fact through our case studies.

The Institutional view suggests a reversal of dependence, in that it suggests that social
capital and its consequences on society are largely dependent upon political, legal and
institutional environment. In the context of India, it suggests that institutions,
governmental, political and/or economic, play a pivotal role in generating social trust.

If we amalgamate the Networks view and the Institutional view, we see that there is
an almost symbiotic relationship between institutions and communities and they
depend on each other in the matter of social capital and development.

Thus, we have now established the relationship between social capital and
development.

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ANALYSIS:

To proceed with our essay, we shortlisted a number of institutions which are directly
or indirectly linked to India’s development. Here, development, even though
primarily related to economic growth and prosperity, also takes into account
philosophical aspects like justice, happiness and satisfaction. After analysing the
instances, we attempt to come up with suggestions and advices as to bridge the gap
between the democratic promise of end to end transparency and the actual state in our
nation.

We have analysed specific instances of development of lack of trust, accountability

and information exchange between the following institutions and people:
1. Central Government
2. Civil Services
3. The Judiciary
4. The RBI

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 I. The Central Government:

Transparency as defined by business dictionary is full, accurate and timely

disclosure of information, a situation in which business and financial activities are
done in an open way without secrets. Transparency leads to build a sense of stability,
spirits of volunteerism, team work, commitment, solidarity and integrity. There are
ample examples when lack of transparency has led to collapse of many business
ventures.
While talking about the working of Indian Government, the three branches of
government namely the legislative, the executive and the judiciary, should all function
independently and transparently. According to Transparency International’s 2012
Corruption Perception Index, India has been ranked 94th out of 176 countries. Lack of
transparency in these branches and interference among them has led to a lot of
corruption and the loss of trust of the people in Judiciary and the overall working of
the government. Some major scams and scandals due to lack of transparency and
corruption are:
 Coal Allotment Scam (Cost-186000 crores)
 2G Spectrum Scam (Cost-176000 crores)
 Commonwealth Games (CWG) Scam (Cost-70000 crores)
 Mega Black money laundering Scam (Cost-70000 crores)
 Stamp paper Scam (Cost-20000 crores)
 Hawala Scam (Cost-8000 crores)

Recently, the Government made Rafale deal with Dassault group. Actually,
IAF (Indian Air Force) is in dire need of around 200 MMRCA (Medium Multi-Role
Combat Aircraft) since 2001. UPA government approved the demand in 2007 and
initiated the bidding process. Many companies responded and finally Dassault won
the bidding in 2012. The deal was to provide 126 Rafales at US $ 10.2 Billion, 18 jets
to be provided ready to fly and rest 108 to be made in India by HAL (Hindustan
Aeronautics Limited) via technology transfer. The deal also included other goodies
like Dassault was supposed to invest 50% of revenue from this deal in India itself. But
the deal made recently by Honourable Prime Minister is quite different and seems to
be a great loss for India. Comparison between the two deals:

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 Details Original Deal Modi’s Deal
Number of Planes 126 36
Total contract (Billion 10.2 8.74
USD)
Cost per plane (Million 81 243
USD)
Technology Transfer Yes No
Fig III. – Details of the Rafale Deal

Trying to figure out the reasons that made Hon’ble PM Modi spoil a sweet
deal benefitting India into an outrageous losing proposition to empty India’s coffers to
enrich France’s, there’s a news which shows that within 2 weeks after the original
contract, Mukesh Ambani became Dassaults’ partner and so did Anil Ambani. Now
Dassault group which was ready for the original deal allegedly asked additional
money for weapon system and technology transfer stretching the deal from 10.2 to
14-18 billion USD. They also refused to provide any guarantee for the planes made by
HAL. Looking at the profile of Dassault group before the deal, it was desperate for
the deal as it had the reputation of non-transparent organisation and its business
wasn’t helping it much. But the Dassault-Ambani partnership changed everything.
Now Ambani who controls most of the politicians, thus the government itself, was the
partner of Dassault group. So, Dassault-Ambani started arm wristing Indian
Government to get the most out of the deal. But thankfully that wasn’t too easy as the
defence minister of UPA government at that time delayed the deal for 2 years until
Modi became PM.

The whole case doesn’t reveal the actual picture of what is going on behind the
scenes. And this is due to lack of transparency between the Government and people,
and even between the Government and Dassault group.

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 II. The Civil Services:

Transparency is considered as a plane mirror which reflects government’s

workings, objectives, executive and legislative actions and its Behaviour towards the
principle of rule of law. It depicts the core images of underlying fundamentals of
accountability and the nature of governance which is prevailing. It is the obligation of
the government, its agencies and the public officials to provide information about
their decisions and actions so as to be answerable to the public and the institutions
overseeing them thus, providing the basis for evaluating the ongoing effectiveness of
the public officials or public bodies and instilling confidence in the government. It
helped uncover the critical process of utilization of the government funds , the
citizen’s hard earned money a part of which they pay as taxes. The question of why
transparency is demanded so much in Indian civil services is because ,in this
subcontinent of 1.2 billion inhabitants the government is critiqued to be a ‘FLAWED’
democracy on the democracy index by political analysts due to corruption, freedom
infringement etc.
The bureaucracy is the backbone of the government should be accountable for
its status and actions. Transparency is aided by the institutions like Comptroller and
Auditor General (CAG), Central Vigilance Commission, Ombudsman offices, Human
Rights Commission etc. Being a democratic state it has become an indispensable need
to ensure the validity of rule of law, constitutional vision and equitable distribution
because democracy is handicapped without achieving the goal of transparent
legislation, executive and judiciary. A major thrust to transparency was the
introduction of the Right to Information (RTI) act in 2005. This act ensured that
Public has right to be well informed about various departments, various ministries,
government's audit report unless or until it is not against the national security.
Several reforms and laws have been brought in place to ensure transparency like are
E-Governance as a tool for sharing information and technology and its aim is to bring
about enhanced access, transparency, accountability and efficiency in the delivery of
government information and services without the involvement of useless agents at
each step. Another such act is Public Service commission (PSC) under the purview of
the RTI Act brought by the Supreme court which has set a precedent for other
banking and co-operative institutions to install more transparency. These institutions
are now forced to disclose information on answer sheets and details of job interviews
which ensures fair play in the competitive sphere and that the candidates have been
awarded marks according to their performance. Social auditing is also used in various
government’s employment programmes in rural regions ensure a high degree of

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autonomy and objectivity and also serve as checks and balances in the
implementation of the schemes.
It is high time now to take steps in the direction to induce transparency in
major government schemes and actions thereby eliminating the virus of corruption
which has plagued the system for the past decades.

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 III. The Judiciary:

In India, supreme power is shared among the legislature, the executive and the
judiciary. Each of these bodies are independent. But there have been instances where
legislature (more precisely the ruling party) has intervened with judiciary
functioning’s. This rises the questions for independence of judiciary.
According to Article 124(2) in the Constitution of India, Every Judge of the
Supreme Court shall be appointed by the President. In the case of appointment of a
Judge other than the chief Justice, the chief Justice of India shall always be consulted
(Anon., n.d.). Recently in March 2018 , Business Standard stated that the
Senior Supreme Court lawyers have echoed Justice J. Chelameswar's concern over the
government's interference in the appointment of judges, saying there is "too much"
interference of the executive in the appointment of "judges with independent minds"
(Anon., 2018).Such involvement by the Government results in biased selection of
judges who show affiliation to their political philosophy or share their policy
performance. Major reason for such interference being judiciary body withholds the
power to keep a check against any arbitrary exercises of powers by the power-holders.
So, the Supreme Court can hold an Act or a particular Clause of an Act passed by
Parliament. By biased selection, government try to have some control over judiciary.
Another aspect for involvement is through Government having the power for rejection
of candidates recommended by the Collegium (a closed group of the CJI, the four
most senior judges of the court and the senior-most judge hailing from the high court
of a prospective appointee) on grounds of national security/public interest.
Judiciary system ensures rule of law by safeguarding Rights of people. Unless
the judges are independent, they cannot be expected to protect the rights and liberties
of the people. Due to which, without an independent, fearless and impartial judiciary
system, democracy cannot succeed. As a result of which people will lose trust in
judiciary and will be feared of their rights not being ensured. This ultimately hampers
the development of nation. So taking in consideration the development of India,
transparency in electing Judges is very important.
So to ensure independence of judiciary a possible solution is through bringing
transparency in electing Judges. This can be done by making Government responsible
to give an appropriate reason for rejection of candidates recommended Collegium.

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 IV. The RBI:

RBI is the central bank of India. The basic role of RBI is to regulate the Indian
Currency-Rupee, keep monetary Stability by holding reserves and to efficiently and
securely operate the credit system in Indian Banks by varying the interest rates. RBI is
officially an autonomous entity, supposed to work independent from the government.
But, it is often seen that the Ministry of Finance and RBI work together towards a
goal. In fact, the government often sets an economic target and RBI then takes steps
to achieve that target. This sometimes leads to a rift between the two when don’t
agree on the way a certain goal (Example: Keeping value of Rupee in check) should
be achieved .
The PNB scam can be seen as a example to the above. The government
blamed the RBI for not foreseeing the fraud and said that it was the responsibility of
the RBI to verify the transactions of the centralized banks. RBI responded by
accusing the government that, in fact it was their responsibility as PNB Bank came
directly under the Central government.
Another subject of constant tussle between the government and the RBI is the
varying of the interest rates. Government often thinks from the perspective of its
industrial partners and hence wants the interest rates changed accordingly. RBI, on
the other hand, tends to look at the broader economy of the country and vary the
interest rates accordingly. This results in obvious confrontation between the two.
The above two examples show that the government indeed wants to influence
the monetary policies of RBI, sometimes for the benefit of the Indian economy or
sometimes for its own interests. It’s the latter part which needs to be curbed to
maintain RBI as an independent entity. Possible steps to ensure the independence of
RBI can be stated as: Changing the frequency of the annual reports of the Finance
Ministry and RBI to Monthly basis or a shorter period. Also, we propose an
independent audit of each of the interests and viewpoints on direction of interest rates
of both parties for a more robust and transparent financial system.

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CONCLUSION:

Hence, after having analyzed particular instances under the four institutions
mentioned, and proposing solutions based on those, we try to answer the question
regarding the existence of lack of trust and the reasons behind the same, as posed in
the introduction. Hence, if considered on a larger context and subjected to a critical
study, the lack of transparency and trust in our nation can be further studied and
stronger solutions can be formulated to ensure true development on economic,
democratic and philosophical grounds.
-2727 words

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 MIND MAP FOR THE FLOW OF IDEAS

References:
1. Anon., 2018. www.business-standard.com. [Online]
Available at: https://www.business-standard.com/article/news-ians/government-
interference-in-judiciary-senior-lawyers-echo-judge-s-concern-118033100201_1.html
[Accessed Friday November 2018].
2. Anon., n.d. https://indiankanoon.org. [Online]
Available at: https://indiankanoon.org/doc/1995948/
[Accessed Saturday november 2018].
Michael Woolcock, D. N., 2018. [Online].
3. Putnam, R., n.d. Citeseerx. [Online]
Available at:
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.178.6284&rep=rep1&type
=pdf
[Accessed November 2018].
4. Woolcock, M. & Narayan, D., 2000. Research Gate. [Online]
Available at:
https://www.researchgate.net/publication/5217916_Social_Capital_Implications_for_
Development_Theory_Research_and_Policy
[Accessed November 2018].
Woolcock, M. & Narayan, D., n.d. s.l.: s.n.

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