As fate would have it, Sriviliputtur Government Hospital (in Tamil Nadu’s Ramnathapuram district) happened to be one of the first hospitals he reviewed on taking charge. An officer on Pankaj Kumar Bansal’s team drew his attention to a heavily pregnant lady, who was close to panic stricken tears on being referred out, yet again, to another government hospital for emergency obstetric care. That Sriviliputtur itself was a designated CEmONC center (Comprehensive Emergency Obstetric and Neonatal Care Center) mandated to provide every conceivable (except for the very super-specialized) care required for a pregnant mother and her neonate, and yet was incapable of handling the emergency, distressed him deeply.
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After visiting a government office, residents in Punjab may be surprised to find a familiar voice on the phone – their Chief Minister. “You have recently registered property,” the voice of Shahbaz Sharif booms, “Did you face any difficulties? Did you have to pay a bribe?” (Hear the robo-call here!)
It is an uncomfortable question – but one that tackles a stubborn social issue in Pakistan. In a country of 180 million, a culture of bribery and pretty corruption plagues public service delivery.
When visiting a land services official, a staggering 75 percent of households reported paying a bribe, according to Transparency International. Over half of households said they bribed the public utilities or a police officer in the last year. Endemic corruption is not just a drag on economic activity and poverty reduction efforts – it erodes trust between citizens and the state.
I was standing behind the Chief Minister, Nitish Kumar of Bihar, and I was amazed as he seemed to be. This young man from a village in Bihar had actually made a functioning hearing aid using electronic waste. He even designed his own Styrofoam cutter to quicken the production process. And the cost of the hearing aid is only 75 rupees ($1.20)! The cutter costs a few dollars only.
Nitish Kumar was making a tour of the Innovation Expo at the Bihar Innovation Forum (BIF). For me, Rishikesh was clearly the most amazing talent, but there were good innovations in many, many areas. Recycling groundwater for irrigation, thus slowing the depletion of scarce groundwater resources; using rice husks to generate electricity in the village; an Internet platform that allows small investors to contribute to grassroots loans; a platform to harness traditional culture to create jobs; I could go on.
The BIF is organized by Jeevika, Bihar’s flagship livelihoods program, which has empowered over a million women already and connected them to banks. I am proud to say that the World Bank is a long term supporter of both Jeevika and BIF.
Many people associate innovation in India with big cities like Bangalore and Chennai. Bihar decided seven years ago to see what innovation can come from its villages. This year they looked again, not only within Bihar but across India and found innovative rural solutions from 16 states. And it does not stop at a forum. The Chief Minister announced the same day that Jeevika will create an Innovation Center to support the grassroots innovators with handholding and technical assistance and to make sure that what works gets scaled up in many villages. This could transform the rural landscape!
The much anticipated Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“the Act”) has just come into force in India on January 1st, 2014. Unlike the replaced 1894 legislation, this act addresses the rehabilitation and resettlement of those who depend on land, in addition to land owners. As emphasized in its title the new act places a greater emphasis on transparent processes at various stages: for example, through its mandatory social impact assessments, public hearings, and dispute resolution mechanisms.
The other key emphasis in the act’s title refers to a new compensatory mechanism. The new act now provides for up to two times market value, against one time in the previous act and this figure is then doubled by applying a one hundred percent “solatium” against 30% in the previous act (additional compensation). Though people get more compensation under new act, an increase in multiplier does not address the fundamental question of determining “market value” in a country where registered values under-represent land purchase price to evade high stamp duties. The challenge is exacerbated in rural areas where there are fewer land transfers, and therefore fewer registered sales deeds to use as reference points. In such situations, a valuation that is perceived to be more “fair” can be found only through consultations and dialogue, as demonstrated by two case studies from World Bank financed projects in India:
Businesses generally stand little chance of doing well when politics is not stable. Political stability is a necessary condition for an enabling business environment. What can the business community do to help achieve sustained political stability? Experience shows more often than not they fail to do so. What keeps the private sector divided even when both their collective and personal interests are directly at stake? Such an apparent puzzle can be explained by the soft budget constraint syndrome interacting with cronyism.
The term “soft budget constraint” (SBC) was originally conceived by the economist, Janos Kornai. The concept has since been regularly invoked in the literature on economic transition from socialism to capitalism. Now the concept is increasingly acknowledged to be pertinent well beyond the realm of socialist and transition economies. A host of capitalist phenomena, ranging from the collapse of the banking sector of East Asian economies in the 1990s and the business rescue packages seen in the midst of the recent global financial crises can be usefully analyzed in SBC terms.
The syndrome is at work only when organizations can expect to be rescued from trouble, and those expectations in turn affect their behavior. The more frequently financial problems elicit support in any part of the economy, the more organizations will count on getting support themselves. The government may from time to time announce they will break with past practice and refrain henceforth from bailouts. But such announcements have little effect unless combined with some institutional change that lends credibility to their claims.
SBC syndrome alone cannot explain why business groups do not react collectively to political adversities. The divisive force in this process comes from cronyism.
Cronyism normally means some of those close to political authorities receive large economic favors. The most visible ones usually entail ownership of a business or its operation, such as the privatization of state-owned enterprises (SOEs). More frequently, however, economic entitlements are provided through privileged access to governmental favors. The most valuable are the provision of monopoly or quasi-monopoly positions and the extension of domestic credit at highly subsidized terms. Favoritism in awarding government contracts is also important and may be as significant as the others.