India is a corrupt country rated at 69 out of 90 countries in the Corruption Perception Index by Transparency International for the year 2000. The Council for a Clean India is based on the premise that India need not continue to be a corrupt country. It can become a far cleaner country and probity in public life can be vastly improved. It has been estimated that if India's corruption level comes down to that of Scandinavian countries, India's GDP will grow by 1.5% and the foreign direct investment will go up 12%.

Other countries have shown that it is possible to improve probity in public life. Till the 19th century, Britain was also a corrupt country. William Gladstone as Prime Minister, four times between 1868 to 1894, was able to introduce system changes to improve the situation. Lee Kwan Yew in Singapore over a period of three decades was able to reshape

Singapore into one of the cleanest countries in the world. Botswana, a developing country in Africa has also shown that it is possible to have greater probity in public life.

India has perhaps become more corrupt after independence because our democracy is based on corruption. Every political party collects funds and this is mostly in the form of cash or black money. Black money is the oxygen for corruption; corruption is the oxygen for black money. Political corruption leads to a vicious cycle of bureaucratic corruption, business corruption and criminalisation of politics. This vicious cycle can be and must be broken.

Here we find that we are a catch 22 situation. The corrupt system benefits a lot of people in sectors of society including politics, business and bureaucracy. It is the people in power who can bring about a change. If they are benefiting from the present system, why should they try to bring a change? The CVC Bill which was referred to the Joint Select Committee, in its recommendation tried to dilute the powers of the CVC. One of the Members of Parliament explaining the position in a TV programme said, "Kyon hum apne haath se apni gardan katenge? (Why should we cut our own head with our own hands?). This probably reflects the reality.

Is there a way out? There is a silver lining in the cloud of corruption. At the gut level, we find that ultimately nobody wants corruption. Even those who are convicted of corruption, when they come to power talk about providing a corruption free society. Corruption is an important issue of debate in the media and elsewhere because we seem to be having a scam a week if not a scam a day. This year alone we have seen the series of scams starting with the Tehalka.com followed by the Ketan Mehta scam and the arrest of the Chairman of the Central Board of Excise & Customs by CBI.

Out of the 100 crore people of the country perhaps five crore may be corrupt because they may be in a position of power. The remaining 95 crore people are not corrupt or from the cynics point of view not in a position to be corrupt. Corruption is use of public office for private gain. Only those in power can be corrupt. While the five crore corrupt are organized and in positions of power, the 95 crore non-corrupt are not organised. The silent majority, as appears in the main defect, it is silent. The challenge before us is whether the power of this 95 crore people can be mobilised to fight corruption.

The CFCI is an attempt to see whether this silent majority can be organised and made more articulate. Our focus must therefore be to see how we can get effective results in the form of checking corruption and bring greater probity in public life. We should therefore focus on agencies which can get results and the technique that can bring out the desired outcome in the form of a less corrupt India.

The first agency in the fight against corruption is the judiciary. In fact, the present position of the CVC, which has been entrusted with certain powers of supervision of the CBI or Enforcement Directorate is directly related to the Supreme Court Judgement in the Vineet Narain's case. Public Interest Litigation and the judicial activism constitute one source, which can help to bring changes.

The second set-of agencies include CVC, Vigilance Commissioners, Lok Ayuktas and Ombudsmen entrusted with the work of vigilance. These agencies can try to leverage whatever powers they have to see how changes can be brought out. The third agency is public opinion. Public opinion can be shaped by the media both print and electronic and also by activist NGOs. NGOs can play an important role in sensitising the people about the dangers of corruption and also help in taking effective action to check corruption.

Major changes can come only if there is political will. Political will in our country gets exercised only under two conditions:

1. when there is a TINA factor ("there is no alternative") or

2. when there is an advantage of a vote bank.

One element of the effort for mobilising the political will may be to see how the issue of checking corruption and bringing better probity in public life can be projected in terms of the TINA factor or the vote bank advantage.

In the Council for a Clean India we are trying to bring together all those who can play a role in implementing the above strategy for fighting corruption which could result in a clean India. We may now focus on the agenda for action.

So far as the CVC itself is concerned, our primary responsibility is in checking corruption at the bureaucratic level in the Government of India and its organisations. We are following a three-point strategy:

1. Simplification of rules and procedures so that the scope of corruption is reduced

2. Bringing greater transparency and empowering the public, and

3. Effective punishment by chasing prosecution and more effectively departmental inquiry cases.

It is said that war is too dangerous a matter to be left to the Generals. Fighting corruption is too important to be left only to the CVC or CBI. Looking to the dynamics of corruption, it is necessary also to mobilise opinion and resources in other sections of the society to fight corruption. Political corruption can be overcome only if we are able to bring greater transparency in our politics especially relating to raising of funds. The root cause is black money. The removal of black money should be an important point to eliminate political corruption. I had brought to the notice of the Prime Minister the following strategy in this context.

A Black money, which is at the root of corruption, in politics business and bureaucracy, should be effectively eliminated. This can be done in a three-phased programme.

Phase I Three months

1. Implement the Benami Transaction Prohibition Act 1988

2. Amend the Prevention of Money Laundering Bill to cover Income Tax, Customs, Excise and Sales Tax

3. Enact Corrupt Public Servants (Forfeiture of Property) Act as suggested by the Law Commission and pending with the government from 4.2.1999

4. Amend the Income Tax Act on the principle of zero exemption. Exempt all incomes upto Rs.2 lakhs per annum. Levy a flat tax rate of 20% on all incomes above Rs.2 lakhs.

5. Amend the Customs and Excise Acts on the principle of zero discretion.

Phase II Three months

Introduce an amnesty scheme under which within a period of three months, all those who have black money can declare the same and regularize the same by paying an income tax of 21%.

Phase III

Effect thesteps as under in the final phase

1. Effectively implement the laws passed in Phase I & II, so that the amount of black money is practically eliminated.

2. Hold the National Convention on Ethics in Government on the lines suggested by Dr C P Srivastava in his book Corruption - India's Enemy Within

3. Enact the CVC Bill after taking into account the comments of the CVC on the Parliamentary Committe

4. Amend the Representation of People's Act so that the candidates against whom serious criminal charges have been framed in a court of law are prohibited from contesting the elections till their name is cleared in the courts of law.

5. For all sensitive posts in Government and sensitive organizations like banks, PSEs etc., introduce the pattern, which is now prevailing for selecting the Director CBI. This will mean that neutral committees of experts will select the panels for filling up the sensitive posts. The government will appoint candidates to the sensitive posts from these panels. Once a person is appointed to a post, he will have a fixed tenure for three years

The strategy for removal of black money from the economy needs some elaboration. Black money in India is like God. It is everywhere. I do not know why black money is also called the parallel economy because in geometry parallel lines do not meet whereas black money intersects with practically all sectors of our life.

Recently there was great excitement about the Mumbai police's initiative to nab the underworld and cut its link with film world. Underlying this whole nexus will be the cementing influence of black money. Black money probably is very dominant in certain sectors like real estate, politics or the film world. Nevertheless, it is practically present in every sector of our life. Every corrupt public servant also in some way or the other hoards black money.

Government has made valiant efforts in the past to tackle the problem of black money mostly in the form of amnesty schemes. The net result of government's effort has been more like trying to use petrol to put out fire. The latest was the VDIS scheme which added insult to injury by providing for the black money hoarders, a soft 30% rate of taxation (which in effect was only 10% according to knowledgeable experts), as against the 40% which honest tax payers had paid.

No wonder black money flourishes in our system. Even when laws are made, they are not implemented like the little known Benami Transaction Prohibition Act passed in September 1988. This Act has not been implemented all these twelve years inspite of the CVC requesting government to empower the CVC under this Act and prescribe the rules for implementation.

The advantages of removal of black money are obvious. The economy will become cleaner. As corruption goes down, economic development takes place. If India's corruption level goes down to that of Scandinavian countries, according to the 1999 UNDP report for South Asia, GDP will go up by 1.5% and FDI by 12%. Now that the budget exercises are on, here are some ideas which government can consider for getting rid of black money substantially by an integrated approach. This approach involves three phases. In the first phase, government empowers itself with legal measures to tackle the problem of black money and also cut at the root of generation of black money. In the second phase which will last for three months, an amnesty is provided to all holders of black money to come out into the open and join the mainstream. The third phase is the stage where after the amnesty period is over, stringent action is taken to rid the economy of the menace of black money once for all.

The first phase which can be completed in three months involves the following:

1. Prescribing rules for implementing Benami Transaction Prohibition Act 1988 which is already on the statute book

2. Enacting the Corrupt Public Servants (Forfeiture of Property) Act which empowers CVC to confiscate ill-gotten wealth of corrupt public servants. The Law Commission's proposal is pending with government from 4.2.1999

3. Adding Income Tax, Customs and Excise, in the schedule for Prevention of Money Laundering Bill which is before the Rajya Sabha, so that if the black money generated by evasion of these taxes is sought to be laundered within the country or abroad, strict action could be taken.

4. The main source of black money is evasion of Income Tax, Customs and Excise. So far as income tax is concerned, we should move over to a zero exemption, simplified flat tax rate system. Incomes up to Rs.2 lakh per annum should not be taxed. Any income above this limit should be uniformly taxed at a flat rate of 20% whether assessees are individuals, HUF, companies, partnership or any other type. This removal of discretion in one stroke will eliminate the scope of corruption. Incidentally, this will also enhance the income to the government because at present government hardly realises 17% as the effective rate for collection of income tax

5. The Customs and Excise Act provide excellent opportunities for corruption because of the ambiguity and discretion at different levels to decide what should be the applicable rate. It will be much simpler if there is an approach of zero discretion by precisely indicating the rate that is applicable for a particular product or services. In fact advance ruling must become a regular part of the system so that well before industrialists import, export or move goods out of the factory, the precise rate is known. For instance, if we take a product like KitKat, is it a chocolate or a biscuit? Many would say it is a chocolate. I am told it has been adjudicated to be a biscuit whereby there is considerable saving for industry and government loses revenue.