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Business Commentary/Dilip Thakore

Law and order shadow over the economy

A new, largely unforeseen, danger threatens to torpedo the Indian government's stop-go economic liberalisation and deregulation programme which is attaining critical mass all over the country: the breakdown of law and order.

For many decades, a law and order crisis nurtured by soft state latitude, licence-permit regime corruption, public sector growth, the law's delay and the unchecked criminal-politician nexus, has been building steam within the recesses of the chronically under-performing Indian economy. Suddenly there is a panicky awareness that the pressure of the law and order crisis will soon reach explosion point, putting paid to corporate development plans as well as to the ambitious economic reform programme of New Delhi and the states.

All over the country, entrepreneurs and businessmen are having to learn to factor an additional outlay of protection and/or mafia payments into the cost of operations and economic activity. In New Delhi, the national capital, enterprises providing security services to big and small businessmen are recording spectacular rates of growth. Likewise, Bombay, the nation's commercial capital, has been converted into the happy hunting ground of the Dubai-based crime boss Dawood Ibrahim's 'D Company' which brazenly uses the city as a distribution point for a international narcotics racket.

Extortion, prostitution, real estate and film financing are the D Company's diversification's. With several other gangs also pitching for a slice of the action, Bombay is all set to emerge as the Chicago of the Orient. There's more.

In the poverty-stricken cow belt states of Bihar and Uttar Pradesh, private armies rule the roost and kidnapping for ransom is the fastest growing industry. In the North-East, the United Liberation Front of Asom, encouraged by the state government, has been levying an unofficial tax on tea companies for several decades. In Tamil Nadu, the well-organised and heavily armed Liberation Tigers of Tamil Eelam, which is fighting for a separate Tamil state in Sri Lanka, has established a strong presence. According to a Bombay police source, the LTTE has entered into an arrangement with the 'D' Company to facilitate its narcotics operations to finance its arms purchases. Even in the hitherto tranquil Garden City of Bangalore real estate and kidnapping rackets are assuming ominous proportions.

In sum, the near breakdown of law and order all over the country has emerged as a serious threat to the economic reforms programme and to economic growth in general. Though the nation's beleaguered finance minister attributes the reluctance of businessmen and entrepreneurs to expand operations at a time when banks are flush with funds to a lack of faith in government policies, it is quite probable that the unreliable law and order enforcement machinery of the state governments is a major inhibiting factor. And if the law and order maintenance machinery is not modernised and restructured to inspire business confidence, it is entirely possible that a Latin American-style flight of capital will sabotage the nation's economic liberalisation and deregulation policies and economic reforms programme in general.

I have often argued in this column that maintenance of law and order should be the first priority of government at both the central and state levels. For the simple reason that the fundamental right to "practice any profession or carry on any occupation, trade or business" is mollified unless the state is ready, willing and able to provide effective security to all citizens. Indeed the citizens fundamental right to life and personal liberty guaranteed by Article 21 of the Constitution is increasingly being violated by the pusillanimous response of the state governments to the rise of Mafia gangs all over the country.

It's not as if solutions to address the problem of growing lawlessness are lacking. Several reports of the National Police Commission suggesting ways and means to improve the service conditions and empowerment of the nation's estimated 10 million policemen are gathering dust in the mouldy archives of government. Likewise, several learned reports of successive Law Commissions recommending ways and means to speed up the ponderous wheels of the justice delivery system are suffering the same fat. Against the norm of one judge per 30,000 citizens in the developed nations, the ratio in India is one per 600,000. Despite this, there are 113 vacancies in the country's high courts. Moreover, vital annexures to the two-year-old report of the Vohra Committee, which contain details of the politicians organised crime nexus are still a state secret.

In short, it's not solutions but political -- and societal -- will to take on organised crime which is lacking. Yet this will have to be summoned up pronto. In the final analysis, political decisions are moulded by the pressure of public opinion. Therefore, this is a good time for the nation's feckless intelligentsia to earn its keep and begin the task of building public opinion to force the political class to seriously address the law and order maintenance problem. Because if this basic requirement of socio-economic development is not effectively -- and quickly -- met, all of the nation's high-potential reform and development plans are certain to come unstuck.

Dilip Thakore