Friday, December 30, 2011

Year end Reflections 2011

Apologies for the blogging silence over the last several months - no excuses, I tend to wait till I think I have a point I think is worth making, and then I wait some more!!

A few things have dominated the political and economic landscape this year - the economic frailties of what we believe to be a significant part of the developed world (Europe) and the exposure of some fundamental weaknesses in what the world seemed to be hoping would be the next growth engines - significantly India and China! Closer to home we have the remarkable India against Corruption movement of Anna Hazare leading to the farcical scenes in the upper house of India's Parliament yesterday and the not unrelated fallout from the Indian telecom, among other scams - including a Government unable to do much more than react to each real or perceived crisis. Financial markets have reacted predictably to all this uncertainty.

For this post I would like to focus on the India against Corruption movement leading to the failed attempt to push the Lokpal bill through Parliament. Specifically the talk about the movement and the cause itself, a lot more important than the individuals involved, having lost steam and momentum.

As background, we need to consider India has been and in many ways remains, an over-regulated and over-taxed economy and a few generations of Indians have now grown up with the realisation that for a half decent standard of living some bending of the rules is necessary. The worrying thing about this was that the limits to this became a matter of personal opinion given a significantly corrupt system - private and public sector. Excesses have happened and will continue to happen, whether they result in arrests and trials that feed a media frenzy or not.

Let us consider however that:
- The public movement against corruption is only a few months old;
- A former Cabinet Minister is in jail, bail denied, and is being tried for corruption among other things - several senior managers of large companies will be similarly tried - this has to have an impact on how willing Ministers and corporate managers will be to indulge in this, especially for big ticket, prominent projects.

While things may not now move fast enough for the media to keep it on the front pages and for the cause to figure prominently in cocktail party chatter the fact is that the solution to India's very real corruption problem is one that will take time to evolve. Those among us who care for the cause must not let recent events lead us to turn our backs on it.

My own view is that the real momentum will come when several thousand, perhaps several million Indian individuals and small businesses come to the realisation that the payer of a bribe is as guilty as the payee and the short term advantages of participating in this just aren't worth it. For this to happen though we also need better and more transparent systems and processes to be adopted by the public and the private sectors - this is actually a lot less complicated than most might assume. A few entities taking the lead will see several follow.

On this note of optimism, my best wishes for 2012!!

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