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Institutional decay terrorises investment

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Somasekhar Sundaresan
Last Updated : Jan 20 2013 | 10:58 PM IST

The nation seems to be under siege. By a medley of forces, the scale and complexity of which only seem to expand by a new dimension every day. This is not just about “civil society” having a desire to govern the nation. It is equally about courts being desirous of running government.

The Supreme Court has set up its own special investigation team to conduct investigations into the hoarding of black money, acting upon a writ petition filed in public interest. The court has appointed a retired judge of the Supreme Court to head the special investigation team, and report directly to the court. The court expressed disgust at how the government was dragging its feet and was not taking decisive action in chasing black money. The government has now filed a review petition, and the hopes that the court would have a change of heart.

This one situation is representative of how institutional clarity is sorely lacking in the system, and how unpredictable the business environment has become in India. The government, although popularly elected, seems paralyzed, without the conviction that should normally be attendant with the people’s mandate. The judiciary is clearly making deep inroads into running government either by drastic direct action like taking on an investigator’s role, or by castigating the government in widely reported despondent statements and desperate utterances in open court.

Just as some government agencies and officers who man them are more prone to speaking to the media and making their presence felt, there is an increasing feeling that judges are making dramatic statements in open court and making their presence felt. When this occurs in the higher judiciary, with the media rewarding it with widespread reportage of every such observation and comment, junior judges accept such conduct as well-approved, and follow suit.

This in turn leads to lawyers, who are officers of the court too taking grand stands in order to be seen by the media as being strong and effective. On the rare occasion of a litigation lawyer refusing to speak to the media about pending litigation, the officers briefing the lawyer, brief the media and make statements in the strongest of terms.

The trial shifts to the media from the courts. The media, thanks to not having any serious fear of having to pay damages for libel or defamation, thanks to the pace of the justice administration system, does not even have any “due process” to be followed in coverage of contentious issues that are being battled in court.

In a nutshell, the functioning of various arms of the State, which are provided for in the Constitution, shifts to the one section of society that the Constitution does not even specially recognize i.e. the media. Every constitutional arm panders to the media. The Comptroller and Auditor General of India, for example, holds press briefings. Court proceedings have turned into press conferences. The Prime Minister holds special press briefings. Regulators speak more in the press about their actions than in their actual orders and decisions that result in action. The consequence is that actions of these arms of the State pander to cause of populism rather than to cold professional decision-making.

In short, clearly we are not witnessing traits of a mature democracy with an institutional framework whose members provide proper role clarity to their constituents. Predictability, the touchstone of a good business environment is fast becoming a victim. If anything kept India in good stead over the past two decades, it was the perception of the existence of the rule of law and her institutional framework. The current eXnvironment has started eroding that confidence, and the investment climate is gloomy.

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Little wonder then, that foreign institutional investment into Pakistan is higher than into India, despite terror attacks in Pakistan being far higher than in India. Institutional decay strikes greater terror.

(The author is a partner of JSA, Advocates & Solicitors. The views expressed herein are his own.) somasekhar@jsalaw.com  

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First Published: Jul 18 2011 | 12:22 AM IST

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