Some provisions of anti-corruption law seem to scare the honest without deterring the corrupt, the Economic Survey today said while calling for an amendment to the legislation to prevent graft in order to improve economic policy-making by public servants.
Spelling out measures to help public servants decide without fear or favour, the Survey said "it would be desirable for the government to set up a Commission to recommend a new prosecutorial policy for the offence of corruption which balances the need for probity with the need for bonafide decisions to be taken without fear of false allegations of corruption".
Drawing attention to problems faced by public servants, the Economic Survey for 2015-16 tabled in Parliament by Finance Minister Arun Jaitley said: "There is a credible perception that well-intentioned but draconian legal provisions seeking to prevent decision-making with favour seem to be resulting in decision-taking with fear."
Some provisions of anti-corruption law seem to scare the honest without deterring the corrupt, it added.
Taking note of the importance of civil servants in growth of the economy, it said rapid and equitable economic growth requires formation and implementation of a good policy, which in turn involves both ministers and civil servants.
"There is widely-held perception both within the civil service and among outsiders who interact with the government that civil servants have in recent times become increasingly reluctant to decide issues quickly and firmly. This has consequences for the economy," it added.
Elaborating, it noted that the problems with civil service decision-making stem from gaps in capacity, training and specialised knowledge in dealing with certain kinds of economic issues, while increasing the rigour of external oversight mechanisms may have unintended effects.
External monitoring in the public sector tends to be skewed towards bad decisions that were taken rather than good ones that were not taken, it noted.
"This promotes a culture where avoidance of mistakes is more important that the pursuit of opportunities," it added.
In a bid to tighten the anti-corruption law, the Prevention of Corruption Act, 1988, added a provision according to which a public servant is said to commit the offence of criminal misconduct if he, while holding the office as a public servant, obtains for any reason any valuable thing or pecuniary advantage without any public interest.
"An error or something regarded in hindsight as an error can constitute a crime punishable by imprisonment and during the trial stage the stigma of corruption," it said.
"No such section appears to exist in other democracies where it is the duty of investigating agencies to establish corruption including evidence of motive," it added.
Elaborating on remedies, the document said the proposed commission, equipped with resources needed to access international expertise, should recommend measures to improve the capacity of both the investigative agencies and the public prosecutors.
The Economic Survey said two kinds of error may arise in tackling corruption -- where the corrupt may escape and where an innocent person may be falsely accused of corruption.
From an economic point of view, it is the second error which has larger consequences in terms of impact on policy and implementation paralysis and the loss to the public.
"There is considerable and very credible evidence that many serious governance problems... Are traceable in large part to the fear of 'causing pecuniary gain' to the other side," the survey said.
The governance problems include reluctance of government to accept responsibility for its own delays in projects, the penchant for departments to appeal even fair and reasonable arbitration awards or lower court judgements, the tendency to raise tax disputes based on audit objections even if the tax authority disagrees with the auditor, the reluctance of civil servants to sell land or divest public enterprises, it added.
The document also said the government needs to "re-assess the relevance of the vigilance machinery".
"The government and public sector are dotted with a large number of 'vigilance officers'. Quantitative evidence and public perception both suggest that this has not been accompanied by any reduction in levels of corruption and if anything the problem is perceived to have worsened," it said.
The "Vigilance Officer" system is widely felt to be ineffective and in some cases even counter-productive, it noted.
"It may be time to consider whether the costs of this elaborate but apparently ineffective system are worthwhile," the document said.
