Without This Everything Will Fail

By Ajay Gandhi

Going beyond merely budgeting for revenues and expenses of
government, budget time is now when we discuss government's^“ 
policies and what it should and will be doing in the year to
come. No wonder we hear so much on what ought to be done and
how by the Finance Minister when he presents his budget for
1998 this evening.

In the backdrop of the nuclear tests by us and Pakistan and
the impact of sanctions, every one is looking at the Finance
Minister and waiting to see if he will provide a magic
touch, as it were, to the economy and ensure that we come
out with as little damage as possible and yet continue on
our growth path.

What then will the FM do today? That is the big question on
everyone^“s minds.

While we can discuss what should be done and what should not
be done to improve the economy, for growth, poverty
alleviation and what not, I believe there is one very big
issue that is so essential to all progress we wish to make,
that without addressing ourselves to it, everything else
will fail.

The issue is The Rule of Law.

For any civilised society to function normally, the law
should prevail supreme. In India, everything but the law
works. In our daily business and personal lives, too.

Let us take a few examples.

You want to sell your property. You enter into an agreement
to sell it to someone for consideration. He pays you 10% of
the agreed amount down and enters into a written agreement.
The property remains in your possession. He violates the
agreement and does not pay you the next installment or any
money thereafter. What do you do? You enforce the penalty
clauses in the agreement and ^—cancel^“ it. Do you think it is
the end of the story as far as this buyer is concerned? Not
in India. The agreement you entered into will have become a
punishment for you. It will result in endless suffering for
you. With unscrupulous ^—buyers^“, ^—sitting^“ on an agreement
to purchase property is a business by itself. They make
money on rights to buy property. Your ^—cancelling^“ the
agreement does not help you. There are various ways in which
the buyer can ensure that you are not able to sell the
property to someone else ^÷ including obtaining an injunction
against you from a court!

Instead of selling it, you enter into a development
agreement (our subject of discussion over the past few
weeks) for your property with a builder. He is to give you
50% of the built up area within a period of 2 years
according to agreed specifications. But, at the end of two
years you find that he has started construction but his
progress is such that it might take another two years for
the project to reach anywhere. What is more, the
specifications are not even half way to the agreed
specifications. You are cheated and do not get what was

Here is another live example of one of my clients. This lady
gave on lease 4000 square yards of land and a house on it to
a polished, suave ^—gentleman^“ who started running a school
on the property. The lease was for eleven months and was to
be renewed only if both parties agreed to it. From the
fourth month, the person stopped paying rent. The post-dated
cheques issued by him bounced. And he continues to be in
possession today - after four years - without a valid lease
deed, without paying rent and without allowing the lady to
enter into the premises even to inspect it! The lady, strong
that she is, follows up with two lawyers and multiple suits
to have her property back, to get her own legitimate rights
back. The icing on the cake is that to vacate the premises,
the ^—gentleman^“ has now demanded a huge sum of money ^÷
forget what he owes her for rent and expenses and

Every criminal knows that you can commit any crime in this
peace loving country of ours - including murder - with
impunity. There are bleak chances of your being found out,
holed up in jail, or being punished. If you are crooked
enough and with some money, virtually everything is

India has today truly become a functioning anarchy.
In India, we understand the rule of law by its absence. A
great judge once said: ^—howsoever high you are, the law is
above you^“. Not in India. And that is India^“s scourge.
How does not being able to enforce an agreement to sell
property become so important? Most fundamental concepts are
indivisible. The rule of law is one such concept. You cannot
have the rule of law prevailing in one area and not in

Our inability and unwillingness to enforce an agreement to
sell eventually resulted in Punjab, Kashmir, North East,
Naxalites, LTTE and, not the least, Bihar.
Once we started treating law with indifference, everyone
started taking law for granted. Including law enforcers. At
the end of half a century, we have total lawlessness.
The results in pure economic terms are mind boggling: lakhs
of crores of rupees spent, lost and not earned because of
lawlessness every where. To top it all, we have a totally
torn social and moral fabric.

Another half century of such growing anarchy and India will
not be a country that shall be recognisable as it is today.
Imagine what a different country it would have been if only
law were allowed to remain supreme. Where every contract was
enforced, every crime punished. It would have been utopia,
heaven on earth.

Government need not have worried or done anything about the
economy, growth and business - it was not created for such
things and is incapable to indulge in it. If only it had put
premium on law and kept out of business, everything else
would have taken care of itself.

But that was not to be. And we have lost the opportunity to
be the giant of the world.

Can anything be done about it now? Most certainly. There are
hundreds of mundane, and a few radical, things that can be
done for an about turn on this matter. The solutions are not
far to seek. What is required are qualities lacking in our
leaders today: vision. And will.

The day a leader with these qualities emerges, our budgets
and policies will be different. When is that going to be?

This column is on the internet at: www.taxnyou.com

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