Kerala - Corruption check

TRUCKERS on National Highway 47, long used to greasing the palms of officials for easy passage through the checkpost at Walayar, are now offered an interesting alternative by the Government of Kerala. They will get quicker passage if their papers are in order and a chance to make a quick buck if they can point out an instance of corruption at the facility that accounts for a major share of the freight traffic entering and leaving the State.

Government advertisements have proclaimed a reward of Rs.25,000 to anyone who offers proof of bribery at Walayar, Kerala’s largest commercial taxes checkpost, notorious until recently for corrupt officials, seasoned tax evaders, middlemen and mafia networks and deliberate traffic jams that they used to create there. Over 80,000 freight trucks and an unestimated number of passenger vehicles pass through the checkpost, on the border with Tamil Nadu, every year.

There have been no claimants for the reward yet, at least in the first two months of the high-profile initiative to make Walayar “corruption-free”. Instead, there were reports of truck operators avoiding Walayar and seeking other checkposts where corruption continued undisturbed and where they seemed to be more comfortable.

But Kerala, a consumer State that buys 80 per cent of the goods that it needs from other regions of the country and sells nearly 60 per cent of its own products in other States, seems to have finally woken up to the danger of its porous borders, not merely in terms of the poor tax collection at the checkposts but, more seriously, in terms of the pernicious underestimation there of the price and quantity of goods entering or leaving its territory. At Walayar at least, there has been an immediate turnaround as a result of a nascent government initiative to wrest free such facilities from the tyranny of middlemen, wayward officials and goonda networks.

Commercial trucks in India are forced to pay about 70 paise on an average as bribe for every kilometre they travel, according to a 2006 study to assess the extent and nature of the corruption involved in trucking operations in the country. Around 14 lakh trucks operate in the country with inter-State permits, and each of them pays an average bribe of Rs.79,920 a year to a variety of authorities of the Central and State governments. The total bribe thus being paid could be as high as Rs.11,198.68 crore a year and on any given day, each truck plying on Indian roads ends up paying Rs.235 as bribe, according to the study conducted for Transparency International India, New Delhi, at 12 major trucking hubs in the country.

However, there is no reliable estimate of the corruption taking place at checkposts in Kerala. According to the State government, 818,102 freight vehicles passed through Walayar in the past year, accounting for nearly 40 per cent of the freight traffic in the State, an important reason why Walayar was selected for such a crucial experiment before larger-scale checkpost reforms were even contemplated.

The experiment is barely two months old and the government is already challenging citizens to prove if things have not improved dramatically at the Walayar facility. The Commercial Taxes Department has issued a 22-point Citizens’ Rights Charter explaining the services that a beneficiary ought to obtain at the checkpost. It has also declared that the checkpost at Walayar – where tax collection had been manual, time-consuming, and a nightmare for truckers and travellers alike until recently – has been freed of corruption; that tax collection has been automated (at least in the commercial taxes section); that middlemen and goondas have been suppressed; that more parking and other amenities are being offered; and that traffic snarls are easing as the “Corruption-free Walayar Project” enters its second phase.

On October 23, at a venue near the checkpost, perhaps for the first time, a government department also took the lead and organised a “social audit” of its two-month-old project, in which all stakeholders were invited to participate, criticise, evaluate, offer suggestions and question the authorities in the presence of a distinguished panel of judges led by social activist and Magsaysay Award winner Aruna Roy.

State Finance Minister T. M. Thomas Isaac reiterated his department’s claims before the stakeholders: “There is no corruption, bribery, or greasing of palms at Walayar and its subsidiary checkposts. There are no middlemen or criminal gangs here any longer. Goondas who were having a field day at Walayar have been suppressed. Tax collection at the checkpost has gone up. Traffic congestion is easing and vehicles would soon be able to leave the checkpost within an hour of arrival as the programme enters the next stage.”

Significantly, no one challenged the Minister’s statements, except perhaps to say that more needed to be done about traffic hold-ups and that the programme should be extended to other checkposts. At least briefly, therefore, Walayar seemed to have been cured of a ubiquitous malady.

But it is not bribery at the checkpoints per se that worries the State government. In September 2006, as it began considering measures to wipe out corruption at Walayar, the government launched a three-day “Operation Palakkad Gap”, with special squads taking over the Walayar checkpost as well as its subsidiary checkpoints simultaneously for nearly 60 hours. The operation was unique for its surprise element and its extended duration, and revealed in a dramatic way the huge revenue loss that the State suffered because of corruption at the checkposts. If the total tax collection in the three days prior to the operation was Rs.45.15 lakh, it rose to Rs.129.85 lakh during the subsequent three-day period, an increase of 187 per cent in tax revenue. This was despite the fact that there was a drop in the number of freight vehicles passing through Walayar during that period.

But the government is now trying to impress on Kerala society that tax collection is not the most important function of the checkposts, as most people have come to believe. Thomas Isaac, the prime mover of the programme, said it was important for people to understand that the principal job of the checkposts was instead to gather correct information about the nature and quantity of goods brought into the State by each trader and to convey this information to the authorities who scrutinised the returns filed by traders.

The information collected through bills and invoices at the checkposts provide the government an estimate of the exact price and quantity of the goods brought in by the traders. This, in turn, allows the authorities to compare the traders’ sales tax returns with the data from the checkposts and catch errant traders who try to evade tax. Corrupt, inefficient checkposts let such traders bring in more goods to the State than they actually declare. Checkposts are meant primarily to prevent this and to collect exact information about the goods that are bought in and taken out, he said.

Therefore, simultaneously with the second phase of the “Corruption-free Walayar” project, the Commercial Taxes Department is planning to launch another programme to take its gains to their logical end. Named “From Walayar to Ernakulam”, it is meant to utilise the concurrent data from Walayar and other checkposts to evaluate scientifically the returns filed by traders and check tax evasion effectively. This pilot programme will initially target traders in Ernakulam, the district with the largest concentration of first point (wholesale) traders.

The new value-added tax (VAT) regime is drastically different from the sales tax regime that existed in the State earlier. While officials determined the tax to be paid by traders in the earlier system, the VAT regime allows traders to file monthly returns on their own. The success of the VAT regime, therefore, depends on the scrutiny and audit of the returns filed by traders. This is where the data from the checkposts play a crucial role. The “From Walayar to Ernakulam” programme is primarily meant to ensure the correctness of the returns by comparing the details provided by the traders in their returns with the declaration that they submit at the checkposts.

The first phase of the “Corruption-free Walayar” project, which ended with a social audit on October 23, was to put an immediate end to corruption, reduce the time taken for vehicles to clear the checkposts and to convey information collected at the checkposts quickly to the commercial tax offices concerned, and suppress the mafia groups that had been holding sway.

In the second phase, the government aims to coordinate the activities of the commercial taxes checkpost with checkposts of other departments functioning at Walayar and to reduce delay in the inspection process as much as possible. Before yet another social audit is held in February 2008, the government has promised to complete road repairs, renovate the offices, improve residential facilities for the staff, and establish weighbridges, electronic surveillance systems and a dedicated checkpost treasury.

When the six-month project comes to an end in February 2008, work will begin on “India’s most modern checkpost plaza” on a 30-acre (1 acre is 0.4 hectare) plot at Walayar, with integrated facilities for online weighbridges, scanning, e-filing and online data entry; a modern office complex; and rest and recreational facilities for drivers, employees and travellers passing through the checkpost. But as T. Nasiruddin, president of one of the largest traders’ organisations, asked the Minister at the social audit, “if you close one gate and keep the rest of them open, do you expect the thieves to come through the closed one”?

Surely, until the government launched its “Corruption-free Walayar” project on August 17, no one in Kerala believed that such a task would start showing results within a few months. Successive governments have turned away from policing checkposts, centres of corruption in any State in India.

For the first time, a determined programme is yielding immediate rewards. The government believes showcasing the results would make it easier to implement similar reforms elsewhere in the State.

The effort behind such a project was indeed unprecedented for a regulatory department initiative, its hallmarks being firm political will, transparency, careful selection of a dedicated team of officials and the built-in opportunity for stakeholder participation and evaluation of the reforms. It was all this that gave the authorities a certain moral right and efficiency to poke at the deeply entrenched forces of corruption that seemed ready to upset the reform process at the drop of a hat.

Surely, the method adopted, with transparency, people’s participation, and evaluation and efficiency as its keywords and with the Citizen’s Charter and Social Audit as its highlights, can be a model for checkpost reforms anywhere in the country. No State government has so far shown the courage to prompt its citizens to ask “Has corruption been eliminated?” “Have traffic blocks been cleared?” “Have the mafia gangs been suppressed?” “Have you added more facilities?” “Have you computerised the accounts?” “Has the tax revenue gone up?” or “Have you implemented the Citizens’ Rights Charter?” as the Kerala government did in huge newspaper advertisements on the eve of the social audit at Walayar.

Yet, it is important to remember that, much before the Right to Information Act was passed by Parliament, Kerala had incorporated such a provision in the law governing its local bodies, and the State’s decentralisation experiment, with its “Power to the People” slogan, made the concept of social audit quite familiar to its citizens. But it is a moot point whether the people had made full use of the lead they had obtained through such innovative experiments, even as the Kerala decentralisation campaign, with similar underlying themes of transparency, people’s participation and evaluation, became a model for other States to follow.

Aruna Roy rightly cautioned the participants at the social audit: “The first thing that happens when there is corruption is for people to say the government is inefficient and to raise the argument for privatisation. This argument for privatisation arises from our own lack of productivity and performance. It is important that the people make use of such opportunities better to help the state function better. I would like to quote South African Communist Party leader Jeremy Cronin here: ‘Democracy is speaking truth to power, making the powerful truthful and the truth powerful.’”