Monthly Archives: July 2014

Solutions to Problems

20140721-005109-3069121.jpgA few days ago, I was in Delhi to understand the processes and operation of Integrity Pact in Steel Authority of India (SAIL). Integrity Pact (IP, for short) is an interesting idea developed by Transparency International It is a voluntarily made agreement binding the signing parties to non-corrupt tender practices during the period of bidding upto a year beyond the last payment in the tendered project. SAIL has operationalised this process since 2007, annually covering around 75% of their tenders in terms of value of contract. Meaning that 75% of their total cost in procurement is covered by Integrity Pacts between SAIL and the bidders.

The positivity I saw regarding this vigilance mechanism, in the officials of SAIL as well as during my interaction with one of their Independent External Monitors’, who is a retired senior govt officer, with a rich experience in government and a sterling reputation on integrity, was interesting. Why would a mere declaration of honest conduct by two parties in a commercial contract be effective?

Thaler and Sunstein’s book, ‘Nudge’, argues for using behavioral influences for reorienting economic and other behaviour of people. And since reading the book, I’ve been looking for evidence of these ideas in Indian policy making. This IP idea being used in Indian public sector tenders is such a one. It is designed to align behavior in commercial dealings towards more honest and fairer practices. It appears to have a focus on ‘pre-crime’ or dealing with a situation before it gets out of hand, and the mechanism is held in place through the possibility of a universally trusted third party enquiry on complaints of transgressions.

Behavioral nudging towards lofty objectives like clean public procurement, can however be a non starter if operationalised only as a formality, without the required seriousness by govt agencies. So positioning the right people for vigilance jobs continues to be a priority. But ideas like the IP can make both beneficiaries and governments, walk the straight path by making corruption more risky. Such measures improve society’s score on voluntary compliance with rules and creates a fairer public environment for everybody over time.

We need such ‘nudges’ in traffic management, crime management, police station responsiveness to the community and so many other areas of policing, in order to intelligently handle the increasing workload on police in this country. It is repeatedly mentioned that we have as good laws as any country could want but we very seriously lack good enforcement. Creating policies effecting better public behavior is a likely golden mean to achieve better enforcement. Maybe, it is time for the bright economists and psychologists of this country to challenge themselves on these issues and for the service givers to effectively use them.