How India Did it

Vol XXIX No 08 l April 30, 2011

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Social networking emerges as the real battle-winner in Anna Hazare’s movement

Nagarajan Vittal

Wajahat Habibullah

Kiran Bedi

VOICES

Touch Me Not /36

92 pages including cover

How IndiaDid it

18 | April 30, 2011 visit www.dqindia.com DATAQUEST | A CyberMedia Publication

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raught by the day-to-day challenges of professional life, Indian middle class has never spoken on national and social issues in a collective manner. They follow laws. They pay taxes. But never purr against lawmakers, ex-cept, sometimes, fairly recently and reluctantly, through ballots. It is this silence of theirs that has allowed politicians and bureaucrats to play with the system in their own way for decades. The rich are pampered and become willing partners; the voice of the poor is too

feeble and is crushed through carrots, sticks and most often, both.

Fighting the

Onkar [email protected]

DATAQUEST | A CyberMedia Publication visit www.dqindia.com April 30, 2011 | 19

discussion to include a little more participants—a cou-ple of lakhs at last count. All of us are only too familiar with this phenomenon. It is called social networking by the journalists and analysts; it is called Facebook and Twitter by the common people.

In reality, there is not much difference between the earlier movements against corruption and this one that India is still celebrating about. Except that this time, mobilizing opinion has been far easier and faster, and it does not depend where you are. You can be in the draw-ing room, bed room, office or moving in your car. You can still join India Against Corruption on Facebook and tweet your one-liner about the Kalmadis and Rajas. And at least a few hundred will see it, and if they like it, a few hundred more will see it as retweets and so on. And the message spreads fast. Really fast.

Menace, Socially

And, Life Goes OnDoes this mean the middle class is afraid? Or it does not have too much of a grievance? Not really. It is just that the now and the immediate takes precedence, even as the dissent and dissatisfaction remains confined to the drawing room discussions.

This time, it was a little different. Not because sud-denly the middle class became aware of its duties and responsbilities and said enough is enough. Or they found an iconic leader like never before. But because, now there is an easy way to expand the drawing room

In the recent campaign against corruption, the middle class segment in India brought their drawing room discussions onto an internet platform like Facebook. Probably this was the first time in India when technology like social media played a role in shaping up public opinion


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Can corruption be stopped in governance without corruption being cured from society?Corruption in India is indeed embedded in society. This has much to do with an imperial tradition from which we have relatively recently emerged. Social and ethical norms established over hundreds of years have persisted, not least because the structure of bureaucracy has remained almost intact. But democratic governance demands that instruments be developed to combat this endemic.

What will lead to minimize corruption?Both transparency, and in consequence, consistent accountability. And it must be civil society which will enforce that accountability. The ideal civil society will be one that is conscious of its responsibility, and itself free from corruption

How? Through the instrument of reasonable, yet stern law, applied judi-ciously.

Things like Lokpal Bill can probably help in arresting corrup-tion to some extent in highest levels. But what about grassroot levels that common man is worried about? This will depend on how civil society can mobilize. RTI has shown the way in part by demonstrating how the common man can participate in the enforcement of his right and compelling authorities to adhere to the law. But the institutionalized framework can only be broken with the full enforcement of accountability at all levels of governance.

How can transparency be institutionalized?RTI already has the answer. But Sec 4 of the Act must not only be enforced in full, but must also be enforceable, which under the present Act it is not fully so.

What role can technology play? The full enforcement of Sec 4 is based on technology. Enquiry through videoconferencing will ensure speed. Access to authority through cell phones will ensure universality.

“Transparency and consistent accountability will minimize corruption”Wajahat Habibullah, first Chief Information Commissioner of India and distinguished civil servant

Shyamanuja [email protected]

Anna Hazare and Lokpal bill may well be the symbolisms. But the real difference this time has been this back-end machine—the extremely familiar internet.

Internet has allowed the yous and mes to raise our voices collectively, without really leaving our comforts, till it gained a critical mass. Then of course, it was the streets and like any other movement, and then the traditional media too joined with its bit.

“Anna Hazare was able to ignite the youth to participate in the fight against corruption. Since it was an issue directly related to every indi-vidual in the country, it emanated a mass movement. What contributed to the success of the campaign was the use of technological means like TV, mobile, and internet. Finally technology let people join the fight against social maladies like corrup-tion and bribery in a big and better way. They have put their opinion forth,” remarks Gaurav Bakshi who closely observed the movement from Jantar Mantar where he was till the fast ended.

Internet, the Battleground Anna Hazare’s India Against Cor-ruption campaign was already there on the web for quite some time. But the day Anna’s fast began, a fresh breed of groups supporting Anna Hazare erupted on the scene in whopping numbers. Individu-als from middle class joined the national debate forming several fan clubs and anti-corruption forums on Facebook. “Social media became abuzz with discussion forums, mes-sages and support campaigns. From all kind of professionals, there was an influx of support,” says Vinita Ananth who runs Vangal, a media


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List of onLine forumsn http://www.facebook.com/annahazare (128,765 people like this)n http://www.facebook.com/IndiACor?ref=ts (201,076 people like this)n http://indiaagainstcorruption.org/ (10 lakh 36 thousand Indians support this)n http://www.causes.com/causes/599489 (25,114 people like this)n http://avaaz.org/ (649,962 have signed the petition) n http://ipaidabribe.com/ (413,952 hits)

research organization that also monitors trends on social media sites.

Facebook’s India Against Corruption page (run by the campaign organizers), which had a little less than 20,000 supporters online before the fast-onto-death, saw a steep rise in its supporters during the campaign. Now, there are more than 2 lakh people liking the page. An-other Facebook page dedicated to Anna Hazare (http://www.facebook.com/annaHazare/) has also close to 1.3 lakh supporters. “It really united masses for a cause. Almost every third person is a victim of bribery in India. Facebook and Twitter let us reach out further. Many of our online supporters registered their support through their physical presence at Jantar Mantar,” shares Shiv-endra Singh Chauhan, who managed the social media and online drive for the anti-corruption movement.

Besides, there were other websites that managed to

garner support for the campaign. An online campaign site Avaaz managed to get over 6.48 lakh registered sup-port for Anna Hazare.

In 140 characters, #janlokpal, #annahazare and the less gracious #meranetachorhain began to trend on Twitter. In addition, celebrities, politicians, artists, jour-nalists and authors, among others left no stone unturned to support the campaign through their tweets. If you search YouTube, it shows up around 2,000 video results, a lot of which are shot by participants.

Equally mobile phone turned out to be a great medium for seeking support for the anti-corruption campaign. The campaigners set up a phone number (02261550789) on which mobile users can give a ‘missed call’ to get an auto-generated message request-ing them to extend support. “Given the fact that there’re close to 7 mn mobile users in India, mobile is a po-tential tool to take your message to the larger chunk of population. A trail of viral messages that did the rounds during the fast is a proof,” avers Bakshi.

Standing in the Witness Box But did this social media buzz translate into more people on the ground? Did the microblogs, emails and messages, that were doing the rounds fairly early on, manage to drive the public opinion? This is a debat-able topic as different arguments emerge from different people.

Social media’s standalone role in catapulting a revo-lution has been dismissed by many. A sizeable section of the intelligentsia argues that social networks may have resounded with support from the middle class for the anti-graft campaign but have not really mobilized the movement on grounds. It was more a media hype on TV channels which have lost their credibility after the Radia Tapes incident.

12,493

4,823

11,099

8,382

17,382

29,120

1,403

Kiran Bedi

Hrithik Roshan

Pritish Nandy

Shekar Kapur

Barkha Dutt

Anupam P Kher

Mahendra S Dhoni

Among celebrity tweets, Anupam Kher topped, followed by Barkha Dutt

5,000,000

4,500,000

4,000,000

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

0

4/5/2011 4/6/2011 4/6/2011

Anna Hazare trended over 4.4 mn tweets on April 7th from 826K unique users

Anna Hazare Unique Users

Source: Vangal


Yet another section of experts has contrary views. It believes that the social media networks influenced many people on ground. “The online campaign has exerted a great influence on people inspiring them to join people at Jantar Mantar and in their own cities. And it works, given my own experience. I ran a campaign few months back on Facebook against the corrupt officers who asked me to pay bribe for adopting my stepdaughter. Within 5 days of its launch, it attracted almost 600 people. I also managed to get some 60 people for dharna from my Facebook supporters. So one can not deny the role social media played in mobilizing mass movements,” says Bakshi.

In addition, numbers extracted from a survey con-ducted by Vangal also show how Anna Hazare ruled the web during his fast. According to Vangal’s analysis of Twitter on April 7th, Anna Hazare trended over 4.4 mn tweets on April 7th from 826,000 unique users. Similarly, there were around 1 mn discussions going on Facebook about Anna Hazare and his anti-corrup-tion stir. Even celebrities and renowned personalities who supported the campaign via twitter had their tweets re-tweeted at significant numbers. “Facebook and Twitter were abuzz with activity. Social media has lent a voice to every single person in the world and we are excited to help measure the magnitude and amplification of those voices,” says Ananth of Vangal. She also hopes that number of people standing against corruption and in support of Anna Hazare may soon catch up with the pro-demo-cratic calls in the Middle East.

“Content engagement on social media networks has given people new wings and empowered them. Their voice now can not remain unheard. I will not say that the movement was success-ful only because of social media but would certainly add that social media have united people from all walks of life,” remarks Chauhan.

‘Sorry IPL, it’s Time for IAC—India Against Corruption’Who says Indians don’t care about serious issues for cricket? Despite the fact that IPL’s new season was beginning on 8th April, Indians especially the mid-dle class which is responsible for TRPs (tele-rating points) kept on standing to show its solidarity for the anti-corruption bill. Serious issues, thus, weigh more on entertainment. The message was loud and clear as one of the placards held by a supporter on that day at Jantar Mantar read “Sorry IPL, it’s time for IAC—In-dia Against Corruption.” Joining the league were also TV channels which reported more about the thawing deadlock between the Anna camp and the government over Jan Lokpal Bill than IPL’s inauguration match. Interestingly on Twitter, the words like #lokpal, #an-nahazare, #corruption, #Mera Neta Chor Hai and #Jantar Mantar were ahead of # IPL, which under-scores a reality—that Indians love to watch cricket!

Incidentally, one of the top tweets on Hazare is from Indian Premier League match host Gaurav Kapur, @gauravkapur, which read, “Anna Hazare wouldn’t be fasting if our politicians didn’t ‘eat’ so much.”

It’s the BeginningUndeniably, the technology has done its duty in making the mass movement successful, which is the beginning of a new chapter in India’s democracy.

Thus, the parochial view that the technology has supported a blackmail campaign by a septuagenarian holds no ground, since the campaign amassed the support of the middle class. The tech-savvy middle class now knows how to utilize technology for the good of all. The middle class has expressed its intent that it will no longer remain aloof from what’s happening in the political circles. Little has free India seen anything of this kind. Although there are those who fear that the campaign will set a bad precedent as it provokes people against a democratically elected government, but tradition must change for the betterment of society and country because “the constitution is for people and not people are for the constitution.” n


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What do you think about the current movement against corruption? Do you agree with the means?The current movement against corruption

is one of those situations where, by divine design, a con-catenation of events takes place leading to unexpected consequences. We have systematically evolved in our country during the last 6 decades and more a system of

NagarajaN Vittal has had one of the most illustrious careers as a civil servant. as the secretary of department of electron-ics, he initiated reforms that encouraged entrepreneurship in the software sector. as chairman of telecom commission, he in-troduced the first private sector partici-pation in telecom, despite pressure from a lot of lobbies. he foresaw the need to allow private sector in last mile, going against international norms of introduc-ing competition in the long distance first. he also served as the chairman of public enterprise selection board. but his most interesting stint was as the chief vigi-lance commissioner. he was the first to take public accountability to a new level by using technology when he published names of corrupt officials in the cvc website, despite lots of pressure not to do so. in fact, that probably was the first instance of using of internet to fight corruption, something that culminated in the facebook activism that we are seeing today. he is the author of a forthcoming book on corruption—‘ENdiNg Corrup-tioN: prEsCriptioN for a ClEaN iNdia’.

“Simple rules, extensive use of IT, and e-governance can help in preventing grassroot level corruption”

shyamaNuja [email protected]

Nagarajan Vittal, ex-CVC


governance where nobody could be held responsible. A vicious gang of the corrupt neta, (political leaders, babu (bureaucrats), lala (businessmen and corporate sector), Jhola (NGOs and civic society organizations) and dada (criminals) have developed a stranglehold on our country. Loot and let loot has become the operating principle of life.

Fortunately this vicious gang is not all inclusive. Per-haps 5% of our population are actively corrupt and have their hold on the levers of power. A governance system designed to hold nobody responsible actively nourishes corruption at every stage and in every sector. What we are witnessing from mid-2010 is a multiple organ failure of governance. The continuous rise in prices, all-perva-sive corruption and massive scams exploding in a series has made even the dullest citizen realize that something is seriously wrong.

Anna Hazare’s fast was the last spark needed to make an issue of corruption and the fact that we are ruled today by a bunch of thieves is realized by every Indian citizen.

The judiciary, the media and the civil society organi-zations are all fighting corruption in the manner suitable to them. This is natural and I have no quarrel with their means.

In a democracy, don’t you think corruption by politicians is a reflection of how people are, as these politicians come from amongst us?This is a lazy argument. Ultimately politics reflects the system. Effective and visionary leaders devise systems and build traditions to nurture good governance. Just recall what one Lee Kwan Yew did in Singapore. What happened in Hong Kong in 1974 when the corrupt police and mafia made it a hell-hole of corruption? How did one Prime Minister Gladstone change the corrupt political system of Britain in the 19th century? What is happening in little Burundi today?

Our leaders have become a bunch of thieves and the honest among them just keep quiet like Bhishmas and Dronas when the disrobing of Draupdi (bharat mata) is going on.

Things like lokpal bill can probably help in arresting corruption to some extent in high-est levels. But what about grassroot levels that common man is worried about?lokpal bill will deal with political mega corruption. What the common citizen faces is petty retail cor-ruption. This can be easily removed by:n Simplification of rules, elimination of unneces-sary rules and procedures n Extensive use of IT. Just recall computerization of railways passenger reservation n E-governance

We must apply the 2T formula for every proce-dure and rule in government. The first ‘T’ is trans-parency. Put every information needed by a citizen in the public domain on the web site of the depart-ment. The second ‘T’ is the TINA factor ie, ‘there is no discretion, there is no alternative’ but to take the right decision.

Do you think checks and balances in the system would help?The main problem in our governance today is total lack of accountability. If we introduce account-ability the need for checks and balances may even disappear. My suggestions for instilling account-ability are:n Amend article 311 of the constitution. n Remove the cast iron security of job to the public servants and replace it with a rolling contract sys-tem performance to be assessed continuously. n Contract to be renewed every 5 years, service can be terminated earlier, if performance is unsatisfac-tory, with a 3-month notice at any time. n There should not be any consideration in assess-ing performance on grounds of social justice. Merely because one belongs to a weaker section or OBC, one should not get any leniency in punishment. n Empower every public servant with specific legal powers so that he can perform effectively.

Technology can play a big role. n

“Anna Hazare’s fast was the last spark needed to make an issue of corruption, and the fact

that we are ruled today by a bunch of thieves is realized by every Indian citizen”

Nagarajan Vittal, ex-CVC


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“Through technology, today we can hear the voices of 1 bn people and more”

o you think corruption can be stopped without changing people?What drives the society is fear, respect, and moral values. What has happened in the last 62 years of independence is that while we are economically liberalized, we gener-ated more money in the society; we increased our prosperity; we had a capacity to buy more; consume

more and generate more; our greed too kept growing. But sadly, we did not alongside work on how to keep a check on greed.

Greed grows when there’s no fear. We did not create a legal system within the entire system, which will make a man afraid of spreading the greed. For example, a pick-

Dr Kiran BeDi is recipient of the pres-tigious ramon magsaysay award and the first woman to join the ips in 1972. a social activist with experience of more than 35 years in tough, innovative and welfare policing, she speaks about ways to make corruption tougher for the greedy and create transparency in the system, in an exclusive interview with dataquest. excerpts

Drishti D Manoah [email protected]

pocketer might be afraid of getting caught, but if it is a bigger scam it goes out of the police purview. The police constable, even the head constable, would not have the power and confidence, and would never dare think of getting hold of a rich man, a powerful man, a politician, or a bureaucrat since they rule and govern him. In fact, he owes even his survival to them. Every common man knows about teachers’ scam, land scam, and more, but can the local police register an FIR and get hold of the chief minister or the bureaucrat? The answer is no. This only shows that our legal system is not in place to get

Dr Kiran Bedi,social activist


hold of the high and mighty corrupt, who are the greedi-est of all.

We are afraid of God and fear that if we do something wrong, He’ll punish us. On the other hand, we worship Him because we love Him and respect Him. From rais-ing fear, comes respect for law—that’s the basic concept of humanity since time immemorial. Therefore, we have to begin with raising fear. At the moment, there’s no fear—that is the reason people who plundered our money during Commonwealth Games could get away.

Till the Right to Information Act (RTI) was brought in, people could shamelessly loot the society. How-ever, in the last few years, RTI has changed the Indian scenario. Earlier people had no access to information, now they have. But what did not follow RTI was an independent anti-corruption authority. You gave people the Right to Information, but what do they do with the information they get? They should be able to go to an independent authority, which is truly independent and cannot be influenced or persuaded to protect someone who’s wrong, but is also guided by certain norms and regulations.

At present, how transparent do you think the processes are? What can be done to create trans-parency? At present, there is no transparency. But the jan lokpal Bill which we drafted, will bring transparency. While not compromising the investigations, once a judgement is before the court, and once it is decided, it will be in public realm, and you can even question that.

What led to this whole movement was the govern-ment bill, which was not transparent at all. It was one more advisory body like the CBC, which would not have allowed transparency. Therefore, the basic principle of the new jan lokpal Bill is transparency.

What about the grassroot level institutionalized corruption? How can that be taken care of?Lokpal bill will keep a check on all levels. Every state has vigilance bodies. These vigilance bodies are

subordinates to their own chiefs. They are not independ-ent. So what happens when their own chief is corrupt? What can they do? Nothing. Therefore, the vigilance bodies are only for the peons and constables, not for their bosses. We noticed that the anti-corruption bodies of every state and every public sector organization, are actually subordinates to their own seniors who are cor-rupt—at least few of them. So there’s nobody to go to. In the past, whenever anybody has taken action or raised voice, they have been removed, penalized, and left voiceless. I am personally aware of people who dared to question the system, and they were thrown out. So then, these vigilance bodies goes under the lokpal bill.

There are state bodies which have units already ex-isting. This implies that with no additional expenditure, these state bodies become arms of the state lokayukta. So the poor, rich and powerful, all come under one rule of the law. lokayukta being independent yet account-able and transparent, following the rule of law, if anyone of them becomes corrupt, faces the same procedure. And since it is a multi-body, not ruled by politicians, judges or bureaucrats; but by social scientists, respect-able people, people like Narayana Murthy on the lokay-ukta of Karnataka, transparency can exist.

What role can technology play in this battle against corruption?Technology is one of the critical answers. For example, while we’ve gone into the nitty-gritty of the lokpal bill, for a common man to understand the complexities of law is not easy. Only a few millions will understand law, rest will not This is where the role of technology and media is so important, explaining everything in layman’s language. Electronic media, social media like Facebook and Twitter, SMSes, emails, and websites, played an extremely vital role in this movement.

Laws have to be debated, people’s views have to be taken forward, and assembling 1 bn people is practi-cally impossible. But through technology, today we can hear the voices of 1 bn people and more. n

“At present, there is no transparency. But the Jan Lokpal Bill which we drafted, will bring transparency”

Dr Kiran Bedi, social activist


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Onkar [email protected]

ver the last 2 years, India has seen an increase in the number of scams spanning across the public as well as the private sec-tor. These scams to some degree have highlighted the prevalent levels of bribery and corruption in the country. With this backdrop, KPMG in India conducted a ‘Survey on Bribery and Corrup-tion—Impact on Economy and Business Environment’ with certain leading Indian corporates. A majority of the respondents believe that India can achieve a higher growth rate if corruption could be contained. However 50% of the participants believe that despite certain measures such as the Central Vigilance Commission’s (CVC) proposed National Anti-Corruption Strategy and the Right

to Information Act, 2005, corruption is expected to remain at the same level in the next 2-3 years.

Potential Risks to GrowthThe survey also underlines that corruption poses a risk to India’s projected 9% GDP growth and may result in a volatile political and economic environment. The respondents also outlined various ways in which corruption could result in lowering the GDP growth, namely lesser Foreign Direct Investment (FDI) into the country, negative impact on the performance of capital markets, and a volatile political and economic environment.

Short Term Gain, Long Term PainIt further says that corruption skews the level playing field, attracts less capable and inefficient organizations to execute projects thereby leading to increase in the cost of op-


Crippling CorruptionBribery and corruption are deeply rooted in both private and public sector, weakening India’s economic prospects—outlines KPMG’s survey on bribery and corruption

erations. The survey also highlighted that in many cases corruption is induced by the private sector.

Ninety nine percent respondents opined that the corruption attracts organizations with lesser capability to execute projects. Such practices could have a serious impact on efficiency and the quality of delivery result-ing in increased costs. Another interesting insight is that 68% of respondents believe that in many cases corrup-tion is induced by the private sector.

Surprisingly, a majority of the respondents stated that corruption has not impacted the organization’s ability to access funds from domestic or international markets.

Another key area where business is impacted is in the area of mergers and acquisitions. Nearly 37% of the respondents opined that corruption could impact the valuation of a company thereby denying shareholders of

31%

1%

Corruption is a deterrent and a key risk to the projected 9% GDP growth rate

India can achieve more than 9% GDP growth if corruption is reduced

68%

Corrup-tion has no impact on India’s GDP growth rate

Impact of Corruption on India’s GDP Growth

40%28%

Corruption increases volatility in the stock market

Corruption prevents institutional investors from investing long term in the capital markets

32%Corrup-tion aids in artifi-cially inflating share prices

Impact of Corruption on Capital Markets

31% 36%

Corrupt environment makes it challenging for companies to access international capital whether equity or debt

Corrupt environment results in greater scrutiny of the company’s operations thus increasing transaction costs

33%

Corrupt environment increases the risk quotient attached to a company resulting in higher financing costs and relatively more stringent terms and conditions for payback

Cost of Corruption

46%

3%

India will attract invest-ments, but only in selective industries/sectors, which may result in skewed growth

India will attract lesser quantum of overall invest-ments than its peers owing to corruption

51%

Corrup-tion will have no impact on the invest-ments coming to India

Impact of Corruption on Investment

Note: % denotes percentage of respondents to the survey Source: Based on KPMG Survey on Bribery and Corruption

a fair price. Moreover, it could also make it difficult for them to find a suitable business partner, thereby seri-ously impacting the growth prospects of the business.

Perceiving CorruptionSome industries tend to have relatively higher instances of bribery and corruption than others, primarily due to the link they have with multiple parties—both in the govern-ment as well as private realm. Approximately 50% of the respondents are of the view that real estate, construction, and telecom sectors are most prone to corruption followed by the social development sector. This does not come as a surprise, since in all of these sectors government and political intervention is considered higher. Large capital investments, multi-level approvals, complex processes, and huge projects gives immense opportunity for corrup-tion in these sectors.


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100%0%99%1%

68%32%

45%55%

11%89%

16%84%

Agree DisagreeCorruption skews the level playing

field and tends to attract organizations with lesser capability

to execute projects

Corruption creates inefficiency in the system and hence increases

the cost of operations

In many cases corruption is induced by the private sector

Corruption has had a direct impact on your business and reduced your

company’s growth which it could have otherwise achieved

Corruption has reduced your ability to access funds from domestic

financial marketsCorruption has reduced your ability

to access funds from overseas financial markets

Impact of Corruption on Business

17%

36%

8%5%

9%6%

13%

10%

Real Estate and Construction

Telecommunications

Financial Services (Banking, Insurance, Mutual Funds, etc)

Defence

IT/ITeS/BPO

Energy and Power

Others

Social Development Sector (education, poverty, alleviation)

Perception of Most Corrupt Industries

1%

5%

33%

46%

15%

Will increase irrespective of the legislation

Drop by more than 50%

Drop by 25-50%

Drop by up to 25%

Remain at the same level

How will the Corruption Scenario in India Change in the Next 2 Years?

Fighting the MenaceRespondents also stated that corruption levels are expected to remain at the current level irrespective of the current and impending legislations. The Prevention of Corruption Act came into force in 1988. However the number of convictions under this act are considered abys-mally low. No wonder 84% of the respondents believe that the Indian government has not been very effective in enforcing anti-bribery and corruption laws. The Right to Information Act (2005), a landmark legislation, under which one can seek specific information under the control of public authorities with the objective of promoting trans-parency and accountability of those holding public posi-tions. This act in recent times has helped unearth certain prevalent malpractices in the country.

India has been facing governance challenges at vari-ous levels for a long time. Rigid bureaucracy, complex laws and long drawn processes of the legal system deters people from considering legal recourse in corruption cases. India has around 35 mn court cases pending to be resolved. Factors such as inadequate infrastructural facili-ties and manpower were identified as the key reasons for such delays. Moreover, the legal framework around bribery and corruption lacks teeth. All these factors have impacted the power and independence of the judiciary.

Amongst the various measures taken by the govern-

ment, the Right to Information (RTI) Act, 2005 has emerged as one of the most effective initiative in fighting corruption. This is followed by the bill on public interest disclosures and protection of informer (Whistle Blower Resolution) and the Central Vigilance Commission (CVC).

This may have to do with the observation that many large scams in the recent past have been unearthed as a result of either the RTI or the PIL being invoked. Sim-plicity of the process and power provided to the common man are the main reasons for RTI having emerged as an effective tool for fighting corruption. This proves that if one needs to fight corruption one should empower people as well as the legal system. Sixty eight percent of the re-spondents stated that in many instances corruption is in-duced by the private sector. Echoing the same sentiments, a majority (42%) of the respondents to the KPMG India Fraud Survey 2010 indicated that bribery is considered as an acceptable behavior in their industry.

On account of these factors, regulators in developed countries are striving to bring the private sector within the ambit of the regulations pertaining to anti-bribery and corruption. US Foreign Corrupt Practices Act (FCPA) and the recently formulated UK Bribery Act 2010 are 2 exam-ples where the government is tightening its noose on the private sector for paying bribes. The Indian government is readying a law to meet the conditions of the United Nations Convention Against Corruption (UNCAC). The proposed law will deal with corruption and bribery in the private sector. At the G-20 summit last year, India signed the group’s anti-corruption action plan, which requires it to ratify and fully implement the anti-corruption conven-tion taking on an obligation to check corruption in the private sector. Though a majority of the respondents feel that the corruption levels in India will remain the same irrespective of the legislation, a significant number also believe that it will reduce in the next 2 years.

Recent disclosures by media on some of the large scams as well as ongoing enquiries of some of the senior government officials indicate that there is a silver lining. Public furore over the recent scams, extensive media cov-erage, and outcry indicate that as a nation we are starting to realize that eradicating corruption must be one of the priorities, if we are to attain sustainable growth.

ConclusionIt is a fact that bribery and corruption is a growing menace that has the potential to adversely impact India’s economic growth, and image to the world. By signing the G-20 Anti-corruption plan, India has signaled to the world its commitment to tackle this issue. However unless concrete steps are taken in the enforcement of existing provisions under the law to prevent bribery and corrup-tion, little change can be expected. n

Note: % denotes percentage of respondents to the surveySource: Based on KPMG Survey on Bribery and Corruption

Source: Based on KPMG Survey on Bribery and Corruption


Cover Story

E-procurement: The Red Flags

Procurement could well be the potential Waterloo in the fight against corruption. A look at the common malpractices and how to avoid them

he reasons for the increasing tendency to switch to e-pro-curement in recent times are certainly speed and efficiency. But in the government space—especially in a democracy—no advantages can substitute the need for national security and transparency. In fact, if anything, e-procurement should be better than manual tendering in these aspects of security and transparency.

While changing over to e-tendering/ e-procurement, it must be ensured that under the pretext of reengineering, the e-procurement software does not in any way compromise on

legal, security and transparency related aspects of public procurement. Well established practices of manual tendering (especially those relating to security and transparency) should have corresponding electronic equivalents in e-tendering/ e-procurement.

There could be many areas of compromise/attempted compromise of security and transparency in an e-procurement process. Here are the most common ways of manipu-lating the e-procurement process. Let us call them the red flags.

Red Flag #1: In most e-procurement systems, the ‘Bid-sealing/Bid-encryption’methodology is poor/ flawed.

Specifically, where PKI is used for bid-encryption, clandestine copies of bids can be stolen through spyware and secretly decrypted before the Online Public Tender Opening Event, resulting in compromise of confidentiality. Similarly, confidentiality can be compromised where the ‘main bid-encryption’ is done at database level, and only SSL encryption is done during the transit phase from bidder’s system to the e-procurement portal.

Suggestions:n Internationally acceptable forms of bid encryption include symmetric pass-

phrase and asymmetric key (PKI). ‘RFPs for e-procurement’ should allow both forms of bid encryption. However if asymmetric key is used for bid encryption, the RFPs should specify that security vulnerabilities as described in CVC circular No.18/04/2010

dated April 26, 2010, especially security checkpoint at S No 14 of this


circular must be addressed by the e-procurement software provider with proper explanation.n There is a ‘misconception’ that the IT Act 2000 recom-mends the use of PKI for data encryption (ie, bid encryp-tion in the context of e-procurement). This is not correct. The IT Act does not prescribe any method of data encryp-tion.

The focus of the current IT Act is on use of ‘digital signatures’ for authentication, non-repudiation, and data-integrity of electronic records. Guidelines under s-84A of the amended IT Act 2000 in respect of ‘Data Encryption (ie, bid encryption in the context of e-procurement) are pending.

Data Security Council of India (DSCI) in its ‘Recom-mendations for Encryption Policy’ u/s 84A of the IT (Amendment) Act, 2008, for ‘Data Encryption’ (ie, bid encryption in the context of e-procurement), has suggested the use of ‘symmetric encryption’, and cautioned against the use of ‘asymmetric encryption’ for ‘data encryption’.

Sections II and III of the ‘e-Procurement Integrity Ma-trix’ (published on TII site—http://transparencyindia.org also highlight security concerns relating to use of Public Keys of the TOE officer for bid encryption, and/ or if main encryption of the bid is done at the database level.

Till the central government prescribes the modes or methods for encryption u/s 84A, guidelines may be issued in line with recommendations of DSCI, or at least the above mentioned misconception should be clarified.

Red Flag #2: In most e-procurement systems, instead of ‘Online Public Tender Opening Event’, there is only a rudimentary ‘Online Tender Opening’. Merely opening bids ‘online’, and then separately making them available for display to the bidders subsequently, and/or from a different location/screen (ie, user interface) without the simultaneous online presence of bidders, does not fulfill the requirements of a proper and transparent online public TOE. The transparency related significance of opening bids in ‘public’, and carrying out various activi-ties such as ‘countersigning’ of each opened bid by the TOE officers in the simultaneous presence of the bidders has been given done away with. E-procurement systems where online TOE is conducted in this non-transparent

fashion, without the simultaneous online presence of the bidders, gives rise to the possibility of bid-data tampering.

Suggestions:A comprehensive and transparent Public Tender Open-

ing Event is the ‘backbone of transparency and fairness’ of the public procurement process, manual or electronic. It must be ensured that e-tendering/ e-procurement has comprehensive functionality for a transparent Public Online Tender Opening Event (Public OTOE).

Some relevant processes of a fair and transparent online public TOE should include:n Opening of the bids in the simultaneous online pres-ence of the bidders with proper online attendance record. Merely opening bids online, and then subsequently displaying some results to the bidders does not fulfill the requirements of a transparent Online Public Tender Open-ing Event n Security Checks to assure bidders of non-tampering of their bids, et al during the online TOE itself n One-by-one opening of the sealed bids in the simulta-neous online presence of the bidders n Reading out, ie, allowing bidders to download the electronic version of the salient points of each opened bid (opened in the simultaneous online presence of the bidders) n There should be a procedure for seeking clarifications by the TOE officers during online Public TOE from a bid-der in the online presence of other bidders, and recording such clarifications n Digital counter-signing (by all the tender opening officers) of each opened bid, in the simultaneous online presence of all participating bidders n Preparation of the ‘Minutes of the Tender Opening Event’ and its signing by the concerned officers in the simultaneous online presence of the bidders

Red Flag #3: Most e-procurement systems do not have the functionality to accept ‘encrypted (ie, sealed) detailed bids. Some systems ‘do not encrypt the technical bid at all’, ie, neither the electronic template of the techni-cal bid, nor the detailed technical bid. In such systems, typically ‘only summarized financial data in electronic

The focus of the current IT Act is on use of ‘digital signatures’ for authentication, non-repudiation, and data-integrity of electronic records


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templates’ is encrypted. This is against the established practices of ensuring confidentiality of technical bids.

Suggestions:As in the manual tendering process, all bid envelopes,

viz, technical, financial, and prequalification, should be sealed, ie, suitably encrypted by the bidders in the e-ten-dering/e-procurement system. In e-procurement systems, a bid envelope may consist of an electronic form, and an accompanying detailed bid for some envelopes. All bid parts must be encrypted and digitally signed. If required, printed brochures, manuals, physical samples etc can be submitted offline.

Red Flag #4: Many e-procurement systems do not have the functionality for digital signing of important electronic records which are part of the e-procurement application. As a result, such e-procurement systems are not in full compliance of the IT Act 2000, and certain guidelines of the CVC.

Suggestions:Use of digital signatures must be as per the letter and

spirit of the IT Act 2000 and its subsequent amendments for the purpose of authentication, non-repudiation, and in-tegrity of all important electronic records. Such electronic records should include tender notices and corrigenda, ten-der documents and addenda, online clarification of tender documents sought by the bidder, signing of bids (including modification and substitution bids) by the bidder, online counter-signing of all opened bids by the tender-open-ing officers in the online presence of bidders, and online minutes of the tender opening event. Facility should be provided within the e-tendering/e-procurement system to ‘verify’ digital signatures which have been affixed to the electronic records.

Red Flag #5: In most e-procurement systems, functionality of the e-tendering system is limited (eg, all types of bidding methodologies are not supported). In some cases only ‘single-stage-single-envelope’ bidding

is supported. Similarly many systems do not support the submission of ‘supplementary bids viz, modification, substitution, and withdrawal’ after final submission, but before elapse of deadline for submission. This is against the established practices of manual tendering.

Suggestions:The e-tendering system should support all established

bidding methodologies, viz, single-stage single-envelope, single-stage two-envelope, two-stage, two-stage two-enve-lope, these bidding methodologies preceded by pre-quali-fication. Where required by the purchaser, the e-tender-ing/e-procurement system should support submission of ‘alternative’ bids, as well as, submission of ‘modification’, ‘substitution’, and ‘withdrawal’ bids by the bidders.

In fact, CVC Circular 01/02/11 dated Feb 11, 2011 suggests use of ‘two-stage’ bidding methodology with provision for ‘Revised Tender Specifications’ under certain circumstances. In this case, the financial bid is not sub-mitted in stage-1.

Red Flag #6: ‘Entry Barriers’ are being cre-ated in many RFPs for e-procurement, on the entry of new players on the basis of ‘unjustified eligibility criteria’, and by insisting on ‘irrelevant experience’.

Caution: It must not be forgotten that e-procurement is an emerging technology, and if entry barriers are created, apart from discouraging competition, the government will not have the benefit of better and more reliable e-procure-ment systems. Furthermore, experience of tenders con-ducted using ‘rudimentary e-procurement software’ would not only be irrelevant but misleading.

Suggestions:n E-tendering/e-procurement is a new methodology/technology for public procurement the world over. It is also well known that initial projects in e-tendering/e-procurement in the country had very rudimentary secu-rity features and limited functionality. It is important to have new players in this area with high levels of security and comprehensive functionality in their e-tendering/ e-procurement software. To achieve this objective, it is important that such new e-procurement software/ service providers are not kept out of competitive tendering by imposing eligibility criteria which require prior experience of hundreds/thousands of tenders.n To encourage competition, and at the same time not waste time in experimentation, eligibility criteria should essentially ask for a ‘ready-to-use’ e-tendering/e-procure-ment software (without any need for customization for the main tendering processes), which is tested and certified, and can be delivered immediately. The functionality of the

As in the mAnuAl tender-ing Process, All bid enve-loPes, viz, technicAl, finAn-ciAl, And PrequAlificAtion, should be seAled, ie, suit-Ably encryPted by the bid-ders in the e-tendering/e-Procurement system


Suggestions:The following may be clarified:

n Reverse auction is not a substitute for the sealed-bid tendering process.n It can be resorted to as per guidelines issued by the Central Vigilance Commission, the Finance Ministry and other regulatory bodies from time to time. Such situations may be explicitly outlined.n Where allowed, it could be a follow-up activity to pre-ceding sealed-bid steps of etendering/e-procurement. In such a case, the reverse auction should be available in an integrated and seamless manner to the preceding sealed-bid steps of e-tendering/e-procurement.n Use of digital signatures must be as per the IT Act 2000 and its subsequent amendments for the purpose of authentication, non-repudiation, and integrity of all impor-tant electronic records, as in case of e-tendering/ e-pro-curement. Specifically, the final offers of the bidders must be digitally signed by the concerned bidders, and digitally counter-signed by the concerned officers conducting the reverse auction.n Minimum Entry Barriers and related Eligibility Crite-ria: Similar to the rules for e-tendering/e-procurement.(Similar guidelines may also be issued for e-forward auc-tion with minimum entry barriers.)

Also, most of the certificates that vendors often boast of are minimum qualifications and should be treated as necessary but not sufficient requirements. But many a times, they are taken as certificates of excellence. Security tests like Cert-In, STQC, OWASP are useful but general in nature, and do not have anything specific to address the intricacies of e-procurement. ‘e-Procurement Certification’ related Govt guidelines (as mentioned in CVC Circular No. 23/06/010 dtd June 23, 2010) are still awaited. n

software can be thoroughly tested before signing the con-tract, through demo/pilot tenders. The main focus should be on the functionality of the software in terms of security, transparency, and comprehensiveness. Where absolutely necessary, experience of a few actual tenders (say 25, or even less), of the types relevant to the organization and meeting the security-checks criteria outlined in the CVC circular No. 18/04/2010 dated April 26, 2010, may be sought as part of the eligibility criteria.

The main tendering processes of government organiza-tions are all within a standard framework, so there should be no need for customization for each project, except pos-sibly for ‘integration with other applications’.

Red Flag #7: Many e-procurement systems are such that it results in abdication of powers of the con-cerned officers of the government purchase department. Furthermore, in some situations it results in handing over the private keys (PKI) of the concerned officers to others, which is a violation of s-42(1) of the IT Act.

Suggestions:n Changing over to e-procurement does not imply that the powers and duties of the officers (including those under the Official Secrets Act) for the core tendering processes can be passed on to ‘private third-party service providers’, or to a few technical personnel within the purchaser or-ganization. Each officer, who currently enjoys powers and has responsibilities relating to the procurement activities, should be able to exercise the same under the e-procure-ment system. The e-procurement system should support such functionality by facilitating a comprehensive hierar-chy of officers, with specific role authorization facility.n Rules should prohibit the engagement of ‘private third parties’ for outsourcing the core tendering processes, unless proper checks are put in place. Most importantly, third parties should only be ‘e-procurement platform pro-viders’, and ‘not e-procurement service providers’.n Sensitive organizations like Defence, should even manage the e-procurement platforms/portals themselves, and only source/ license the software from e-procurement software developers.

Red Flag #8: There is lack of clarity about where e-reverse auction is to be used. It is obvious that the government does intend to replace sealed-bid tender-ing with e-reverse auction. Also there are guidelines about ‘not negotiating’ after the financial bids are opened, except possibly with L1 (which is contrary to the concept of reverse auction). At the same time, reverse-auction could be useful in some situations, eg, commodity purchases. In such a scenario it is important to clarify where reverse auction can be resorted to.

the mAin tendering Process-es of government orgAnizA-tions Are All Within A stAnd-Ard frAmeWork, so there should be no need for cus-tomizAtion for eAch Project, excePt Possibly for ‘integrA-tion With other APPlicAtions

JitendRa Kohli The author is a member of Transparency International India. The article is roughly based on his presentation made at the National

Workshop on Integrity Pact held recently [email protected]

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