Delays at the police

by Renuka Sane and Neha Sinha.

The Chief Justice of India's recent emotional outburst over judicial delays has reignited the discussion on India's criminal justice system. The focus of much of this discussion has been on judicial delays. Policy reform discussions range from increasing the number of judges, and improving the basic infrastructure in courts, to deeper reforms in the form of separating out the administrative function from the judicial function. These discussions are important.

Our ultimate objective, however, is to create deterrence against crime. The criminal justice system is the interlocking institutional infrastructure of laws, police, courts, public prosecutors and prisons. We must, therefore, look at all delays from the date of the crime to the date of the conviction. Judicial delays are one part of this. Delays at the police are an equally important problem.

After a crime takes place, the very ability to conduct an investigation and identify the criminal degrades with time. Witnesses forget, evidence is lost. Delays in investigation drive up the probability of a failed investigation. The urgency of reducing delays here is, in some sense, even greater than the problem of delays at courts.

What do we wish to measure?

In an ideal world, we should see the delays associated with all the steps from the date of the crime to the date of the conviction. The units for this measurement are in days. Fine-grained data is required, at the level of a sample of cases or the population of cases, in order to make statements such as `On average, when a complaint is filed under IPC S.300 (murder), there is a conviction with $x$% probability, and this takes place with a lag of $y$ days.' Two useful metrics are:

1. The age of the case: measured from the date of the FIR registration.
   
   
2. The amount of time devoted to each process: measured as the start and end date for each step from crime to conviction. For ongoing cases, many elements of this pipeline would be NA, and one would be censored.
   
   

Such measurement will help understand where delays occur, what kinds of cases take more time, how lags in the process vary based on the crime involved, and how police resourcing can change various elements of the lag. Answers to such questions can be the basis for improved management of the police.

The current state of measurement on police pendency

Data on reported crime and response by the police is published by the National Crime Records Bureau (NCRB). Information from individual police stations registered as the First Information Report (FIR) is reported to the District Crime Records Bureaus, flowing up to the State Crime Record Bureau which is finally consolidated by the NCRB. The consolidated data processed by the NCRB is published in their annual publication "Crime in India" providing consolidated numbers for crime registered and status of police as well as judiciary responses at the state and national level. Within this, "Disposal of IPC cases by Police" for the states and union territories provide data on cases reported to the police, pending cases, and cases charge sheeted during the year.

Police pendency in year $t$ in the NCRB is defined as the number of cases pending investigation at the end of year $t$ divided by the sum of cases pending investigation from the previous year and cases reported during the year. This pendency rate was 28.10 per cent at an all-India level in 2014 (Table 4.1). As the previous discussion suggests, this is a pretty bad way to measure pendency at the police.

The North Eastern states of Manipur, Meghalaya, Arunachal Pradesh and Assam reported highest pendency rates amongst all states at 84.75 per cent, 69.91 per cent, 57.91 per cent and 55.29 per cent respectively. On the lowest end of reported pendency were Rajasthan, Madhya Pradesh and Chhattisgarh with pendency rates of 7.13 per cent, 7.27 per cent and 9.88 per cent. Does this mean the latter states have a better functioning police force? When data is so aggregated, it is hard to make such inferences.

Conclusion

What you measure is what you can manage. In India, we do not do a good job of collecting and disseminating facts about the criminal justice system, down the full pipeline from the crime that citizens experience through all the steps of government systems going all the way to convictions. What data is available is highly aggregated, and therefore not very useful in studying police actions. For a contrast, consider the data portal of the police in UK. This provides detailed information on each crime that took place in each county in each month, and the latest outcome on the crime. We need to move towards better data collection and dissemination as we embark on the reform of our criminal justice system.


Renuka Sane is a researcher at the Indian Statistical Institute, Delhi. Neha Sinha is a researcher at IDFC Institute in Bombay. We thank Rithika Kumar for valuable discussions.

Reforms of prosecution in the Indian criminal justice system

by Smriti Parsheera

The criminal justice system consists of four main components - police, prosecution, prisons and courts. These agencies are collectively responsible for apprehending, prosecuting and sentencing offenders, keeping in view the interests of the accused, the victims and the society at large.

The little data that is available about the workings of the system in India, at present, paints a grim picture. At the end of 2012 there were 18.82 million criminal cases pending before subordinate courts. Disposals and institution of new cases during the year led to a marginal decline in the figure to 18.56 million in 2013. Data from the Crime Records Bureau shows that there were 9.7 million serious criminal cases pending under the Indian Penal Code in that year out of which the trial was concluded in 1.2 million cases with a conviction rate of 40.2 per cent. Only a small fraction of the pending criminal cases are geting decided each year. Of the ones that do get decided, a majority of the verdicts in serious criminal cases do not support a conviction. A combination of factors contribute to this situation - defects in investigation techniques, inefficiency of court processes, poor quality of prosecution, delay tactics used by the parties, insufficient coordination between the agencies and absence of a framework to protect victims and witnesses, which often results in them turning hostile.

The performance of the prosecutorial wing has a direct bearing on the pace as well as quality of justice being rendered by courts. Often referred to 'ministers of justice' and 'gatekeepers of the criminal justice process' (197th report), public prosecutors (PPs) represent the interests of the state before the courts. Under Indian law, the prosecutor's role comes into play after completion of the investigation and once the matter has been admitted before the court. A lot has been legitimately said about the responsibilities of PPs and their duty to act in an impartial, truthful and fair manner. But these expectations need to be weighed against the ground realities in which the prosecution system operates. Problems in the selection and training of PPs, their poor service conditions and lack of independence and supervision have all led to prosecution being branded as the "weakest link of the criminal justice system".

The subject of prosecution falls under the concurrent list of the Constitution. This has induced difficulties in consistent nationwide reforms. States have used their authority to formulate rules for the appointment, conduct and remuneration of PPs. Recent developments include the introduction of an e-Prosecution system in Madhya Pradesh to streamline and manage the workflow of PPs in the state, and a slew of changes announced by Maharashtra to boost their conviction rates. These include a number of positive steps such as measures for securing greater independence for the Directorate of Prosecution (DoP) and evolving a court monitoring system for better coordination between the prosecutor, the investigator and witnesses. There is also a suggestion of allowing the police to have a direct say in the appointment of PPs, which goes against the well established principle of independence of the prosecution from police control.

This is, hence, a good time to think about and debate fundamental questions about the independence and accountability of prosecutors and their relationship with the other state agencies. Better knowledge can help shape and strengthen the reforms of Madhya Pradesh and Maharashtra, and help other states better navigate their own reforms of prosecution.

Structure and independence of prosecutors

The Code of Criminal Procedure (CrPC) speaks of four categories of prosecutors - PPs and additional PPs; assistant PPs for magisterial courts and special PPs who may be appointed under exceptional circumstances. Appointment of PPs and additional PPs at the district level can be done in two ways - 1) on tenure basis from a panel prepared by the district magistrate in consultation with the sessions judge; or 2) from a regular cadre of prosecutors maintained by the state.

Both methods have their pros and cons. The former makes it possible to attract the best talent from the bar while allowing judicial officers who have direct insights on the competence of those lawyers to have a prominent say in the matter. However, the extent to which this happens in practice is suspect, given the vast difference between the earnings of a successful defence counsel and a PP. Panel appointments are also criticised for lack of accountability as appointments are for a fixed tenure, generally three years, and tend to be more susceptible to political interference. The CrPC was amended in 1978 to address these issues by introducing the concept of cadre appointments. States that maintained a "regular cadre of prosecuting officers" were required by the law to treat that as the only source for appointment of PPs. The idea was that a new breed of salaried PPs would replace all empanelled prosecutors. This would improve accountability and create promotion opportunities for prosecutors in the permanent staff.

The proposal for exclusive cadre appointments, however, turned out to be a non starter. First, the Supreme Court interpreted the term "regular cadre of prosecuting officers" to mean a permanent prosecution cadre encompassing all levels, starting from assistant PPs and going up to the PP at the top. This is not the case in most states - cadre appointments are generally restricted to the level of assistant PPs. Second, a number of states passed local amendments to dilute the requirement of mandatory cadre appointments. Some of them have also done away with the need for consultation with the sessions judge for panel appointments thus giving full control to the executive. In 2006, the Prime Minister's office raised concerns about these developments and their consequent scope for arbitrariness. The Law Commission responded by indicating its preference for a combined appointment process - 50:50 split between Bar members and assistant PPs selected from the regular cadre. The Malimath Committee had also expressed the same view. A decade has passed since these recommendations, and implementation has not taken place.

The appointment process of assistant PPs for magisterial courts is more straightforward. It is generally done through a direct recruitment exercise conducted by the state public service commission. Before the enactment of the CrPC in 1973, prosecutors working at this level used to function under the control of the police.

In many cases, police officers themselves used to act as prosecutors. This blurring of lines between the prosecution and police was problematic on may counts. It was observed by the Law Commission that the police had a tendency to focus on securing convictions, which made it difficult for them to exhibit the degree of detachment found necessary for the role of a prosecutor. In the words of the Law Commission: “In undertaking the prosecution the State is not actuated by any motives of revenge but seeks only to protect the community. There should therefore be an unseemly eagerness for, or grasping at a conviction. A public prosecutor should be personally indifferent to the result of the case. His duty should consist only of placing all available evidence irrespective of the fact whether it goes against the accused or helps him, in order to aid the court in discovering the truth.”

Section 25 of the CrPC fixed this by explicitly stating that police officers would not be not eligible for appointment as assistant PPs. In doing this, the legislature recognised the importance of independence of the prosecution from the investigative arm of the state, a demarcation that has also been emphasized by the courts.

Sometimes the complexity or gravity of a case may justify a more experienced lawyer to handle the prosecution. Section 24(8) of the CrPC recognizes this possibility by empowering the government to appoint a special public prosecutor (SPP) for a specific case or a class of cases. The appointment of a SPP amounts to a deviation from the general norm (of using PPs) and is therefore resorted to only under special circumstances and only and only when public interest so demands. Many times, the request for appointment of a SPP may come from the victim of the crime, but the law as laid down by the Supreme Court makes it clear that such requests cannot be granted on a routine basis. The application for appointment of a SPP has to be properly examined by the government - in most cases through the Remembrancer of Legal Affairs in the state - and should be granted only after being satisfied that the material on record justifies the need for a SPP. It has also been clarified that even though the request may have been initiated by the complainant the costs of the SPP are to be borne by the government.

Relationship with the government

PPs are appointed by the government, but the duty cast upon them is to represent the interests of the State and not the government of the day. Prosecutors who are wholly dependent on the executive for their tenure and appointments may find it hard to maintain this distinction. This is illustrated by the reshuffling of posts which seems to happen with every change in government. The problem becomes all the more stark in cases involving corruption, violence by state agencies or other instances where people close to the government find themselves on the wrong side of the law. For instance, while ordering a retrial in the Best Bakery case the Supreme Court noted that no credibility could be attached to an acquittal that is based on tainted evidence, tailored investigation, unprincipled prosecution and perfunctory trial. The court found that through selective examination of witnesses and mishandling of evidence, the PP had "acted more as a defence counsel than one whose duty was to present the truth before the Court".

Section 321 of the CrPC gives the PP the power to withdraw any case from prosecution with the consent of the court. This leads to the discharge/acquittal of the accused. The wording of the law and its interpretation by the Supreme Court makes it clear that the discretion to withdraw from prosecution is that of the PP and none else. The Government may suggest a withdrawal to the PP but cannot compel her to do so. It is the duty of the court to consider if the PP has applied her mind "as a free agent, uninfluenced by irrelevant and extraneous considerations". Yet it is often reported that prosecutors act on the directions of the government. This again raises concerns about the lack of independence from the executive.

One way of addressing this is to entrust the appointment and monitoring of PPs at all levels to an independent DoP. Most states have already set up their own DoPs but these bodies are not really independent. For instance, the head of the DoP does not have a statutorily prescribed term of appointment that would allow her to function freely from the government. DoPs are also not entrusted with control over the appointment process of PPs. The vision and organisation design of DoPs varies across states. To take an example, the DoP manual for Delhi speaks of the duty of the prosecution to secure justice for victims of crimes, and to extend support to the state in maintaining law and order. The guiding policy in Maharashtra is "To secure maximum conviction in criminal cases in all courts", which explains the nature of changes being adopted by the state. Practices also differ on where the DoP is placed - under the home department or the law department; who heads it - judicial officer, bureaucrat (Haryana), prosecutor (Delhi) or police officer (Tamil Nadu) and the scope of the DoP's powers. In a feeble effort to streamline these systems, the CrPC was amended in 2005 to say that the state governments may establish a DoP to be headed by an experienced advocate who should function under the administrative control of the state's home department. The benign wording of the provision, and the concurrent nature of the subject, have ensured that states continue to exercise their discretion on whether or not to have a DoP and what form it should take.

International practice

Unlike the Indian system where the prosecutor has little or no say till a case has been filed before the court, most other jurisdictions regard the decision on whether or not to prosecute as one of the core responsibilities of a prosecutor. In addition, prosecutors also tend to have some role to play in the investigation stage although the scope of their intervention varies across jurisdictions. The United States is an example of a country where the prosecution plays a dominant role in the working of the criminal justice system. At the federal level, a set of US Attorneys working under the US Attorney General are responsible for trial in criminal and civil cases before federal courts. They initiate prosecutions in cases and also have the authority to request investigative agencies to conduct investigations in suspected violations. In fact the attorneys can also use the grand jury process to conduct an investigation on their own.

In addition, each US state has its own State Attorney General who is in most cases an elected representative. All the State Attorneys are members of the National Association of Attorney Generals, a coordinating agency that facilitates inter-state cooperation and conducts policy research and training programs for attorneys and their staff.

This presents a useful model that can be emulated in India. The heads of the DoP or whichever body is in-charge of prosecutors in each state can be members of a body created as a forum for regular exchange of ideas among prosecutors. This will help in articulating the issues faced by them which are often common across states and finding appropriate solutions. It can also be used to create a mechanism for specialised training of PPs from across the country.

In England the Crown Prosecution Service (CPS) serves as the principal prosecuting agency. The CPS is a statutory body headed by a Director of Public Prosecutions, who works under the overall superintendence of the Attorney General. Their role is to advise the investigation authorities, decide on which cases are to be prosecuted, and to frame the charges in more serious cases. To facilitate better cooperation with other government agencies, the CPS has entered into comprehensive agreements with the police association and the prison authorities that set out their respective responsibilities for appropriate handling of crimes. Accountability and transparency in the functioning of the office is maintained through the publication of detailed annual reports, business plans and evaluation reports.

The way forward

Independence, both from the police and the government, is essential for the efficient discharge of the prosecutor's functions. This calls for the creation of a strong DoP in every state that is both operationally and financially independent. Some of the ways to do this are by statutorily providing for a transparent appointment process for the head of the DoP, a fixed term of service and clear process of removal for cause. The functions of the DoP should also be clearly articulated in the law to cover the appointment, evaluation and training of PPs and allocation of work to them. In addition, improvements of remuneration and working conditions are required so as to improve the talent pool.

The legislature should act on the recommendation of having 50:50 tenure and cadre appointments for PPs and additional PPs. The DoPs can then be tasked with the duty of evolving the evaluation criteria for the empanelment and selection of PPs from the bar and the regular cadre. In doing so, the DoPs must look at performance measures that go beyond mere conviction rates. Some of indicators that may be considered include time taken in the completion of trials; role in causing any delays in the process; conduct in plea bargaining cases; feedback of victims and witnesses; and participation in professional training programmes. In order to achieve all of this, states need to give the DoP the capacity to operate independently and the budgetary capacity to deliver on these promises. Corresponding accountability measures are required, to assess the performance of the DoP and ensure proper utilisation of resources.

There is a pressing need for better coordination between the investigation and prosecution wings. The DOPs can manage this interface with the police through a formal coordination mechanism that will enable the police to seek legal advice from the prosecution prior to the framing of charges even though they are not statutorily bound to do so. The prosecution will also benefit from police assistance in the production of witnesses and evidence before the court. The goal should be to strike a fine balance between the independence and interdependence of the two agencies.

Acknowledgements

I thank Nandkumar Saravade, Pradnya Saravade and Raja Thakare for valuable discussions.

Reinventing the criminal justice system (Part 2 of 2)

by Nandkumar Saravade.

Background

In Part 1 of this article, we looked at the problems of investigative capacity. This yields a picture of a case load that has overwhelmed the criminal justice system, poor performance, and an overall lack of effectiveness in criminal investigation and prosecution. We now turn to the ways to remedy the situation.

The key issues which must be understood are capacity and resource constraints, clarity and measurement of the output of the Indian Police, the required structural changes in Police organisations the required accountability framework for that resourcing.

Guiding Principles

Record all crime: The purpose of criminal investigation is to generate deterrence by ensuring that the perpetrator is identified and brought before the court to face trial, while adhering to due process. All citizens have recourse to the law. The first step towards ensuring the rule of law is to record all complaints, irrespective of what further action taken.

There is a bias in public systems to turn away complainants. In addition, not all victims may want to report. These two problems generate bias in the official statistics. This calls for a three-pronged approach with (a) Cultural change that removes the stigma associated with being the victim of a crime; (b) Improved technology and process design through which all crime is reported and (c) Parallel measurement of crime incidence using Crime Victimisation Surveys (CVS).

Investigate selectively: Since resources are limited, not all instances of violation of laws can be investigated. The purpose of the criminal justice system is deterrence, not retribution. If perpetrators feel there is a sufficiently high probability of getting caught, and if the punishments are sufficiently severe, this will generate deterrence. For offences involving loss of property, insurance and other compensation mechanisms may be operated to substantially comfort the victim. However, all instances of offences involving bodily hurt must be investigated. Indian law separates offences into cognisable (where police register a First Information Report (FIR) and investigate) and non-cognisable (where permission of a court is required). There is no merit in this distinction.

Analyse for prevention: Data collected through direct reporting and CVS can be used to improve the allocation of scarce police presence, channeling this to locations and timepoints which maximise deterrence for the same expenditure.

Speed up prosecution: As we saw earlier, delayed trials are not only ineffective, but also counterproductive for subsequent cases. The judges:population ratio needs to be substantially higher. The Law Commission (120^th Report) recommended in 1987 that this ratio needs to go up from 12.5 judges per million to 50, which is a four-fold increase (2009 data). This would still be half of that found in the US in 1999. At the same time, dramatic increases in the productivity of judges are feasible through better process engineering of courts. There may be a case for large-scale withdrawal of unviable and old cases, as a one time measure, to debottleneck courts.

Agenda for State Governments

The most important change that is required is to improve the working of the police. The police machinery is currently controlled by the party in power and manipulated for their short term objectives of 'managing the crime numbers.' The National Police Commission (NPC), set up in 1977, went into all aspects of policing in the country and gave detailed recommendations through several reports, which have not been implemented. Most of the findings and the recommendations of the NPC remain valid even today. The issue of police reforms got revived after the Supreme Court judgement on a case filed by Prakash Singh, former DGP, UP and others. It is making slow progress, though not always in the right direction.

The recommended governance model for the police involves setting up of State Security Commission (headed by the Chief Minister, the Leader of the Opposition, the Chief Secretary, members of the civil society and subject matter experts) to act as the highest policy-making and oversight body. Further, an empowered Police Establishment Board is required, to insulate police officers from political interference. A Police Complaints Authority is required, to look into allegations of unprofessional/illegal behavior of police officials.

As the police is a subject in the state list under the Constitution, all the issues of police reform -- structural change, and better resourcing -- have to be carried out by the state governments. There is a remarkable opportunity to re-ignite this agenda, owing to the recent decision of the Central Government to increase the states' share of tax revenues to 42%, which is going to dramatically enhance budgets at the level of states. As part of the devolution of greater resources to the state level, the Central Government is also exiting its interventions in state subjects, which has led to discontinuation of the Police Modernisation Scheme. The facts need to be taken together by the leadership of states, and a sharp increase in the resourcing of police is required, alongside improvements in the organisational effectiveness and accountability mechanisms. These three elements -- increased resourcing, institutional reform, and enhanced accountability -- should be seen as a package.

Vision for the Police

For police organisations themselves, the mission to improve investigation effectiveness starts at creating an effective reporting mechanism, in addition to the local police station. Currently, there is a common telephone number (Dial 100) in most states, which does not always work. However, this is meant only for emergency responses. For filing a complaint, the complainant has to travel to the police station. With appropriate amendment in the Code of Criminal Procedure (CrPC), modified processes to mandate registration of crime must be brought about, including: (a) Reporting on the spot with the police official visiting the place of occurrence and (b) offering multiple channels (telephone/email/web/paper) of interaction. Will these changes reporting will improve, fulfilling the first requirement of police being a responsive organisation.

With a business triage approach enabled through a suitable CrPC amendment, high priority investigations can be taken up and the rest, especially those relating to minor property offences, only acknowledged.

From the organisational side, it would be important to devote a sufficient number of skilled police officers, give them standard operating procedures and measure their performance more accurately, with commensurate incentives for better achievement. To improve the supply of investigators without excessive cost escalation, the current heavy bias towards low-output constabulary should shift to officer-oriented composition. At present, 15% of the staff are officers; this needs to go up to 25%. This will also improve promotions and, consequently, motivation and morale of the force, through aspiration based efforts and more meaningful job content.

Separating the investigation function from public order maintenance to promote specialisation has been a long-standing recommendation. This was (recently done in Punjab). This involves earmarking a fixed number of officers for investigative work at the police station level. These detectives cannot be deployed for public order management or security without the orders of the district police chief and unless there is a dire emergency. This protects the prioritisation of investigations.

A national Police Standards Board needs to be created, to improve police investigative processes with clear Key Performance Indicators (KPIs) and an external audititing mechanism, which can directly report to the State Security Commission (SSC), as is done by Internal Audit to the Audit Committee in a listed company.

To enable the SSC to gauge the level of crime afflicting the society, independent surveys are required to be carried out, as a standard practice. Called Crime Victimisation Surveys, these are invaluable for measuring trends on crime reporting and comparative performance of different police units. They constitute reporting of the performance of the police that is completely independent of the police, and serve as an accountability mechanism in the eyes of society, which would see performance in these surveys as the outcome of resources put into the police.

For keeping the knowledge, skill and ability of the investigators at the desirable level, modern training infrastructure is essential. The current training mechanism emphasises a long initial training period over several months, but little subsequent training. However, there is a need for continuous training all through the working years, through which experience and knowledge interventions come together to induce a spiral of capability. This can be addressed through higher budgets for training and developments of a comprehensive Learning Management System (LMS) and community building through professional certifications, Continuing Professional Education (CPE) and a Code of Ethics to promote independence and integrity.

The technology infrastructure of the police department needs to be transformed. An enterprise-scale Information Technology backbone is required, with seamless flow of communication across the police, judiciary, prisons, forensic department and prosecution. Currently, investigation generates a lot of manual and tedious paperwork. With modern devices and well-designed software, the investigator can be freed to concentrate on the actual work. Digital tools for data visualisation and case management, as well as forensic databases for fingerprints, DNA, ballistic markings, paint/glass, shoe prints and tyre marks will improve the success rate of investigations.

It would simultaneously be important to build in accountability mechanisms for the improved resourcing so that the changes in the system stay put, or become feedback loops for the next stage of improvements.

The Supreme Court has passed an order asking for mandatory registration of criminal cases without any discretion to the police officer, as well avoiding indiscriminate arrests. Adherence to this on the ground is inconsistent and low.

Summing up

In summary, it is important to treat the Criminal Justice System holistically. It is possible to get some early wins, by fast tracking trials of cases involving elected representatives and creating specialised units and courts dealing with economic crimes and violent crimes against women. However, for long-term success in establishing the rule of law, there is no alternative to improving governance and making adequate investments in quantity and quality of investigative resources and trial courts.

Reinventing the criminal justice system (Part 1 of 2)

by Nandkumar Saravade.

Police and court inefficiency is the dominant feature of the Indian criminal justice system. The latest verdict on the L. N. Mishra murder case, which took 40 years to resolve even when the victim was a central minister, has once again brought home the point that things just don't work. Our system has repeatedly fallen short of its objective of being able to investigate and prosecute to ascertain the culpability of the accused and award deterrent punishments. Failure in this area is a significant inhibitor for achieving society's true potential, including economic progress.

After many decades of stagnation, there are now signs of important change in this field:

1. There was a time when the dominant idea of the Indian State was a "mai baap" who would wipe every tear. The Indian State is now re-engineering itself towards a much narrower vision, of achieving State capacity in delivering core public goods, and leaving the pursuit of happiness to the private choices of each individual. Law and order looms large in the field of public goods. Law and order is the ultimate public good: it is non-rival (my consumption of safety does not diminish the safety available to you) and non-excludable (there is no way to exclude a new born child from the blanket of safety).
2. Important new work has begun on building high quality courts in India. If these innovations work out well, and are then transplanted more widely into the working of courts all over India, this could have a major impact upon the criminal justice system.
3. The 14th Finance Commission has given a great surge of budgets at State governments. This is an important time for State governments to rethink their expenditure priorities, and a key element of this should be a greatly increased focus on law and order.

Prioritisation of the criminal justice system is going beyond the intellectual elite to every citizen. One highly visible episode of rape in Delhi [link] appears to have had an impact on elections at the level of the state government and possibly in the general elections also. Politicians are now much more oriented towards succeeding on law and order. As an example, the manifesto of the newly elected AAP government in Delhi speaks of reducing judicial delays.

We may thus be at an important moment, at the early stages of reinventing the Indian criminal justice system. It is, then, particularly important to obtain a clear diagnosis of what is wrong, and of effective strategies for reform. This is what motivates this two-part article. The first part is on the state of affairs of crime, and of the police machinery. The second part will be on the strategy for police reform.

What is the extent of crime?

Crime must be measured as as the crime experience of the citizenry. E.g. the number of murders per 100,000 of population, per year, is a measure of crime. For our present purposes, it is useful to think of the work of the police which takes in a complaint that is filed at one end, and results in convictions at the other end. The workload that comes into the entry point is the number of FIRs filed.

During the 2003-2013 period, India's population grew by 15%, but was outpaced by the growth of crimes defined in the Indian Penal Code (IPC) by 54.3%. The number of IPC crimes registered as First Information Reports (FIRs) during the year 2013 was about 2.65 million.

While the IPC is the main law on crime, there are other laws called Special and Local Laws (SLL), which also keep police investigators busy. These include offences under, among others, the Motor Vehicles Act, Arms Act, Gambling Act and Narcotics Act. SLL figures reached 4 million in 2013. SLL grew less rapidly (5.7%) during the same period, probably due to the fact that most of cases booked under SLL result from a proactive and preventive approach, depending on the time and resources available to police leadership at the local level. For the sake of simplicity, we will focus only on IPC crimes.

With respect to IPC FIRs, investigators processed 3.5 million cases (including cases carried forward from the previous years) during 2013. They completed investigation in 2.5 million cases, of which 1.9 million (75%) cases were sent for trial, leaving 0.95 million cases under investigation to carry over to the next year.

Large as these numbers seem, it is well known that only a fraction of the criminal incidents get registered as FIRs. Indeed, non-registration of crimes is a major factor in citizens' dissatisfaction with the Indian Police. In a landmark experiment conducted in Jalpaiguri, West Bengal in 2007, it was revealed that the actual incidence of IPC crimes across different categories was 4 to 6 times of the recorded numbers. More recently, the Delhi Police leadership stepped up registration, with revealing results. Delhi Police had recorded 64,882 IPC cases in 1998, which fell to 54,287 in 2012. However, the numbers rose rapidly to 80,184 in 2013 and 147,230 in 2014, close to a three-fold jump over two years.

How do the police fare on investigative capacity?

The Bureau of Police Research and Development (BPRD) publishes data on police resources on a regular basis. It shows that the police-population ratio has improved from 139 (per 100,000 population) in 2002 to 181 in 2012. The state police comprises of civil police (police station and support unit staff) and armed police (reserve units). According to NCRB, the total sanctioned strength of the state civil police at the end of 2013 was 1.79 million, while the actual was 1.3 million, leaving about 25% of the positions vacant.

For the purpose of investigation, it is more important to look at the number of investigators who primarily come from the ranks of Assistant Sub Inspector (ASI), Sub Inspector (SI) and Inspectors. These are mere 11% of the civil police strength. However, these officers cannot consider investigation as their primary job, having to give priority to maintenance of public order, VIP security and court appearances.

There have been a few studies in recent years estimating the actual workload at police stations. Though not specifically aimed at the investigation function, these provide some clue about the existing gap. A recently released BPRD report on 8-hour shifts in police stations looked at the existing supply side situation and found that majority of police stations had its staff putting in 11- hour to 14-hour workdays. Further, most police station staff members could get only one or two days as weekly off during a month. The report estimates that to enable a 48-hour work week, with an assured weekly holiday, it will take 68% enhancement in the police station strength. Another highlight was that, of the total police strength, only a third was posted in police stations, though, admittedly, it was the most important part of the police organization.

A smaller workforce is directly linked to low crime registrations described earlier. They are seen as a necessary evil by police supervisors to ensure that work load remains manageable. Even when the top leadership is interested in more realistic registration, the police stations thwart the efforts by turning away complainants. In a territory-based approach, the local police station has a monopoly on registrations and uses it to the detriment of the poor victims, who are unable to get their grievances addressed. In other countries, this monopoly is taken away to a certain extent by a centralised emergency response system, such as the 911 mechanism in the US. No equivalent system has been created in India yet. Madhya Pradesh Police is attempting this currently, with the project cost of Rs.6.33 billion over a five year period.

Court delays and policing

Another factor impacting investigative capacity of the police is the pendency in courts. As described earlier, 1.9 million cases got added to the pool of cases under trial in different courts, swelling the number to 9.8 million. During 2013, only 1.3 million cases were disposed of, increasing the pendency by 0.6 million. Of the 1.3 million disposals, about 0.2 million were due to cases being compounded or withdrawn, 0.77 million discharged or compounded and only 0.52 million convictions. The success rate in offences like rape and murder was around 27% and 36% respectively. The prosecution was even less successful in economic crimes like criminal breach of trust (23%) and cheating (24%). The slow pace of the proceedings was apparent from the vintage of concluded cases, with 13% cases aged between 5-10 years and 3.2% older than 10 years.

Court pendency keeps the investigators unproductively occupied in attending courts where more time is spent on procedural matters, rather than deposing. It reduces the viability of success of prosecution, finally impacting the outcome of investigations and motivation of investigators. It adds to the burden of preserving evidence and tracking witnesses - jobs mostly done by the police - over a longer period of time. Delayed trials are also responsible for the lower rate of success, as a study of corruption cases under the Karnataka Lokayukta showed.

What is the level of funding?

Though manpower is an important factor, it is also relevant to look at the financial expenditure on police department, as an indicator of the relative importance given by the state governments towards bolstering the rule of law. State governments seem to be spending between 3-5% of their budgets on the police.

It would be interesting to put this low expenditure in context by looking at Maharashtra budget figures for FY 2015. The total number of employees under the state government was 0.64 million, of which police personnel were 0.2 million. Thus, despite being one third of the state government workforce, the budget allocation for police was less than 5%, of which sustenance spends (such as salary, fuel and office expenses) took away 98%. The low allocation of resources for training results in lack of upgradation of investigators' knowledge about forensic techniques and new modus operandi.

What is the level of data collection and analysis?

Poor funding has meant that police departments lack IT systems for managing workflow better and data analytical tools to crunch large data sets available in cases of terrorism and financial crimes. The funding for creating new data-sets on understanding crime victimisation, demographic and spatial mapping of criminals, statistical analysis of the investigative processes are non-existent.

One significant factor in doing meaningful analysis is the antiquated method of compiling and analysing crime statistics. The whole process is manual and prone to errors and manipulations. An enterprise level case management system, called Crime and Criminal Tracking Network and Systems (CCTNS) has been delayed by more than four years due to inadequate funding and poor project management. Till the crime data is digitally captured at source and is amenable to modern techniques and tools of business intelligence, mapping the problem of poor-quality investigation in adequate detail remains only an aspiration.

What incentives exist for better performance?

It is not impossible to conceive of an efficient police force within the limitations imposed by the manpower and resource constraints. For this to happen, performance appraisals need to be aligned to elicit appropriate behaviour. Little is known about what constitutes good performance, and how police fare on such metrics.

What metrics of performance exist, are not linked to effectiveness in investigating crime, since it figures low in the list of priorities. Also, trials take a long time to reach conclusion and a negative outcome is attributable to various factors, such as poor investigation, insufficient evidence, long delays and witnesses turning hostile. Existing internal processes to fix accountability for bad investigation seldom seem to work.

Conclusion

Even at current levels of registration of crime, the criminal justice system is overwhelmed and in a state of logjam. There is gross under-registration of crimes; a fact well known to the police leadership. There continue to be considerable delays in police investigation. The police continue to be under-staffed and under-funded. At the same time, performance measurement of the police is weak.

Simply adding more manpower, or increasing resource allocation without appropriate performance metrics and accountability frameworks will not get us the desired results. A reform strategy has to take into account the failures on each of these fronts and devise an approach that will bring in more accountability, structural modifications, adequate resourcing, training and process improvements. This will be the subject of Part II of this article.

My experiments with truth in the Indian capital markets

by C. B. Bhave.

Thank you, Bangalore International Centre, for the invitation.

I joined SEBI in 1992. SEBI was given statutory status in that year and was facing huge hostility from brokers. They thought that their freedom would now be curbed by the new regulator. In any case, they did not think that SEBI knew anything about the markets. Some parts of Government were also hostile to SEBI since they thought that their turf was being encroached upon. In 2014, SEBI is a respected regulator nationally as well as internationally. You must have recently read that according to a study carried out by IOSCO and BIS, Financial market regulation in India was rated among the top 6 in a study of 27 top markets.

In 1996, I quit SEBI and the administrative service to set up NSDL - a depository for keeping share ownership records electronically and for facilitating easy settlements. In 1998, the magazine Global Custodian described the Indian market settlement system as the worst in the world (in a study of more than 80 markets) but facing stiff competition from the Russian market for the last place! By 2001, the same magazine placed India in the top 10 markets in the world. These rankings are in sharp contrast to India generally being placed between 100-120 when 150 countries are compared internationally whether it be on health parameters or on poverty or on corruption. The examples of SEBI and NSDL show that we don’t always have to be among the worst, even though we may be starting there. SEBI’s journey from being a fledgling institution to an internationally respected regulator is both fascinating and instructive. It tells us first and foremost that notwithstanding the enormous challenges, reform and overhaul of huge structures is possible in India.

It appears to me that our resistance to change is on account of our being a risk averse society. We are quick to agree that the existing state of affairs in a given area is no good, but each suggestion for change meets with such a multitude of objections that the status quo appears to be the best option. We need to develop tolerance for failure. By trying to keep away from failure, we miss out on valuable learning. We overdo this to an extent that we lose faith in ourselves. We persuade others as well to lose faith in us.

In 1996, I made the decision to give up the administrative service and set up NSDL, the depository. It was an exciting challenge and it was crucial to further reforms in the market. It is amusing to recall what people said to me then. There were many who believed that the depository would fail in India. The conversation would run like this: "The US and Europe have depositories: we cannot be compared with them. That is a developed world. Singapore has a depository: Oh, it is also more developed and is just a city-state. Even Sri Lanka has a depository. It is a developing country. Yes, but it is again just a small island nation. China is setting up a depository. Where does China have democracy? How can you compare China and India?"

India seemed to be in a peculiar place where the problems associated with paper certificates could not be handled. At least do not give up the Service was the last argument. I had a problem there. If the depository was so likely to fail, how would I carry any conviction with the people I was to recruit? Would they be comfortable with a boss who had a safe harbor or one who would sail and sink with them? I had to burn my boats. The irony was that these were my well wishers telling me why the depository would not work. We, in India believe that we have a problem for every solution. There is a lot of truth in this humour. There is hope, however. Young people are an exception by and large. The India we see today is different from the India of 1996. We seem to be well on our way to `can do' from a position of `cannot happen'.

In July 1993, I was invited to a seminar to be on a panel that was to discuss some fundamental changes that the panelists expected to see in their respective areas. One CMD of a nationalised bank was presiding over the panel. I was the last person on the panel before lunch. As is usual in our seminars, I had very little time because earlier panelists had been generous with their interpretation of the time allotted to them. NSE was expected to start its operations that year and automation of trading was, to my mind the most exciting thing that would change the shape of things in the capital market. I was barely five minutes into describing the changes and the presiding officer declared that I needed to wind up in the next two minutes. I was disappointed but wound up saying that time does not permit me to say more. While the rest of the audience and the speakers made their way to lunch, a group of 15-20 youngsters sat me down and said they wanted me to complete what I was saying and wanted to interact with me. There is hope in the young.

Let me give you another example of how young minds work. We needed to set up our mainframe in September 1996 in order to meet our deadline of starting depository operations in November 1996. This was to be done in a building that was still incomplete. We needed to take the mainframe to the fourth floor. The lift was installed but did not have the lift inspector’s permission to be made operative. We did not want to bribe anyone. The mainframe could not be carried via the staircase. Youngsters in NSDL found a solution. We operated the lift mechanically to load the mainframe. We did not break the law and yet kept to our principle.

Reform can be a long and painstaking process. It is almost never a one shot exercise. SEBI identified `Badla' (a particular method of carrying forward the settlement of a trade by getting a lender to intervene) as one of the structural issues in the trading system in India. SEBI’s initial attempts to do away with Badla met with fierce resistance. So much so that the then SEBI Chairman was moved out! Badla was eventually reintroduced. Most people thought that the issue had been buried forever. It appeared that there would be no way that the Indian Market would ever be rid of Badla. However, there were many reasons why the Badla system was popular. These related to lack of many other legitimate facilities needed in the market. SEBI kept working on these issues. Finally, when Badla was done away with eight years later, there was hardly any murmur. Reforms need persistence.

The proponent of a new idea must take into account the reasons why the existing idea came about in the first place. It may have come into place because something else did not work. These linkages are important. If we act to take care of those aspects as well, reform will be so much the easier. Our market used to have very long settlement periods. Long settlement periods introduce avoidable risk in the market. Despite SEBI’s best efforts we found that delays could not be reduced to less than ten days. A modern depository system was a must before any further reduction could be attempted. Today India has a settlement system that matches with the best in the world. There are less than ten countries in the world that settle as fast as the Indian Market.

In capital market regulation, the regulators find that they will not hear the voice of the retail investors unless the regulator makes a specific attempt to hear them. The big corporations have access to media and the powers that be. They can make sure that their difficulties reach your ears. The intermediaries and the institutional investors are similarly placed. If special efforts are not made to reach out to non-institutional investors, there is a danger of missing out an important piece. This is a difficult job. The non-institutional investors are not very well organized. There are investor associations that serve as a fair proxy for this work. It can sometimes be a thankless job. If, in the process of securing the interests of investors, market intermediaries are hurt, you can face a lot of criticism and voices would be so loud that it would appear that your judgment was altogether wrong. It is important not only to stand firm but communicate your view effectively.

Acting for investors can be a difficult task sometimes. Let us say I am serving one lakh clients and I find a clever way of charging my clients Rs. 10 extra every month. The clients do not feel the pinch of that extra money and if I am clever they do not even know about it. In any case what does Rs 10 buy today? But my gain is Rs 10 lakhs a month. Now if a regulator comes along and stops this practice, I have a huge incentive to cry foul. I would brand the regulator market unfriendly, would advise it not to interfere in small matters and focus on issues of policy. What is the incentive for the man who gained Rs 10 to argue the opposite? Very little. So this may appear a thankless thing to do. Regulators need the will to go the extra mile and do it all the same. When we questioned banks about the float money in IPOs and tried to eliminate it, the situation was similar.

The intermediaries act as agents of investors. One would imagine that their interests would be aligned. That need not be the case. The regulator has to be alert to this. Once interests are misaligned, there will be mis-selling. Brokers routinely take the power of attorney from clients to trade in the clients' account and to debit their accounts when required. The broker gives an incentive fee to his employee based on the brokerage revenue generated by the employee. It is easier to maximise brokerage by churning a client portfolio, than by acquiring new clients and convincing them to invest in the market. This is not in the client’s interest. One might argue that regulators should not micro-manage by getting into the nitty gritty of incentive structures of the employees of an intermediary. It is a good argument, but fails to address the issue of misaligned interests. If the regulator does not address this issue, there is little chance that investors will be able to do much about it.

At times there is confusion about the role of agents. Let us look at mutual fund agents. Whose agents are they? They are agents of the fund manager because they earn their commission from the fund manager and the fund manager appoints them. They claim that they are also agents of the investor because they give advice to the investor on the appropriate scheme to invest in. But the investor does not appoint them nor does the investor control their payment on the basis of quality or quantity of service delivered. When you are the agent of both the investor and the fund manager, and the fund manager has appointed you, in whose interest will you act? It was clear that the whole theory of the agents acting in the interest of investors was just a theory. When SEBI abolished the entry load, we faced criticism even to the extent that we were killing the mutual fund industry. We had thousands of schemes, and constantly new schemes were being floated. This whole operation definitely worked well for the agents and the fund managers. It was not in the interest of the investors. It was like churning a client portfolio for generating brokerage.

One of the lessons we learned in NSDL was that changes like a depository system affect different elements in the market in varying ways. Unless one listens to these carefully and understands the affected party, we may end up with wrong answers. We used to address investors seminars all over the country to explain demat to them. One question used to come up frequently: "If your system is good and will provide excellent audit trail, why will people who have bought shares with unaccounted money join you?" Our initial reply used to be that we were setting up the system for law-abiding citizens of the country. We did not care if people who employed unaccounted money could not use the system. This reply satisfied us but some how did not seem to satisfy the audience though they would keep quiet. We decided we needed a better answer. We brainstormed. Our reply in the next seminar was that if all people with clean money came to the depository the tax department will just have to ask the companies the list of those shareholders who still have shares in paper form. They would be sitting ducks. This drove the point home. One has to speak the language of the consumer to win him over.

We quickly realized that while implementing such a large scale system you cannot achieve your ultimate goals by following a predetermined path. While you need to have an idea of how you intend to get to your goal, you must have the flexibility and humility to change course. On reaching one lakh accounts, when we analysed the pincodes in the addresses of the investors, we found that a vast majority was from Kerala. This was counterintuitive. Mumbai or the state of Gujarat would have been the logical candidates. We realised the reason. We changed the language of our literature and seminars from being merely in English to Hindi and eight regional languages as well. In a couple of years the balance was restored.

The moneyed and the powerful form a cozy club in India. The first rule is that you should mouth the principle of equality before law but must understand that this does not apply to the members of this club. If you act tough with small fry, there will be all round appreciation. If you, however, try to enforce the rule of law on the members of this club, there will be public appreciation and private anger. Retribution will follow. Lack of ethical values and morality in our public life has degenerated so much in the recent decades that it threatens our very core. Citing examples of aberrant behavior in other countries is just fooling ourselves to believe that here the problem is not all that severe. Earlier the unethical needed a place to hide. They carried out their activities covertly. Now, any talk of morality or ethics is seen as a mere fetish, an impractical virtue, an impediment in the path of the getting things done. It is not just that. We first transited from tolerating the corrupt to tolerating the honest. The corrupt are now saying that the honest are too much of a nuisance in this cozy world of give and take. Let us harass the honest. Even if they are foolish enough to fight back and win, the dishonest would still have achieved their goal. After seeing the harassment caused to these honest people, they hope that the succeeding people will not entertain any thoughts of behaving in this odd honest manner, Am I exaggerating? No. Things are so bad that one of the Supreme Court judges who recently retired had this to say:

There are matters pending with the court, but the pressure, tension and strain both of us have undergone is unimaginable. I can't explain. The pressure was reflected on my wife and family. I can't speak much on the Sahara case.

What would one's reaction be, when one hears this? We would be shocked, horrified and wonder `How dare anyone do such things vis-a-vis a Supreme Court judge?' Not one eminent lawyer. His comment was that the judge should not have said this!

A two judge bench had delivered a judgment in that case just a few days prior to this. The entire judgment is instructive and should be read in full. I am just referring to para 147 of the judgment:

The number of similar litigants, as the parties in this group of cases, is on the increase. They derive their strength from abuse of the legal process. Counsel are available, if the litigant is willing to pay their fee. Their percentage is slightly higher at the lower levels of the judicial hierarchy, and almost non-existent at the level of the Supreme Court. One wonders, what is it, that a Judge should be made of, to deal with such litigants, who have nothing to lose. What is the level of merit, grit and composure required, to stand up to the pressures of today’s litigants? What is it, that is needed to bear the affront, scorn and ridicule hurled at officers presiding over Courts? Surely one would need superhumans to handle the emerging pressures on the judicial system. The resultant duress is grueling. One would hope for support for officers presiding over Courts, from the legal fraternity, as also, from the superior judiciary upto the highest level. Then and only then, will it be possible to maintain equilibrium, essential to deal with complicated disputations, which arise for determination all the time, irrespective of the level and the stature, of the Court concerned. And also, to deal with such litigants.

If Supreme Court judges are saying this, you can imagine the circumstances under which regulators work.

That brings me to the point of the recent investigation launched by the CBI regarding the license granted by SEBI to MCX-SX for running an exchange to trade in currency derivatives. They say it is a preliminary enquiry so there are no charges; they are merely investigating. When I asked them what they meant by `a PE against Bhave and Abraham', they said it is an unfortunate use of words. Unfortunate indeed, but by whom and for whom? They leak news all the time. The only time they have come on record is to say `Why all this fuss when there have been no arrests or raids!' Do we expect the citizens of a free country to protest only after they are raided or arrested? The second statement on record is `Thousands of crores of investor money have been swindled by MCX and it was incumbent on the agency (CBI) to look at the very procedure of registration of MCX' by SEBI. This is ill informed and if not ill informed then ill intentioned. The money was lost in NSEL and not in the entity licensed by SEBI. To date, CBI has not revealed whether they are investigating anyone who sanctioned NSEL, the exchange in which people actually lost those thousands of crores. What is our remedy against this arbitrary behavior of an investigating agency? What does one do when they publicly say that the PE is against Bhave and Abraham and privately tell me that it is an unfortunate use of words?

I believe there is no remedy because CBI is an autonomous investigator and no one can question them. In our effort to free CBI from the clutches of the political executive have we gone too far and forgotten the issue of accountability? At last count, CBI’s rate of successful conviction on launching prosecutions is less than 5 per cent. Who questions them about this? We cannot, in a democracy, have an institution exercising coercive powers of the State without any accountability. This question needs the attention of the Government as well as the judiciary.

Is investigation and successful punishment to wrongdoers such a difficult thing? At SEBI we found that investigation and successful conviction is not a rocket science. Robust common sense, and an unbiased evaluation of the material gathered, can help you reach the right conclusion. We need to proceed not because we want to fix someone but because the evidence is against the entity concerned. I do not believe that competence is an issue. People can be trained. It is usual to blame the courts: that they are unreasonably strict in terms of the standard of proof required. That was not our experience. We did not lose a single high profile case launched by SEBI in those years. The inevitable conclusion is that lack of will and objectivity, and not the lack of skill, is the problem.

With such low conviction rates, the general public has lost any faith that the moneyed and the powerful will ever be punished. They, therefore, rejoice when raids are conducted and arrests are made. The society has come to see raids and arrests as a proxy for convictions. In the process we do not realize that if the agency raids or arrests an innocent person, he or she will also be seen as a black sheep by all of us. A raid or an arrest is only an aid to gathering credible evidence and not an end in itself. The agency has to be accountable for the rationale and the timing of the raid or the arrest. Such questions are rarely asked. The NSEL scam came out in the open in August 2013. CBI raided NSEL in March 2014. Our anger against the scam is such that, to us, the raid was the right thing to happen. Nobody asked the question as to what was gained by raiding an entity 8 months after the scam. Was CBI of the belief that the entity would have preserved incriminating documents for full 8 months so that CBI would discover them in a raid?

The whole system is so vitiated that pendency is used as a potent weapon. As long as CBI is investigating something the concerned person better not speak up, otherwise he will face the consequences. He will be denied promotions. If it is an entity there will be no permissions or licenses for the entity. If the government finds some officers’ honesty or outspokenness too uncomfortable, why not start a CBI enquiry or an income tax investigation against him? The chances are that the officer will keep shut. Attempts have been made and they continue even today to harass my colleague Abraham. Fortunately, he has spoken up, refusing to be cowed down. The investigation can remain pending for months or years and no one is answerable for the delay. Procrastinating is not only the norm today but CBI seems to be taking it to a new level. One of the questions they have of us is `Why did we not keep license pending when an income tax raid had been conducted against a related entity'! They want to elevate procrastination from a level of the tool of the timid or the crooked, to being a virtue. They suspect criminality when you do not procrastinate!

There is a section in the Prevention of Corruption Act that is the cause of most of the mischief. The government's attention has been drawn to it. There was some attempt at amending this section. Let us hope that the newly constituted Parliament will take it up as a priority.

Such is our fascination with raids and the details of what was found that we do not see beyond the raid itself. About a decade ago, there was a raid on a senior officer of the central excise department. There were details about how much cash was found in the raid and how it was difficult for the raiding party even to count the cash. There was also description of the moveable and immoveable property discovered in the raid. The officer was suspended. This is not uncommon. We needed to go beyond that. Firms had obviously paid off this officer for getting illegitimate concessions. How about reviewing the major cases decided by the officer in (say) five prior years and getting the firms to pay up what was legitimately due to the public exchequer? I made this suggestion to who ever I could approach in the Government. (I was not in the Government at the time). There was no appetite for this. Why? Your guess is as good as mine. Should we give up? I have not. I still make this suggestion to who ever will hear me. You are my captive audience today, so I am making this point to you.

When you are in authority and people appreciate you for meeting them at the appointed time, when they thank you for returning their calls and when they compliment you for your honesty and for owning up responsibility for your decisions you might feel happy. But may I submit to you, that these things should be a cause for deep reflection. The first two tell you how feudal our mindset is and how free citizens of this country still expect to be treated with disdain by the authorities. They are surprised and thankful that normal courtesy is extended to them! The other two make us wonder if our expectation of ethical behavior is so low that what should be normal behaviour is treated as a great virtue. Should public servants not normally be honest and ready to own up responsibility?

Despite all the gloom around us there are many in the country that have not given up. The recent appointment of the SIT on black money is a case in point. There were some people who did not give up the idea of bringing the tax evaders to book. They used the PIL route to get the attention of the Supreme Court. After some dithering and a change of Government we have an SIT in place. Notwithstanding some pundits who have already declared that nothing worthwhile will come out of this, I have no doubt that a process has been set in motion that will solve at least a part of the problem.

To sum up, ladies and gentlemen, I have tried to make the following points. The state of ethical standards and moral behavior in our society is really down in the dumps. We are in bad shape but we do not have to be that way. There is no reason for us to give up. Reform and improvement is possible. The progress made by us in the area of capital market regulation and infrastructure shows that things can be changed dramatically. Reform is a long and painstaking process. We can make our contribution by standing up for the right causes.

This talk was based on my own experience and observations. The challenge was to talk about my own experience but stay focused on ideas and issues. If I had talked merely about issues and ideas it would have sounded like homilies. If I had talked excessively about my own experience I would have committed the mistake of self-projection. I have tried to achieve a balance. I leave it to you to decide if the balance was right. Thank you for your attention.

The Bombay police: A failure story

A few days ago, I woke up at 4 AM under an onslaught of the shouting of large beefy men instructing a crew, using megaphones, in a movie shoot in Film City. I thought to myself "this must violate some law".

For a while, I tried to be a free rider, thinking "Someone else will complain". But it was 4 AM and clearly nobody had complained. So I thought I should call the police and complain.

1. I used my (Airtel) cell phone and dialled "100". The cell phone said this was an imaginary number. I rotated the phone by 90 degrees but this also did not work.
2. I tried to dial "022-100" but this gave the same error.
3. Some websites said that 112 is an omnibus emergency number. I tried 112 and 022-112. Neither worked.
4. I broke into cold sweat thinking that in Bombay, I actually have no means to call the police in an emergency using my cell phone.
5. I hunted for other ways to reach the police. There is no rapid access mechanism using new technology: You cannot send in a complaint by email or IM. You can chat with an Amazon customer support person by IM or on email, but you can't do this with the Bombay police.
6. I started hunting for a phone number for the police on the web. There were large numbers of websites. It was not clear which to use.
7. If you google for "Mumbai police" and click on the first link -- http://www.mumbaipolice.org -- it takes you to a fashion store.
8. I hunted more on the web and got hold of a few numbers and started trying. The first two shooed me away.
9. The third one was willing to listen to me, but not in English. The only languages that he would speak were Hindi and Marathi. I happen to know some Hindi and some Marathi, but a large number of migrants to Bombay speak neither. It is not good to have government interface that does not grok the lingua franca of India.
10. He heard me and said "okay". He did not say "This is illegal and we will shut it down". 
11. He did not give me a ticket number. He made no attempt to take my phone number or email address. Nobody contacted me in the end to tell me what was the disposition of my complaint. I had no idea what happened. The noise blared on.

And I understood why free riding did not work. Nobody had complained because there is no mechanism through which anyone can complain.

There is no public good as fundamental as the criminal justice system, and we in India are simply not trying hard enough.

Gold smuggling explains the decline in the CAD?

I have an article on this subject in the Economic Times today.

The convenience of the citizen or the convenience of the government?

Road safety is a problem in India. The authorities are getting push back from the citizenry about the carnage on the roads. What is convenient for them is: to shut down roads.

Finding terrorists is difficult. Terrorists can use open wifi networks or trains. What is convenient for the authorities is to shut down open wifi networks or trains.

Achieving safety in public spaces late in the night is difficult. What is convenient for the authorities is to force all establishments to close down at 10 PM.

In similar fashion, I was disappointed to read Chanpreet Khurana in Mint write about how the Delhi Metro is trying to achieve safety of women: through gender segregation. This is profoundly wrong. Women must have complete flexibility to dress as they like, go where they like, and at any time they like. Anything less than that is a reduction of personal freedom of women. It is the job of the State to achieve extreme levels of safety while never interfering with the freedom of women. Gender segregation is a cop out. It will lead to a worsening of safety of women, by emphasising to the authorities that they actually don't have to figure out how to achieve a sound criminal justice system. The next time a woman gets attacked in a mixed-gender coach, she will be blamed for having been in the wrong place.

The rules of society must be designed to maximise the freedom of citizens. It is only in a police state that a policeman's job is easy. Decisions should not be taken which make life convenient for bureaucrats and politicians. Achieving a capable State is hard work! That is what politicians and bureaucrats must do, as opposed to finding easy ways to dodge the problem. We have to hold their feet in the fire, else they will readily wriggle out using these excuses which are bad for citizens, avoid the problem of building State capacity, and perpetuate an incompetent State. On a related note, see Faulty tradeoffs in security, on this blog.

It is very convenient for bureaucrats to ban things in Indian finance and cut Indian finance off from the world. This reduces their work. Why bother learning about credit default swaps when you can just ban them? Blocking a capable financial system is easier than restructuring regulatory organisations, enacting new laws, recruiting high quality staff, and setting up sound business processes. The strategy of blocking the emergence of a capable Indian financial system is self-serving and convenient; it avoids the difficult work of actually constructing capable financial regulators. As Percy Mistry says, in Indian finance, instead of regulators adapting themselves to the needs of the financial system, we have the financial system distorting itself to fit the needs of the regulators. In an accountable democracy, it must be the State that constantly adapts to achieve freedom for each citizen.

There is a principal-agent problem between citizens and State. The principal wants the agent to serve their goals, i.e. to produce public goods at the lowest possible cost, and to not abuse power by meddling in the lives of citizens. The agent wants to be lazy and inefficient, to steal, and to abuse power. We should be cautious: we should not hear the views of the agent on what the principal should do, and we should not accept solutions that are convenient for the agent such as gender-segregated coaches in Delhi metro.

Autonomy for the CBI: Desirable but non-trivial

I wrote an article in the Economic Times today about autonomy for bodies such as the CBI. 

There are five areas where there is a role for autonomy. But this is a difficult puzzle in public administration and we should be wary of simplistic solutions. We know a bit about how to do autonomy correctly in three areas (monetary policy, financial regulation, infrastructure regulation). Comparable cogitation is required for the other two problems (criminal investigation, tax administration).

What ails the police?

by Pradnya Saravade and Renuka Sane.

The recent incidents of rape in Delhi have led to public outrage and calls for resignation of the Delhi Police Commissioner. The problems in police functioning and the unmet expectations of the people are not restricted to Delhi alone. There is a sense of distrust and dissatisfaction with police organisation and operations across the country. In a survey by Transparency International and the Centre for Media Studies, the police topped the list on both perception of corruption and actual experience with corruption. The challenge of police reforms looms large, and an inadequate response may prove to be very costly to not just economic growth, but overall social stability of the country.


It is important to think of three aspects of police operations:

• Manpower
  
• Competence
  
• Accountability

Manpower

The number of policemen per 100,000 people in India in 2011 was 137. This compares to about 217 in Australia, 393 in Hong Kong, 370 in Malaysia, 195 in South Korea, 307 in the UK and 256 in the USA.

The overall average masks remarkable variation within states in India. The first column (1) in the Table below on the four most populous states from the four regions in India sourced from the National Crime Records Bureau, shows that Bihar and Uttar Pradesh have only 65 and 94 policemen per 100,000 population, a very low number even by Indian standards. These statistics reflect a very low presence of police personnel on the streets and consequently a high work-load on those on duty.

	(1)	(2)
State	Per 100,000 population (2011)	Police expenditure (% of total expenditure) (2012-13)
Uttar Pradesh	94	5.2
Bihar	65	4.5
Maharashtra	163	4.8
Andhra Pradesh	106	3.1

Competence

The State may increase recruitment into the police force over the next few years. For policing to be effective, however, the policemen need to be competent to serve the population on local crimes: from murder and rape to kidnapping and burglary, handling mass agitations of an aggrieved public against the State in a sensitive manner, and also getting into action during terrorist strikes utilising a completely different skill set. The increasing demands on all of the above require that the police undergo continuous training and upgradation of skills, and be well equipped with the latest technology and weaponry. It is, then, not just a matter of hiring more policemen but also a matter of devoting top management time to organising the police force well, and ensuring adequate inputs of equipment and training.

The second column (2) in the Table above, sourced from States of India, CMIE, shows that the expenditure on police in the four states is about 3-5% of total expenditure. A large part of this expenditure is on the maintenance of the existing police machinery. There is little scope for the police to invest in training and upgradation of skills. This expenditure on policing is not enough to even cater to the basic needs of staff and equipment.

Accountability

The efficiency with which spending is converted into public goods outcomes depends on accountability mechanisms. Ultimately, the test of the effectiveness of the increase in police strength and expenditures is the resolution of crime, and satisfaction of the public on the service provided by the police machinery. There has been dissatisfaction on the evaluation system of police organisations, and a Supreme Court judgement required the setting up of state security commissions in every state. One of the mandates of these commissions is to develop a framework that measures performance through crime victimisation and police perception surveys. As yet, no state has done this. There was one randomised experiment which included a crime victimisation survey in Rajasthan. However, it has not been institutionalised as part of police policy to be followed up at regular intervals. Unless a well conceived survey based feedback loop is established, and becomes a periodic feature of the policy on policing, accountability on the desired outcomes cannot really be expected.

Conclusion

The personal safety of citizens is a public good. It satisfies the two tests for a public good: it is non-rival (your consumption of safety does not diminish my safety) and non-excludable (we cannot exclude a new born child from the blanket of safety).

The desire for safety is the most basic human impulse. To some extent, sectarian impulses amongst common people in India may be driven by the unmet requirement for safety in individuals who then resort to embracing kith and kin in the quest for safety. Without safety, the project of building prosperity through a market economy will stall, as the operations of complex firms break down when faced with criminality and the threat of expropriation dulls the incentive to work.

The republic needs to do more in terms of building a world class criminal justice system, and achieving safety for all. This requires improvements in laws, courts and police. For the police, this requires getting more policemen, transforming their training, equipment and management, and establishing accountability mechanisms.

Law and order: How to go from outrage to action

There is fresh rage on the bad state of law and order in India today. That rage is entirely appropriate.

My father was born in 1926 and experienced British rule. One of the high points of his life was participation in the freedom movement. He used to say to me with great regret that under British rule, the Shiv Sena would have never arisen. What has happened in India is a disgrace.

The interesting and important question is: How can the problems be solved?

Moral outrage does not lend itself to good policy analysis. As with the problem of corruption, the problem of law and order requires sophisticated thinking. Just as the young people who got enamoured by Baba Ramdev and Baba Hazare got nothing done in terms of combating corruption, we should worry about what comes next on law and order. Anger and outrage, coupled with low knowledge of political science and public economics, is a sure path to poor policy analysis. What matters is shifting from anger to analysis to action.

As an example, if laws are modified to prescribe draconian penalties for rape, then rapists are more likely to kill the victim. What is required is better quality implementation of the existing law.

What would it take to make the police and courts work better? The three ingredients that are required are incentives for politicians, resources and feedback loops.

Incentives for politicans

The first issue is incentives for politicians. Politicians will deliver law and order if they think that this is what will get them re-elected. From Indira Gandhi's time onwards, politicians in India have felt that the way to win elections was to focus on welfare programs for the poor. As long as this is the case, the narrative that will dominate the Indian State is that of poverty, inequality, and welfare programs.

Economists distinguish between public goods and private goods. Public goods are defined to be those that are `non-rival' (your consumption of safety does not reduce my consumption of safety) and `non-excludable' (it is impossible to exclude a new born child from the environment of safety). The legitimate purpose of the State is to pursue public goods. All citizens gain from public goods, and all voters should respond to these benefits. The first and most important public good is safety, which requires building the army, the police and the courts.

The Indian State has, instead, gone off on the adventure of building welfare programs: of government giving private goods to marginal voters. The first priority of the Indian State is the themes of poverty, inequality and welfare programs. Politicians need to learn that this hurts. Sheila Dixit should realise that her top priority in Delhi is law and order.

There are undoubtedly problems in the leadership and management structure of the police. I believe that once politicians want law and order, this will drive them to recruit the leadership that is required, and undertake structural reforms, so as to get results. As an example, look at how the politicians broke with PWD and setup NHAI, or setup Delhi Metro. The question that matters is : Do politicians want law and order? From the 1960s onwards, the minds of politicians have been addled by welfare programs.

If Rs.X is spent as a gift on a few marginal voters, it makes a certain difference to winning elections. If that same money is spent on public goods -- e.g. better safety for all -- it should make a bigger difference to winning elections since more voters gain. The question is: Do politicans see this and act in response?

Resources

The second issue is resources. India needs much more staffing in the police and the courts. This includes both technical staff (e.g. constables and judges) and support staff (e.g. clerical staff, operators of computer systems, etc).

Courts and police stations need to be high quality workplaces with air conditioning, computer systems, modern office equipment, canteens, web interfaces to the citizenry, lighting, toilets, and such like.

Policemen need to live in high quality housing. If policemen live in high quality housing and work in high quality offices, they will be more civilised both in terms of the quality of intake and in terms of how their behaviour evolves on the job. This will cost a lot of money. The State in India has very little money. To improve the police and courts will require cutting back on welfare programs.

As Robert Kaplan says, underdevelopment is where the police are more dangerous than the criminals. One element of this is the biases in recruitment. As an example, the police in Bombay tends to be male Maharashtraian and relatively low skill. This needs to evolve into a more sophisticated workforce, with gender, ethnic and religious diversity that reflects the cosmopolitan structure of the populace.

At present, in India, spending on police and courts (which are core public goods) is classified as `non-plan expenditure' and is treated as a bad thing. Spending on private goods like welfare programs is classified as `plan expenditure' and grows lavishly year after year. In the UPA period, plan expenditure has gone up by four times in 10 years. These priorities need to be reversed.

The other critical resource, other than money, is top management time. The simple question that I would ask Sheila Dixit or Manmohan Singh is: What fraction of your time do you devote to public goods? My fear is that the bulk of their time is spent worrying about welfare programs. When the top management is not focused on law and order, safety will degrade.

The lack of safety is a regressive tax: it hits the poor more than the rich. The rich are able to insulate themselves at a lower cost. When a policeman faces me on the street, he immediately speaks to me in a certain way once he sees that I come from the elite. Poor people are mistreated by both criminals and the police. Through this, the number of votes that should be affected by improved law and order is large. The people who care deeply about the poor, and would like to focus the Indian State upon problems of inequality and poverty, should ponder the consequences of what they have wrought.

Feedback loops

In order to think about law and order, we need measurement. I used to think that the murder rate is high quality data. Over recent years, I have come to believe that in many parts of India, not all murder is reported to the police. In this case, we are at ground zero about the state of crime: we know nothing about how much crime is taking place out there.

What you measure is what you can manage. I had recently written a blog post about health, and the same issues apply here. Our first priority should be to setup crime victimisation surveys [link].

The most important outcome that I think matters is a question asked in a household survey of parents: Are you comfortable when your teenage daughter is out alone at 11 PM? That's it. That's the end goal. Civilisation is where parents are comfortable when their teenage daughters are out alone at 11 PM.

Once the CPI is measured, and measured well, RBI can be held accountable for delivering low and stable inflation. In similar fashion, the Bombay police can be held accountable once we get a graph updated every month about the crime rate in Bombay, supplemented by quarterly data from crime victimisation surveys. This would generate feedback loops whereby we can judge whether Sheila Dixit has improved law and order in Delhi on her watch.

When Sheila Dixit gets anxious about the lack of progress on publicly visible statistics about the state of law and order in Delhi, she will have the incentives to recruit high quality leadership for the Delhi police, and to resource them adequately, to get things done.

Why are these good things not getting done?

This is the hardest question. I have three opinions about what has been going wrong.

The first lies in the incentives of politicans. Why do politicians pursue private goods for a few when they can instead spend money on doing public goods that benefit all? Why does democracy not push Indian politicans towards the centre? I think one element of the answer lies in first-past-the-post elections.

Today in India, winning elections does not require pleasing all voters; it only requires a base of 30% of the voters. This gives politicans a greater incentive to dole out goodies for the 30% and not work on public goods that please all voters. This reduces the prioritisation for public goods.

The second issue is that of urban governance. The defining challenge for India today is to make the cities work. But our constitutional structure is confused on the location of cities versus states. The feedback loop from the voters in Bombay do not drive improvements in governance in Bombay.
Delhi is unique in this respect in that it's the first city of India where the basic structure is correct. Sheila Dixit is the Mayor of Delhi. She is held accountable for making voters in Delhi happy. Voters in Delhi bother to vote in the Delhi elections. Hence, I am far more optimistic about the future of Delhi than I am with Bombay.

The third issue lies in the intelligensia. Western NGOs, aid agencies and the World Bank are focused on inequality, poverty and welfare programs. This generates incentives for individuals to focus on inequality, poverty and welfare programs, owing to the funding stream and career paths associated with western NGOs, aid agencies and the World Bank. These large funding sources and career paths have generated a distorted perspective in the Indian intelligensia. We need more minds in India who think in terms of first principles economics and political science, without the distortions that come from the worldview of development economics.

We blame politicians in India for being focused on welfare programs. But to some extent, they are influenced by the intelligensia. It is the job of the intelligensia to hold their feet in the fire, and hold politicians accountable for public goods. The politicians were too happy when, from the 1960s, the intellecturals proposed welfare programs, poverty action, socialism, etc.

Acknowledgments

I am grateful to Pradnya and Nandu Saravade who helped me think about all this.