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We thrive on finding loopholes
December, 28th 2006

What is our national trait? `Defection,' declares V. Raghunathan in Games Indians Play, from Penguin Portfolio (www.penguinbooksindia.com). Another shared trait is `looking for loopholes in practically every law or system,' he rues. "Be it our company law or criminal law, we thrive on finding loopholes in these laws." If you find the charge difficult to digest, the author offers an example. "If the government announces a higher interest income on fixed deposits for senior citizens, we would find hundreds of names, including those of family servants, their offspring and cousins, to make use of that provision." Finding loopholes around income tax or various other taxes is too well known to merit enumeration, he sighs.

"The true role of lawyers is to pursue genuine prosecution, defence or advice under the ambit of the available legal provisions and not to get the crooks off the hook using legal loopholes in those provisions." Will that happen through self-regulation? The book begins with N. R. Narayana Murthy's foreword, which rhetorically calls upon Indians to `recognise the challenges we face as a society, and address them with courage and a commitment towards reform.' Then, you read in the preface about how the author's interest in `why are we (Indians) the way we are' originated in Milan.

Uniquely Indian

Chapter 1 lays down three prerequisites that wannabe readers must acknowledge: "One, that there is indeed something wrong with us; two, that there are aspects in our traits that do not seem to sit well in a modern civilised society; and three, that merely because modern and civilised societies, whether occidental or oriental, also suffer from many ills, it does not make our own ills any more acceptable."

On these, you may not agree, yet the book is worth thumbing through for the liberal traces of economics among the pages. For instance, a chapter on `prisoner's dilemma' (PD) discusses an everyday application: "A small exporter in India manages to bag a one-time export order based on a promising sample sent by him earlier." What are the odds that either the Indian or the foreign trader will default on his obligation, asks Raghunathan? He wagers that the Indian exporter would default, by supplying spurious consignment.

"A similar non-cooperative behaviour indicative of misplaced understanding of self-interest is often seen in our joint ventures (JVs)," he adds. The reference is to the usual practice of taking a 51 per cent stake, with the Indian partner bringing his `razor-sharp mind' to `bend, twist and rattle the terms of the JV agreement so as to outsmart the partner.

A chapter titled `Can competition lead to cooperation?' explains how in PD you can never resolve the problem by approaching it from outside, `that is, from the other's viewpoint first.' Instead, look inside, advises Raghunathan, because then, `no matter how selfish you are, you will find the correct resolution to the dilemma.'

The author finds the roots of `free riding' in `the enormous size of our bureaucracy and the concomitant anonymity.' A smaller, hierarchical organisation probably reduces the extent of free riding in a system, he postulates. In a vast organisation, the fear of being caught is low, and `as the probability of discovery goes down and greed increases constantly, the tendency to free ride graduates to corruption.'

Readably rambling.

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