Those were its proselytizing days, in the Sixties. The World Bank used to display before bemused governments of poor countries resorting to price controls a sparkling pearl of wisdom: do not deride the blackmarketeer; instead, honour him. The price he charges reflects social reality; it is because the supply of a commodity is awfully short in relation to its demand that the blackmarketeer sets the price high; this encourages additional output and thereby closes the demand-supply gap. On the other hand, when the government, by imposing price controls, puts the squeeze on profit margins it deters further output and additional supply. It is therefore the blackmarketeer who is the purveyor of genuine social welfare. The market is king, the blackmarketeer scrupulously obeys the dictates of the market.
The officially sponsored and officially sustained Indian Institutes of Management have been major promoters of the free-market doctrine in our country. Following globalization, their prestige and influence have grown exponentially. What they teach is in accordance with the wavelength of the Washington consensus, and the Washington consensus shapes the destiny of the world. The IIM graduates are naturally in great demand. Spokesmen of the IIMs have now made it a habit. On the eve of the academic session each year, their spokesmen do a press-briefing to inform countrymen how successful their boys and girls have been in today’s intensely competitive market; even before they obtain their formal certificates of graduation, they are snapped up by the corporate sector, and some of them by major multinational companies. And, what do you know, their starting emoluments are a minimum of six or eight or ten or twelve lakh rupees per annum; those picked by the global companies, at least some of them, earn as much as one million dollars annually. Their Newfoundland, their America.
The majesty of the market is the ruling idea. It engrosses society. Admission to any of the six IIMs is the dream of every boy and girl in the country, at least every boy and girl from aspiring families. All told, IIMs offer only 1,500 seats each year, while the number of applications easily exceeds 150,000. A common admission test is held to select the top one per cent of the candidates and weed out the rest. Competition, fearsome competition, is the name of the game. Those who fail to enter the portals of the IIMs are obviously a frustrated lot. To console them, ersatz management schools have sprouted all over the country offering crash courses of doubtful value at fancy prices. There is no dearth of takers for these courses too. Water finds its own level; backwater also does.
Let us however return to the problems encountered by seekers of admission to any of the IIMs. Market signals are not for spurning. An IIM graduate, evidence says, fetches the highest price in the job market, so much so that even many Indian Institute of Technology graduates, after receiving their B.Tech or M.Tech degrees, gladly spend another two years to get the imprimatur of an IIM graduation.
The demand for admission into the IIMs is high. The demand for a modality which either ensures or heightens the chance of admission to an IIM is therefore equally high. Demand creates its own supply. In the circumstances, some enterprising people assume the responsibility to arrange for such a modality, they organize a racket to leak the papers for the CAT organized by the IIMs, and charge for their service what the market rate will be. According to gossip, the market price quoted per one leaked paper is as high as four or five lakh rupees.
Everything was hunky-dory till recently. Suddenly, a kink has developed. A number of the smart entrepreneurs who were at work leaking the CAT papers have been caught at one or two centres this year. The discomfited Union minister for human resource development has taken the initiative to cancel the test taken at each and every centre. This has caused chagrin among candidates who appeared at the centres where the leak did not take place. As of now, confusion abounds.
What is still difficult to understand is the feigned sense of outrage in genteel society at these goings-on. If one embraces the market principle, one must go the whole hog, no scruples should be allowed to encumber the rake’s progress. The racketeers who arranged for the CAT leak have followed the teaching of the World Bank mentioned earlier to the minutest detail. The bank hailed the blackmarketeer because the blackmarketeer’s acts and activities, according to its judgment, mirrored social reality. But why stop with the blackmarketeer' Why not include others as well in the pantheon of market-loving gods and goddesses' The law of the land may suggest that the persons who engaged in the business of leaking CAT papers are guilty of criminality. The law of the market however does not say so. The racketeers involved were merely responding to a challenge posed by the market. Admission to an IIM is as good as admission to El Dorado. A leaked CAT paper facilitates admission to the IIM. There is therefore a fantastically high demand for a leaked paper in the market. The racketeers took the initiative to arrange for the supply required to satiate the demand. Have a heart, the price they charged — four or five lakh or rupees or whatever — was market determined and hence sacrosanct.
It is a moot issue. We cannot embrace globalization and the doctrine of the free market, and yet be choosy. Having scrapped price controls and done away with other restrictions on the market, it is no longer in our domain to be squeamish. The legal system the nation has inherited is also a moral system. That structure of morality is in conflict with the signalling system laid down by the market forces. Let us be blunt. The issue is not just the narrow specific happenstance of the “scandal” of the CAT leak, it really is a tussle between the old morality and the new ethos.
To consider another instance. The government at the Centre is not, apparently, the least concerned about development. Apart from Hindutva, it has its focus on China and Pakistan. It would like to spend all the money it can collect on defence, including nuclear defence, and security. In order to augment its own resources for such purposes, it has been advised to flout constitutional norms and conventions and deny the state governments their fiscal dues. Propelled by the same motive, the Centre prints money at zero cost and charges fantastically high interest when lending the money to the states. The states are in consequence in dire trouble. The government in New Delhi is a distant entity. The state governments, in contrast, are next door to the people who howl for food and apparel and literacy and shelter and jobs.
The pressure is nearly unbearable on the state administrations: they must either fulfil the people’s aspirations or death to them. Frightened out of their wits, they run hither and thither, in search of funds which could be put to use to enlarge health and education facilities and create income and employment opportunities in industry, agriculture and infrastructure. Advice flows freely to the states’ politicians and administrators: do not stand on ceremony, it is a hard competitive world, pursue the potential investors and other money-givers wherever they foregather. In case you find a group of potential investors congregating at a golf course on an indolent afternoon, please agree to act as their caddies for the afternoon; as you cart around their sporting paraphernalia, do tell them how investment-worthy your environs are and superior to other environs, they may take pity and offer you a few crumbs.
But suppose these would-be investors, mostly foreigners, love to spend most hours of their weekend in a massage parlour, which no doubt has a more sophisticated French sobriquet, maison this or maison that. Would you also invade this parlour with your brochures and videotapes, even if such leisure activities as the parlour specializes in are illegal in the country' This can pose a problem. It can actually be a moral problem too. But whatever it is, should you fall prey to it, or obey the law of the market, since otherwise you will be unable to survive' No question. The advice will be: be a good boy, and fall in; you must not tinker with the market; rather, change your law.