Good policing a must for economic growth

Rohit Choudhry

CRIMINAL  activity can drag the entire economy by discouraging domestic and foreign direct investments, reducing the competitiveness of business organisations, and reallocating resources. It creates uncertainty and inefficiency in the business environment. Thus, law and order is considered an important function for the state to perform and is placed among minimal functions of the state in addressing market failure. In today's globalised world, the increasing flows of economic investment and business traffic between the nations bring into focus the relationship between investment confidence and security and crime, the latter being important in terms of both official crime rates and the fear of crime. Recently, the Government of South Africa, in its green paper on policing acknowledged that high levels of violent crime in South Africa are having a significant negative impact on the country's economy. Rise of violent crimes was costing the country dearly due to loss of productivity and foreign investment.

Higher-than-average macroeconomic uncertainty, witnessed in India due to the global financial crisis of 2007-2009, and the policy paralysis in the aftermath of several mega corruption cases, from 2009 to 2014, has increased. This has  enhanced the adverse impact of crime on growth, making the effect of the crime-uncertainty interaction highly significant. In particular, studies indicate that higher-than-average macroeconomic uncertainty enhances the adverse impact of crime on growth implying that a 10 per cent increase in the crime rate can reduce annual per-capita GDP growth by between 0.49 and 0.62 per cent.

Policy implications for India
In the Indian context it can be concluded that 25 per cent rise in the number of crimes from 21,21,345 in 2009 to 26, 47,722 in 2013 would have further considerably dampened the economic growth. The empirical results show that crime has had a significant and negative effect on economic performance of a few Indian states. As crime rates, especially the homicide rates, are higher in most of the northern and north-eastern states, compared to their counterpart in the western and southern states, this may explain, to some extent, better economic growth and investment climate in states like Gujarat, Maharashtra, Kerala and Tamil Nadu. The states prone to the problem of insurgency are most affected due to violent crimes which had a significant impact on their economic growth.

This result has important policy implications for India. Besides boosting the investor confidence, the programmes that directly or indirectly prevent crime can also generate substantial economic benefits by reducing crime-related costs incurred by victims (medical care costs, lost earnings, and property loss/damage), communities, and the criminal justice system which includes state, and central government funds spent on police protection, legal and adjudication services, and correction programmes. Further, there are the opportunity costs associated with the criminal's choice to engage in illegal rather than legal and productive activities and the indirect losses suffered by the victims, including pain and suffering, decreased quality of life, and psychological distress.

Invest to improve policing
In the US alone, more than 23 million criminal offences were committed in 2007, resulting in approximately $15 billion in economic losses to the victims and $179 billion in government expenditures on police protection, judicial and legal activities, and corrections. However, the western world has been consistent in its efforts to raise the policing standards. In America, the fall  in crime rate began around 1991; in Britain it began around 1995; in France, property related crimes rose until 2001 but it has fallen by a third since. While the sociological changes like the young becoming increasingly sober and well behaved  and repopulating the inner cities, economic and other factors like the end of the crack-cocaine epidemic in the 1990s are widely credited with reducing crime. Better policing, which includes both crime prevention and detection measures, have also contributed significantly to this phenomenon. Combination of community policing and intensive targeting of crime "hotspots" with the help of "CompStat'", which is a data-driven model of policing, has transformed the way streets are protected. Technology has improved the effectiveness of detective work too. The advent of mobile-phone call analysis and surveillance, Internet data connectivity, online banking and surveillance cameras have all increased the chances of tracking the digital foot prints and  criminals getting caught and punished.

The crime and economy correlation would suggest that adequate allocation in budgets for improving the policing could only be considered as prudent and productive spending by the governments. In the US, COPS programme had a strong federal support and the support of the US President, funds to the tune of $9 billion were provided by the federal government to implement the community policing schemes all over the country.

Rule of law and economic growth
The rule of law indicator measures the extent to which individuals and firms have confidence in and abide by the rules of society; in particular, it measures the functioning and independence of the judiciary, including the police, the protection of property rights, the quality of contract enforcement, as well as the likelihood of crime and violence. Judicial and the police independence are strongly linked to growth as it promotes a stable investment environment. Also, according to one study, the difference between developing economies that observe rule of law and economies that do not, is a more than 3 per cent growth in GDP. Realising the need for an environment of rule of law as an essentiality for economic growth, the Chinese government also has implemented a comprehensive legal system to shift from a system of "rule by man" to "rule by law". The Chinese government stresses on strong terms that police administration and operation must be guided by legislative provisions and has passed numerous laws and regulations in relation to police administration and operation, ushering in a new era of police development in China.

Political economy of police reforms
Northern Ireland and South Africa serve as useful examples of successful police reforms in the recent years. Both countries transformed local policing systems into more trusted democratic forces, representative of the demographics of each country, while continuing to respect the human rights of citizens. The reforms have been successful in the two countries as they possessed four important prerequisites; a political will, shared values of governance, administrative capacity, and a vibrant civil society. Unfortunately, in India, owing to lack of political will and adequate push from the civil society, efforts have been targeted at selected aspects of policing rather than an overall systemic reform. As a result, the police forces remain highly politicised which limits their operational autonomy and ability to uphold the rule of law. Given the constitutional arrangement, of police being the 'state list' matter, has restricted even the implementation of clearly expressed Supreme Court directives on police reforms in 34 different state police forces in the country.

India experienced, on an average, a growth rate of about 5 per cent per annum in the per capita income since 1991 as a result of economic liberalisation. However, while there were institutional reforms on the economic front and the economic controls were removed as a process of liberalisation, the criminal justice system in the country remained untouched. Although over the past 40 years there have been several reform committees, commissions and reports, the basic criminal laws; the Indian Penal Code (IPC), the Criminal Procedure Code and the Indian Evidence Act, that define criminal behaviour, prescribe police procedures and guide evidence presentation in the courts, have remained the same, barring few minor amendments from time to time. The archaic Indian Police Act of 1861, tailored for a colonial rule, still governs the constitution and organisation of police forces in all the Indian states.
Per capita availability of police and judiciary is low in the country; police per 1,00,000 people in India is 130 as against the minimum UN norm of 220, the ratio dips to around 70 in states like Uttar Pradesh and Bihar with serious law and order issues. There are only 13 judges per million people in India and the total number of pending cases in the High Court and subordinate courts was around 32 million as on December 31, 2010. The police and judiciary system is not fully modernised. In view of the rise in crime in India, the Ministry of Home Affairs, Government of India, recently issued an advisory to all states to fill the 5.5 lakh vacancies in police forces across the country within a year.

In accordance with the Internationally Accepted Principles of Policing in a Democratic State, signed in Bonn, on  April 25, 1996, police must conduct their activities with respect for dignity and basic human rights, discharge their duties in a non-discriminatory manner, be more accountable to the public and uphold the rule of law in their functioning. They must adhere to a professional code of conduct, be sensitive to the needs of citizens and empower them while providing them with world-class services. The market today seeks good policing and the rule of law to flourish, in order to attract capital and foster growth, the onus is on the states to respond.

The writer is Addl DG in the Punjab Police