Brokerage, Development and the ‘New Bihar’: Reflections from the field

By Shahid Perwez

‘Development’ in Bihar is a new phenomenon. Since 2005, it has had the fastest economic growth rate in India and is applauded for a dramatic turnaround of its poor governance. In November 2005, Nitish Kumar took over as Chief Minister promising to leave no stone unturned in making ‘good governance’ a reality. The state he took over was marred by a sluggish economy, severe malnutrition and an unusually high maternal and infant mortality rate, inaccessible hospitals due to lack of functional roads, massive unemployment leading to outmigration of youths, and unusually high crime rate including in the form of frequent kidnappings for ransom.

Cover image of The New Bihar depicting a young girl riding a bicycle distributed under a cash conditional programme to attend school

Cover image of The New Bihar depicting a young girl riding bicycle to attend school, distributed under a cash conditional programme

He launched major initiatives in four crucial areas: infrastructure; law and order; health and education; and social policy. In order to deliver these, he had to energise a paralysed bureaucracy, inherited from the previous government (to the extent that his critics alleged that he had ‘bureaucratised’ the development process in Bihar instead of decentralising it and in the process has fuelled the levels of corruption and brokering activities). In a nutshell, this is the story captured by a book called “The New Bihar: Rekindling Government and Development”, recently launched by the London School of Economics and Political Science (LSE). The book, with contributions from eminent economists like Amartya Sen, has been conceived and presented by its advocates as a new treatise on the ‘Bihar model of development’ and governance.

A key feature of this model has been the introduction of a range of cash conditional transfer programmes funded by the central and state government and international donors, including one depicted in the cover image of the book, The New Bihar. These have been conceived as a means of re-packaging India’s plethora of redistributive policy packages that were not in fact reaching their intended poor beneficiaries. Already aware of the fact that these new policies appeared to be giving rise to a new category of intermediaries in the development process – ‘brokers’, colloquially called ‘dalals’ – who were operating between the state and beneficiaries to implement these new policies, I conducted ethnographic fieldwork in Araria district in north Bihar between November 2013 and March 2014.

The story of Mansoor, an entreprenuer broker, helps illustrate what is happening:

Youth sitting idle at the village tea stall

Youth sitting idle at the village tea stall

After completing his university degree at the capital city, Patna, Mansoor returned home to his village, as he could not find a job in the city. Back in the village, he had no work to do. While sitting idle at the village tea stall, one day, one of his relatives approached him and inquired about a recently introduced government housing scheme [Indira Awas Yojna – Indira Housing Scheme] meant for the rural poor, and handed him an application form to fill in (as his relative was an illiterate). Mansoor had no idea of the scheme then, but he nonetheless filled-in the application as a gesture of kinship and returned it back to him.

A few months later, his relative came back to inform him that his application had been approved, and that he received INR 50000 in cash from the government for house building. His relative gave him INR 5000 in cash as payback for his ‘help’. As much as he was thrilled at this unsolicited income, Mansoor wasted no time in ‘reaching out’ to prospective ‘beneficiaries’ in the village in an attempt to earn more money by facilitating their application. To do this, he first developed a close contact with the local Mukhiya (the village head, who is democratically elected under the Panchayati Raj system of local self governance in India), who had already established ‘unofficial’ ties with the concerned government official, a bureaucrat, at the block and district level – the ultimate authority for clearing/approving such applications.[1] He would share a part of his ‘commission’ (which is taken part upfront and rest after the completion of job) with Mukhiya, who would then share it with other officials.

The 'new' road to village

The ‘new’ road to village

His modus operandi involved actively preparing a list of prospective beneficiaries, with the help of Mukhiya who has access to such data, for various other government cash conditional schemes. Next, he would meet these beneficiaries in their homes, make them realise their eligibility for such schemes (if they already did not know), and persuade them to apply through him, in lieu of certain commission for his work that he refers as PC (the acronym of PC remain ambiguous to me as nobody in the area could clarify it – it could therefore mean either ‘private commission’ or ‘per cent’).

In a short span of few years, Mansoor became wealthy which was visible from a palatial house that he built and the number of vehicles that he owns, thus, soon came be regarded a successful ‘dalal’ (broker). Looking at his prosperity, his friends and acquaintances came to him in flocks, and joined hands with him in this lucrative enterprise.

Such flows of finance in the form of aid money have therefore opened newer and novel ways of earning income for a dormant class of unemployed but largely educated youths. They are becoming ubiquitous, and are found operating outside the administrative offices, banks, post offices, hospitals, drug stores, and pathological lab centres at the district level, and within the institutions of Panchayati Raj at the village level.

These brokers are not entirely new breed of intermediaries in Bihar. In the context of a paradigm shift to development assistance relying on cash conditional transfer schemes, the rise of ‘dalals’ is increasingly seen as replacing erstwhile feudal patronage of preferentialism and rent-seeking. Until recently, rural Bihar continued to be characterised as dependent on feudal patronage, in which village-based elite brokers (often from high castes) would mediate between the common villagers and the state in matters of employment, land, conflict, law and order and so on. During colonial rule, taxes from peasants in Bihar were collected through these intermediaries, who often used to act as landlords in the village. A history of Bihar reveals that in the absence of the state or markets, this ensured the continuity of the structures of domination, dependency, and subservience for a village community.

The New Bihar, however, has a strikingly missing feature, i.e., a critical ‘gap’ in public service delivery that these brokers are increasingly filling up. When I first began to inquire the extent of brokering activities, I was unequivocally told that there is not a single sphere of social life where there are no brokers, indicating a general public resentment against their increasing presence in social life. This initial enquiry was instantly followed by a hypothetical question: what would happen if these brokers were to disappear one day? The overwhelming response suggested that the flow of funds would come to standstill since neither files nor bureaucrats would move from the desk. It then became clear that it was not the brokers’ presence, which people resented, but the unregulated and exaggerated fees or commissions they charged. In the absence of regulation, these brokers are free to charge exorbitantly, and people are rarely able to bargain or look for alternatives, as it is generally the brokers who approach the beneficiaries (in their enthusiasm to earn more money) who often are either acquaintances or close relatives in the village. In this situation, those who can afford to pay broker’s upfront fees rarely complain. However, those who can pay up are not usually the intended beneficiaries of government programming but become such beneficiaries through the claims process by involving a broker. In fact, such people narrated me their personal experience of how hiring the service of these brokers freed them from a tortuous experience of bureaucratic harassments, so emphasising the necessity of these brokers in dealing with government. It is this mode of public service delivery, established on a nexus between bureaucracy and brokerage, which people who are not the intended beneficiaries often referred to as the ‘coming of development’ in the area. As a result, brokerage is seen to be fuelling a redistribution of resources and government programmes that is – in cahoots with bureaucratic corruption – producing ‘development of a sort’ effect on the ground. So, a short answer to who has benefitted from the government’s newfound largesse would be; other than brokers themselves, those who are not entitled for government programmes but have access to funds to pay up broker’s upfront fees.

So what is wrong with brokerage? Well, in such a development framework as outlined above, those who cannot afford to pay broker’s upfront fees most strongly resent against brokers especially those situated in the bottom of social hierarchy. Brokerage is clearly an obstacle in accessing public services for people classified as ‘below poverty line’ (BPL). Therefore, it is the people belonging to this extremely poor category, who are overwhelmingly frustrated by the current development process, as the benefits of development do not reach them at all. Indeed, it seems that this is a key reason why Nitish Kumar – the architect of development – and his political party, Janta Dal (United), faced a resounding defeat in the recent national elections, which won only 2 parliamentary seats out of 40, leading him to resign as Chief Minisiter of Bihar.

What is further distinct and peculiar about the current form of brokerage in Bihar is that it is linked and viewed alongside (bureaucratic) ‘corruption’, by the public and the government alike. While most people in the area view brokering work as a corrupt activity, one of my respondents makes an analytical distinction between the two in the following manner:

“Corruption [in bureaucracy] occurs when a government official takes ‘bribe’ for the work he is obligated to do…but when a broker asks for ‘commission’, he promises to do something that is not his responsibility. Where is corruption in his this? He is only charging his labour.”

But this is not the view that government in Bihar can afford to entertain because this would then require taking stringent actions against the bureaucracy, which creates, promotes and sustains brokers in the first instance. The idea of cornering bureaucracy in order to account for the rise of brokers goes against the very logic of governmentality in Bihar, in which corrupt bureaucracy plays a pivotal role in mobilising both the masses and the brokers for a public service delivery. As much as such ideas have deep colonial imprints, they continue to be put in practice in postcolonial Bihar. Perhaps, for this very reason, the figure of a broker in Bihar has been increasingly demonised and criminalised. This is reflected in Bihar government’s recent response to the media sensitisation of the problem of brokering, which has formulated a plan, called Operation Dalal, to arrest these brokers and put them behind the bars. So far, over 100 dalals (brokers) have only been arrested and their property confiscated, even though many government officials were believed to be running these brokers. Such a move only reflects the contradictory position of bureaucracy in Bihar, which has to mediate between existing interests and a development demand for transparent and accountable government.

One wonders what benefits such a step against corruption can bring about, when it is a common knowledge that a broker cannot operate without the support of a ‘corrupt’ public official, who in the first instance invites such brokers to work with him/her. Hence, it is bureaucratic corruption, which acts as surrogate for brokerage. Unless solid steps are taken to deal with the corrupt officials at the highest level of authority, the elimination of brokers would remain a futile exercise because given the largest concentration of (unemployed) youths in Bihar one broker would be replaced by another. Alternatively these brokers will be pushed underground and become an even more complex feature of poor governance.

[1] In recent years, these Mukhiyas have also developed such ties with various Bank Managers in the district, who are given the responsibility of dispensing cash/cheque to the beneficiaries. The mandatory provisioning of releasing cash entitlements through a bank account of the beneficiary has come about as a result of realisation of ‘heavy-handedness’ of these brokers in government’s cash conditional transfers. Earlier provision required these beneficiaries to be given cash in hand.

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