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India has an unmatched capacity to look opportunity firmly in the face, turn around, and walk off resolutely in the opposite direction.

The latest manifestation of the national pastime comes in relation to public corruption. Prime Minister Manmohan Singh could have appropriated the cause and channelled the people's movement to enact tough new laws to rid India of corrupt practices and cement its economic future. Instead he has responded with vacillation and, by using the powers of the state to intimidate activists, planted his flag on the wrong side of history.

In 2008, Singh's government survived a no confidence vote by allegedly bribing some lawmakers. Recent mega-scandals include last year's Commonwealth Games boondoggle, a $40 billion telecom scandal and a real estate scam in Mumbai. Telephone intercepts revealed a nexus of journalists, businessmen and politicians doing deals in a profit-for-everyone chain.

The Washington-based Global Financial Integrity estimates Indians' overseas illicit assets (gained through corruption, bribery, criminal activities, tax evasion, etc) at $462bn. The annual capital flight is worth 17 per cent of GDP. India's Supreme Court calls this "pure and simple theft" a "plunder of the nation".

Licences, degrees and permits bought and sold daily are less spectacular, but affect most people. The overall impression is that society has lost its moral moorings, greed is good, everything is a commodity, and everyone is on the take.

Like India's famous three monkeys, Singh neither sees, hears nor speaks evil. He has not gained pecuniary benefits himself, but there has been an explosion of financial corruption and blurring of the boundary between public power and private gain on his watch.

Corruption is a cross-party state of mind and habit: the BJP-led state government of Karnataka is the most recent instance of public larceny on a grand scale. But the party did dump the state premier. By contrast, in a recent poll, 60 per cent of Indians held the Congress-led government to be corrupt and only 17 per cent believed it wanted to prosecute those with black money stashed abroad.

In April, 74-year-old social activist Anna Hazare undertook a fast unto death, a technique of civil disobedience sanctified by Gandhi during the independence struggle against British rule. The government capitulated to his demand for a joint committee to draft a Lokpal (people's ombudsman) bill. Faced with the need and demands for a robust bill, the government proposed a particularly limp one: few of the recent big scandals would have come within its ambit. When Hazare threatened another fast, he was arrested.

Many commentators have reservations about some of Hazare's uncompromising demands and disagree with the threat of a death fast as a form of political blackmail. But Indians, fiercely proud of democratic institutions, traditions and practices, were appalled by the ban on peaceful protests. They reacted with derision and disdain to allegations levelled by political attack dogs about Hazare's character and probity.