Corruption in India: Unbound

Megha Agarwal

India is the largest economy and will be completing 60 years of freedom on 15 August, 2007. But freedom from corruption still remains a long lasting hope. Corruption in India is acknowledged as a complex problem. The reason for this is that the political, legal and judiciary system cannot be relied upon. It has so ingrained in Indian psyche that one does not look down upon it.

The growing concern is that the incidence of corrupt economic practices has been increasing over the years at high rates. These practices have gained so much strength that business entities have now indulged in ‘break the law’ frame of work.

As per the current and past economy, I have presented the effects and possible action steps from three main perspectives: Political, Economic and Development/Growth level. The following model classifies the effects of corruption from the mentioned three broad perspectives. Each factor is explained in detail for clear understanding of the current scenario.

Political perspective: Corruption is considered and proven to be one of the most damaging consequences of poor governance. It hinders economic growth and human development. The key reason for corrupt political scenario is that the politicians make policy decisions to ensure their own re-election rather than policies in public interest. Government budgets meant for public welfare are spent for election campaigns. The driving factors are low transparency and accountability standards for government employees. National government employees demand bribes from state government officials to transfer and release budgets. This cycle percolates down till it reaches the end consumer. One of the key issues India is facing in the fiscal 2006-07 is inflation. If government would have practiced clean activities, citizens would not to bear the brunt of sky rocketing prices of basic necessities. Bureaucrats raise red tape to extract bribes and this corruption undermines the true meaning and purpose of regulation. If the law maker themselves indulge in corrupt activities, the question of the appropriateness of law will not hold true. TI’s survey of international business’ perceptions ranks India worse than China. World Competitiveness Year Book also ranks India amongst those countries where bribing and corruption is very high. Corrupt behavior has become a way of life to get things done fast and concise.

Economic Perspective: A 2005 study by Transparency International (TI) India found that more than half of those surveyed had firsthand experience of paying bribe or peddling influence to get a job done in a public office. TI India study estimates the monetary value of petty corruption in 11 basic services provided by the government, like education, healthcare, judiciary, police, etc., to be around Rs.21,068 crores. India ranks second worldwide in farm and agricultural output. Agriculture and allied sectors like forestry, logging and fishing accounted for 18.6% of the GDP in 2005, employed 60% of the total workforce. International comparisons reveal that the average yield in India is generally 30% to 50% of the highest average yield in the world. The reasons for the low productivity are slow progress in implementing land reforms and inadequate or inefficient finance and marketing services for farm produce. Adoption of modern agricultural practices and use of technology is inadequate, hampered by ignorance of such practices and high costs. Irrigation facilities are inadequate, as revealed by the fact that only 53.6% of the land was irrigated in 2000–01, which result in farmers still being dependent on rainfall, specifically the Monsoon season. Agriculture sector has been controlled by the government since ages. No progress has been made after the Green Revolution plans. Though government still offers subsidies to inputs like fertilizers etc, the end benefit to the farmer still remains dismal. The entire value chain has been affected the middlemen and the central and state government officials. Economic prosperity is one the most sought after things by an individual and society as whole. Therefore it is the duty of every citizen to play ideal role of an official and keep country’s interest one step ahead of one’s own financial gains.

Developmental/ Growth Perspective: Infrastructural development is completely in the hands of the public sector and was plagued by corruption and bureaucratic inefficiencies. Large scale inefficiencies still exits in the system in terms of implementation and registering a change for the society. Contribution of the service sector has almost doubled post liberalization in the early 1990’s. Private sectors like Information technology have risen phenomenally and have placed India in the global eyes for outsourcing and back office work. IT and ITES generated around 400,000 jobs in the 2006. Every one job created in ITES sector creates around 500 more jobs for the economy. People who look at India from the IT sector’s perspective say that India serves the world. Similarly in the field of education, private engineering colleges produced only around 60-80,000 engineers a decade back. The figure is now estimated to reach around 360,000 till 2007 end. The IT sector if compared with the oil sector in India shows completely different results for better outlook on the private and public sector contribution to India’s dynamic growth factors. Oil ministry officials regulate the complete processing of oil projects and oil pricing. This sector has been in control of government since its inception. Economic reforms of 1990 brought in foreign competition, led to privatization of certain public sector industries, opened up sectors hitherto reserved for the public sector and led to an expansion in the production of fast-moving consumer goods. What is required for utmost change is special focus on squeezing costs, revamping management, focusing on designing new products and relying on low labor costs and technology.

Following references from the surveys conducted by World Bank and the Transparency International are given to substantiate India’s position in the corruption rankings

Transparency International is a civil organization set up in 1993, which publishes the Corruption Perceptions Index. It is a composite index that draws on multiple expert opinion surveys that poll perceptions of public sector corruption in 163 countries around the world. 2006 Corruption Perceptions Index reinforced the link between poverty and corruption. The key message form the 2005 survey was that corruption is a major cause of poverty as well as a barrier to overcome it. India ranked 70th in the 2006 moving up from 88th rank in the 2005 survey. Both the survey reports strongly suggested that despite strict actions in the formulation of anti corruption laws and regulations, there still a wide gap between the desired and the actual realistic situation

In another report by Transparency International, entitled `Corruption in South Asia - Insights & Benchmarks from Citizen Feedback Surveys in Five Countries', identified high levels of corruption encountered by citizens attempting to access seven basic public services.

• In India, Pakistan and Sri Lanka, 100 per cent of respondents that interacted with the police during the past year reported encountering corruption. In Bangladesh, this figure was 84 per cent and in Nepal, 48 per cent. In their experiences with the judiciary, nearly all Indian (100 per cent), Sri Lankan (100 per cent), and Pakistani (96 per cent) households polled reported paying bribes
• Judicial corruption was also significant in Bangladesh (75 per cent of users) and Nepal (42 per cent). After the police and judiciary, land administration was identified as the next most corrupt sector across the region, according to the experiences of South Asian households.
• The survey showed that bribes are a heavy financial burden on South Asian households, both due to the high frequency of bribes and to the large sums paid. More than half of the users of public hospitals in Bangladesh, for example, reported that they had paid a bribe to access a service, with bribes averaging BDT 1,847 ($33). In Pakistan, 92 per cent of households that had experience with public education reported having to pay bribes; the average amount paid was PKR 4,811 ($86). These figures are startling in a region where 45 per cent of the total population of 1.4 billion live in poverty

The above results prove that regional prosperity influences the world’s outlook on an individual nation. Many factors listed below have been talked about in numerous reports and journals and various committees have formed to take actions against them.

Government officials give contracts to themselves, their family members and their party members or to those who pay hefty bribes before the orders. Educators charge bribes to enroll children in schools. Education is a fundamental right in Indian society. But both government and private run schools charge heavy donation amounts for the basic right of education and knowledge. Health care workers ignore patients unless their family members pay bribes. As per the perception of people, police is the most corrupt sector. Police takes bribes rather than write bills or tickets. Traffic police and safety officials accept bribes and leave the culprits instead of punishing them. Perceptions at best are indicative of existing evils in a society. But the perceptions of masses should not mould the laws and regulations as it will generate biased results.

The World Bank framework was taken into consideration to understand and explain the role of education in combating corruption and consider recent initiatives for an effective action plan in this regard.

India is one of the most regulated economies in the world with powers concentrated in few hands. The resources are scarce and demand is always more than supply. Wealth is concentrated in a few hands therefore the receivers of public services are largely poor. Due to lack of access to health and education, the poor section of the society is ignorant and unaware of possible steps for justice and goodwill.