Dynamics of Corruption

Corruption in this country is no longer an issue nor does it figure in the election manifestoes of any political party at the time of elections. Corruption, as we all have learnt to our bitter experience, has become a way of life as it has spread its tentacles in all the conceivable areas of public good. That nothing works without bribe is the message that has reached the farthest corner of the country. There is a tendency among government/public functionaries having discretionary powers for taking decisions affecting individuals or corporate sector in the country to encash their powers for personal benefit. Shri N. Vittal, former, Chief Vigilance Commissioner, has often said that “Corruption is a low-risk and high profit-activity in this country, since those indulging in corrupt practices are often let off by the courts or awarded insignificant punishments”. During the past 50 years, common man in this country has witnessed large number of frauds and scams involving thousands of crores of rupees, but it has rarely happened that those who perpetrated such crimes were brought to justice or punished.

Corruption in India appears to be a highly organised activity and also institutionalised. There is an unholy nexus between politicians, bureaucrats and corporate sector in this country which has led to concentration of wealth and power in a few hands. Each colluding partner misuses public power for private benefit. The existing administrative structure has produced a section of the bureaucracy which enjoys absolute powers without any accountability. In the financial sector, the existence of non-performing assets amounting to nearly Rs.1,10,000 crore in the commercial/co-operative banks and financial institutions, including state-level financial institutions (SLFIs), is a testimony to the above observation. One cannot believe that with the professional management in the banks and financial institutions genuine NPAs can be of this order. In this connection, it is relevant to quote the observation made by the Supreme Court while dealing with a convicted bureaucrat’s petition wanting restoration in the job till his appeal was decided by the higher court : “Corruption by public servants has now reached a monstrous dimension :.............its tentacles have started grappling within even the institutions created for the protection of the republic ............... the corrupt servants (including M.P.s and MLAs) could even paralyse the functioning of such institutions and thereby hindering the democratic polity”.

In the ranking of 91 countries by the perceived degree of corruption, with higher score for lesser corruption, India earned a miserable 2.7 out of 10 and ranked 71. World Bank has made anti-corruption its priority task since 1995, having discovered that a part of its assistance was pocketed by officials and politicians. A survey made by the World Bank in May last revealed that institutions most

affected by corruption are senior executives, bureaucracy, legislature, judiciary and courts, police, international investors, domestic entrepreneurs and banks in that order. The cost of corruption to the country’s economy is very high. According to a study of PHD Chambers of Commerce and Industry, investment would increase by 2.9% of GDP and GDP growth by 1.3% if corruption index improves by around 15%. India is losing at least Rs.6,380 crore worth of additional investment per annum, roughly three times the foreign direct investment we are attracting now and Rs.28,600 crore of consequent national income per annum. The unaccounted money in India is estimated to be in the range of Rs.350 to Rs.700 thousand crore, which is more than combined revenue of the Centre and the State Governments in the last fiscal. A survey of exporters by Exim Bank found that 64% of those interviewed faced major problems with custom clearance processes and with port authorities; exporters spent 5 to 15% of export revenue to grease the corruption machinery. Corruption leads to the favouring of inefficient producers, distortion of allocation of scarce public resources and causes leakage of revenue from government coffers to private hands. Large-scale tax evasion erodes the tax base and in the process helps generate black money. Corruption in the economy leads to inflated government expenditures and scarce resources are squandered by uneconomic projects because of their potential to generate lucrative pay-offs. Hence, it is not uncommon to find schools without students, teachers without schools, hospitals without doctors or medicines and so on, though on paper all expenditures have been accurately accounted for. The result is the crowding out of investment in priority sector such as education or health. Corruption in the post-independent India is attributed to an over-regulated environment in which the State played a predominant role in economic decision-making, providing powerful incentives to bureaucrats and those in power to indulge in corruption. It has been estimated that if the taxes imposed by the Centre/State Governments are collected honestly without any leakage, tax/loan arrears are recovered from the corporate sector, the country’s economy will become vibrant without levying any fresh taxes and the fiscal deficit in the government will fall within the manageable limits automatically.

Despite overall degeneration in the country and erosion of human values leading to present state of affairs, there are honest people in the administration who do not indulge in corrupt practices and on whose shoulders the government machinery runs. These honest people are not allowed to function in areas where corruption breeds. In fact, the few people, around, who refuse to indulge in such practices, are dubbed fools of the highest order. Honesty, therefore, is equated to stupidity and lack of intelligence in an environment where corruption is no longer the exception, but the rule. If we wish to bring about economic development in the country with social justice, we shall have to banish corruption from this country. How this can be achieved is a million dollar question.