Amend Prevention of Corruption Act to remove grey areas which inhibit decision-making
Central Bureau of Investigation was subject to nuanced criticism by Prime Minister Manmohan Singh and finance minister P Chidambaram this week during the agency's conference on combating financial crimes. The criticism was justified and must be seen in the context of UPA's move to fine-tune Prevention of Corruption Act through an amendment Bill in the last Parliament session. The Bill - which was referred to a parliamentary standing committee - seeks, among other things, to remove grey areas in current legislation.
The amendment Bill enlarges the scope of the legislation by targeting the bribe giver in addition to a corrupt public servant. The amendment, however, will also protect honest decision-makers who have to make a call in an imperfect world, that is, take a decision on inadequate information. This is a key change as in the absence of legislative protection, decision-making slows down as risk aversion sets in. In the current legislation, a grey area is the space CBI has to prosecute a public servant even in the absence of quid pro quo if the agency feels a decision benefited someone "without any public interest".
CBI has at times interpreted the relevant section in a way that has allowed it to prosecute without having to show an accused had criminal intent. This is dangerous because it can mean the breakdown of a system of checks and balances that prevents abuse of power. Chidambaram rightly says it runs counter to a sense of fair play if an investigative agency ignored motive or criminal intent before concluding a decision amounts to a crime. The amendment Bill does not dilute CBI's powers to prosecute a wrongdoer, but does call for greater rigour from the agency. Hopefully, it will be subject to serious debate in the next session.
Officials in Speaker’s office cannot claim immunity in corruption cases before Lokayukta: Court
The Supreme Court on Tuesday held that no immunity is available to officials of the Speaker’s Secretariat in corruption cases before the Lokayukta and initiation of such proceedings would not amount to breach of privilege of the Legislative Assembly.
Giving this ruling, a three-judge Bench of Chief Justice of India P. Sathasivam and Justices Ranjan Gogoi and Shiva Kirti Singh said: “The law applies equally and there is no privilege which prohibits registration of a case by an authority that has been empowered by the Legislature to investigate the cases relating to corruption and bring the offenders to book. Simply because the officers belong to the office of the Speaker of the Legislative Assembly, the provisions of the Lokayukt Act do not cease to apply to them.”
Quashing the notice of privilege issued to Justice Ripusudan Dayal (Retd) and others, the CJI said: “The law does not make any differentiation and applies to all with equal vigour. As such, the initiation of action does not and cannot amount to a breach of privilege of the Legislative Assembly, which has itself conferred powers in the form of a statute to eradicate the menace of corruption. It is, thus, clear that no privilege is available to the Legislative Assembly to give immunity to them against the operation of laws. It is made clear that privileges are available only insofar as they are necessary in order that House may freely perform its functions.”
The Bench said: “By carrying out investigation on a complaint received, the petitioners merely performed their statutory duty and did not in any way affect the privileges which were being enjoyed by the Assembly and its members. The action of the petitioners did not interfere with the working of the House and as such there are no grounds for issuing a notice for breach of privilege.”
“Complaints unfair”
The Bench said: “Privileges do not extend to the activities undertaken outside the House on which the legislative provisions would apply without any differentiation. In the present matter, the petitioners have not made any inquiry against any member of the Assembly or the Speaker or about their conduct and, therefore, the complaints made against the petitioners by some of the members of Assembly were completely uncalled for, illegal and unconstitutional.”
Enquiry was initiated against the officials of the Madhya Pradesh Vidhan Sabha as well as against the officials concerned of the Capital Project Administration — the contractor company — alleging irregularity in construction work carried out on the premises of Vidhan Sabha. For this, breach of privilege notice was issued and this was challenged in a writ petition in the apex court.
All deals with Rolls-Royce put on hold
After ordering a CBI probe into allegations of kickbacks and unauthorised use of an outside “commercial adviser” by Rolls-Royce in contracts with Hindustan Aeronautics Ltd. (HAL), the Defence Ministry on Monday put on hold all deals with the British engine manufacturer till the completion of the investigation.
Rolls-Royce contracts, worth nearly Rs. 10,000 crore for the supply of aircraft engines to HAL for its trainer aircraft during 2007-2011, are under a cloud.
The controversy evoked sharp reaction from political parties with CPI(M) general secretary Prakash Karat tweeting that as in the Agusta VVIP chopper scam, the UPA government was forced to order a CBI probe only after foreign governments acted against arm dealers.
The BJP demanded a court-monitored probe. “The probe progresses only if it is monitored by the courts. The Congress government always hides the scams,” spokesperson Prakash Javadekar said.
Rolls-Royce said it would cooperate with the authorities and had repeatedly made clear that “we will not tolerate misconduct of any sort.”
No country for whistle-blowers
In 2013, generic pharmaceutical company Ranbaxy pleaded guilty to seven criminal felonies for drug manufacturing fraud and agreed to cough up an unprecedented $500 million in fines.
The case against Ranbaxy was significant not only for being a successful prosecution of a powerful India corporation. It also marked the triumph of Dinesh Thakur, who took on the pharmaceutical giant by tapping into United States’ whistle-blower protection laws that incentivise and protect people who expose unethical business practices.
Mr. Thakur was a Director at Ranbaxy after joining the business in 2003. He brought to the company’s notice certain fraudulent practices with regard to drug development, manufacturing, and testing data. In 2005 he was compelled to resign after exposing the fraud internally.
Thereafter working with the U.S. Food and Drug Administration (FDA) and the Department of Justice, he exposed widespread “false, fictitious, and fraudulent statements” made to regulators resulting in substandard and unapproved drugs.
The footprints left by Mr. Thakur are large. The FDA increased the number of inspectors allocated to India and China from four in 2009 to nearly 15 at present.
Increased resources have aided in the identification of other problems at other Indian companies. Even today, the FDA continues to exert pressure on Ranbaxy to adhere to current Good Manufacturing Practices. It has imposed import alerts against three additional facilities in India tracing back to Mr. Thakur’s whistle-blowing.
Improving drug quality
The FDA’s continued focus on India is appropriate. Of the 21 warning letters issued by FDA in 2013 for serious drug quality problems, one-half were issued to Indian companies. Approximately 40 per cent of the generic drugs sold in the U.S. are made in whole or in part in India. These facts expose not only serious drug quality problems, but highlight how tightly woven together the economies of the two countries are.
Most enthusing for Indian consumers of drugs, FDA Commissioner Margaret Hamburg recently opened a direct line of communication with the Indian regulator, the Drug Controller General Of India and the Central Drugs Standard Control Organization in New Delhi. This initiative aims to strengthen and overhaul Indian regulatory standards to improve drug quality, including guidelines for inspections and independence of government agencies from company influence.
These changes benefit Indian consumers, who are entitled to the same safe and high-quality drugs as those sold in any other nation.
With India’s election juggernaut kicking off this month and a new power constellation assuming responsibility for governance soon, the paramount question for Indian lawmakers is this: is it acceptable that India lacks a strong whistle-blower protection law?
Such a law would save and improve lives and expose financial corruption in a way that reinforces ethical business practices. Tolerating “business without ethics” only tarnishes India’s hard earned identity as a leader in international commerce.
This pressing question is not new. In 2010 the Lok Sabha passed the Whistleblowers’ Protection Bill currently languishing in the Upper House of Parliament. The interminable delay in its passage into law aside, the Bill has also been widely criticised as providing insufficient protection to whistle-blowers.
It does not regulate private sector and State governments. What protections it affords are limited to those who would expose wrongdoing in the Government of India’s bureaucracy. Further, multiple analyses of the bill suggest that it has critical flaws, such as not admitting anonymous complaints and insufficiently penalising officials who retaliate against whistle-blowers.
There is an urgent need for a meaningful whistle-blower protection law in India. We need look no further than the murder of several whistle-blowers in recent years as support for new laws.
In 2003, Satyendra Dubey was killed for exposing “financial irregularities in the Golden Quadrilateral highway construction project in Bihar,” and in 2010 Satish Shetty was fatally attacked for making a police complaint alleging “massive irregularities” when “an infrastructure company had connived with government officials to purchase land in villages along the Pune-Mumbai Expressway.” These whistle-blowers were killed because they were committed to doing the right thing. That cannot stand.
Whistle-blower protection laws incentivise integrity to help detect and deter unethical business practices and fraud. This type of law has been very successful elsewhere. In the U.S., the False Claims Act (FCA) has returned to the government more than $40 billion in penalties, including the $500 million secured from Ranbaxy. The FCA is intended to encourage, protect and reward citizens who come forward with information to assist the government in identifying companies that cheat federal spending programmes.
Under the FCA, a private person such as Mr. Thakur can sue a company on behalf of the federal government in what is called a qui tam suit. If the federal government collects a settlement or court judgment because of the information provided by the qui tam plaintiff, the government is required to pay a portion of the recovery to the plaintiff. An integral component of the FCA gives legal protection to whistle-blowers from retaliation by companies that cheat the government.
The significance of a whistle-blower protection law such as the FCA is not limited to billions in penalty payments and additional revenue for the government. These laws place pressure on companies that are engaged in unethical practices to respect the law, commit to compliance, and not retaliate against whistle-blowers. After all, it is better to prevent violations than to penalise after the act.
Returning to the paramount question for Indian lawmakers on whether it is acceptable that the country lacks a strong whistle-blower protection law, the simple answer is that it is not acceptable, and it is not consistent with good business and governance.
Whether the U.S. model works well for India may be subject to debate, but it is not debatable that new protections are long overdue, and it is in our power to make it happen.
Irrigation scam: ATR blames officials
Even as it tabled in the Maharashtra Assembly the report of the Chitale Committee, which probed the multicrore irrigation scam, the Congress-NCP government gave a clean chit to politicians in its Action Taken Report (ATR).
The ATR made no mention of politicians, including Deputy Chief Minister Ajit Pawar, who was Irrigation Minister between 1999 and 2009. He belongs to the Nationalist Congress Party.
The probe was initiated in 2012 after allegations of major irregularities in irrigation projects. The outcry led to Mr. Pawar’s resignation as Deputy Chief Minister. However, he was reappointed three months later.
The Chitale report itself lays the bulk of the blame on officers rather than politicians. It points out that investigating several irregularities were outside its terms of reference.
The report has only one line which points to the role of Mr. Pawar, though it does not name him. It says that in some cases of cost escalation, a revised approval for more funds was given in violation of rules.
“It was sanctioned despite being brought to the notice of the Governing Council. In such cases the responsibility lies with the members and the president of the Governing Council,” the report says. As Irrigation Minister during the period, Mr. Pawar headed the Governing Council.
While the report has asked the government to decide on the possible action, the ATR claims that the Governing Council had the power to sanction extra money till August 2009.
Eyewash: Opposition
The Opposition called the ATR eyewash to protect politicians. “We hope the government initiates criminal proceedings against those criticised in the report. Otherwise, we will consider going to court,” said State BJP president Devendra Fadnavis.
The report has pointed out major irregularities by project officers while granting Administrative Approvals (AA) for projects. In several cases, the AA was granted without finalising the design of the project, it says.
Rs. 60,234 cr. overrun in projects, says CAG
The Maharashtra government has seen Rs. 60,234 crore cost overrun in its irrigation projects, says a report by the Comptroller and Auditor-General. The report on the management of irrigation projects was submitted to the State Assembly on Saturday, leaving the Water Resources Department red-faced.
The report shows that the estimated balance cost of Rs. 82,609 crore of 601 projects was nine times the capital grant of the WRD for 2012-2013. About 225 projects have been under execution for more than 15 years. As many as 77 projects have been in progress for 30 years. The report has details of irrigation projects up to June 2013.
“Projects were taken up without proper surveys, environment and forest clearances, acquisition of requisite land and non-rehabilitation of project-affected persons. As a result, there was enormous increase in the cost of the projects and delays in completion,” reads the report.
For instance, the implementation of the Vishnupuri project was initially approved in May 1979 at a cost of Rs. 32.24 crore. Significant delays and frequent changes in the scope of work led to an increase in the cost by Rs. 2,419 crore.
The report shows that cost overruns have taken place over and above the approvals and in violation of the Maharashtra Public Works Manual. An expenditure of Rs. 2,367 crore is seen in 100 ongoing projects, which is over and above the revised administrative approvals. Moreover, contract terms and conditions have been violated resulting in grating of undue benefits to contractors.
There were also discrepancies between irrigation potential created and used. As against 48.26 hectares of potential created, only 67 per cent or 32.51 hectares was used. The poor utilisation, according to the CAG report, was due to inadequate maintenance of dams and canals, siltation, inefficiency and insufficient water supply.
Certain public sector anti-corruption safeguards in India perform very well while others do not. India’s performance on the 2009 Global Integrity Indexindicates a huge gap between anti-corruption policies and practice. The legal and institutional framework to curb corruption is well developed and the country receives high scores in terms of anti-corruption law and institutions. This was testified by an analysis conducted by Transparency India in 2007 to identify possible gaps between the UN Convention against Corruption (UNCAC) and the legal and institutional framework of India. The biggest substantial gap identified by the report was in the area of whistleblower protection. Thus, the law enforcement is significantly weak, suggesting a lack of political will to effectively address corruption challenges in the country.
The lack of legal protection to whistleblowers was glaringly highlighted by the 2003 murder of Sri Satyendra Dubey, who exposed corruption in the National Highway Authority. Recent murder of an RTI activist, Shehla Masood in Bhopal is just another painful reminder of vulnerability of whistleblowers in this country.
In recent years, the Supreme Court has taken a stronger stance against corruption. It has challenged the powers of states in several instances. For example, in 2007 in Uttar Pradesh, it challenged the state governor’s powers to pardon politically connected individuals based on arbitrary considerations. In other instances, judges have taken on a stronger role in responding to public interest litigation over official corruption and environmental issues. In December 2006, in a landmark ruling, the Supreme Court ruled that prosecutors do not need prior permission to begin proceedings against politicians facing corruption charges. It has also started addressing corruption in the police by mandating the establishment of a police commission to look into these matters and has ruled that corrupt officers can be prosecuted without government consent.
The Central Vigilance Commission (CVC) is the apex watchdog agency established in 1964. The CVC can investigate complaints against high level public officials at the central level; not at the state level. In 2005-09, CVC slapped penalties on 13,061 CASES (average 2612 per year).
The Central Bureau of Investigation (CBI) is the prime investigating agency of the central government and is generally referred to as a credible and respected institution in the country. It is placed under the Ministry of Personnel, Pensions & Grievances and consists of three divisions: the Anti-Corruption Division, the Special Crimes Division and the Economic Offenses Division. The Supreme and High Courts can instruct the CBI to conduct investigations.
The Office of the Comptroller and Auditor General (C & AG) is the apex auditing body. The C & AG has produced several reports on state departments such as railways, public sector enterprise, and tax administration. These reports have revealed many financial irregularities, suggesting a lack of monitoring of public expenses, poor targeting and corrupt practices in many branches of government. The most recent example is its report on Commonwealth Games that nailed the corrupt organizing committee members.
The Chief Information Commission (CIC) was established in 2005 and came into operation in 2006. It has delivered decisions instructing government, courts, universities, police, and ministries on how to share information of public interest. State information commissions have also been opened, thus giving practical shape to the 2005 Right to Information (RTI) Act. Of India’s 28 states, 26 have officially constituted information commissions to implement the RTI Act. Nine pioneered access to information laws before the RTI Act was passed. It is hoped that the CIC will help spread the culture of public seeking information under the RTI and expose wrong doings.
Corruption is an age-old phenomenon. The word corruption means destruction, ruining or spoiling – a society or nation. Selfishness and greed are at the root of it; it also implies lack of integrity and honesty. A corrupt society is characterized by immorality and lack of fear or respect for the law. When it stops valuing integrity, virtue or moral principles it starts decaying. Corruption is the abuse of public power for private gain. Corruption comes under many different guises: bribery, misappropriations of public goods, nepotism (favoring family members for jobs and contracts), and influencing the formulation of laws or regulations for private gain.
Probably the first high profile scandal after independence was the Jeep scam in 1948, when jeeps were required for the army operation inKashmir. V. K. Krishna Menon, the then High Commissioner for India in London entered into a deal with a foreign firm without following the normal procedure. Rather than initiating a judicial inquiry, as suggested by the Inquiry Committee led by Ananthsayanam Ayyangar, the then Government announced in1955 that the Jeep scandal case was closed. Union Minister G.B.Pant made a funny announcement “that as far as Government was concerned it has made up its mind to close the matter. If the opposition was not satisfied they can make it an election issue.” Soon there after in 1956, Krishna Menon was inducted into the Nehru cabinet as minister without portfolio.
What Makes India Corrupt?
Bad Governance and Corruption
In a world where money is god morality cries and corruption thrives. Since the institutions that used to care for moral values in society are no longer relevant in today’s technology oriented world, the only way to keep corruption at bay is the good and efficient governance. Good governance is a prerequisite for strengthening the economic and social performance of a country. Hence, corruption and good governance are certainly related in opposite ways.
Good governance is dependent on accountability – of those responsible for running the country, mainly politicians and bureaucrats. Lack of mechanisms (or weak mechanisms) to hold them accountable for their actions is the common reason that allows them to get by with sins (or errors of omissions and commissions, in today’s popular languages). This happens when the governance is not participatory – where general public is mere spectator.
Therefore, good governance necessarily means an accountable system of governance. Accountability has two components, Proactive – ensuring fair and proper selection of public officials and participatory governance;Reactive – ensuring transparent and legitimate conduct and enforcing liability on the conduct of public officials.
In order to work properly, the mechanisms for accountability must not be under government control – it defeats the very purpose – and they must be easily accessible to the ordinary people.
Good governance is dependent on accountability – of those responsible for running the country, mainly politicians and bureaucrats. Lack of mechanisms (or weak mechanisms) to hold them accountable for their actions is the common reason that allows them to get by with sins (or errors of omissions and commissions, in today’s popular languages). This happens when the governance is not participatory – where general public is mere spectator.
Therefore, good governance necessarily means an accountable system of governance. Accountability has two components, Proactive – ensuring fair and proper selection of public officials and participatory governance;Reactive – ensuring transparent and legitimate conduct and enforcing liability on the conduct of public officials.
In order to work properly, the mechanisms for accountability must not be under government control – it defeats the very purpose – and they must be easily accessible to the ordinary people.
Why Corruption Thrives in India?
Lack of transparency and complicated procedures are two important hallmarks of Indian bureaucracy. General public can never understand what is actually going on in the minds of top bureaucrats and their representatives sitting at the top. Indian politicians have also done a brilliant job of staying above accountability: they have kept the main investigating agency, the Central Bureau of Investigation, under the control of government and denied it freedom to initiate investigation against public officials (wrongly called “public servants” in India) without permission. The other two top bodies – the Central Vigilance Commission (CVC) and the Controller & Auditor General – are also reduced to advisory roles (advise can always be ignored!). The CVC is, in reality, like a non-executive ombudsman or a paper tiger.
Another brilliance of Indian politicians has been to thwart creation of an independent ombudsman with freedom and power to investigate top bureaucrats and ministers, for last Forty Years. Recently, a notable Gandhian social worker, Anna Hazare sat on a “fast-till-death” to pressurize the government to immediately pass a strong ombudsman bill. It was surprising to see a spontaneous and widespread mass support to his peaceful movement – perhaps first such movement in the history of independent India.
The third factor that has been encouraging organized corruption is the absence of legal protection to whistleblowers. The news of harassment and even murder of those who expose corruption is a common occurrence in India.
Another brilliance of Indian politicians has been to thwart creation of an independent ombudsman with freedom and power to investigate top bureaucrats and ministers, for last Forty Years. Recently, a notable Gandhian social worker, Anna Hazare sat on a “fast-till-death” to pressurize the government to immediately pass a strong ombudsman bill. It was surprising to see a spontaneous and widespread mass support to his peaceful movement – perhaps first such movement in the history of independent India.
The third factor that has been encouraging organized corruption is the absence of legal protection to whistleblowers. The news of harassment and even murder of those who expose corruption is a common occurrence in India.
Global Integrity Report and India
Global cross-country surveys have been repeatedly highlighting the rather poor quality of governance in India, in comparison with other major economies. This poor governance and the resulting high corruption is the prime cause of high poverty and ineffectiveness of family planning efforts – India failed to achieve the targeted fertility rate of 2.1 by 2010 end needed for population stabilization.
The Global Integrity Report provides an understanding of the governance and anti-corruption mechanisms in a country. It uses over three hundred actionable indicators to provide a picture of citizens’ and businesses’ access to key governance and anti-corruption mechanisms and their effectiveness. The elaborate scorecards take into account both existing legal measures on the books and ground realities of practical implementation which is what really counts for the citizens. The final out put comes in the form of the Global Integrity Index (GII) which should have been more aptly labeled as “governance effectiveness indicator”.
Difference between the red and blue scores in the image above gives the gap in implementation of the written law. A wide “implementation gap” is a sign that written law is widely ignored, creating a situation where real reform depends more on political will than on new laws.
The Global Integrity Report provides an understanding of the governance and anti-corruption mechanisms in a country. It uses over three hundred actionable indicators to provide a picture of citizens’ and businesses’ access to key governance and anti-corruption mechanisms and their effectiveness. The elaborate scorecards take into account both existing legal measures on the books and ground realities of practical implementation which is what really counts for the citizens. The final out put comes in the form of the Global Integrity Index (GII) which should have been more aptly labeled as “governance effectiveness indicator”.
Difference between the red and blue scores in the image above gives the gap in implementation of the written law. A wide “implementation gap” is a sign that written law is widely ignored, creating a situation where real reform depends more on political will than on new laws.
India Report Card – Global Integrity Index 2009
India’s score (70 out of 100) implies that it is only moderately capable of handling the menace of corruption and has lot to do in improving its governance. It also highlights a large gap between the legal framework and actual implementation on the ground. The report rightly exposes that of all six indicators the weakest is the Government Accountability (59, Very Weak). When seen in light of high score on Oversight and Regulation (80, strong) it implies that there is a vast “implementation gap”.
In fact, any ordinary Indian can testify that implementation is the weakest area – and often people don’t even know the existence of many laws concerning them. A glaring example is the PESA Act of 1996. It is the most important piece of legislation that empowers the 8% tribal population to rule themselves and manage their local resources – so that their exploitation at the hands of the bureaucrats and other rich and influential people stops. It is a law social activists working in tribal areas always want to know but find little information. It is just one example of a good-intentioned law remaining only on paper.
The report also rightly states that “the country struggles with promoting transparency and accountability in the financing of political parties and candidates”. For instance, there are currently no regulations that require parties or candidates to disclose the donations they receive. This is where the seeds for future corruption are sown.
In fact, any ordinary Indian can testify that implementation is the weakest area – and often people don’t even know the existence of many laws concerning them. A glaring example is the PESA Act of 1996. It is the most important piece of legislation that empowers the 8% tribal population to rule themselves and manage their local resources – so that their exploitation at the hands of the bureaucrats and other rich and influential people stops. It is a law social activists working in tribal areas always want to know but find little information. It is just one example of a good-intentioned law remaining only on paper.
The report also rightly states that “the country struggles with promoting transparency and accountability in the financing of political parties and candidates”. For instance, there are currently no regulations that require parties or candidates to disclose the donations they receive. This is where the seeds for future corruption are sown.
Conclusion
Corruption coming from bad governance is the major reason for most of the major problems such as poverty and high population. And speaking analytically, ineffective implementation of laws, absence of proper accountability mechanisms, opaque electoral financing, and absence of laws to protect the whistle-blowers are four major shortcomings in the governance system of India.
India: A Good Country with Bad Governance!
Governance in India
Good governance is a prerequisite for strengthening the economic and social performance of a country. Governance implies the traditions and institutions by which authority in a country is exercised. This includes how governments are selected and replaced; its capacity to effectively formulate and implement sound policies and provide public services; and the respect for the institutions that govern economic and social interactions among them. Good governance, respect for human rights and efforts to crack down on corruption are not just desirable for their own sake but they also provide foundation for faster economic development.
India owes its system of governance to the British rulers. When the British left India, after dividing it into India and Pakistan, the system remained. They had designed it to serve their colonial interests – to rule the colored Indian subjects and exploit the resources so that the “Great Britain” prospered and remained “great”. The new rulers began ruling and the elections became the only proof and symbol of Indian democracy. No one cared to make it participatory despite Gandhi’s suggestion to empower village assemblies (called Panchayats); the common man and his interests remained confined to election talks. Once elected, the representatives colluded with the rich businessmen and bureaucrats to serve their own interests. Six decades after independence, the gap between the ruling class and general public has remained as it was when the British ruled. Gandhian Social worker, Anna Hazare can not be more accurate when he says “In 1947, the “white British” were merely replaced with “brown Indian”; nothing changed in the mindset of the rulers. No one showed the courage or foresight to “Indianize” the system of governance.
India owes its system of governance to the British rulers. When the British left India, after dividing it into India and Pakistan, the system remained. They had designed it to serve their colonial interests – to rule the colored Indian subjects and exploit the resources so that the “Great Britain” prospered and remained “great”. The new rulers began ruling and the elections became the only proof and symbol of Indian democracy. No one cared to make it participatory despite Gandhi’s suggestion to empower village assemblies (called Panchayats); the common man and his interests remained confined to election talks. Once elected, the representatives colluded with the rich businessmen and bureaucrats to serve their own interests. Six decades after independence, the gap between the ruling class and general public has remained as it was when the British ruled. Gandhian Social worker, Anna Hazare can not be more accurate when he says “In 1947, the “white British” were merely replaced with “brown Indian”; nothing changed in the mindset of the rulers. No one showed the courage or foresight to “Indianize” the system of governance.
Worldwide Governance Indicators
World Bank’s Worldwide Governance Indicators (WGI) provide a comprehensive picture of the quality of governance in individual countries. The indicators provide a good overview of a country’s political stability, quality of governance, and the rule of law.
Financial institutions such as Goldman Sachs use them as a guiding tool in their investment decisions and countries like US and Netherlands decide aid to developing countries based on the picture provided by such Indicators. Risk rating agencies as well as certain NGOs also use them. However, it must be emphasized that the World Bank does not use WGI to allocate funds.
Recent research using the Worldwide Governance Indicators shows that industrial countries with more corruption also have higher budget deficits. Further, the evidence for developed and developing countries suggests that quality of governance has a major impact on a country’s development.
The governance indicators are defined to correspond to what are considered “fundamental governance concepts.” The WGI rank countries with respect to six dimensions of good governance:
Financial institutions such as Goldman Sachs use them as a guiding tool in their investment decisions and countries like US and Netherlands decide aid to developing countries based on the picture provided by such Indicators. Risk rating agencies as well as certain NGOs also use them. However, it must be emphasized that the World Bank does not use WGI to allocate funds.
Recent research using the Worldwide Governance Indicators shows that industrial countries with more corruption also have higher budget deficits. Further, the evidence for developed and developing countries suggests that quality of governance has a major impact on a country’s development.
The governance indicators are defined to correspond to what are considered “fundamental governance concepts.” The WGI rank countries with respect to six dimensions of good governance:
- 1. Voice and accountability – the extent to which the general public is able to participate in selecting the government, degrees of freedom of expression and association, and the extent of media freedom.
- 2. Political stability and Absence of Violence – likelihood that the government will be destabilized or overthrown by unconstitutional or violent means, including political violence or terrorism.
- 3. Government effectiveness – the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government’s commitment to such policies.
- 4. Regulatory quality – ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development.
- 5. Rule of law – the extent to which people have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, the police, and the courts, as well as the likelihood of crime and violence.
- 6. Control of corruption – the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as “capture” of the state by elites and private interests.
The aggregate indicators combine the views of a large number of enterprise, citizen and expert survey respondents in industrial and developing countries. The data comes from a diverse variety of survey institutes, think tanks, NGOs, and international organizations. The WGI cover 213 countries and territories.
The Nordic countries along with New Zealand have been the perennial chart-toppers in the WGI, but rich countries are by no means always better governed than emerging or developing economies. In fact, over 30 developing and emerging economies, including Slovenia, Chile, Czech Republic, Hungary, Poland, Rwanda and Costa Rica have higher governance scores than industrialized countries such as Italy (ranked 87 in Corruption Control) or Greece (ranked 82).
The Nordic countries along with New Zealand have been the perennial chart-toppers in the WGI, but rich countries are by no means always better governed than emerging or developing economies. In fact, over 30 developing and emerging economies, including Slovenia, Chile, Czech Republic, Hungary, Poland, Rwanda and Costa Rica have higher governance scores than industrialized countries such as Italy (ranked 87 in Corruption Control) or Greece (ranked 82).
Worldwide Governance Indicators and India
In terms of WGI, India ranked at about 46th percentile in 2009, implying that more than half of the 210 countries studied score better on governance. India is particularly weak on political stability and regularity quality. If the control of corruption indicator is compared for top ten economies of the world, India gets third rank from the bottom – only better than Russia and China.
Therefore, India has a long way to go in improving its system of governance to inspire confidence not only in its own people but also in the global community. Growth in terms of GDP alone is neither sufficient to provide a better quality of life to majority of its citizens nor for eradicating poverty – government recognized that 407 million Indians live below the latest defined poverty line. Needless to say this number is grossly underestimated – other measures such as the multidimensional poverty index put this number at 665 million.
Perhaps the most basic issue facing the Indian democracy is reflected by the first indicator – voice and accountability. Freedom of expression and media freedom is pretty good, but Indian democracy is certainly not very participatory. There is a wide separation between the ruling political class and the masses they claim to represent. In collusion with the highly callous bureaucracy they have mastered the art of evading accountability. Highly opaque political financing leaves them defending interests of the rich and the powerful who provide money power at the time of their election. Therefore, on paper legislations are created supposedly for the people, but careful reading between the lines and the manner of implementation gives a lot of maneuvering space to the rich and the powerful at the cost of the common man.
The Global Integrity Index report of 2009 also highlights this “implementation gap” of the written law. This gap is a sign that the written law is widely ignored, creating a situation where progress depends more on political will than new laws.
Therefore, India has a long way to go in improving its system of governance to inspire confidence not only in its own people but also in the global community. Growth in terms of GDP alone is neither sufficient to provide a better quality of life to majority of its citizens nor for eradicating poverty – government recognized that 407 million Indians live below the latest defined poverty line. Needless to say this number is grossly underestimated – other measures such as the multidimensional poverty index put this number at 665 million.
Perhaps the most basic issue facing the Indian democracy is reflected by the first indicator – voice and accountability. Freedom of expression and media freedom is pretty good, but Indian democracy is certainly not very participatory. There is a wide separation between the ruling political class and the masses they claim to represent. In collusion with the highly callous bureaucracy they have mastered the art of evading accountability. Highly opaque political financing leaves them defending interests of the rich and the powerful who provide money power at the time of their election. Therefore, on paper legislations are created supposedly for the people, but careful reading between the lines and the manner of implementation gives a lot of maneuvering space to the rich and the powerful at the cost of the common man.
The Global Integrity Index report of 2009 also highlights this “implementation gap” of the written law. This gap is a sign that the written law is widely ignored, creating a situation where progress depends more on political will than new laws.
The Corruption Landscape of India
Corruption in India
Recently the public perception of India has been badly damaged by the corrupt activities of politicians, bureaucrats and business houses. The telecom spectrum allocation scam – the biggest in the history of independent India – for which a minister, an MP and several corporate bosses are in jail and others are expected soon, the Commonwealth Games scandal in which the whole organizing committee, including the chairman are in jail, politicians grabbing prime real estate in housing Society meant for war widows in Mumbai, and the cash-for-vote scam involving parliamentarians have all badly eroded the public faith in government functioning in India.
Corruption and Its Consequences
Corruption is popularly defined as the abuse of entrusted power for private gain. It is like a cancer that eats away progress and creates a pessimistic and cynical business atmosphere. It certainly originates from individual dishonesty and immoral character but societal and governance factors can provide fertile ground for its further propagation, which can ultimately decay societies and countries. History tells us that whenever a great civilization or empire was wiped out, corruption was the root cause.
High level of poverty in India is a direct result of corruption – in fact, the poor are also the most exploited at the hands of lower bureaucracy for bribery.
Experts estimate that global economy annually loses 1 – 1.6 trillion USD to corruption. Dishonesty and corruption are two major factors that distinguish good societies from the bad ones. The system of governance plays a major role in keeping people away from dishonesty and corruption. It is common knowledge that a bad system can corrupt even the good people. Therefore, good governance and level of corruption are inversely related. Conversely, the extent and nature of corruption also throw light on a country’s society and its system of governance.
Read: India: A Good Nation with Bad Governance
High level of poverty in India is a direct result of corruption – in fact, the poor are also the most exploited at the hands of lower bureaucracy for bribery.
Experts estimate that global economy annually loses 1 – 1.6 trillion USD to corruption. Dishonesty and corruption are two major factors that distinguish good societies from the bad ones. The system of governance plays a major role in keeping people away from dishonesty and corruption. It is common knowledge that a bad system can corrupt even the good people. Therefore, good governance and level of corruption are inversely related. Conversely, the extent and nature of corruption also throw light on a country’s society and its system of governance.
Read: India: A Good Nation with Bad Governance
Measuring Corruption
Level of corruption in a country is an important parameter for international funding agencies and aid giving nations. Therefore, they need some comparative estimate of corruption level in different countries. Several global agencies try to compile corruption data for various nations. However, corruption, being a clandestine activity is hard to quantify. Berlin-based non-governmental agency, Transparency International, is a global pioneer that studies various aspects of corruption in countries across the world. Three of its corruption measures are widely used by researchers, sociologists, economists as well as by funding policy makers.
- The Corruption Perception Index (CPI) ranks countries according to the perception of corruption in the public sector. It draws upon different assessments and business opinion surveys carried out by independent and reputable institutions and captures information about the administrative and political aspects of corruption.
- The Briber Payers Index (BPI) was created in 1999 and it ranks about two dozen leading exporting countries in terms of their companies’ propensity to bribe abroad. It is based on the informed observations of senior business executives in various countries.
- The Global Corruption Barometer (GCB) is another measure of corruption. It, however, focuses on general public’s views on their experience of corruption. It is a poll of ordinary citizens, not experts.
Taken together, these three indicators provide an overall picture of corruption in a country and the respective rankings offer useful comparative status at the global level. This article aims to provide a snapshot of corruption in India; detailed discussion of each indicator will be shortly taken up in separate articles.
India Under the Scanner
India occupies 87th position on the CPI ranking out of 178 nations; the BPI ranks Indian firms as the fourth-worst bribe payers in the world, only slightly better than the tail-enders – Mexico, China and Russia; and the GCB also places India amongst the worst bribe paying country. The findings are not flattering at all for a country that is seen as an emerging economic superpower and boasts of having Gandhi as national father. The only consolation is that the Corruption Landscape of the World is also not very appealing.
International Corruption Indicators and India
Though India is credited with having made considerable progress in terms of economic reform over the past few years, corruption is perceived to be widespread and entrenched at all levels of the political and administrative system. India ranks 87 from 178 countries surveyed in Transparency International’s 2010 Corruption Perception Index (CPI), with a score of 3.4. Since the first iterations of the index, India has scored between 2.7 and 3.5, indicating that – despite some progress – corruption continues to be perceived as rampant and endemic by the various CPI sources.
Similarly, the 2009 World Bank Governance Indicators suggest little change over the years. The country performs consistently above average on indicators of voice and accountability, government effectiveness and the rule of law, but poorly in terms of regulatory quality and control of corruption. Its rating for political stability and regularity quality are particularly weak. With an overall percentile score of just 47, India does not instill much confidence.
Freedom House 2008 comes to similar conclusions, noting that government effectiveness and accountability continue to be undermined by the close connections between crime and politics, weak government institutions and widespread corruption. The latest survey by Political and Economic Risk Consultancy ranked India’s bureaucracy as the worst in Asia.
According to the Global Corruption Barometer 2010, petty corruption is common inIndia. Citizens do not expect the situation to change in the short term and expressed skepticism with regard to government political will and/or capacity to curb corruption. 74% people felt that corruption has increased in the last three years.
Indian firms are also perceived to export corruption outside its borders. The country comes at the bottom of Transparency International’s 2008 Bribe Payer Index, ranking 19 from 22 countries with a score of 6.8. This indicates that Indian firms are perceived by business people as very likely to engage in bribery when doing business abroad.
A corruption survey published in June 2008 by Transparency International-India and the Centre for Media Studies India confirms these findings. One-third of Below Poverty Line (BPL) households across the 31 states covered by the survey paid bribes to access one or more of 11 public services. The percentage of respondents paying bribes to access services was especially high for the police, land registration and housing.
However, there is some good news too. The “2010 India Corruption Survey” by the Centre of Media Studies (CMS) showed a decline in graft over a period of five years in public services. According to the survey, there is an increasing percentage of citizens who said that corruption in public services had declined in the previous one year. Also, the percentage of those who had actually paid bribe during the year had also declined, compared to a similar study in 2005. Those who paid bribes in 2005 stood at 61 percent but only 28 percent in 2010.
Why India’s Anti-Corruption Agencies are so Ineffective?
“People think that Corruption simply means Bribery in general understanding, It is more than that. Corruption Means Injustice, misuse or disorder in morality, monetary, mental , Physical etc. Corruption Of any Kind are nuisances to the society. Corruption is the root cause of all the evils in the society. It hampers progress. It brings unhappiness. It Brings war. Corruption brings Crime in society.” http://nacib.in/
Independence of the CBI, or lack of it, is an issue that has also been noticed by the Supreme Court. In the landmark Vineet Narain case, it gave extensive directions to the government to secure the independence of the CBI and the Enforcement Directorate (ED), but that is not ruling political elites ever want to do.
But unwilling politicians are not the only reason. Experiences of many other countries reveal that the anti-corruption agencies (ACAs) fail to do their best also due to a lack of public involvement and insufficient accountability. These reasons apply to the Indian ACAs too because the flaws are mostly institutional. Under the current setup, independence or autonomy of the CBI will always remain a myth. First of all, it needs sanctions for prosecuting corruption cases against public servants and in some situations it even needs permission to register cases. Again, the government must grant approval if the CBI losses a case in the trial court and wants to appeal to the higher court. Like a small boy, it needs to ask its daddy for every thing.
How the CBI is staffed: Senior level CBI officers come from the Indian Police Service who owe their allegiance to their employer – the government. So, they are government employees. Can anyone go against his own employer and jeopardize the future well being? This also explains why senior bureaucrats feel so invincible and above law. This put a clear bias in their investigation where their higher-ups are involved.
The government claims to have a “three pronged strategy for prevention, surveillance and detection” to contain corruption. The preventive vigilance functions of the ACAs is a multi-agency combined force of the Department of Personnel & Training (DoPT), Central Vigilance Commission (CVC), CBI and Chief Vigilance Officers (CVOs); it virtually exists on paper only. Low registration of cases and low conviction rates point as much to poor vigilance as to ineffective investigation and prosecution.
Single Anti-Corruption Agency
In 1997, the SC perhaps tried to create a powerful single agency by empowering the CVC with powers of supervision and control over vigilance administration and corruption cases as well as over CBI investigations. The SC directive intended to insulate appointments, investigation and prosecution from government control (read the DoPT). This experiment with independence failed for obvious reasons.
However, the single-agency approach appears to have worked for South Korea – it has an Independent Commission that reports to the President. It has also worked well in Hong Kong with its Independent Commission Against Corruption.
Why Merely Creating a Single Agency is Not Enough
In trying to create a single agency system, was the SC relying far too much on independence and autonomy? Studies show that having accountability and formal independence, though desirable, are not sufficient in themselves because they can be easily subverted by political factors. The Global Integrity Report also shows that there are many countries besides India where agencies are in law protected from political interference, but fare poorly in practice. The United States on the other hand, without any formal law, does well in insulating its ACA.
There are other supportive factors that are essential if the paper independence and autonomy have to make any sense. Some important factors are: simple effective laws, simple procedures, efficient courts system, and transparent financial system. The experience of Hong Kong shows that public and civil society participation is important to eradicate corruption, as are the freedom of information laws. India enacted the RTI Act still has no whistleblower protection law – so an RTI activist has to risk his life if wants to expose any powerful figure.
Anti-Corruption Framework in India: Global Integrity Index 2009
The Global Integrity Report provides understanding of the governance and anti-corruption mechanisms in a country. Over 300+ actionable indicators provide a picture of citizens’ and businesses’ access to key governance and anti-corruption mechanisms and their effectiveness. It also examines issues like their ability to monitor government’s behavior, and their ability to seek redress and advocate for improved governance. The elaborate scorecards take into account both existing legal measures on the books and ground realities of practical implementation which is what really counts for the citizens.
In simple terms, the Global Integrity Index (GII) does not measure corruption, but in stead, investigates the “medicine” or the mechanisms being used against it. Thus, it is a governance effectiveness indicator.
Difference between the red and blue scores in the image (at left) gives the gap in implementation of the written law. A wide “implementation gap” is a sign that written law is widely ignored, creating a situation where real reform depends more on political will than on new laws.
Here is the report card of India from the last data published in 2009. The index, however, is now discontinued.
Global Integrity Index 2009 – India Report Card
Indiascores 70 (out of 100) implying that it is only moderately capable of handling the menace of corruption. It also highlights a large gap (of 31 points) between the legal framework and actual implementation on the ground. Let us see the overall score in each the six categories:
Category I – Civil Society, Public Information and media (72, moderate)
Category II – Elections (70, moderate)
Category III – Government Accountability (59, Very Weak)
Category IV – Administration and Civil Service (66, Weak)
Category V – Oversight and Regulation (80, strong)
Category VI – Anti-Corruption and Rule of Law (71, moderate)
Thus, overall government accountability comes to be very weak despite strong oversight and regulatory mechanisms.
The official summary ofIndia’s Integrity indicators highlights the following:
- Certain public sector anti-corruption safeguards inIndiaperform very well while others do not.
- Good news can be found in robust public access to government information, high levels of public participation in elections, and a relatively strong anti-corruption legal framework.
- Furthermore,India’s functional equivalent of an ombudsman mechanism — the Central Vigilance Commission — is quite effective.
- Despite strong performance in these areas, the country struggles with promoting transparency and accountability in the financing of political parties and candidates. For instance, there are currently no regulations that require parties or candidates to disclose the donations they receive (although there is an ongoing effort to pass a law that requires political parties to publish their financing).
- In addition, conflicts of interest laws governing the executive, legislative, and judicial branches of government are absent or are weakly enforced.
- Citizens face obstacles in accessing the anti-corruption agency for support; anonymous complaints are not allowed and there have been some cases of whistle-blowers being publicly identified.
Note that corruption and good governance are certainly related in opposite ways. However, “high integrity” score is not the same as “less corruption”. The integrity indicators scores can at best point to the right directions in which efforts need to be made.
The report exposes two major reasons why corruption is still so high in India.
(1) The root of the problem appears to be the political financing which is totally opaque.
(2) No legal protection to whistleblowers. This discourages people from coming out in the open and expose wrong doing. Harassment and even murder of RTI activists speaks clearly that a law is urgently needed in the country.
Anti-Corruption Framework in India
The Legal Framework
Prevention of Corruption Act, 1988 (POCA) is India’s principal legislation against corruption. Its main thrust is to prohibit public servants from accepting or soliciting illegal gratification in the discharge of their official functions. In addition, bribe-givers and intermediaries may be held liable under POCA for bribing public officials. However, prosecution under POCA requires prior approval of high authorities which severely limits its usefulness particularly where there is collusive activity within government branches.
[The term “Public servant” under POCA (section 2) is quite broad, and includes central and state government employees, employees of government-owned corporations, judges, arbitrators, elected officials, and anyone authorized or required to perform a “public duty”.]
In addition to POCA’s prohibitions, various sections of the Indian Penal Code (IPC) provide criminal punishment for public servants who disobey relevant laws or procedures, frame incorrect or improper documents, unlawfully engage in trade, or abuse their position or discretion.
The Prevention of Money Laundering Act 2002 seeks to prevent money laundering including laundering of property through corruption and provides for confiscation of such a property. It mainly targets banks, financial institutions and intermediaries such stock market intermediaries. They must maintain records of all transactions exceeding Rs 10 lakhs. Later amendment has also brought non-profit organizations under PMLA. They have been the typical conduits for terror organizations. The Enforcement Directorate recently began action to attach properties of DMK-controlled Kalaignar TV under the PMLA to recover Rs 215 crore in connection with the 2G scam for which DMK MP Kanimozhi is in jail along with A Raja.
The 2005 Right to Information (RTI) Act represents one of the country’s most critical achievements in the fight against corruption. Under the provisions of the Act, any citizen may request information from a “public authority” which is required to reply within 30 days. The Act also requires every public authority to computerize its records for wide dissemination and to proactively publish certain categories of information for easy citizen access. This act provides citizens with a mechanism to control public spending. Many ani-corruption activists have been using the RTI to expose corruption. Lack of legal protection against whistleblowers, however, puts them in risky situation and many RTI activists have lost their lives in last six years.
No Protection to Whistleblowers
After Dubey’s murder, government issued a resolution known as the Public Interest Disclosure Resolution (PIDR) authorizing the Central Vigilance Commission (CVC) to be the ‘Designated Agency’ to receive written complaints on any allegation of corruption or misuse of office and to recommend appropriate action. The CVC was also empowered to take action against anyone who leaks the names of whistleblowers and witnesses and may request police to investigate further. 1300 complaints were received by the CVC in next three years, but 30 whistleblowers faced harassed in spite of the confidentiality of PIDR complaints – as reported by the CVC.
The Central Bureau of Investigation (CBI) also has an online complaint mechanism which guarantees the protection of whistleblowers reporting corruption cases. But people want an explicit piece of legislation that protects the honest voice raisers and punishes those who harass them
The Institutional Framework
Note that Indiaendorsed the ADB-OECD Anti-Corruption Action Plan in 2001 and ratified the UN Convention against Corruption (UNCAC) and the UN Convention against Transnational Organized Crime (UNCTOC) recently in May 2011. Therefore, it is duty bound to bring its legislative framework closer to the International norms. Significant effort is required not just to strengthen the anti-graft laws but also to provide teeth and freedom to the implementing agencies. Following is a snapshot of current institutional framework that is supposed to prevent corruption.
There are various bodies in place for implementing anti-corruption policies and raising awareness on corruption issues. At the federal level, key institutions include the Supreme Court, the Central Vigilance Commission (CVC), the Central Bureau of Investigation (CBI), the Office of the Controller & Auditor General (C&AG), and the Chief Information Commission (CIC). At the Sate level, there are local anti-corruption bureaus such as the Anti-corruption Bureau of Maharashtra.
Mandate: Oversees and supervises vigilance and anti-corruption work in all central government ministries, departments and PSUs. All group A officers (joint secretary and above) come under its ambit.
Limitation: Needs prior sanction to prosecute. Cannot probe officials below Jt Secy level until government refers case. Limited staff, normally on deputation.
Mandate: Investigates offenses by central government and PSU employees. States too can seek help. Also probes criminal cases.
Limitation: Cannot probe or frame charges on its own. Cases have to be referred. Is under government control and not autonomous.
Mandate: Audits accounts of all government departments/ ministries/PSUs. Look into discrepancies of expenses made by government/departments government controlled companies. Submits reports to Parliament that are then referred to the Public Accounts Committee.
Limitation: Limited to audits and accounts. Cannot probe corruption as defined by the Prevention of Corruption Act; has powers only to recommend; no investigative or prosecution powers.
E-Governance has considerably increased the speed of government services in a number of areas and reduced opportunities for bribery. A wide range of public services have been digitized such as obtaining licenses, paying taxes and clearing goods. The National Portal of India (http://india.gov.in) was subsequently created and lists all the services that have been digitized.
Pending Anti-Corruption Legislation
Important pieces of anti-corruption legislation have been pending for years, including theCorrupt Public Servants Bill, the Lok Pal Bill, which is supposed to address corruption in high offices, including the office of the Prime Minister, and the Judge Inquiry Bill designed to introduce an inquiry mechanism for allegations and complaints against members of the judiciary. Election Commission’s recommendation to debar candidates with a criminal background from parliamentary and assembly elections is also awaiting action by the law makers.
Summary
The assessment of the legal and institutional anti-corruption framework points to a combination of robust institutions and lack of accountability in key areas. Some institutions such as the Supreme Court or the Election Commission have taken a stronger stance to combat malpractice in recent years, while key pieces of legislation such as the RTI Act promote greater bureaucratic transparency, granting citizens access to public records.
Despite these emerging trends, however, the institutional anti-corruption framework generally suffers from a lack of coordination, and overlapping and conflicting mandates between institutions addressing corruption. Key institutions often lack the staff and resources to fulfill their mandate adequately and struggle to protect themselves from political interference. Often, they primarily focus on investigating alleged cases of corruption at the expense of preventive activities. Influential politicians and senior officials are rarely convicted for corruption, eroding public confidence in the political will to effectively tackle corruption.
The Anatomy of Corruption – Why Should We Care?
Corruption is not just the clearly “bad” cases of government officials skimming off money for their own benefit. It also includes cases where the systems don’t work well, and ordinary people are left in a bind, needing to give a bribe to get a work done or the licenses they need.
The state of economy also plays an important role in corruption. Inequality of wealth distribution, exploitation by employers, and low wages and salaries provide ideal breeding ground for corruption. A license-permit regime or scarcity of basic commodities adds fuel to the fire. India is a textbook example of how license-permit Raj can vitiate political as well as economic atmosphere of the nation.
Broadly speaking, there are two forms of corruption:
Administrative Corruption: Corruption that alters the implementation of policies, such as getting a license even if you don’t qualify for it.
Political Corruption: Corruption that influences the formulation of laws, regulations, and policies, such as revoking all licenses, and gaining the sole right to operate some public utility with monopoly.
The Root Cause of Corruption
Corruption is always contextual and rooted in a country’s policies, bureaucratic traditions, political development, and its social and cultural history. Still, corruption tends to flourish when policies are complicated, their implementation is weak, and the general public has no redressal mechanism. Klitgaard has modeled the dynamics of corruption (C) in the public sector in the following equation:
C = M + D – A
Corruption tends to increase when an organization or person has monopoly (M) power over a good or service, which generates income, has the discretion (D) on its allocation, and is not accountable (A).
Why should We Care?
Average income is about three times lower than in less corrupt countries (the difference between, say, Ukraine and Czech Republic, Indonesia andSouth Korea, or Chad and Namibia).
When the ruling elite fail to curb the activities of the corrupt and the selfish within it, the governance begins to rot and the ordinary people begin to lose faith in the ruling class. Such a society begins to decay and sets itself on the road to self-destruction. A state of unchecked political corruption is known as kleptocracy, which literally means “rule by thieves”.
According to World Bank estimates, between $1 trillion and $1.6 trillion dollars are lost globally to illegal activities each year. Corruption decreases the amount of wealth in a country and lowers the standard of living. Corruption affects you even if you don’t come into direct contact with it. For example, corruption:
- Vitiates the business atmosphere and discourages businesses from operating freely; thus, acts as a demotivating force, which reduces opportunities for all.
- Reduces the amount of money government has and degrades the quality of government services; for example education, healthcare, infrastructure, welfare programs, police, etc
- Is an important factor behind the widespread poverty inIndia. A large chunk of funds meant for the welfare programs for the poor is siphoned off by the corrupt officials and the intermediate agencies.
- Allows criminal activities such as money laundering, extortion and drug trafficking to thrive.
- Allows those with money or connections to bend the law or government rules in their favor. This is how rich businessmen and politicians are always hand in gloves.
- Puts weaker section of the society to disadvantage because those with less power are particularly disadvantaged in corrupt systems, which typically reinforce gender discrimination.
- Distorts national and international trade.
- Jeopardizes sound governance and ethics in the private sector.
- Undermines democracy and the rule of law.
The conclusion – Corruption hurts everyone.
Impact on the Poor
There is considerable evidence to show that although rich people are more likely to pay bribes, the poor bear a disproportionately high burden of corruption if measured as the fraction of income paid in bribes. They often face outright exclusion when access to public goods and services require bribing, given their powerlessness due to lack of voice or political influence. Moreover, when corruption results in shoddy public services, the poor have no other options but to live with sub-standard services.
Corruption also unfairly weighs heavily on trade and service activities of small enterprises not only for the added cost but also as a discouraging factor. Corruption allows already influential individuals or groups of individuals to take advantage of state activities at the cost of the rest of the population; it hurts the poor disproportionately and increases income inequality.
A study of recent economies in transition indicates that the changes in income distribution have been partly the result of corrupt actions of non-transparent privatizations.
How to Stop Corruption
Accountability and transparency are two great antidotes to corruption. If the legal system is quick, fair and uncomplicated, it makes the task of fighting corruption easier. Free and strong press is the third facilitating factor. Therefore, laws fixing accountability and encouraging transparency combined with efficient judiciary and free press provide ideal atmosphere to tackle the menace of corruption.
Anna Hazare’s crusade for an effective Janlokpal Bill and reforms of election and judicial system, if implemented properly, will go a long way in curbing corruption inIndia.
A Brief History of Corruption after Independence
Other notable scandals include the Mudgal case (1951), Mundra deals (1957-58), Malaviya-Sirajuddin scandal (1963). The governing climate in those days can be gauged from the following observations:
A one man committee of A. D. Gorwala, set up to suggest ways to improve the system of governance, observed that quite a few of Nehru’s ministers were corrupt and this was common knowledge and that the government goes out of its way to shield its ministers.
The Santhanam Committee, which was appointed in 1962 to examine the problem of corruption, observed in 1964 that: “There is widespread impression that failure of integrity is not uncommon among ministers and that some ministers, who have held office during the last sixteen years have enriched themselves illegitimately, obtained good jobs for their sons and relations through nepotism and have reaped other advantages inconsistent with any notion of purity in public life.”
In later years, corruption gradually became almost institutionalized when power got concentrated in just one person – Indira Gandhi. Nagarwala case (or V K Malhotra) was a most bizarre scandal when the Chief Cashier of State Bank of India, V.P.Malhotra paid Rs 60 lakhs to one Nagarwala supposedly on telephonic instructions from Indira Gandhi. Nagarwala died in jail but the mystery was never really resolved.
Later, the Bofor’s deal and the kickback charges led to Rajiv Gandhi losing power. Then Narsimha Rao became the first Prime Minister to be prosecuted in corruption charges in the JMM bribery case. Of course, he was later acquitted.
What is surprising is that despite the knowledge of widespread corruption no effective measures have yet been installed that curb the menace. The Lokpal Bill could not be passed in last decades; it speaks for the utter lack of political will in the country.
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