Economy riddled with corruption

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Economy riddled with corruption

Friday, 05 March 2021 | Moin Qazi

Economy riddled with corruption

Graft is a huge, insidious problem in our country that has eaten into every aspect of our lives, be it in rural or urban India

A survey conducted by Transparency International (TI) last year found that India has the highest rate of bribery in the Asian region. The survey titled, ‘Global Corruption Barometer (GCB), Asia’ revealed that the nation also had the highest rate of people using personal connections to access public services. The country has a bribery rate of 39 per cent while 46 per cent people use “familiarity” to get access to services. The report noted that “slow and complicated bureaucratic process, unnecessary red tape and unclear regulatory frameworks force citizens to seek out other solutions to access basic services through networks of familiarity and petty corruption (in India).”

The nation’s quest for economic dynamism has been severely stifled by chronic corruption. The country needs to urgently modernise its institutions and end the culture of rent-seeking and cutting corners if it wants the wheel of its economy to roll seamlessly. Corruption is both anti-national and anti-poor because the resources meant for poverty alleviation schemes get siphoned off by dishonest politicians and bureaucrats. It is among the most debilitating economic illnesses that afflict large parts of the world. India is now caught in a situation where many sectors are steeped in endemic corruption, including those charged with controlling it — from the legislators who write the laws, to the judiciary which makes them roadworthy and the police which is charged with enforcing them.

In the last four decades, despite several Government programmes for the welfare of the rural poor, poverty remains endemic. Either the nets were not cast wide or there were too many holes blown into them. The cruel reality is that much of the public spending does not reach the poor. It is either sponged off by the delivery mechanism consisting of consultants, advisors, their equipment and studies — or it gets pocketed. This has become a touchstone for all public-funded programmes and is now parroted in all Indian development literature. Low-level graft remains pervasive. Much of the Western world aid is running down the bureaucratic ratholes. Corruption is a huge, insidious problem in our country that has eaten into every aspect of life. It can lead to distrust in the Government, generating civil strife, violence, and conflict. 

While the poor do not have the money to bribe public servant to avail services that are their right, they have a vote that the politician wants. The politician does a little bit to make life a little more tolerable for the poor — a seat in a good school for the lucky few, a Government job for the even luckier, on occasion the unexpected munificence of a loan waiver or, more commonly, a phone call that helps them get a police case registered. For all this, the politician gets the gratitude of his voters. However, he then also has little reason to improve the system by reforming it.

The state of affairs is grim, as every village official must be paid not just to expedite the application form for development schemes but specifically for not obstructing it. There is no easy solution to the problem. The corrupt police officials have a rollicking time at the expense of helpless citizens. In fact, there is no link between corruption and poverty. It is easier to convert a corrupt constable rather than an officer into an honest person. Higher officials get so carried away by the glamour and competition evident among their peers, and the aspirations of their families, that malpractices and bribes become a part of their lives. Surely education is a failure here. Voters favour a familiar family pedigree, partly because of a cultural reverence for the family and because of feudal habits that go back centuries. These traditions are more important in politics than individual qualities or merits in India and they strike at the very core of democracy. Grassroots activists and student leaders with no patronage matter little, and given the huge money and muscle power involved in elections, outsiders can only dream of power. In fact, the impact of nepotism goes beyond politics, with the reign of dynasties extending to most businesses too.

Like the mythological hydra, corruption is a many-headed foe that insinuates itself into every part of the social fabric — weakening the body politic and jeopardising prospects for economic growth. It can wither only after the heads are lopped off.

It has been a long-standing problem that successive Governments have battled and mostly failed to quell. In his magnum opus ‘Arthashastra’, written nearly three centuries before the Christian era, Kautilya, the classical master of statecraft, observed: “Just as it is impossible to know when a fish moving in water is drinking it, so it is impossible to find out when Government servants in charge of undertakings misappropriate money.”

The phrase, “probity in public life” has become an oxymoron. The time to start popping the corks would be when corrupt officials are actually convicted and penalised. Unfortunately, our criminal justice system has a truly pathetic record on this front. As long as that remains true, much publicised arrests serve little or no purpose. They certainly do not act as effective deterrents to potential bribe-takers or bribe-givers. Corruption is too often seen as merely a moral issue. Not enough people realise just how crippling an economic factor it can be. The cost of the bribes clearly must be factored into the business model and hence into the costs.

The country’s economic system is fused with many strands of corruption and organised systems of tax evasion. Cases of people greasing palms to get a college scholarship, tax refund or mortgage from a State-owned bank are now commonplace. Petty corruption includes slipping banknotes to the police and to officials to get paperwork done. Businessmen have to offer “seed money” to avoid red tape.

Writer and former diplomat Pavan Varma suggests that the persistence of corruption in India also reflects a strain of amorality in our character: A willingness to tolerate corner-cutting and rule-breaking in the successful pursuit of wealth and power. “Corruption, of course, is not unique to India,” he writes in ‘Being Indian’. “What is unique is the level of its acceptance, and the creative ways in which it is sustained. Indians do not subscribe to antiseptic definitions of rectitude… Their understanding of right and wrong is related far more to efficacy than absolute notions of morality.”

Most Indian businesses cannot survive or remain competitive without stashing away undeclared earnings. Almost everybody who has sold a house has taken one part of the payment in cash and evaded tax on it. Huge quantities of secret wealth are still a part of our system.

The solution lies in ensuring that the Central Bureau of Investigation remains free of Government interference and that whistle-blowers, witnesses and journalists working on corruption cases are protected. The Government must realise that increasing corruption can act as a speed breaker in the Indian growth story. There is a need for a strong political will to untangle it. Without a strong civil society or an independent judiciary to check Government power, the political class can become complacent. We have a long distance to cover to get rid of corruption and it may require longer sprints as time is running out. 

The writer is a well-known development professional. The views expressed are personal.

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