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CORRUPTION TRAP
By
Sankar Sen


The World Bank has defined corruption as the use of "public office for private profit". Corrupt acts include bribery, extortion, embezzlement, use of speed money, etc. Generally, in our country the focus remains on the demand side of corruption and not so much on the supply side. We talk of corruption by the public servants and political leaders forgetting the role of the corrupt businessmen. Corruption is always like two hands clapping. 

It is an unfortunate fact that with the passage of time corruption level in India has substantially increased. A non-governmental organisation, Transparency International, based in Berlin, has come up with the Corruption Perception Index. It ranks countries according to the level of corruption as assessed by those who do business with the country. Last year, out of 85 countries listed by the Transparency International, India's rank was 66. This year, Transparency International has ranked 99 countries and our rank is 73. Thus, 19 countries were perceived to be more corrupt than India in the last year and this year, 27 countries are considered to be more corrupt. However, this marginal improvement in position should provide no satisfaction. Transparency International has also listed countries in terms of Bribe-payers Perception Index (BPI). The BPI, undertaken by Gallup International for Transparency International in 14 leading market economies, shows that companies from many leading exporting countries regularly resort to bribes for expansion of their business. The BPI reveals that of a scale 0-10, where 10 reads as corruption-free exporting country, the best score among exporting countries was 8.3, while the worst was 3.1. China was seen as having the greatest willingness to pay bribes abroad followed by South Korea, Taiwan, Italy and Malaysia. Sweden, Australia and Canada achieved the most favourable results. 

For a developing country like India, corruption is a scourge. It is anti-national. It seriously retards a country's economic development. The MNDP Report on Human Development in South Asia 1999 The Crisis of Governance says that if corruption levels in India were reduced to those of the Scandinavian countries, the investments in the country' could increase annually by 10 per cent and GDP growth by almost 1.5 per cent each year One recent study shows that investing in a relatively corrupt country compared to a relatively honest one is equivalent to additional 15 per cent profit tax on investment. In India, as per the current corruption levels, the implicit corruption tax on investment is almost 20 per cent. Corruption, thus, diminishes the country's capacity for investment by reducing the resources of the government. The high potential for capital /light of illegal earnings makes corruption associated with a very negative impact on the balance of payments. 

In India, as well as in many South Asian countries, corruption can be divided into three categories : (a) petty corruption, (b) middling corruption, and (3) grand corruption. There is a growing perception that corruption has moved upwards from petty corruption in 1950s to grand larceny at the highest levels of the State in 1980s and 90s. 

Features of Corruption in India

Corruption occurs in almost all countries, but in India and the neighbouring countries of South Asia, corruption has certain characteristic features that make it far more sinister and damaging than corruption in other parts of the world. These features have been highlighted in the UNDP report. First, corruption in India occurs upstream and not downstream. Corruption at the top distorts fundamental decisions about policies, projects and development. In industrialised countries of the West, core decisions are taken through transparent competition and on merit, even though petty corruption may occur downstream. Second, corruption in India has wings and not wheels. Most of the corrupt gains made in the region are immediately smuggled out to safe havens abroad and not ploughed back to domestic production and investments. Third, corruption in India and other Asian countries often leads to promotion and not prison. The big fish are rarely caught. In advanced industrialised countries there is a process of accountability. Even top leaders are not spared. For instance, the former Italian Prime Minister, Bettino Craxy, has been forced to leave in exile in Tunisia to escape extradition due to corruption charges in Rome. The frustrating aspect of the situation in India is corrupt persons are too powerful and beyond accountability. Fourth, corruption in countries like India, where majority of the people live in abject poverty, can have a very unsettling impact. Combating corruption is thus not punishing some dishonest politicians but also saving human lives. Fifth, corruption increases injustice. Basic human rights and freedom are threatened when criminal justice administration is perverted because of misuse of money power. In Bangladesh, in a survey by Transparency International, 90 per cent of the respondents pointed out that the police and judiciary were the most two corrupt institutions. It is a fact that with entrenched corruption the basic trust between citizens and the state disappears. In India also in many courts the people have to offer bribes in order to get a quick verdict. According to a, 1998 survey, 63 per cent of the respondents reported that they had to pay bribe to the court officials in order to get a verdict in their favour. Another survey shows that 80 per cent of the people in India feel that they need influence or have to pay bribes in order to see a case through. 

Corruption Equation 

Robert Klitgaard (Controlling Corruption, Berklay University of California Press) devised a formula that lies at the heart of the corruption problem. It equals corruption with monopoly power plus discretion minus accountability and low government salaries. Corruption takes place when a person has monopoly power over a good or service and has a discretion to decide who will receive it and how much and is not accountable and has a low income level. Thus, the solutions to the problem of corruption need reduction of artificial monopoly power, limited official discretion, increased punishment for the violators and enhanced transparency. Corruption continues because, very often, the offenders feel that they can get away scot-free. In India, most of the government officials know that they would never be caught, and if caught, would escape punishment because of legal delays. 

Again, there are some laws and rules in existence, which perpetuate corruption and give opportunities for corrupt practices among the government officials. For instance, it requires 47 different approvals to construct a building in Mumbai and a small-scale entrepreneur has to handle 32 different inspectors and 46 different documents. Malpractices remain unchecked because most of the government departments lack effective in-house vigilance machinery. Many of the government agencies have also developed institutional mechanisms that perpetuate, not eliminate, corruption. Upright officers, who refuse to be corrupted, are frequently transferred to unimportant jobs so that corruption chain is not delinked. 

In this connection it may be mentioned that the Santanam Committee on Prevention of Corruption in its report recommended to the government that since corruption was closely related to administrative procedures and abuse of discretion, the Central Vigilance Commission (CVC) which they had proposed to be set up should deal not merely with cases of corruption but also hear complaints against wrong, dilatory or unfair administrative exercises and procedures. The Committee wrote to the then Prime Minister, Lai Bahadur Shastri, that "in order to effectively deal with the problem, it is necessary to take into consideration the root causes, of which the most important is the wide discretionary power which has to be exercised by the executive in carrying on the complicated work of modern administration." However, the Government of India was not in favour of empowering the CVC with the job of looking into the grievances of the citizens against unfair administrative practices and procedures. So, it ordained that the CVC should only look into the matters relating to corruption. It promised that the Department of Administrative Reforms would work out the details of such a machinery. This promise remained unfulfilled. Thus, the CVC could not play the role of ombudsman as in U.K. and other western countries. 

Grease-the-Wheel Arrangement 

It is argued by some writers that corruption and bribery are necessary lubricants for a cumbersome system of administration. But this "greases the wheel" argument is flawed. Speed money belying the name has the effect of slowing down the pace of administration further. Delay will be deliberately caused in order to invite payments of bribe. This is because of the enormous discretion that many politicians and bureaucrats have over the creation, proliferation and interpretation of counter-productive regulations. Sometimes, it is argued that deregulation or privatisation are the panacea for corruption. This is not a fact. Deregulation and privatisation are not magic wands that can remove corruption overnight. Experience in countries like Russia, China and India have shown that deregulation can lead to an increase in corruption. It is seen that, very often, corrupt rulers may be keen to privatise state assets because of the opportunity for large one-time gains. And again, regulatory powers may be created paradoxically in the process of deregulation. Regulatory Committees set up by the government can be corrupted by the businessmen and monopolists. It is necessary that institutional structure of regulatory agency should be determined before bidding in order to prevent manipulation. 

Strategies 

It is necessary to devise a series of long-range strategies and short-term measures to deal with the menace of corruption. An anti-corruption revolution, if it is to be credible, must start at the top. To make an impact in public mind, it is necessary to prosecute and punish some major corrupt figures. These are pave-the-path actions necessary to jolt the system out of the corruption trap. Unfortunately, in India till now very few corrupt political leaders or businessmen have been brought to book and hence talk of war against corruption brings cynical reactions from the public. 

Actually today, political corruption has become the mother of all kinds of corruption. Hence, some determined action against corrupt politicians is called for. Revision of electoral law is necessary to ensure that anyone chargesheeted or challaned in any criminal case or who has been a history-sheeter in the records of the police should not be given tickets to contest the election. 

The National Commission to Review the Working of the Constitution in its paper on the review of "Election Law Processes and Reform Options" has also suggested disqualification of a candidate against whom charges relating to certain crimes have been framed.

 Corruption flourishes because punishment is lacking. The conviction rate in India is hardly 6 per cent. Corruption has thus become a low-risk and high-profit activity. The Corrupt Public Servants (Forfeiture of Property) Act, 1999 is pending with the government for consideration since 04.02.1999. It is necessary to pass such an Act so that real punishment by way of confiscation of the property can be enforced. 

Politicians, bureaucrats, judges and military officers must be required to make a detailed break-down of their assets position and tax return every year after assuming the office. Actually, if the property statements of the officers are properly scrutinised, action can be initiated against many of the black sheep. Annual Property Returns (APRs) are not submitted, despite clear service rules, by many civil servants regularly. 1 know of a case where a very senior officer of the rank of Director General of Police did not submit APRs for 15 years and could get away by pleading the ignorance of these rules. If these returns are carefully scrutinised and then followed by swift enquiries against some of the known corrupt public servants living beyond their means, it will have a deterrent impact.

An effective Right to Information Bill would go a long way to help the citizens to combat corruption. In India, the Right to Information Bill is lying in Parliament for several decades. It has still not been passed. It is essential that government policies and programmes become transparent and the people are able to exercise their right to information. The official secrecy code is often used by those in authority to suit their whims. In developed countries like USA, UK and Canada, people have the right to obtain certain documents, except those pertaining to the security of the state and defence matters. 

One also notices international double standards in dealing with the corruption problem. There is an urgent need to ensure that all countries should declare bribery illegal, regardless of whether it is paid to foreign officials or national residents. Currently, many European countries have declared bribery illegal when paid to their own nationals, but payment to foreigners are often regarded as necessary for business and are treated as tax deductible payments. 

Though corruption has become deeply entrenched, yet it is not impossible to get out of its trap. Countries like France in the 19th century and Singapore and Hong Kong in the 20th century have completed the transition from high-corruption societies to low corruption ones. Strong political will and commitment to a clear anti-corruption agenda can bring about similar outcome in India also. In Hong Kong the Independent Commission against Corruption (ICAC) has done remarkable job in reducing corruption. ICAS was given the power to investigate and prosecute corruption cases and engage in a campaign of public education. The government indicated its commitment by appointing a person of unquestioned integrity to head ICAS and also prosecuting some big fish. In India, highly politicised nature of anti-corruption wings in states shows that very often they have been used for political witch-hunts rather than for catching corrupt officials. Further, lack of real statutory powers have made many of these anti-corruption agencies ineffective.

 

"Views and opinions expressed in the articles and notes published in this web site are of the authors and do not necessarily reflect the views of the Association of Retired Senior IPS Officers".

 

 

 

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Last modified: January 20, 2004