Corruption in India is a major issue and adversely affects
its economy. A 2005 study conducted by Transparency International in India
found that more than 62% of Indians had first-hand experience of paying bribes
or influence peddling to get jobs done in public offices successfully.
In its 2008 study, Transparency International reports about
40% of Indians had first-hand experience of paying bribes or using a contact to
get a job done in public office.In 2011 India was ranked 95th out of 178
countries in Transparency International's Corruption Perceptions Index.
Some of the largest sources of corruption in India are
entitlement programs and social spending schemes enacted by the Indian
government. Examples include Mahatma Gandhi National Rural Employment Guarantee
Act and National Rural Health Mission.
Other daily sources of corruption include India's trucking
industry which is forced to pay billions in bribes annually to numerous
regulatory and police stops on its interstate highways.
Indian media has widely published allegations of corrupt
Indian citizens stashing trillions of dollars in Swiss banks. Swiss
authorities, however, assert these allegations to be a complete fabrication and
false.
The causes of corruption in India include excessive
regulations, complicated taxes and licensing systems, numerous government
departments each with opaque bureaucracy and discretionary powers, monopoly by
government controlled institutions on certain goods and services delivery, and
the lack of transparent laws and processes.
The economy of India was under socialist-inspired policies
for an entire generation from the 1950s until the late 1980s. The economy was
characterized by extensive regulation, protectionism, and public ownership,
policies vulnerable to pervasive corruption and slow growth. In 1960s,
Chakravarthi Rajagopalachari suggested License Raj was often at the core of
corruption.
The Vohra Report, submitted by the former Indian Union Home
Secretary, N.N. Vohra, in October 1993, studied the problem of the
criminalisation of politics and of the nexus among criminals, politicians and
bureaucrats in India.
The report contained several observations made by official
agencies on the criminal network which was virtually running a parallel
government. It also discussed criminal gangs who enjoyed the patronage of
politicians — of all political parties — and the protection of government
functionaries.
As of December 2008, 120 of India's 523 parliament members were
facing criminal charges. Many of the biggest scandals since 2010 have involved
very high levels of government, including Cabinet Ministers and Chief
Ministers, such as in the 2G spectrum scam, the 2010 Commonwealth Games scam
and the Adarsh Housing Society scam, Coal Mining Scam, mining scandal in
Karnataka and cash for vote scam.
A 2005 study done by Transparency International (TI) in India
found that more than 50% of the people had firsthand experience of paying bribe
or peddling influence to get a job done in a public office.
Taxes and bribes are common between state borders;
Transparency International estimates that truckers pay annually 22,200 crores. Government
regulators and police share in bribe money, each to the tune of 43% and 45%
respectively.
The en-route stoppages including those at checkpoints and
entry-points take up to 11 hours in a day. About 60 percent of these (forced)
stoppages on road by concerned authorities such as government regulators,
police, forest, sales and excise, octroi, weighing and measuring department are
for extorting money.
The loss in productivity due to these stoppages is an
important national concern. The number of truck trips could increase by 40%, if
forced delays are avoided.
According to a 2007 World Bank published report, the travel
time for a Delhi-Mumbai trip can be reduced by about 2 days per trip if the
corruption and associated regulatory stoppages to extract bribes was
eliminated.
A 2009 survey of the leading economies of Asia, revealed
Indian bureaucracy to be not just least efficient out of Singapore, Hong Kong,
Thailand, South Korea, Japan, Malaysia, Taiwan, Vietnam, China, Philippines and
Indonesia; further it was also found that working with India's civil servants
was a "slow and painful" process.
Corruption may lead to further bureaucratic delay and
inefficiency as corrupted bureaucrats may introduce red tape to extract more
bribes. Such inadequacies in institutional efficiency could affect growth
indirectly by lowering the private marginal product of capital and investment
rate.
Levine and Renelt showed that investment rate is a robust
determinant of economic growth.
According to the neoclassical growth model, institutional
variables contribute to determining steady-state per capital income levels and
speed of convergence to its steady state, hence affecting its growth rate.
Bureaucratic inefficiency also affects growth directly, such
as through misallocation of investments in the economy. Additionally,
corruption results in lower economic growth for a given level of income.
Lower corruption, higher growth rates
If corruption levels in India were reduced to levels in the
developed economies such as the United States, India's GDP growth rate could
increase by an additional 4 to 5 percent, to 12 to 13 per cent each year. C. K.
Prahalad estimates the lost opportunity caused by corruption, in terms of
investment, growth and jobs for India is over US$ 50 billion a year.
The level of corruption varies in different parts of India.
In a July 2011 report, The Economist for example, claims the state government
of Gujarat has kept red tape to a minimum, does not ask for bribes, and does
not interfere with entrepreneurial corporations.
The state, the article claims, has less corruption, less
onerous labour laws and effective bureaucracy. With growth rates matching some
of the fastest growing economic regions of China, Gujarat continues to outpace growth
in other Indian states.
