Lax enforcement of laws causing spread of corruption: Survey

An overwhelming majority of respondents to a survey on corruption in India feel lax enforcement of laws was resulting in widespread bribery and graft, it was stated here Monday.

"Around 89 percent of the (over 200) respondents felt that inadequate enforcement of laws is resulting in bribery and corruption proliferating in the country," said the survey 'Bribery and Corruption: Ground reality in India', conducted by FICCI and Ernst and Young (EY).

It was released here to coincide with the FICCI National Executive Committee meeting.

The survey found that "majority of the respondents were optimistic that new regulations such as the Companies Bill 2012 will make a difference and help in reducing fraud, bribery and corruption in the country".

EY said over 200 responses came from senior executives handling internal audit and finance, legal and compliance, and vigilance and risk management to the online survey conducted between March and May.

"Our respondents represented a mix of Indian enterprises with domestic operations, as well as Indian and foreign multi-nationals in the US and the UK, whose annual incomes range from Rs. 50 billion to Rs. 100 billion," it said.

The survey report said "corruption - real or perceived, is having a detrimental impact on the country's economy. Around 83 percent of the respondents felt that the recent spate of scams will negatively impact FDI inflows into the country".

It said "the sectors most vulnerable to corruption include the government and public sector, infrastructure and real estate, metals and mining, aerospace and defence, and power and utilities sectors".

"A large number of respondents appeared to be aware of unethical business conduct, including irregular accounting to hide bribery and corruption, gifts being given to agents and third parties being used to pay bribes. More than half of the respondents felt that it is the lack of will to obtain licenses and approvals the 'right way', which leads to bribery and corruption," the report said.

"Complicated taxes and licensing system also fuel corruption," it pointed out.

Arpinder Singh, partner and India Leader - Fraud Investigation and Dispute Services, EY, said the impact of the corruption was that it was "forcing investors to rethink their India entry strategy" and also "distorting free market and creating unfair competition".

He said while the Indian government was doing its bit to improve the business environment, "private sector too has a significant role to play".

"Though many companies show awareness of the risks and have intensified their anti-corruption compliance initiatives, the results of this survey show there is still much to be done," he said.

"Companies will have to ensure high level of transparency in business conduct and take a steadfast long-term view to resist the pressure or temptation to pay bribes," Singh said.

FICCI president Naina Lal Kidwai said "corruption invariably increases transaction costs and uncertainty in an economy while lowering efficiency by forcing entrepreneurs to divert their scarce time and money to bribery rather than production".