Viksit Bharat needs a clean system: Growth depends on fighting corruption

Tales of corruption from almost every part of India appear regularly in both mainstream and social media. Consider a few examples: 

• A retired chief financial officer of a prominent public sector enterprise had to pay bribes at every stage for an ambulance — for filing an FIR, at the crematorium, and even for the death certificate — after losing his 34-year-old daughter to a brain haemorrhage. From the police officer to the clerk in the municipal office, everyone demanded money for performing their basic duties. This was in Bengaluru, Karnataka.

• A sub-inspector in Lucknow was caught taking a ₹2 lakh bribe to remove the name of an accused in a gang rape FIR. He had reportedly demanded ₹50 lakh for the task and this was a part payment for the job.

• An entrepreneur recounted how he finally closed his operations in India because of the bribes he needed to pay the Customs officers at the Chennai Port Trust each time his shipment arrived, even if his papers were in order. In response to his post on X, social media was soon flooded with businessmen and common citizens recounting their own experiences with bribes sought by Customs officers across the country as well by officials dealing with goods and services tax.

 

Corruption is not a new phenomenon in India. Nor is it unique to India — indeed corruption can be found across the world. However, as countries move up the development ladder, corruption typically reduces. And with India aspiring to become a developed nation by the time it celebrates its 100th birthday, it will need to tackle this endemic problem. The damage it is causing to the country’s development aspirations is too great to ignore.

 

Since the 1990s, many researchers have studied the effects of corruption on a country’s economic growth. Studies have established how detrimental corruption is to attracting foreign direct investment (FDI), private investment, job creation, and income equality. Some researchers have shown how corruption leads to poor-quality products and services, a lower quality of life for citizens, and the creation of powerful oligopolies. Others have pointed out that corruption can lead to subsidies not reaching their intended beneficiaries, thus negating the social security nets and exacerbating the challenges faced by the extremely poor and most vulnerable. In 2022, a paper by E Spyromitros and M Panagiotidis said that empirical studies have shown that a mere one per cent rise in the corruption index can decrease gross domestic product per capita by 0.15 to 1.5 per cent.

 

According to Transparency International’s widely followed Corruption Perceptions Index, India scored 38 out of 100 in 2024, ranking it 96th out of 180 countries in terms of corruption. The score of 38 was marginally better than what the organisation had assigned to India in 2012 and 2013, but same as its score in 2014. There had been some improvement between 2014 and 2023, but its survey showed that India had started slipping again.

 

Meanwhile, the World Bank’s Control of Corruption assigned India an equally dismal ranking in 2023. (2024 data has not been compiled yet). India scored 42 on a scale of 0 to 100, where 0 is most corrupt and 100 is least corrupt. It stood at 108th place out of 193 countries in the World Bank list. Denmark was the least corrupt nation.

 

While the deleterious effects of corruption have been established fairly well through research, there is less unanimity about how to reduce corruption. To be fair, a few researchers also put forward the “Grease the Wheels” hypothesis that some corruption can help in specific cases but most researchers have come to the opposite conclusion. While it is well-known that most highly developed economies have very low corruption, it is less clear whether development automatically leads to lower corruption or lower corruption leads to the development of a nation. Intuition says that the latter is more likely.

 

So how does one reduce corruption in India? A few scholars and influencers say that a strong foundation of morals and ethics in education, especially from primary levels, can help. Again, this is a hypothesis. 

 

Your columnist thinks that three things can help reduce corruption. One is simplifying the regulatory maze in every area from land acquisition to Customs classification. This will reduce the opportunities for bureaucratic rent-seeking. 

 

The second is to reduce the strong protective shield that bureaucrats, especially senior ones, enjoy against investigations and prosecutions. Today, unless the government gives sanction to prosecute, a corrupt officer is fairly safe, and vigilance departments often find such sanctions very hard to obtain. While these protections were put in place with the best of intentions — to protect bureaucrats from being wrongly blamed for decisions taken in the course of their professional duties — they have had a perverse effect over time. Perhaps an income and assets audit, done every 10 years, that automatically sanctions investigation and prosecution of officials whose assets cannot be explained by income, investment returns, or inheritance, is required now. 

Finally, the legal system needs major revamp so that corruption cases do not drag on for three decades or more.

 

Corruption needs to be tackled if India wants to become a developed country but for that, governments at the Union and state levels will need to bite the bullet — even if it is politically dangerous.

The author is editor, Prosaicview, and former editor, Business Today and Businessworld