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India corruption commentary

Published by The Straits Times, Singapore on 2004-05-24

NOIDA (India) - In this growing young community of industries and call-centres just across the Yamuna River from New Delhi, there isn't undue excitement over political developments in the capital city, where a new Congress-led government has taken office under the stewardship of Prime Minister Manmohan Singh.

Everyone here has noted, of course, that several stalwarts from long-forgotten administrations have been brought back into seats of power. Everyone's noticed, with some amusement, how leaders of the ruling 13-party coalition called the United Progressive Alliance are importuning Mrs Sonia Gandhi, the Congress dowager, for choice ministerial berths. Everyone's noticed, too, how publicly sulky and sour even the most experienced politician in India can get when he's not offered the cabinet post he sought.

To an outsider, the jostling for cabinet posts may seem a bit unseemly. But it's far more than a matter of regional feathers being ruffled or political egos being squeezed. Who gets what in national - and state - government often determines how much money they get to make during their tenure in office, and not just through their relatively meagre salaries (a federal minister gets the equivalent of US$1,000 per month). Little wonder then that while the new government is liberally talking up its vision for economic growth and social justice in an India of 1.1 billion overwhelmingly poor people, not one leading politician has uttered the 'C' word - corruption.

It's no hyperbole to suggest that in India public service is the quickest route to amassing personal fortunes; despite the loosening of governmental controls over the economy, significant sections of it remain hostage to a tightly-wielded system of licences and permits. Ministers and bureaucrats, who adjudicate that system, are nicely positioned to make financial demands of petitioners seeking approval for industrial expansion.

Indeed, just yesterday (Monday), the influential US-based Centre for Public Integrity said that, the recent general election notwithstanding, India was a 'weak democracy' on account of corruption and lack of accountability in public institutions. After a year-long study of 25 countries, the nonprofit, nonpartisan centre issued its 'Global Integrity Report' in which it said that 'the absence of any meaningful law to monitor the funding of political parties has been a glaring limitation in the Indian electoral/political system.'

The report also said that a 'major bottleneck' in the Indian democratic and legal framework has been 'lack of transparency about the functioning of government.'

'This lack of transparency empowered the bureaucracy in significant ways and paved the way for abuse of power,' the report said. 'The system as a whole does not seem to have effective checks in place to prevent or tackle corruption.'

Consider how vast India's bureaucratic system is: There are some 20 million civil servants and elected public officials in the country's 29 states. Mr Pavan K. Varma, director of the Jawaharlal Nehru Centre in London - and a prolific author - estimates that in India as a whole the amount of 'black money' in circulation exceeds 40 percent of the gross domestic product of US$600 billion. 'Black money' represents cash that's unaccounted for - meaning money that is spread around in bribes to officials, gratuities and peculation. It also represents an amount that the government cannot tax, and hence constitutes a major loss of revenue for the national treasury.

Consider this, too: There are some 2.5 million small-scale industries in India today. They pay more than US$1 billion in bribes. In New Delhi alone, according to estimates by nongovernmental organizations, the 500,000 street vendors who offer everything from fast-food to trinkets are forced to give US$100 million a year in bribes to local policemen and municipal officials in order to receive informal approval to ply their trade. More than half of India's top 1,500 corporations - including those among the 5,000 listed on thee prestigious Mumbai Stock Exchange - pay no taxes at all.

And consider this: Through a resourceful system of over-invoicing of imports and under-invoicing of exports, India's businessmen quietly send abroad nearly US$3 billion each year. 'The unaccounted money of Indians in tax havens is estimated to be over US$100 billion,' says Mr. Varma in an acclaimed new book, 'Being Indian' (Penguin Viking, New Delhi, 2004).

And why the pervasive corruption? Mr Naveen Mehta, a medium-sized entrepreneur here in Noida, has this to say: 'For businessmen, gratuities to people in power is simply the cost of doing business. For the politician-recipients of those payments, it's a way of obtaining financial security in an insecure business like politics, where there's no such thing as a long-term career. For the average bureaucrat, bribes are a way of supplementing shockingly low incomes. And for the everyday Indian? Well, who doesn't mind that extra rupee with which to buy the nice goods we see every day on TV? Show me who isn't a culprit in today's India.'

Culprits are rarely caught, and still more rarely prosecuted - even though the Indian Penal Code rails against corruption and national legislators passed the Prevention of Corruption Act in 1988. When 100 cooperative banks in Gujarat state collapsed because of massive embezzlement by a financier, the culprit was apprehended briefly and then took off on a long foreign holiday from which he's yet to return.

Mr Mehta told the story, perhaps apocryphal, of an Indian minister who visits the US. He's taken by a senator to his southern state. The senator shows the minister his fancy home, whereupon the Indian asks how the American could afford such lavish living on a relatively low public salary. The senator points to a bridge across a river from his home and says, 'See that bridge? Ten percent for me.'

Some months later, the American senator visits India, and the Indian minister takes him to his constituency in Uttar Pradesh, one of the country's poorest states (although, at 175 million people, its biggest). The senator is impressed by the minister's luxurious home. 'How can you afford this on your salary?' the senator says to the Indian. The latter points out of the window and says, 'See that bridge?' The senator is puzzled. 'What bridge?' he says, 'I see no bridge.' The Indian says, 'Exactly. One hundred percent for me.'

Lately there are signs, however, of mounting citizen concern over the extent of corruption in the polity. In the heavily industrialised state of Maharashtra, grassroots groups are protesting that while their state accounts of 80 percent of the national government's revenue from taxes, only 15 cents of every dollar reaches grassroots development programs.

'This kind of corruption slows the nation down,' says Ms Sucheta Dalal, one of India's leading economic analysts. 'It's creating too much economic disparity between the states, and it's retarding social development. People should get hot and bothered about the corruption. It's destroying India.'

So when will Prime Minister Manmohan Singh utter the 'C' word?

Pranay Gupte,
Senior Writer and Global-Affairs Columnist

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