3CMGM 2011-2012

Geo-Politics

“India, corruption and the next door to development”

Anshuman Patra

Table of Contents

India and its Corruption ............................................................................................................... 2

Market perspective ...................................................................................................................... 3

The economic mind of the bribe taking public official.................................................................... 5

Why such a deep rooted problem today? ..................................................................................... 8

The Social Dilemma ...................................................................................................................... 9

What is Jugaad? ......................................................................................................................... 10

The Lokpal and Mr. Anna Hazare ................................................................................................ 11

Summary and Conclusion ........................................................................................................... 12

References ................................................................................................................................. 14

India and its Corruption

India is called the land of unity in diversity which is true in terms of its natural,

cultural, historical past and significance. Although it still holds true in modern

India where people of different castes, creed, religion and states with their

unique language and culture all co-exist in the same environment there is a

small difference between the modern and rural cities, which are economically

very different. The income equality is apparent yet at the same time it is still

highly united as a country marching towards the next decade. However in terms

of traditions, political systems, governance and business environment it still

remains very complex and less easily explained or understood. According to a

World economic Forum report, the second most problematic factor for doing

business India is corruption after bad infrastructure which is a structural

problem.

Source: World Economic Forum, Global Competitiveness Report 2011-2012. 1

Furthermore the current state of corruption that exists is also unique and

complex to understand. I would like to bring to attention the number of

1 World Economic Forum 2012,Accessed from

http://www3.weforum.org/docs/WEF_GCR_Report_2011-12.pdf

scandals/scams which have been growing exponentially with time. The biggest in

the recent months have been Common Wealth Games, 2 G Telecom license

auction, Adarsh Housing and Coal Mining Scams which have deeply hurt the

public ex-chequer (Wikipedia, 2012)2. It is roughly estimated that all corruption

scams put together to have a total value of 20 Trillion dollars of those which

have been made public. If all this were invested in India, it would be on a high

growth trajectory to say the least. It is a matter of shame that an Economist and

a person like Dr. Manmohan Singh is occupying the Highest Authority in India

when Corruption is at its peak with billions stashed in tax heavens, while

Governance has hit rock bottom. What is rather more concerning is that even

industry leaders like Mr Keshbu Mahindra, Mr Azim Premji, Mr Deepak Parekh

etc. have taken to writing joint letters to the prime minister raising their

concerns about growing Governance Deficit, Galloping Corruption and the urgent

need to distinguish between „Dissent‟ and „Disruption‟.(FreePress, 2012)3

Market perspective

At a time when India is aiming for a 6% GDP growth due to macro and micro

economic shocks, the rising level of bribery and corruption cases have cast dark

cloud over the hard earned success earned by the country over the last two

decades. These corruption cases and scams over the past two years are now

threatening to derail the country‟s credibility, especially in the international

arena, and the economic boom witnessed especially since liberalisation is now

under intense scrutiny by the international markets and investors.

India has scored 3.1 on a scale - where 10 indicates very clean and zero, highly

corrupt - of Corruption Perceptions Index (CPI). The CPI focuses on corruption in

the public sector, involving public officials, civil servants or politicians. The data

sources used to compile the index include questions relating to the abuse of

power and bribery of public officials, kickbacks in public procurement,

embezzlement of public funds etc.

2 Wikipedia, 2012, Accessed from http://en.wikipedia.org/wiki/List_of_scandals_in_India#2010s

3 FreePress 2011, Accessed from http://freepress.in/download/Industrialists_Open_Letter_PMO.pdf

Huguette Labelle, chairperson of Transparency International, explained that

although India is moving in the right direction to fight corruption they have to go

a long way. As three out of four Indians said their family had to pay bribes

according to the survey, particularly in the areas of healthcare and land

ownership. The average for the rest of the world is one out of four (The

Economic Times, 2011).4

A survey conducted by KPMG on bribery and corruption had a few key findings:

• 68% of survey respondents believe that India can achieve more than projected

9 percent GDP growth if corruption is controlled

• 51% of the survey respondents fear that rising corruption will make India less

attractive for foreign investment

• 90% of respondents felt that corruption negatively impacts the performance of

stock markets by increasing volatility and prevents institutional investors from

making long term investments

• 99% respondents felt that the biggest impact of corruption on business was its

tendency to skew the level playing field and attract organisations with lesser

capability to execute projects

• 68% of respondents believe that in many cases corruption is induced by the

private Sector

• Majority of the respondents feel that the corruption level in India will remain at

the same level irrespective of the legislation. Among the various measures taken

by the government, the Right to Information Act emerged as the most effective

in fighting corruption

• 84% of the respondents believe that Indian government has not been very

effective in enforcing anti-bribery and corruption laws.

This is just scratching the surface by knowing what is going on; I would like to

further ask why corruption is rampant, an acceptable practise or why it is easy

4 Ghosh, Labonita, The Economic Times (Online)[New Delhi] 03 Dec 2011 “Transparency International

chief Huguette Labelle [Interviews]”

for people to become corrupt in the Indian context especially a government

employee. There is more to it than meets the eye.

The economic mind of the bribe taking public official

In this section I will try to reason and illustrate from all possible secondary data

sources and my experiences into account to build a case for the perspective of

the bribe taking government employee and his reasoning or incentive to fall prey

to it. For this I consider an employee either working in Kolkata or Mumbai and

form a comparative analysis.

In the state of Karnataka the pay scale prevalent for a government employee

ranges between INR 4800 – INR 39900(Total) (Finance.kar.nic.in, 2012)5. There

are variations in the type of office held, nature of industry, central government

or state government employee, etc. but generally pay scale structure has very

little variations in all states throughout India. The only difference is the salary

held by the highest post in any organisation might differ but cannot be greater

than INR 150,000 (Ministry of Home affairs, 2012)6, the salary of the president

of India. For this paper since we will consider lower and middle level employees

we do not need to consider other pay variations.

Now let us consider a well-educated middle level government employee whose

starting salary may range from INR 16000 – INR 25000, who has completed a

bachelor‟s degree (BSc/ BCA)7 or a Master in Science degree (MSc) or B.Tech

(Bachelor in technology) since these are most prevalent forms of degree opted

for by students (Wkipedia, 2012)8.

If this employee happens to stay in any of the metropolitan cities in India like

Mumbai which is a relatively expensive city or Kolkata which is considered to be

one of the cheapest metropolitan cities, the table below gives rough estimations

on average monthly basic expenditure comparisons between the two cities. This

5 Finance karnatake, 2012, Accessed from http://www.finance.kar.nic.in/gos/FD07SRP2012-GO-

Revised%20Pay%20Scale.pdf

6 Ministry of Home Affairs, 2012, Accessed from

http://mha.nic.in/pdfs/President_emoluments_act1951_UPDATED_.pdf

7 BSc- Bachelor of Science, BCA- Bachelor of Computer Application

8 Wkipedia 2012, Accessed from http://en.wikipedia.org/wiki/Bachelor_of_Computer_Applications

excludes leisure activities, spouse , children education, life insurance, vehicle

insurance or any other essential expenditures due to lack of a social security

system or otherwise.

Kolkata9

Variable Amount in INR

Apartment (1 bedroom) in City Centre

7,800.34

Apartment (1 bedroom) Outside of Centre

3,896.64

Basic (Electricity, Gas, Water, Garbage) for

85m2 Apartment

1,527.32

Transport Monthly Pass

448.48

Meal, Inexpensive Restaurant

118.73 *30 ( Rs 3561.90)

Total in the city centre 13338.04

Total Outside of city centre (Suburbs) 9434.34

Mumbai10

Variable Amount in INR

Apartment (1 bedroom) in City Centre

26,604.31

Apartment (1 bedroom) Outside of Centre

15,002.78

Basic (Electricity, Gas, Water, Garbage) for

85m2 Apartment

2,222.54

Transport Monthly Pass

566.61

Meal, Inexpensive Restaurant

199.10 *30 (Rs 5973)

Total in the city centre 35,366.46

Total Outside of city centre (Suburbs) 23,764.93

9 Numbeo, 2012 ,Kolkata Living Index, Accessed from http://www.numbeo.com/cost-of-

living/city_result.jsp?country=India&city=Kolkata&displayCurrency=INR

10 Numbeo, 2012 , Mumbai Living Index, Accessed from http://www.numbeo.com/cost-of-

living/city_result.jsp?country=India&city=Mumbai&displayCurrency=INR

Source: Human Development in India, Challenges for a society in transition, 201011

One important note is that government employees in some cases get subsidised

housing up to 70% of the market value in some cases but even after that the

government employee needs to feed his family of 4, wife and two kids. In the

above calculation, estimates have been drawn for a single person in a single

bedroom accommodation. It is clearly visible that the employee cannot meet his

expenses in either city, he might be able to just survive in Kolkata but not so the

case in Mumbai.

Furthermore, as already mentioned before there are additional essential

expenditure that range from INR 5000 – INR 20,000 depending on the amount

of savings he wants to have for a rainy day and mode of transport he buys (Two

wheel motorbike or car). Furthermore owning a house is an additional dream

after all this and most probably he will not be able to pay his debt even if he

dares to buy one. Also it is important in the Indian culture to take care of his

parent‟s healthcare and economic interests as they get older. From an economic

11 Human Development in India, 2010, Accessed from

http://www.ncaer.org/downloads/Reports/HumanDevelopmentinIndia.pdf

point of view it makes perfect sense to the employee to make any form of

additional income and in this case a bribe. The average government employee is

far less compensated making him an easy prey to economic incentives of any

kind and even if there are strong laws made, enforcement will be a systemic

problem and the ever growing inflation does not make this an easy problem to

solve.

Why such a deep rooted problem today?

It is important to note here that I have considered only a lower/ middle level

government employee as he/she acts as the immediate point of contact to the

common man. All the developmental schemes are implemented and

operationalized by these employees. More importantly the employees are in the

beginning of their careers and their career direction will be moulded in this

crucial phase. Furthermore there were no references to be found of any form of

formal training on moral/ ethical values of doing businesses being imparted by

any Government organisation during my research to help make them aware of

the same to help the cause by even a little. Also, the private sector has no role

in administrative powers or legislative powers on any of these government

schemes unless it is a PPP-Scheme (Public Private Partnership). In a PPP-

Scheme the problem of corruption becomes aggravated because there are more

transaction and exchange of information occurring between to two stakeholders.

Furthermore, the approval system is still very archaic in most government

organisations and rooms filed with piles of files are easy to find where the only

source of retrieving information is the very same low/middle level employee.

There was a recent case where one of the Government offices holding this

caught fire and documents relating to 6 ministries burned out without any

backup (DNAIndia, 2012)12 Especially even more today because the size of these

organisations has become very large due to the sheer volume and scope of

action needed in a hugely populated country like India. In addition, if the

number of movements of the files increases then there would be a proportionate

12 DNAIndia, 2012, Accessed from http://www.dnaindia.com/mumbai/report_mantralaya-blaze-

controversial-files-burnt-to-ashes_1705162

increase in the amount of monetary incentive needed to move the file as it

would change hands.

In addition, quota or reservation systems although meant to help the

underserved in the society create a social, educational gap in Government

organisation due to different measurement criteria for selection in the same job.

This leads to further breakdown of the system due to lack of formal training and

different levels of acceptance of ethical and unethical behaviour.

The Social Dilemma

Ideally there are three national holidays in India but the number of public

holidays depends on the state. Each state is unique and different from one

another in terms of language, cuisine, lifestyle, festivities and celebrations.

There are 14 Bank holidays, 21 restricted holidays and 3 National holidays13;

each state government has the right to celebrate to choose from optional

holidays. There could be a huge list of festivals you would celebrate depending

on the community you reside in your personal life and hence would become

accustomed to receiving and giving gifts in form of sweets or other small

gestures.

Furthermore, if you are a small kid and are going to see your distant uncle and

aunt, they would give you pocket money even if you are meeting them for the

first time in 5 years and if you say no, they would insist and put the money in

your hands and close your fist saying “Tumhara chocolate paise hai”( It‟s your

chocolate money) , this is from own experience. All this is great but there is one

small problem today, people expect to be given gifts especially in government

offices and if you do not entertain then probably your civil right, access to water,

application for a passport, driving licence, application for subsides in form a

ration card for subsidised fuel and rice for people living below the poverty line

might be declined. This is probably one of the biggest forms of injustice but

unfortunately the legal system is not very accountable for either. It has

deteriorated to levels where it is better not to file a case and the soaring costs

would be unbearable for the common man before he/she is served justice.

13 Wikipedia 2012, Public holidays, http://en.wikipedia.org/wiki/Public_holidays_in_India

Another incident which happened to one of friends reminds me of the lacuna that

exists in the legal system. When he had parked his vehicle under a parking

signboard but was asked to pay a fine because he was 20 inches to the left of

the signboard and hence assumed to have violated the law by the police. The

cop had no intention to fine him, but he wanted to make some quick “Chai ka

paisa” money for my tea on the wrong pretext. And yes my friend did not get an

official ticket but he had to pay as he threatened to abuse his power and there

are several other incidents pertaining to the same.

What is Jugaad?

Today it is not about getting a job done or “Juggad”. As Mr Sanjay Banerjee

defines it as follows; “Jugaad is actually a Hindi word that loosely translates as

"the gutsy art of overcoming harsh constraints by improvising an effective

solution using limited resources." It is an antidote to the complexity of India: a

country of mind-blogging diversity; pervasive scarcity of all kinds; and exploding

interconnectivity. A jugaadu person is the one who is smart, plans intelligently

and has a manipulative mind (in the right sense), uses his networks with results,

and knows how to achieve Key Result Areas with the minimum of resources

available. “14 (Sanjay Banerjee, 2012)

Although Wikipedia refers to Jugaad15 more as a vehicle, it is more of a symbol

which represents this sentiment behind Mr. Sanjay Banerjee‟s definition. Today

more often this word means getting things done by corrupt means or paying a

bribe16 or an incentive to move your file faster in simple terms “express service”

but unfortunately even that takes a decade even after which your job might not

get done, be it application for a passport or any other essential service; rather it

has become a form of abusing power to make personal economic gains at the

hands of others which is more disturbing.

14Sanjay Banerjee, March 2012, “Innovation to Indian Jugaad”, Accessed from

http://www.allunare.co.in/thought.html

15 Wikipedia, 2012, Jugaad, Accessed from http://en.wikipedia.org/wiki/Jugaad

16 Clean India fight corruption, Accessed from http://www.responsiblecitizens.in/views/57-clean-

india-fight-corruption-.pdf

The Lokpal and Mr. Anna Hazare

In the fight for a society free of corruption a military veteran Mr Anna Hazare

better known as "Anna"(elder brother), for turning a village, which was stricken

by drought and hooked on alcohol, into a model of economic development town.

Mr. Hazare, captured the sentiment of the people and his movement tapped a

leader whose austere lifestyle and history of nonviolent protests, including fasts,

recalled the spirits and tactics of modern India's most iconic founding father,

"Mahatma" Gandhi (Wallstreet Journal, 2011)17. He was one of the pioneers and

helped in bringing in the Right to Information Act popularly known as RTI Act

which has enabled to deter public officials in engaging in corruption quite

recently through using these very same methods of non-violent protests.

Several thousand people came to Jantar Mantar, the venue

where Mr. Hazare held his fast (Hunger Strike) to non-violently protest against

corruption and injustice towards the people of this country ()WAllstreet Journal

,2011)18.

His team of protesters were demanding that the government should enforce and

bring into legislation a new bill which was worked upon by eminent citizens of

India called the “Jan Lokpal Bill” (Annahazare.org, 2012)19. The government had

introduced a counteractive bill called the „Lokpal Bill‟ (Wikipedia, 2012)20 which

has been around for four decades initially introduced in 1968, but even after 42

years it never happened to pass through both houses of parliament. Even now

the chances are very slim as it has been forwarded to yet another select –

committee of the Rajya-Sabha(Upper House) recently, pushing it to the freezer

again (Hindustan times, 2012)21. Mr Hazare and his supporters claim the Govt

draft of the Lokpal Bill is very weak and a joke to the nation and its people,

17Sharma, Amol; Pokharel, Krishna, Wall Street Journal, 23 Aug 2011, “A Gandhi Model Galvanizes

India”

18 Anonymous, Wall Street Journal (Online)[New York, N.Y] 12 Dec 2011 “Anna Fasts, Supporters

Rally” &

Pokharel, Krishna, Wall Street Journal (Online)[New York, N.Y] 17 Aug 2011, “India Jails

Anticorruption Activist”

19 Jan Lokpal Bill, annahazare.org 2012, Accessed from

http://www.annahazare.org/pdf/Jan%20lokpal%20bill%20by%20Expert%20(Eng).pdf

20 Lokpal Bill, Wikipedia 2012, Accessed from http://en.wikipedia.org/wiki/Lokpal

21 Hinudustan Times, May 21, 2012, “UPA pushes lokpal bill into deep freezer”

especially the poor. For now it‟s a very thin line that the government is threading

and he hopes that the anger, frustration and rage against corruption of the

common man will be visible again in 2014 General elections as was the case in

Dec 2011, when thousands of supporters poured into the streets to support

Anna.

Summary and Conclusion

In all this chaos I still believe that one way or another a form of „jugaad‟ would

be created by the political and the civil society of my country to reach

equilibrium. Although this might take another decade but India is a very vibrant,

energetic young country with enormous growth potential. If there are calculated

systemic corrective actions taken to curb these problems then tremendous

growth potential could be realised.

A report by KPMG highlights the a strong effective bill which punishes both the

bribe taker as well as the bribe giver. Even the corporate sector has demanded a

structured and effective whistle blowing mechanism to report potential bribery or

corruption issues; thereby, ensuring more scams come under the public purview,

while assuring complete security to the whistleblower.

Key measures that can be taken:

Formal training on ethical/ unethical practices in Government

organisations.

Increase of Government salary for low/middle level employees.

Strict penalties on any forms of corruption.

E-governance system for public resources and easy access to the citizens.

Electronic conversion of all procedures in public offices to avoid all forms

of middlemen in this the public official.

A uniform training program for educating all employees to standard level

of education in any Government organisation to remove any bias in

ethical/ unethical standards.

Making “express service” legitimate and assigning a proper channel for

the same.

Making people accountable for their actions by creating E-governance and

public grievance redressed systems transparent to the citizens.

Having an independent body to perform enquiry into any form of

corruption at any level.

The Indian government has taken several steps in these directions but yet a lot

has to be done for correct implementation and enforcement of these systems

when they come into existence. The next door to development is right around

the corner but India has to take the right turn in the coming months to achieve

its true potential. Either way the direction is right but the door that would open

remains to be seen.

References

1. World Economic Forum 2012,Accessed from

http://www3.weforum.org/docs/WEF_GCR_Report_2011-12.pdf

2. Wikipedia, 2012, List of Scandals, Accessed from

http://en.wikipedia.org/wiki/List_of_scandals_in_India#2010s

3. FreePress 2011, Accessed from

http://freepress.in/download/Industrialists_Open_Letter_PMO.pdf

4. Ghosh, Labonita, The Economic Times (Online)*New Delhi+ 03 Dec 2011 “Transparency

International chief Huguette Labelle *Interviews+”

5. Finance karnatake, 2012, Accessed from http://www.finance.kar.nic.in/gos/FD07SRP2012-GO-

Revised%20Pay%20Scale.pdf

6. Ministry of Home Affairs, 2012, Accessed from

http://mha.nic.in/pdfs/President_emoluments_act1951_UPDATED_.pdf

7. BSc- Bachelor of Science, BCA- Bachelor of Computer Application

8. Wkipedia 2012, BCA, http://en.wikipedia.org/wiki/Bachelor_of_Computer_Applications

9. Kolkata, Numbeo, 2012, http://www.numbeo.com/cost-of-

living/city_result.jsp?country=India&city=Kolkata&displayCurrency=INR

10. Mumbai, Numbeo, 2012 , Accessed from http://www.numbeo.com/cost-of-

living/city_result.jsp?country=India&city=Mumbai&displayCurrency=INR

11. Human Development in India, 2010, Accessed from

http://www.ncaer.org/downloads/Reports/HumanDevelopmentinIndia.pdf

12. DNAIndia, 2012, Accessed from http://www.dnaindia.com/mumbai/report_mantralaya-blaze-

controversial-files-burnt-to-ashes_1705162

13. Wikipedia 2012, Public Holidays, http://en.wikipedia.org/wiki/Public_holidays_in_India

14. Sanjay Banerjee, March 2012, “Innovation to Indian Jugaad”, Accessed from

http://www.allunare.co.in/thought.html

15. Wikipedia, 2012, Jugaad, Accessed from http://en.wikipedia.org/wiki/Jugaad

16. Clean India fight corruption, Accessed from http://www.responsiblecitizens.in/views/57-clean-

india-fight-corruption-.pdf

17. Sharma, Amol; Pokharel, Krishna, Wall Street Journal, 23 Aug 2011, “A Gandhi Model Galvanizes

India”

18. Anonymous, Wall Street Journal (Online)*New York, N.Y+ 12 Dec 2011 “Anna Fasts, Supporters

Rally” &

Pokharel, Krishna, Wall Street Journal (Online)*New York, N.Y+ 17 Aug 2011, “India Jails

Anticorruption Activist”

19. Jan Lokpal Bill, annahazare.org 2012, Accessed from

http://www.annahazare.org/pdf/Jan%20lokpal%20bill%20by%20Expert%20(Eng).pdf

20. Lokpal Bill, Wikipedia 2012, Accessed from http://en.wikipedia.org/wiki/Lokpal

21. Hinudustan Times, May 21, 2012, “UPA pushes lokpal bill into deep freezer”

22 Vito Tanzi, Hamid Davoodi , IMF 1998, “Road to Nowhere: How Corruption in Public Investment

Hurts Growth”, Accessed from http://www.perjacobsson.org/external/pubs/ft/issues12/issue12.pdf