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Has corruption haunted india's growth ?

"Corruption and hypocrisy ought not to be inevitable products of democracy, as they undoubtedly are today." Mahatma Gandhi

Corruption is a common word that has become a usual topic of discussion in all areas of life, corner of the world, and by all people of the globe. The word corruption can be defined as Wrongdoing on the part of an authority or powerful party through means that are illegitimate, immoral, or incompatible with ethical standards. Corruption often results from patronage and is associated with bribery. Greed for position and money, and the corrupt nature and character acquired by birth are some factors that pave for the germination, growth and promotion of corruption. Corruption in any form is treated as incurable disease that is the cause of many social and economic events in the society and it damages the ethical and moral fibres of the civilization.

Now the question is how the dark hands of corruption attack the growth and development of India. In a developing country like India, corruption has prevailed from time immemorial in one form or the other. It began with opportunistic leaders who had done greater damage to our country and its economy. People who show punctuality and responsibility to their work are unnoticed and unrecognized. Modern society considers these people as fools. Corruption had reached a stage where, citizens have to bribe public servants, even for satisfying their legitimate rights. This has become all-pervasive that Indians accept it as inevitable fact of life.

In India, corruption is a result of relation between bureaucrats, politicians, and criminals. In earlier times, bribes were paid to get wrong things done. But nowadays it is done for getting right things done at right time. Tracing the social roots of corruption, we could find a strong rationale for dishonesty in the organization of Indian society along caste and kinship lines. The dowry system, donations for school admissions, spreading cult of consumerism are some other evils that encourage corruption. At the systematic level, Indian democracy itself is "based on corruption because all political parties have to collect funds in cash, which is black money. Corruption thus is now a low-risk, high-profit business.

Further corruption has become something that is respectable, because of involvement of respectable people in it. In today's situation, if a person needs a government job, there is no value for his eligibility. Only if he can pay lakhs of rupees to higher officials, he will get a job. In this case, poor people won't get a job even if they are qualified and are eligible for the job. By adulteration and duplicating the weighing of products in food and civil suppliers department, the workers cheat the consumers by playing with their health and lives. In assessment of property tax, the officers charge money even if house is built properly according to the rules and regulations of government. In government hospitals, Doctors ask for bribes to conduct operations and other proper treatments. Many cases of corruption in hospitals have been reported. Thus corruption has become a common practice in every levels of bureaucracy.

At present, political corruption is common in India. Corruption weakens the political system and makes a lot of damages to the law that governs the society. Nowadays most politicians are like criminals and we can find a few people in politics who work whole heartedly for the welfare of nation and its people. In many parts of the country, elections seem mainly for spreading crime. The voters are threatened to vote for a particular candidate or prevent them from going to the polling booth or the people are given money and other valuable things to make them vote for a particular candidate. Recent accusations on corruption appear to put the country in to the category of the worst African 'Cleptocracies'. They have also paralyzed the Indian parliament and gravely damaged the reputation of the hitherto successful Congress- led government of Manmohan Singh. Recently the government increased the salary of MPs from Rs. 16,000 to Rs. 50,000. But many of them are unhappy with rise and want the government to increase the salary to much more extent.

This clearly shows that politicians are in constant thirst for money and not caring about the welfare of people. Tax evasion is one of the most popular forms of corruption. It is mostly practiced by government officials and politicians who lead to the accumulation of black money which in turn spoils the moral of the people. The following account of some recent cases gives information on the scale and cost of corruption in India.

Former Mines Minister and Chief Minister of Jharkhand, Madhu Koda, is in jail on allegations of having siphoned off about US$1 billion, mainly from corrupt mining deals, during his short tenure. By laundering funds through cronies, Koda allegedly managed to acquire hotels around the world and even a mine in Africa.

A recent Global Financial Integrity report alleges rich Indians launder a staggering US$19 billion per annum. Although India passed legislation to strengthen its anti-money laundering regime, the US Bureau of International Narcotics and Law Enforcement Affairs found in its 2009 report that illicit hawala transfers for incoming remittances amounted to US$13-17 billion alone, leaving aside the fact that the majority of hawala dealings probably relate to criminality and tax evasion transfers of outgoings. According to an audit, the so called 2G telecommunication license sales of 2008 allegedly cost the Indian state US$39 billion in lost license fees due to under-selling. To the international shame of India, the administration of the New Delhi Commonwealth Games was replete with examples of corruption and incompetence. All payments for services are now frozen pending corruption investigations and legitimate providers, including some leading Australian companies, are incurring millions of dollars in losses, leaving India's reputation in tatters and putting at risk the staging of future events.

Alleged tax evader Hasan Ali Khan who is supposedly an associate of mobster Davood Ibrahim, allegedly illicitly placed US$8 billion in UBS AB Zurich bank. The government is attempting to suppress documents associated with German accusations concerning other Indians with Liechtenstein accounts in LGT Bank, the bank infiltrated by a German agent. Audits of the giant rural work program, the Mahatma Gandhi National Rural Employment Guarantee Act scheme (MGNREGA) indicate that in some states only a small percentage of allocated funds is provided to intended recipients. Even the millitary, hitherto relatively free of corruption, has recently been involved in several land scams, including the notorious Adarsh scam in Mumbai. Indian Premier League scam claimed the scalps of several Congress luminaries. A recent survey indicates widespread disillusionment with the Singh government over corruption. The shattering of Congress in the Bihar election probably in part reflected concern about corruption. But it is not just Congress that is under the gun: in Karnataka the BJP Chief Minister is also caught up in an alleged land fraud and the BJP high command has refused to sack him.

These are some cases that can be interpreted as a rapid decline in the state of governance in India. This casts a shadow over future development and stability of the emerging Global Leader.

From economic point of view, there seem to be no clear cut correlation between corruption and the economic growth of the country. We can find several countries having corrupt regime but yielding excellent economic result and other countries with clean regime showing very poor result in terms of economic prosperity and growth. The most important factor for the growth of the country seems to be the quality of its institutions. If the institutions work moderately well, progress is possible even if money is skimmed off at the top. But if institutions are incapable of enforcing any right, corruption will hasten economic collapse.

Globalization is uncovering the costs of corruption as never before. Southeast Asian tiger economies, which rode the globalization wave, lacked proper corporate governance in the financial sector and collapsed by mid-1997. Costs imposed by corruption can be categorized in to different types. First, there are lost revenues from customs, excise, taxation, privatization etc. Second, corruption reduces productive investment and growth. Multinational corporations are pursuing criminal courses to win contracts in emerging markets. By adding top-ups to the cost of production, "government interaction costs" render exports non-competitive. Third, corruption costs the public and the poor in particular, by tearing their small savings to shreds. Fourth, corruption negates the rule of law, sanctity of contracts and the legitimacy of the state. A fifth cost is financial terrorism and money laundering by transnational fundamentalist networks. The RDX that killed so many people in the Mumbai serial bomb blasts of 1993 was smuggled in to India by bribing customs officials.

Economist Kaushik Basu has shown how "faster economic growth is not just a consequence of appropriate economic policy, saving rate, human capital and fiscal deficits, but the level of honesty in the citizenry". In South Asia, where 515 million people are in abject poverty, combating corruption amounts to saving human lives, since corruption "literally snatches food away from the mouth of the poor". Anti-poor implementation of pro-poor development policies is a perverse feature of Indian administration.

The emerging role of governance mechanisms such as audit, 'social audit ' by India's vigorous civil society sector, activism in financial and tax departments, judicial activism particularly in the Supreme Court and the activities of India's vigorous and free media are discovering cases of corruption and seeking to impose justice. The enhanced role of various government audit, tax and financial regulation agents can also fill some of the gaps left by India's somewhat etiolated and toothless anti-corruption mechanisms. For example: in the 2G sale, it was the government's own audit office, the office of the Comptroller and Auditor General (CAG), that identified the apparent shortfall of about US$39 billion. The Supreme Court has been highly active in seeking to expose the corruption associated with the alleged deposits by Indians in Liechtenstein banks, the alleged corruption of the Karnataka's former Chief Minister Yeddyurappa and a number of other illicit activities. Interestingly, the Enforcement Department of the Ministry of Finance, responsible for financial compliance, was the initiator of the actions against Koda, precipitating the wider involvement of other anti-corruption and law enforcement agencies and his eventual arrest.

So at one level one could lament the apparent decline of public life in India and the breathtaking scale of corruption. But at another, on could also note that so many illicit activities are now being exposed. This is generating considerable disgust and political disillusionment, that various government instrumentalities are now starting to do their job and exposing graft and that the government itself has built in anti-corruption measures to some of its large activities such as NREGA. In other words, one can either adopt a 'glass half full' or a 'glass half empty' view of corruption in India. Corruption is always there but appears to have increased because it is more frequently exposed. And surely this is a good thing.

So far the slow progress of Indian economy is the result of lack of decision making at higher level. Many politicians take money but could not enforce their will because of powerful lobby of bureaucrats at many places and in a democracy like India, voice of media, voice of opposition could suppress the wish of the leader.

India's economic growth on an average 6% GDP despite considerable corruption is because of the stability and the liberalized measures taken by the present government, gradual privatization of various sector, reducing bureaucratic intervention in routine work and other measures adopted by the government. From the above discussions, we can conclude that corruption and economic growth are not directly correlated, but corruption can affect economy of the country, if the government can't do anything to reduce it.


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