Good News on Corruption

Good News on Quality and Quantity of Corruption published in the newspaper Business Standard

http://business-standard.com/india/news/the-anatomycorruption/461899/

As the past year has demonstrated, the ubiquity of corruption in India has become an unprecedented challenge for the ordinary citizen in particular and the political economy in general. This eminently readable volume with rare insightful analysis and due diligence encapsulates the salient facets and ramifications of this complex subject.

Though Indians are familiar with the corruption story, readers will be bewildered by the incredible story Debroy and Bhandari narrate — of the public “servants” involved in welfare schemes ingeniously playing their sordid roles, mulcting the exchequer and hurting the hapless intended beneficiary. Endemic and all-pervasive, with “its tentacles deep into not just organs of the state but with strong links with media, civil society, and even the electorate”, corruption “has eaten into the edifice of the state”.

When the world is alluding to India’s potential to be an economic powerhouse, a number of specified international agencies point to the serious negativities characterizing it. For example, India ranked 87th among 178 countries in the Transparency International’s 2010 Corruption Perceptions Index. The World Bank Institute’s Worldwide Governance Indicator on control of corruption showed little change in India’s score over 1996 (-0.38) to 2008 (-0.37). The World Economic Forum’s Global Competitiveness Index 2010-11 rated India in terms of quality of institutions at 58 among 139 countries.

The reference to DNA and RNA, which appears somewhat laboured, is amplified by way of a distinction between the petty or small-ticket corruption associated with delivery of public services (DNA) and large-ticket corruption such as the recent mega scams or RNA. Although the book would have us believe that RNA and DNA go hand in hand, the RNA story remains untold and unexplained. The authors may want to consider a sequel to this volume and examine the perceived apathy, if not hostility, on the part of most politicians towards creating institutions to help stem the rot.

The authors point out that no sector or activity seems to be exempt from graft. There is corruption in welfare delivery, but much more of it in law, order and justice. Corruption hurts the poor disproportionately by diverting funds intended for development. The India Corruption Study 2008 found that BPL households paid bribes of the order of Rs 883 crore in availing the 11 public services – the public distribution system (PDS), medical, schooling, power and water supply and so on – with the maximum corruption being in police, land records and registration, and housing. PDS is seen as an incentive towards leakages built into the system: the block supply officer charges a commission of three per cent, the head office two per cent, senior employees of the division 23 per cent, panchayat sevak two per cent, middlemen nine per cent and others six per cent. Similarly, the Mahatma Gandhi National Rural Employment Guarantee Scheme has corruption issues connected with job cards, with intermediaries involved for payment through banks and post office savings accounts.

Laws, rules, regulations, procedures and processes all facilitate corruption. As the authors show, labyrinthine processes have been debilitating; typically, for a plan involving costs of over Rs 5 crore in Jharkhand, a file goes through 240 stages. Laws created ostensibly to protect the common man are used to extract higher bribes instead.

Economic reforms reduced the environment that nurtured corrupt practices in many areas. The licence raj may have ended for manufacturing, but remains alive and kicking for services. Street vendors, for example, are required to obtain a licence called tehbazaari in Delhi. They are compelled to pay hafta to municipal functionaries and the police. Why a licence, the authors ask. And why so few? Likewise, the licence for cycle rickshaws.

Citing Gary S Becker that corruption occurs “as long as the expected gains from corruption exceed the expected costs” and that it is essential “to reduce the gains from corrupt activities and increase the expected costs”, the book refers to around 45 million government employees falling under the ambit of Prevention of Corruption Act and related IPC clauses; even if 10 per cent of them are corrupt, there are 4.5 million among them who ought to be prosecuted, whereas the probability of a cognizable crime being registered is 0.082, and of a charge sheet being filed 0.282. That is why corruption is a low-risk, high-gain activity. With no fear of retribution or punishment, deterrent and swift, criminals prosper and multiply.

Coincidentally, some of Debroy and Bhandari’s prescriptions for the alleviation of the malady find an echo in the crescendo of demands now made by civil society for appropriate laws for vibrant institutions — a strong Lok Pal, a centralised template for Lokayuktas, an autonomous CBI, protection of whistleblowers, and citizens’ charter to improve service delivery quality and increase accountability.