Combating corruption in india some suggestions


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  • Nearly all the communities in India (such as Bengali), are succumbed in 'Culture of Poverty'(a theory introduced by an American anthropologist Oscar Lewis), irrespective of class or economic strata, lives in pavement or apartment. Nobody is at all ashamed of the deep-rooted corruption, decaying general quality of life, worst Politico-administrative system, weak mother language, continuous absorption of common space (mental as well as physical, both). We are becoming parents (mindlessly) only by blindfold self-procreation, simply depriving their (the children) fundamental rights of a decent, caring society, fearless & dignified living. Do not ever look for any other positive alternative behaviour (values) to perform human way of parenthood, i.e. deliberately co-parenting of those children those are born out of ignorance, real poverty. All of us are being driven only by the very animal instinct. If the Bengali people ever be able to bring that genuine freedom (from vicious cycle of 'poverty') in their own life/attitude, start/involve themselves in 'Production of Space’(Henri Lefebvre), at least, initiate a movement, by heart, decent Politics will definitely come up.
    - Siddhartha Bandyopadhyay, 16/4, Girish Banerjee lane, Howrah-711101, India.
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Combating corruption in india some suggestions

  1. 1. PURPOSE OF RESEARCH: Strategies for combating corruption in an established and developing democracy The objective of this paper is to highlight the extent of corruption in India by identifying the main causes for corruption in major sectors such as the bureaucracy, judiciary and polity and suggest remedial measures. Unlike other middle- income newly independent nations that are yet to build up their political, judicial and executive governance infrastructure, India has a well—established governance system with all the requisite institutions in place for over half a century now. This research therefore, takes into account the natural and human resources, industrial and technological skills available within India and contrasts it with the underlying corruption as a way of life retarding progress and development and depriving citizens of their legitimate right to ensure a better quality of life for themselves. The weak rule of law and a drastic overhaul of the legal system and other accountability systems therefore feature prominently in this paper. Deregulation and outsourcing too occupy a significant position being major elements in devolving power to citizens and assuring indirect popular participation in governance. While there may be more than an alternate opinion on many of the suggestions made as being Draconian, the fact would, nonetheless, remain that perhaps only such Draconian changes and enforcement alone can lift India from the morass it has sunk into in the last six decades since independence. Unless corruption as a national way of life is jettisoned to the extent of at least 70-80 per cent of its present level, annual GDP growth rate of over 8 per cent would remain only an impressive statistic and not translate to a better quality of life for India‘s citizens who belong to the world‘s two largest ‗tiger‘ economies. It is this issue that my research would seek to investigate. In doing so such research would also touch upon several other SHANTANU BASU
  2. 2. SHANTANU BASU 2 facets that would be of interest not only to other relatively smaller and less complex developing countries but also many international organisations and multinational corporations and other bodies corporate who are investing substantial capital and resources in these countries. Such research may also be of help not only to academic researchers but also foreign educational institutions and other corporate bodies as they cross the seven seas to establish their satellite campuses or seek to invest in educational systems, health services, transportation and a host of other infrastructure areas. Therefore the purpose of this research is to briefly analyse corruption in seven key sectors in public administration in India: Bureaucracy Elections and political party funding Judicial administration Police administration Municipal administration Health administration Education administration So far anti-corruption measures have mainly confined themselves to addressing administrative corruption by reforming public administration and public financial management. However, with increasing recognition that the roots of corruption extend much beyond lacunae in government, suggestions for redressal are focusing on broader structural relationships such as those relating to the organisation of the political system, states and firms and states and civil society. No single strategy would succeed, instead a healthy mix of coercion and incentives in varying measures may provide answers to the
  3. 3. SHANTANU BASU 3 complexities of the Indian situation. Such strategies would also have to take into account the presence of powerful vested interest, political compulsions, considerations of caste, community, geographical and linguistic chauvinism, etc. The following diagram would show the symbiotic interplay of various forces that would recall the need for a multi-pronged strategy to combat corruption: Competitive Private Sector Political Accountability Economic policy reform Political competition, credible political Competitive restructuring of monopolies parties Regulatory simplification for entry Transparency in party financing Transparency in corporate governance Disclosure of parliamentary votes Collective business associations Asset declaration, conflict of interest rules ANTI-CORRUPTION Institutional Restraints Civil Society Participation Independent and effective judiciary Freedom of Information Legislative oversight Public hearings of draft laws Independent prosecution, enforcement Role for media/NGOs Public Management Meritocratic civil service with monetized, adequate pay Budget management (coverage, treasury, procurement, audit) Tax and customs Sectoral service delivery (health, education, energy) Decentralisation with accountability Source: The World Bank, 2000: Anticorruption in Transition – A Contribution to the Policy debate Although corrective models may vary by practice and experience, yet the goals remain identical, viz. enhancing state capacity and public sector management, strengthening political accountability, enabling civil society and increasing economic competition. Though a formidable task, a healthy interplay between the executive, polity and judiciary and a country‘s
  4. 4. SHANTANU BASU 4 citizens can bring such reform to life. The following chart would illustrate the symbiotic interplay of these forces in assuring accountability: Civil Society - Media Judiciary Legislature Subnational governments and autonomous oversight agencies Executive Source: Global Monitoring Report, 2006: pp. 159, The World Bank, Washington DC
  5. 5. SHANTANU BASU 5 Strategies to Combat Corruption in Public Management in India 1.1 India: The Geographical Background India, the second largest country in the world population wise and seventh territory wise, lies north of the Equator, between 8'4''to 37'6" North latitude and 68'7"to 97'25" East longitude. The country's landmass is flanked by the Bay of Bengal and the Arabian Sea, along the southeast and along the southwest respectively. On the western border is situated Pakistan and in the east, Bangladesh and Myanmar. Along her northern boundary are Bhutan, Nepal, and Tibet and Sinkiang region of China. The Gulf of Mannar and the Palk Strait separate India from Sri Lanka. From North to South, India measures about 3214 km and from east to west, about 2933 km. The total land area is 3,268,090 sq. km. Its land frontier is 15,200km and coastline, 6,103km. The Andaman and Nicobar Islands in the Bay of Bengal and Lakshadweep in the Arabian Sea are parts of Indian territory. 1.2 India’s natural resources India has a large number of economically useful minerals and they constitute one-quarter of the world's known mineral resources. India also has the world's largest deposits of coal. Next to Russia, India has the largest supply of manganese. India also produces three quarters of the world's mica. The country has substantial resources in chromite, bauxite, gypsum, nickel, copper, ileminite, silimanite, gold, uranium and rare earths. Petroleum deposits are found mainly in Assam and Gujarat and off the Western coast. India ranks 3rd in production of coal, lignite and barytes, fourth in iron ore, sixth in bauxite and
  6. 6. SHANTANU BASU 6 manganese ore, tenth in aluminum and eleventh in crude steel in the World. 1.3 India’s demographic profile The population of India has grown from around 300 million in 1947 to 1.02 billion as per the Census 20011 marking a 23 per cent rise over the previous decennial census of 1991. Of this 532 million is the male population while the female population is 496 million. India accounted for 17 per cent of the world‘s population with just 2.40 per cent of the world‘s landmass. This population is forecast to rise to 1.26 billion by 2016 by the Registrar General of India- a five-fold rise over 1871 (211.7 million). Given the relatively young demographic profile of the present population 500 million would be added to the
  7. 7. SHANTANU BASU 7 population in the next few decades taking the total population by World Bank estimates to 1.57 billion by 2051.Translated into population density terms the 2001 census has added 57 persons per sq. km. to the existing 267 persons per sq. km. per the census report of 1991. This is in stark contrast to a density of 77 per sq. km in 1901. The following population density graph would amplify the growth race of India‘s population: 350 300 250 200 150 100 50 0 01 11 21 31 41 51 61 71 81 91 01 19 19 19 19 19 19 19 19 19 19 20 Source: Adapted from Registrar General of India Census 2001 The crude literacy rate for males is 64 while that for females is only 46 per cent. Despite this phenomenal growth of population the net per capita national product has risen by a factor of eight in the last fifty years while life expectancy has risen to 61.6 years for males and 63.3 for females. Satellites in space, nuclear reactors in operation, a world I-T leader; yet India remains at 127th position in the UNDP‘s Human Development Index 2 for 2005 having dropped a further nine notches from 2004. India ranks 58th in terms of human poverty with 31 per cent of its population living below the poverty line with 72 per cent of its
  8. 8. SHANTANU BASU 8 population in the villages, 33 per cent under the age of 15 years and 21 per cent being malnourished. About 260 million people live on less than a dollar a day. India‘s Constitution recognizes 22 official languages, in addition to English, although the country has about 800 languages and 2,000 dialects. However, India does not have any state religion and all religions have equal rights of preaching and practicing. 1.4 India’s economic indicators Despite the single largest handicap of a burgeoning population, India sustained a growth rate of 7.5 per cent in 2004-05 which is projected to rise to 8.1 per cent in 2005-063. Inflation has mainly stabilized around the 4 per cent per annum mark and the total GDP (PPP basis) in 2005 is estimated to be US$3.699 trillion with per capita GDP being US$3400. Agriculture has remained largely stagnant and contributed 20.6 per cent to GDP while services provided 51.4 per cent and industry 28.1 per cent. The balance of trade remained unfavourable and foreign debt totaled 22 per cent of GNP. Regrettably, the per capita income remained at an abominable US$285 in 2004-05. 1.5 India’s infrastructure Despite several centuries of neglect and colonial administration, India today boasts of 50,000 km of national highways and 3,000,000 km of secondary and other roads, 11 major and 163 minor ports along its 6,000 km long coastline. India's 21.59 million-line land telephone and 41 million cellular networks are one of the largest in the world and the 3rd largest among emerging economies (after China and Republic of Korea). Given the low telephone penetration rate - 2.2 per 100 people of population, which is much below the global average, India offers vast scope for growth. It is therefore not surprising that India
  9. 9. SHANTANU BASU 9 has one of the fastest growing telecommunication systems in the world with system size (total connections) growing at an average of more than 20 per cent over the last 4 years. This is despite only 31 per cent of India‘s population living in urban agglomerations. Indian Railways extend over 60,000 route km and carry 25 million passengers annually. India‘s information technology industry has become a global phenomenon. 1.6 Paradox of development and future growth Vision 20204, a document published by the Planning Commission of the Government of India envisages the creation of 150-200 million jobs by 2020 distributed over commercial agriculture, tourism, construction, housing, I-T and I-T enabled services, transport and communication, education and health. This, in turn, would require doubling of allocation of resources for education to about 6-7 per cent of GDP per annum and a four-fold rise in health. Expenditure on R&D would raise manifold from its present level of 1/60th of South Korea‘s. Public mass transportation and telecommunications too would witness a manifold rise. For India to rise to the world‘s fourth largest economy by 2020, the country would have to produce 10 per cent annual GDP growth rate during 2007-11 and 13 per cent during 2012-20, both within the realm of the possible. A colossal sum of US $ 72 billion is estimated to be required for a cent per cent literate India by 2010. At the same time India produces 441,000 technical graduates, nearly 2.3 million other graduates and more than 300,000 post- graduates every year. Bharat Forge, a private Indian company is the world‘s second largest maker of forgings for car-engine and chassis components, behind Thyssen-Krupp of Germany5. The production efficiencies of Indian private industry too are improving rapidly. While in the early 1990s, Bajaj Auto, a
  10. 10. SHANTANU BASU 10 leading Indian manufacturer of two-wheelers, was producing a million vehicles with 24,000 workers; in 2005 it produced 2.4 million vehicles with only 10,500 workers. While Indian garment exports climbed to US$ 7.5 billion of total textile exports of US$ 17 billion, nevertheless they remained a poor second to China with figures of US$ 40 billion of a total of US$ 107 billion, after accounting for trade safeguards. Peak electricity supply falls 11 per cent short and 56 per cent of households live without connections. Although India‘s has a road network of 65,000 km, of national highways only 9 per cent have four-lane traffic. Although domestic air travel have increased by over 25 per cent per annum and Bombay-Delhi air fares down to an all-time low of US$40 (one-way), aircraft often have to circle overhead for over 30 minutes for want of runways at airports. India‘s annual expenditure on infrastructure has fallen to 3.5 per cent of GDP at US$ 21 billion compared to China where the corresponding figures were 10.5 per cent and US$ 150 billion. While investment of US$ 55 billion is required for airports and railways, power would require US$ 75 billion and telecommunications US$ 25 billion. Poor and slow inland transport causes 35-40 per cent of fresh farm produce to rot before distribution while it takes a transport lorry 32 hours to transit between Delhi and Bombay, a distance of about 1,400 kms. Yet Indian industry has not given up. Reliance Industries Limited, India‘s largest private conglomerate plans to establish over the next four years a mega chain of 1,000 hypermarkets and 2,000 supermarkets that would be an ―integrated farm-to- fork supply chain‖. Similarly, Indian industry estimates that the number of mobile telephone users would cross the half-billion mark by the next decade. The market capitalization of major Indian companies too has undergone a sea change with
  11. 11. SHANTANU BASU 11 traditional leaders falling behind and even some public sector enterprises forging ahead as the following graph shows: Market capitalisation of select Indian companies 45 40 US $ in billion 35 30 25 20 15 10 5 0 s es s n n n ro r C rie ve sy tio tio tio IT ic ip fo Le st rv ra ra ra W In du Se po po po an In or or or y st nc du e C C C nc lta as in il er lia O su H G w Re Po on an al ur di C al In at ta rm N Ta he & lT il na O io at N Name of company Source: Adapted from The Economist, London, Indian public and private sector companies too have lately acquired coal mines in Australia, tea gardens in Kenya, a $ 32.50 billion 49.4 per cent shareholding in Arcelor Steel (now called Arcelor-Mittal with an annual output of 100 million tones) and Tata Coffee‘s $220 million takeover of the century-old Eight O‘Clock Coffee Company (EOC) based in Montvale, NJ, from its US owners, Gryphon Investors6. A similar bid by United Breweries to take over a large German brewery is on the cards. Indian pharmaceutical companies hold patents for several life- saving generic drugs and a conglomerate of Indian pharma companies is presently scouting for a large dispensing pharmacy chain in the US on outright purchase basis on a cash budget of US$ 800 million. A company of the Indian railways
  12. 12. SHANTANU BASU 12 provided the software, its operation and maintenance for the London Tube while a combine of two public sector companies has bagged orders for the turnkey construction of thermal power plants in Australia, Belgium and a number of other countries in Europe in global competitive bidding. But would the Indian bureaucracy be able to fulfill such expectations despite the inherent strength and resilience of the Indian people, entrepreneurship and knowledge and the natural resources of the land? The answer would seem to lie in the ability of the country to combat corruption which has engulfed almost every aspect of national life and is retarding it progress and development. 2. Defining corruption Corruption involves behavior on the part of officials in the public and private sectors, in which they improperly and unlawfully enrich themselves and/or those close to them, or induce others to do so, by misusing the position in which they are placed. Transparency International (TI)7, the leading NGO in the global anticorruption effort defines corruption as: “Corruption involves behavior on the part of officials in the public sector, whether politicians or civil servants, in which they improperly and unlawfully enrich themselves, or those close to them, by the misuse of the public power entrusted to them.” An illustrative List of Corrupt Behaviours8 published by the Asian Development Bank includes the following: The design or selection of uneconomical projects because of opportunities for financial kickbacks and political patronage.
  13. 13. SHANTANU BASU 13 Procurement fraud, including collusion, overcharging, or the selection of contractors, suppliers, and consultants on criteria other than the lowest evaluated substantially responsive bidder. Illicit payments of "speed money" to government officials to facilitate the timely delivery of goods and services to which the public is rightfully entitled, such as permits and licenses. Illicit payments to government officials to facilitate access to goods, services, and/or information to which the public is not entitled, or to deny the public access to goods and services to which it is legally entitled. Illicit payments to prevent the application of rules and regulations in a fair and consistent manner, particularly in areas concerning public safety, law enforcement, or revenue collection. Payments to government officials to foster or sustain monopolistic or oligopolistic access to markets in the absence of a compelling economic rationale for such restrictions. The misappropriation of confidential information for personal gain, such as using knowledge about public transportation routings to invest in real estate that is likely to appreciate. The deliberate disclosure of false or misleading information on the financial status of corporations that would prevent potential investors from accurately valuing their worth, such as the failure to disclose large contingent liabilities or the undervaluing of assets in enterprises slated for privatization. The theft or embezzlement of public property and monies.
  14. 14. SHANTANU BASU 14 The sale of official posts, positions, or promotions; nepotism; or other actions that undermine the creation of a professional, meritocratic civil service. Extortion and the abuse of public office, such as using the threat of a tax audit or legal sanctions to extract personal favors. Obstruction of justice and interference in the duties of agencies tasked with detecting, investigating, and prosecuting illicit behavior. The Oxford Unabridged Dictionary defines corruption as “perversion or destruction of integrity in the discharge of public duties by bribery or favor.” The Merriam Webster‘s Collegiate Dictionary defines it as “inducement to wrong by improper or unlawful means (as bribery).” It is often useful to differentiate between grand corruption, which typically involves senior officials, major decisions or contracts, and the exchange of large sums of money; and petty corruption, which involves low-level officials, the provision of routine services and goods, and small sums of money9. It is also useful to differentiate between systemic corruption, which permeates an entire government or ministry; and individual corruption, which is more isolated and sporadic. Finally, it is useful to distinguish between syndicated corruption in which elaborate systems are devised for receiving and disseminating bribes, and non-syndicated corruption, in which individual officials may seek or compete for bribes in an ad hoc and uncoordinated fashion. Some types of corruption are internal, in that they interfere with the ability of a government agency to recruit or manage its staff, make efficient use of its resources, or conduct impartial in-house investigations. Others are external, in that they involve efforts to manipulate or extort money from clients or suppliers, or to benefit from inside information. Still others involve unwarranted interference in
  15. 15. SHANTANU BASU 15 market operations, such as the use of state power to artificially restrict competition and generate monopoly rents. The World Bank labels this as administrative corruption and refers to it as the “intentional imposition of distortions in the prescribed implementation of existing laws, rules and regulations to provide advantages to either state or non-state actors as a result of the illicit and non-transparent provision of private gains to public officials”5. Joseph S. Nye10 posits a fairly comprehensive definition of corruption: “Corruption is behavior which deviates from the formal duties of a public role because of private-regarding (family, close family, private clique) pecuniary or status gains; or violates rules against the exercise of certain types of private-regarding influence. This includes such behavior as bribery; use of a reward to pervert the judgment of a person in a position of trust; nepotism (bestowal of patronage by reason of ascriptive relationship rather than merit); and misappropriation (illegal appropriation of public resources for private-regarding uses). In continuation of Nye‘s definition, Mushtaq Khan11 defines corruption as “behaviour that deviates from the formal rules of private-regarding motives such as wealth, power, or status”. In a statistical study of 106 countries during the late 1970s and early 1980s, IMF economist Paolo Mauro12 found that corruption ―is strongly negatively associated with the investment rate, regardless of the amount of red tape.‖ Mauro‘s model indicates that a one standard deviation improvement in the ―corruption index‖ will translate into an increase of 4 per cent in the investment rate and more than a 0.5 per cent increase in the annual per capita rate of GDP growth. Thus ―if Bangladesh (with a score of 4.7) were to improve the integrity and efficiency of its bureaucracy to the level of that of Uruguay (score 6.8), its investment rate would rise by almost five percentage points and
  16. 16. SHANTANU BASU 16 its yearly GDP growth rate would rise by over half a percentage point‖. 2.1 The extent and forms of corruption That corruption in various forms is endemic to all nations is a universally acknowledged fact. It only differs in content and direction. The following instances would show the extent of corruption worldwide13: Some estimates calculate that as much as $30 billion in aid for Africa has ended up in foreign bank accounts. This amount is twice the annual gross domestic product (GDP) of Ghana, Kenya, and Uganda combined; Over the last 20 years, one East Asian country is estimated to have lost $48 billion due to corruption, surpassing its entire foreign debt of $40.6 billion; An internal report of another Asian government found that over the past decade, state assets have fallen by more than $50 billion, primarily because corrupt officials have deliberately undervalued them in trading off big property stakes to private interests or to international investors in return for payoffs; In one South Asian country, recent government reports indicate that $50 million daily is misappropriated due to mismanagement and corruption. The Prime Minister stated publicly recently that the majority of bureaucrats and the administrative machinery from top to bottom are corrupt; In one North American city, businesses were able to cut $330 million from an annual waste disposal bill of $1.5 billion by ridding the garbage industry of Mafia domination. A particular problem was the permeation of regulatory bodies by organized crime;
  17. 17. SHANTANU BASU 17 Studies of the impact of corruption upon government procurement policies in several Asian countries reveal that these governments have paid from 20% to 100% more for goods and services than they would have otherwise; Corruption can cost many governments as much as 50% of their tax revenues. When customs officials in a Latin American country were allowed to receive a percentage of what they collected, there was a 60% increase in customs revenues within one year; Some estimates of the role of corruption in a European country concluded that it has inflated this country's total outstanding government debt by as much as 15 per cent or $200 billion. In one city, anticorruption initiatives have reduced the cost of infrastructure outlays by 35-40 per cent, allowing the city to significantly increase its outlays for the maintenance of schools, roads, street lamps, and social services. Academicians over the decades have provided various classifications of corruption. Amundsen14 provides a useful classification. The basic level of corruption is grand and petty corruption that plagues the political leadership and the bureaucracy. This can be further sub-classified into private and collective (institutionalised) corruption and redistributive (from below) and extractive (from above) corruption. While private corruption is normally limited to an individual or a small set of individuals, collective corruption is a societal phenomenon with more pronounced negative economic effect by extortion/extraction in collusion between groups/classes of individuals for their respective group/class benefit. Similarly, while extractive corruption is limited to extraction by select ruling elite (such as the Duvaliers of Haiti 1957-86 or Mobutu of Zaire 1965-97), redistributive corruption stems from powerful
  18. 18. SHANTANU BASU 18 interest groups based on caste, community, tribes, etc. that corner certain strategic benefits for themselves. In the final analysis, the State and its regulating capacity remains the ultimate sufferer. Rose-Ackerman15 has correctly related the bargaining power of the state vis-à-vis those of non- governmental or private actors. She has argued that the nature of corruption depends on the organisation of government as well as that of non-governmental actors and the final advantage is derived from monopoly power of the respective parties in their dealings. Another classification of corruption made by the World Bank16, particularly in emerging nations, is between state capture and administrative corruption. “State capture refers to the acts of individuals, groups or firms both in the public and private sectors to influence the formation of laws, regulations, decrees, and other government policies to their own advantage as a result of the illicit and non-transparent provision of private benefits to public officials”. In this group would fall “the legislature, executive, judiciary and regulatory agencies. This form of corruption is generally prevalent in an economy where economic power is highly concentrated, countervailing social interests are weak, and the formal channels of political influence and interest intermediation are underdeveloped”. On the other hand administrative corruption refers to “the intentional imposition of distortions in the prescribed implementation of existing laws, rules and regulations to provide advantages to either state or non-state actors as a result of the illicit and non-transparent provision of private gains to public officials”. However, the World Bank‘s classification is in tune with various other similar classifications attempted.
  19. 19. SHANTANU BASU 19 2.2 The impact of corruption Corruption delays, disturbs, distorts and diverts growth and development. It lowers foreign and domestic investment, reduces incentives for entrepreneurs and heightens risks of investment. High levels of corruption threaten economic stability, slow down growth, weaken institutional capacities and reduce resources available for social development. It violates basic human rights and introduces preferential treatment in exchange for consideration. Corruption also has a devastating impact on the environment. For private industry, it distorts the growth of sectors, engenders unfair competition and discourages capital investment. The economic costs of corruption not only create inefficiencies in the operation of markets but also distort patterns of public expenditure. Finally, corruption is divisive and makes a significant contribution to social inequality and conflict. Corruption disrupts and even prevents orderly competition and weakens institutions. Klitgaard17 has explained this with the following schematic equation: Corruption = Monopoly + Discretion – Accountability In his view, corruption thrives where officials have exclusive control over valuable goods and can use their discretion in farming these out without having to answer to anyone. Monopoly plus discretion undermines competitive participation while discretion minus accountability weakens official institutions and creates illicit ones. Citizens seeking redress through established channels against such entrenched corruption may be reasonably expected to adopt what Alam18 calls evasive ways. Such ways may include dropping out of politics or the mainstream economy, foregoing economic
  20. 20. SHANTANU BASU 20 benefits or even use corrupt links of their own. In fact they can swell the ranks of corrupt interests. For some time viewed as an agent for promoting economic growth by creating informal markets and price systems and integrating political systems (Leff)19 corruption is today viewed as a major source of economic and political retardation of nations keeping in view its long-term effects (Rose-Ackerman)20. In the process of replacing fair competition by illegal payments, corruption severely undermines entrepreneurial activity from productive action into rent seeking. Ironically, corruption also is seen as an aid to augmenting efficiency (Kaufmann and Kaliberda)21 - efficiency of extortion. Decline in investments for human development also leads to a corresponding decline in the quality of public services (Mauro and Rauch)22. The value and positive inclination of prospective investors too takes a hit as corruption becomes a tax on such investment (Wei)23. Corruption also fosters crime. Corrupt businesses are sheltered from competition with legitimate businesses by their illegality. In corrupt systems they also operate without fear of prosecution by paying off the police and politicians or by incorporating them, directly or indirectly, into their businesses. The danger for economic development arises when organized criminal groups begin to dominate otherwise legal business, e.g. control over petrol bunks or coal transport contracts in India. Profits from such illegal business are diverted to legitimate businesses often undermining them in the process of obtaining public contracts (Gambetta and Varese)24. Such criminality can generate financial resources at usurious rates by threatening violence in a scarce capital scenario in certain industries (Webster; Webster and Charap; Yabrak and Webster)25, e.g. the Bombay film industry which is, to a large extent, financed by the underworld.
  21. 21. SHANTANU BASU 21 Corruption distorts political development. The essence of a welfare state is defeated when patronage networks come into being for the sole purpose of controlling citizens and resources rather than for improving the quality of human life. Politicised use of divisible incentives (Johnston)26 degenerates into a disorganized scramble for spoils (Easterly and Levine)27 culminating in corrupt elites consuming as much as possible within a limited time (Scott)28. Such aberrations notwithstanding, democracies are however, unlikely to lose their basic character given the presence of independent regulators, law enforcement agencies and popular will. Corruption ultimately affects the poor and causes the gap between the rich and poor to increase. The poor will invariably receive a lower level of social services. Use of illegal price systems to distribute pensions, public housing, education and health will disadvantage those unable to pay. Secondly, investment in infrastructure will be biased against anti-poverty projects. Small and simple community projects and indigenous small-scale enterprises that would not contribute substantially to bribery would be placed on the back burner. Thirdly, the poor not being able to face the taxation system without bribes may proceed to the underground economy. Consequently, the state would not be able to provide them the requisite social services once faced with a fiscal crunch from falling tax revenues. 2.3 Corruption as a national issue in India With a pessimistic 78 per cent of an interviewed population29 believing that corruption would increase in India and US$ 523 (PPP value) being the estimated average annual outgo per capita and accounting for 10-20 per cent of GDP paid as bribes per household, , any study must necessarily focus on the causes of such rampant corruption. For this purpose it is proposed to
  22. 22. SHANTANU BASU 22 classify the sources in three categories, viz. historical, societal and environmental in this study. Transparency International‘s Report for 2005 ranks India at 88th place out of 158 in its Corruption Perceptions Index. The following table would amplify the position further: 3.5 3 2.5 2 1.5 1 0.5 0 Sri Lanka Bangladesh Pakistan Myanmar China India Source: Adapted from TI International: Corruption Perceptions Index, 2005 The major sources identified by Transparency International globally are also the same in India as would be seen from the following table: 4 3.5 3 2.5 2 1.5 1 0.5 0 Political Police Business Customs Medical Education Registry & Religious parties services permit bodies services Source: Adapted from TI International: Corruption Perceptions Index, 2005
  23. 23. SHANTANU BASU 23 This is all-important when one considers the public perception of basic public services as being excessively corrupt as would be seen from the following table from Transparency International India‘s (CMS) study in 200528: Using Department Direct Poor influence/ Corruption Commitment Perception Composite experience quality middlemen perception to reduce increased Index of bribing of of dept. corruption value service NEED BASED RFI 19 23 14 25 31 29 22 Income Tax 20 30 23 62 38 38 35 (individual assesses) Municipalities 23 60 32 75 60 57 47 Judiciary 47 62 31 81 58 63 59 Land 48 58 37 79 63 62 59 administration Police 8-0 74 12 88 64 77 77 BASIC Schools (up to 18 20 9 45 27 31 26 Grade 12) Water supply 9 33 13 56 37 38 29 Public 16 43 27 62 48 46 37 Distribution system Electricity 20 41 12 67 50 49 39 (consumers) Govt. hospitals 27 44 18 67 48 50 42 Average 18 36.2 15.8 59.4 42 42.8 34.6
  24. 24. SHANTANU BASU 24 The World Bank‘s governance performance statistics30 too show a similar picture from 1998-2004 as follows. In fact the graph and appended show several critical parameters having significantly worsened in 2004 over 1998, in particular regulatory quality, rule of law and control of corruption: Percentile Rank Governance Indicator Year (0-100) 2004 53.9 Voice and Accountability 1998 58.6 2004 24.3 Political Stability 1998 27.3 2004 55.8 Government Effectiveness 1998 50.8 2004 26.6 Regulatory Quality 1998 41.8 2004 50.7 Rule of Law 1998 67.0 2004 47.3 Control of Corruption 1998 59.6 Source: Kaufmann D., A. Kraay, and M. Mastruzzi 2005: Governance Matters IV: Governance Indicators for 1996-2004.
  25. 25. SHANTANU BASU 25 2.4 The Weberian model and Indian bureaucracy Bureaucracy plays a pivotal role in ensuring the rule of law and preventing corruption. It is therefore necessary to trace its evolution Max Weber‘s31 theory of bureaucracy describes a new organizational form called a bureaucracy. To him, in a bureaucracy leadership and authority were derived from a more ‗rational‘ framework than was the case before. Unlike in earlier periods the bureaucracy derived its authority from logic, efficiency and reason rather than charisma or tradition. This new organisation functioned on the basis of rules, laws and regulations and their legitimacy from the consistent, disciplined, rationalised and methodical calculation of optimum means to given ends. Weber viewed bureaucratic action as being typically oriented towards solving problems and that bureaucratic decision-making was guided by the objectives of efficiency, calculability and predictability. Thus decision-making was ‗rational‘, made as these decisions were not with reference to any person(s). Weber also believed that bureaucracies being technically efficient instrumentalities of administration since their institutionalised rules and regulations helped their employees to perform their duties optimally. Notwithstanding the value Weber attached to bureaucracies, Weber was also critical of the bureaucracy for its tendency to impose excessive controls on employees often imprisoning them in an ‗iron cage‘. In sum, the key features of Weberian organisations are that they are hierarchical, maintain division of labour and are governed by rules. While hierarchy results in vertical differentiation, division of labour entails horizontal differentiation within the structure of an organisation. In the century after Weber‘s assertion of the virtues of a bureaucracy, most scholars have become increasingly critical of its ways thereby giving the term ‗bureaucracy‘ a most negative
  26. 26. SHANTANU BASU 26 connotation in more modern times. Burns and Stalker32 observed that highly bureaucratic organisations were change- resistant. The traditional hierarchical structure itself promoted self-perpetuation and retarded innovation. Another negative quality was the sub-optimisation‘ (Selznick)33 in bureaucracies by which units possessing delegated powers worked at cross- purposes with the stated objectives of the mother organisation. Yet another criticism of the traditional theory has come from Gouldner34 who found that the ‗govern according to rules‘ culture in bureaucratic organisations led to members following the minimum possible rules required. This, in turn, had a cascading effect in obtaining more than minimally acceptable behaviour from members. Merton35 has stated that a major failing of bureaucracy was its tendency to foster ‗goal displacement‘. In the process of following rules and regulations rigorously resulted in rules becoming an end in them thereby subverting the real goals of an organisation. Further, application of rules and regulations often in inappropriate circumstances and the tendency to routines unique events resulted in dysfunctional outcomes. The role of individuals in a bureaucratic organisation has been commented upon adversely by Blau36 who proposed that in bureaucratic organisations, certain people who knew how to ‗play by the rules‘ shifted power from the nominal leaders, who did not know how to play by the rules, to with people who did. In a similar vein, Ostrom37 has argued that the bureaucratic structures ―are necessary but not sufficient structures for a productive and responsive public service economy.‖ Claus Offe38 has, in his counter Weberian analysis spoken of a bureaucratic structure as running against the rationality of developed welfare-state capitalism unlike the Weberian bureaucracy that was relevant to a ―specific historical phase and contingent from the standpoint of functional rationality‖. Mainly, scholastic studies have dwelt upon specific
  27. 27. SHANTANU BASU 27 aspects of the bureaucracy such as inefficiency, corruption, concentration of power, managerial frustration, dissatisfaction, low creativity, organizational conflict, poor decision-making, misuse of power, political interference, etc. Yet studies have found that bureaucracies work well in certain contexts such as the evolution of society in erstwhile communist USSR, decline of the ancient Roman army and the development of the British pottery industry during the Industrial Revolution. However, these appear to be more by way of exceptions than as rules. An attempt has been made to fuse some of the above theories and opinions in the Indian context in the succeeding paragraphs. 2.5 Causes of corruption in India Before delving into the causes of administrative corruption, it is important to understand the hierarchical organisation of the bureaucracy in India. The following diagram shows the layout of a typical federal Ministry/Department:
  28. 28. SHANTANU BASU 28 Prime Minister Cabinet Minister Minister of Secretary State Secretary Same as for the other Secretary Additional Secretary/Jt. Secretary Director/Dy. Secretary Under Secretary Section Officer Clerical staff Chairperson, Advisory Councils Directors-General Central Police Forces [Home only] Autonomous body CEOs Public sector CEOs Average: Secretaries (2-3); Addl. Secretaries: 1-2; Jt. Secretaries: 5-7; Directors/Dy. Secretaries: 10-15; Under Secretaries: 15-20; Section Officers: 15-20
  29. 29. SHANTANU BASU 29 2.5.1 Historical causes of administrative corruption in India For 4850 of its 5000 year history, India remained a bevy of feuding princely states whose sole sources of revenue came either from land and trade or pillage. Colonial administration relied mainly on strength of Draconian laws, police and military might, fostering dissension amongst the Indian princes and a fear of the State apparatus on the citizenry to govern the country. Nor was Indian enterprise and capital encouraged to flourish. Needless to say, democratic institutions did not have any opportunity of formation. At the dawn of Independence in 1947, India had a band of visionary and dedicated leaders with a colonial bureaucracy to overcome centuries of maladministration and human suffering. Bureaucracy in India – its structure, role, behaviour and interrelationships – has evolved over 150 years. The Macaulay Committee Report (1854)39 recommended a civil service based on the merit system establishing the principle that ―henceforth, an appointment to the civil service of the (East India) Company will not be a matter of favour but a matter of right. He who obtains such an appointment will owe it solely to his own abilities and industry.‖ This was significant since a study has shown that 23 per cent of nominations to the Indian Civil Service between 1809 and 1850 were made to relatives of Directors of the East India Company while 55 per cent were on the basis of friendship (Cohn)40. This bureaucracy also had a Weberian side to it inasmuch as it was recruited from the affluent sections of society owing allegiance to the English Crown- exclusivity that Weber felt was essential to a true bureaucracy. Recognising this bureaucracy‘s imperial significance Prime Minister Lloyd George declared in the House of Commons in 192241 that ―they are the steel frame of the whole structure. I do not care what you build upon it - if you
  30. 30. SHANTANU BASU 30 take the steel frame out, the fabric will collapse‖. This perception did not change even with post-independence leaders of the stature of Jawaharlal Nehru (India‘s first Prime Minister 1947-64) and Vallabh Bhai Patel (India‘s first Home [Interior] Minister 1947-50). This was perhaps on account of the bureaucracy and the political leadership sharing a common social and cultural background42. Wedded to the Weberian characteristics of hierarchy, status and rigidity of rules and regulations and concerned mainly with the enforcement of law and order and collection of revenues, the Indian bureaucracy in its colonial form did not fit into the priorities of a developing state. Up to the 1930s the Indian bureaucracy was well-paid even by contemporary international standards as Potter43 has shown in the following table: Top Indian Civil service Monthly pay Comparative Posts Monthly pay Posts (In Rupees) (In Rupees) Governor of United Provinces 10,000 - - Governor of Bihar 8,333 Governor, New York State 5,687 Member Viceroy‘s Council 6,666 Cabinet Minister, UK 5,555 Governor of Assam 5,500 Chief Justice, US Supreme 4,550 Court Secretary, Govt. of India 4,000 Treasury Secretary, UK 3,333 Chief Secretary, Madras 3,750 Cabinet Member, USA 3,412 Commissioner, Bombay 3,500 President, Poland 1,560 Chief Secretary, Bihar 3,000 Governor, South Dakota 682 Secretary, Madras 2,750 Prime Minister, Japan 622
  31. 31. SHANTANU BASU 31 The idealism of the pre-Independence leaders soon gave way to a sea of political leaders claiming to represent caste and communal interests and whose sole interest lay in vote politics based on caste, regional and linguistic basis while the bureaucracy gained in strength as the ultimate arbiters of India‘s destiny. In doing so, the bureaucracy fully ‗lived up‘ to the words of Sir John Simon in his Indian Statutory Commission Report (1930)44: “In a country of small cultivators, no accumulated resources and little experience in organisation, except along the limited and traditional lines of the village community, private enterprise cannot undertake new and costly experiments. The task of bringing within reach of such a society the benefits of the administrative experience and the applied science of the West was possible for one agency only-Government; no other had the necessary knowledge or machinery. Thus the civil service of India, which in origin was little more than a revenue collecting agency, gradually took upon itself a very wide range of duties. As the work became specialized, new services had to be created to carry it on, and in this way there grew up departments dealing with public health, education, forestry, agriculture, irrigation, archaeology, and many more. India looks to government to do many things which in the west are done by private entrepreneurs.” Idealism and euphoria arising from newly found freedom coupled with the multifarious problems from the greatest divide in human history (Partition) and a sudden vacuum created by the departure of colonial administrators ensured that the colonial bureaucracy assumed control. The press and media, stifled by years of colonial repression, neither had the networks
  32. 32. SHANTANU BASU 32 nor the capital to enhance their coverage. Neither had the telecommunication and education sectors developed nor the capabilities of the accountability enforcing agencies. Grinding poverty, hunger and disease disallowed the population from devoting its energies to enforcing accountability. The middle class and intelligentsia also constituted a miniscule proportion of the population and even so, were more favourably disposed to the erstwhile colonial rulers that had created this class. The legal system too, suffering from the ravages of Partition, was in no position to play the role of an effective enforcer. Therefore it was but natural that India had little choice but to fall back upon the bureaucracy to administer the nation during this crisis and execute the first mega development projects. A millennium of civil strife, foreign invasion, colonial rule and societal divisions centering on religion, community and caste, absence of political cohesion amongst rulers, ensured that the impoverished and hungry population, at the dawn of Independence, possessed neither the bare minimum educational attainments nor the capital and resolves to claim their lawful rights and participate in government. Conditioned by the demands of a highly stratified feudal society and lured by an utter mismatch between a burgeoning population and available infrastructure and services, open to not infrequent political intervention, India‘s civil service is yet to come to grips with the fast changing economic scenario and desperately clings to its colonial vestiges with an adopted veneer of modernity and a put-on concern for welfare of the community of governed citizens. Shrouded in a veil of secrecy with an open disdain for professionals, mainly confined to mass-scale graduate and post-graduate degrees and deeply rooted in colonial times, India‘s bureaucracy is partly responsible for the country‘s abysmal rating by Transparency International. The
  33. 33. SHANTANU BASU 33 Indian bureaucracy‘s inability to deal effectively with the complexities and ravages of a post-Partition (1947) India stemmed from the facts that they were ill-equipped both by training and mindset to cater to the wave of rising expectations of a newly independent population in a democratic polity. Nor did they possess what Bhatt45 quantifies as the sole objective to ―emphasize results, rather than procedures, team-work rather than hierarchy and status, [and] flexibility and decentralisation rather than control and authority‖. It was quite unlike what Woodrow Wilson in his seminal essay on ‗The Science of Administration‘ (1887)46 had envisioned the role of government: “There is scarcely a duty of government which was once simple which is not now complex; government once had but a few masters; it now has scores of masters. Majorities formerly underwent government; they now conduct government. Where government once might follow the whims of a court, it must now follow the views of a nation.” This essay was written when there was a public outcry against corruption, improvement of efficiency and streamlining of service delivery in the pursuit of public interest – a scenario that is being presently repeated in India. Therefore it is imperative that the Indian bureaucracy, as Esman47 says, accepts its limitations and works in tandem with community and private agencies. In a similar vein, Chambers48 describes the need for ‗bureaucratic reversals‘ in most situations where officials know less than their clients; professionals should move from being experts transferring information to become consultants and collaborators of the poor. Disillusionment with the bureaucracy and its inability to deliver on promises has fuelled demands from a section of academia that sees non-governmental
  34. 34. SHANTANU BASU 34 organisations (NGOs) as agents of development (Korten)49. Notwithstanding such opinions, one cannot wish away the continued importance of governance and it three main organs, viz. the executive, judiciary and legislature. Governance in the contemporary context is as Rhodes50 states “……. the new method by which society is governed”. “Thus the governance concept points to the creation of a structure or an order which cannot be externally imposed but is the result of the interasction of a multiplicity of governing and each other influencing actors” (Kooiman and Van Vliet)51. Thus the role of governance retains centre stage in all lending operations of the World Bank52 as would be seen from the following table: Category Proportion of lending operations with governance content (per cent) Legal framework 6 Participation 30 State-owned enterprises reform 33 Economic management 49 Capacity building 68 Democratisation 68 Source: World Bank, 1992. Governance and Development, Washington DC Expansion of market concepts in the public sector is taking place coinciding with the thrust to build administrative systems that address the problems of a growing urban-industrial nation. That is why the public sector appears to be large, cumbersome, wasteful and beyond citizen control (King and Stivers)53. The
  35. 35. SHANTANU BASU 35 historical distinction between private and public sectors is ‗essentially obsolete‘ and management therefore should be generic across sectors. (Peters and Pierre)54. However, treating citizens as happy customers may also be equally counterproductive. Therefore governance in India needs to be dynamic, responsive and participative and deliver public services economically and efficiently with adequate levels of accountability. 2.5.2 Societal causes of administrative corruption in India Any bureaucracy arises from society and there can be no different yardstick for the Indian bureaucracy. Recruitment to the ‗Covenanted Services‘ such as the Indian Civil Service, Imperial Police and Indian Audit and Accounts Service, although based on competitive examinations conducted in England, were restrictive in nature and other considerations such as those relating to family connections, caste, religion, etc. played significant roles in determining selection. There was also selection by nomination without any benchmarking examination. It was therefore natural that only the miniscule and land-owning rich middle class (the biggest single supporters and beneficiaries of colonial administration) were represented in the upper echelons of India‘s bureaucracy. Having benefited from English education and largesse in various forms (including, but not limited to, knighthoods, land grants, etc.) this class, since its inception by the then Governor General of India Lord Cornwallis in 1793, served as a surrogate bureaucracy to the colonial administrators. There was not much difference when it came to recruitment for subordinate government positions either. Bulk of the jobs were low paying but welcome to an otherwise impoverished population with virtually no other sources of income. Having originated from various castes and communities, the colonial civil service
  36. 36. SHANTANU BASU 36 favoured regional and caste based loyalties and was looked upon as the saviours by fellow citizens. It was this very class of indigenous colonial administrators that decided the distribution of projects, their executors, funding, and deployment of personnel and shaping of a nascent nation‘s laws. Centuries of deprivation and impoverishment coupled with the laxity of the post-independence polity enabled the Indian bureaucracy to make inroads into every sphere of life in India, irrespective of their capabilities. 2.5.3 Environmental causes of administrative corruption in India The causes under this category are mainly economic and partly related to service conditions of the bureaucracy. Economic causes of administrative corruption in India An important economic cause of corruption is the relatively low salaries of the 20 million government work force, particularly the senior civil services. A secretary (in his mid to late-fifties) to the Government of India (the topmost rung of the civil service) today earns around INR 60,000 per mensem that translates to US$ 1350. However, added to this are non-taxable fringe benefits such as chauffeured staff cars, orderly messengers/attenders, other personal staff, virtually unlimited telecom facilities, leave travel concession by air for himself and his dependants, spacious premium government residential family accommodation, inflation-indexed lifetime pension and family pension thereafter, provident fund, comprehensive lifetime health care (at US$ 3 per month) for himself and his dependants and, in case of railway officers , the lifetime privilege of free air-conditioned first class railway travel for himself and his spouse. An approximate additional cost to all these items at
  37. 37. SHANTANU BASU 37 current cost would translate to INR 400,000 or US$ 9,000, making for a gross salary liability per head for the federal government of approx. US$ 10,350 per month. This pales into insignificance when one considers starting salaries for a fresh Indian Institute of Management graduate (in his early twenties) ranging from INR 300,000 to 400,000 per month (US $ 7,000- 9,000) plus incentives that could add twice as much to the base salary apart from self-designed rapid intra/inter-sectoral mobility at a time of his/her choosing. However, the lower echelons of the bureaucracy, particularly junior officers and an army of clerks, accounting for about 95 per cent of the bureaucracy are paid salaries ranging from INR 8,000 – 30,000 (US$ 175 – 700) although they too have scaled down non- taxable perquisites such as pensions and health care. In 1991, the then Government of India introduced far-reaching reforms in the first phase of liberalization of the economy. Subsequent interventions by successive governments have added pace to this movement. However, by redefining the role of government vis-à-vis the economy, liberalization has given way to the bureaucracy to use its state power for selling/disinvesting public enterprises in oft-criticised and low-transparent manners as also arrogating to itself the authority to permit or deny licenses to foreign/indigenous companies/entrepreneurs for setting up manufacturing, service or much-needed infrastructure facilities. However, this may be only a transitory phenomenon as private industry comes to occupy centre stage and a relatively limited ‗price‘ to pay for a brighter future. Another factor that impinges on corruption is the recent trend of coalition politics in India. Underhand political funding and uncertain tenures of governments and ministers have engendered an unholy nexus between the bureaucracy and the politicians insofar as corruption is concerned. Such a strong
  38. 38. SHANTANU BASU 38 nexus also becomes apparent when one considers the utter helplessness of accountability agencies that are either given advisory status or have to wait endlessly for government permission to institute prosecution proceedings against delinquent officers/politicians. Even proceedings where launched are stymied by poor legal follow-up and presentation, absence/destruction of original evidence, layers of legal appeals and ultimately, nominal exemplary punishments. The all-pervasive lure of ill-gotten money that India‘s Central Vigilance Commission characterizes as a ―low-risk and high- return‖ enterprise has encouraged the average citizen to view the Indian bureaucracy as predatory and oppressive rather than enabling thereby reinforcing their sense of helplessness and exclusion. By distorting development priorities such as the execution of often-controversial single mega projects instead of localized smaller and functional ones (without attendant problems of rehabilitation, employment, etc.) in the search of a bigger ‗share‘ of the ‗booty‘, the bureaucracy, in tandem with the political leadership has skewed development to the detriment of the population. Service conditions as cause of administrative corruption in India An interesting feature about India‘s bureaucracy is that it constitutes only around 1.2 per cent of the population against the OECD average of 7.7 per cent (with pronounced reliance on private sector delivery mechanisms)55 and yet exercises a stranglehold on the country. While there is, prima facie, a strong case for increasing the government workforce, yet there are major angularities in the staffing patterns thereby giving an impression that salary and pension spending at around 25 per cent of total government expenditures is too high relative to non-
  39. 39. SHANTANU BASU 39 salary spending. Thus the State Government of Delhi has only 37 food inspectors to inspect 450,000 food outlets – a ratio of 1:12,000. Against this the Karnataka State Administrative Reforms Commission (2001) found that 45 per cent of filled positions in the Irrigation department, 73 per cent in the Public Works Department and 53 per cent in the Mines and Geology Department were in excess of requirement. The productivity of the government workforce does not generate any cause for optimism either. Steady salary increases in the public sector have ensured that the salary of a graduate teacher in the Indian state of Uttar Pradesh increased in real terms by 36 times from 1960-61 to 1995-96 (Kingdon and Muzammil)56. Mehrotra and Buckland57 have estimated that the ratio of trained graduate teacher salary to state domestic product per capita increased from 8.4 in 1985-86 to 13.5 in 1995-96. This compares unfavourably with Carnoy and Welmond‘s58 findings that show the ratio of an average teacher‘s salary to GDP per capita for West and Central Africa at 7.3, almost half of Uttar Pradesh‘s average in 1995-96. The declaration of all private elementary schools in the state of Madhya Pradesh as government schools by the state government in the early 1980s overnight brought 650,000 teachers into government service. Thus political compulsions in creating posts and recruitment to these posts, except the senior federal and state civil services, has severely skewed the structure of the Indian bureaucracy for it to be able to act as a major agent of change and development. Fragmentation of the civil services both at federal and state level and the absence of any horizontal, vertical or lateral movement between services have also added to the absence of specialisation and recognition of good performance as a way to obtain career advancement. Faced with slow promotions, many of these services have sought to make good official
  40. 40. SHANTANU BASU 40 compensation with less honourable means fuelling corruption further. An important aspect that merits discussion is the training of personnel. Although the Government of India has laid down that every Ministry/Department shall earmark one per cent of its gross annual expenditure on staff training and training institutions have mushroomed, yet the quality and commitment to such training remains well below par. An unwillingness to serve in any training institution and perception of such institutions as being anti-professional climbers has characterized these institutions. Although the senior federal services are trained in private institutions such as Indian Institutes of Management and foreign universities, the training effort for the bulk of the file-processing ranks has been lackadaisical at best. The end result is a vast bureaucracy that frequently oversteps its rights and obligations, is ill-equipped to comprehend the subtleties of current-day economics and finance, yet standing in the way of professionalisation of these services. A standing example of bureaucratic ennui is the almost daily multiple interventions by courts of law, including the federal Supreme Court, on issues relating to subjects as diverse as admissions to educational institutions, environment, unauthorised constructions, etc. A major factor that affects the civil services in India is that of chronic and rampant political interference leading to frequent suspensions from service and transfers and diluting or even removing any accountability of these officers. This engenders corruption by way of informal auction of posts to the highest bidder by politicians. About two decades back, Robert Wade noted the buying and selling of posts in his study of the irrigation department of a major south Indian state government. Wade59 noted that irrigation engineers were able to extract large
  41. 41. SHANTANU BASU 41 amounts from the sale of posts as well as award of contracts and water to lobby groups. After a share for the engineers, the bulk of this money found its way into the coffers of politicians for elections and other purposes. The buyers of these posts, in turn, had to work hard to recoup their investment by extracting as much revenue as they could before either being transferred or winning an extension with this wealth. Evidently, the more downstream problem of chaos in administration caused by high turnover rates is linked to the upstream imperative effacing politicians to extract revenue from routine government functions to finance their quest for office. Another important factor that adds to the limited capabilities of the bureaucracy and engenders corruption is the continued employment uncertainties of the bureaucracy, particularly in the wake of recent government pronouncements and action in strategic disinvestment, winding up of unprofitable ventures, ban on recruitment, economy instructions, scaling down of some redundant organisations, etc. All these have been mainly done by governments unable to make their balance sheets tally. Lowering of revenue barriers, post-WTO, also has meant a general decline, in real terms, of government revenues and consequently the affordability of several government structures in a scenario where a dynamic private sector has emerged as a powerhouse of industry and services. With the services sector of the economy expanding at almost breakneck speed, many government departments would have to be eventually closed down. Possessed of very limited educational and professional attainments and skills vis-à-vis fast advancing technology and skills from the private sector and the perceived absence of alternative employment opportunities have led the bureaucracy into believing that as a facilitator alone, their sources of ‗supplemental‘ income would eventually dry up. This perhaps
  42. 42. SHANTANU BASU 42 has also led the bureaucracy at all levels to attempt a free run on all the resources that India has. A bureaucracy mirrors the societal environment of any country which also becomes its biggest negativity. Complacency arising from excessive insulation by a maze of antiquated rules, regulations and laws, high levels of illiteracy in the population, a non-participatory monolithic administrative organisation vested with unwritten discretion, regional and caste loyalties – all these and more serve to make the Indian bureaucracy expensive and expansive, inefficient and corrupt apart from engendering mediocrity. 3. Elections and political party funding as a source of corruption in India The evolution of a democracy usually takes several centuries and several generations of citizens to mature. While the UK became a constitutional monarchy in 1689, established the Tories, Whigs and Liberals as the precursors of today‘s parties, introduced universal suffrage in 1918, it was not until 1945 that a well-defined and distinct two-party political system was evolved. Similarly, although France became a constitutional monarchy in 1790 and a democratic republic in 1871, yet a stable democracy came into being only in 1958. The US too, starting with independence in 1783, introduction of the party system in 1824, established the present party system in 1856. Thus while the UK took between 27 and 256 years to build its democracy, France took 78-168 years, Germany 30-80 years, the US 30-70 years and Japan around 50 years. However, none of these nations had ever to carry a colonial burden or were faced with a fragmented and fractured society, political disunity and major social divides. Compared to these nations India‘s democracy has found firm roots although it would yet take
  43. 43. SHANTANU BASU 43 perhaps another five decades to reach a similar level of maturity. Nevertheless, the basic concepts of a democratic polity such as universal franchise, popular sovereignty, and institutionalised control of power and pluralism of political forces are quite well established in India. Since Independence (1947), India has witnessed series of elections to the lower House of Parliament (Lok Sabha or the House of the People). The official estimated figures of expenditure on such elections are shown in the following graph: 14000 Expenditure incurred (In INR 12000 10000 million) 8000 6000 4000 2000 0 52 62 71 80 89 96 99 19 19 19 19 19 19 19 Year Source: Adapted from data available at The size of the electorate too is perhaps the largest in the world, proof of India‘s living democracy as shown in the following graph:
  44. 44. SHANTANU BASU 44 800000000 700000000 600000000 500000000 Number of electors 400000000 300000000 200000000 100000000 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Year Source: Adapted from data available at In 1991, the conduct of general elections required some 600,000 polling stations (775,000 for 1999 and 687,000 for 2004 elections) for the country's 3,941 state legislative assembly and 543 parliamentary constituencies. To attempt to ensure fair elections, the Election Commission in India deployed more than 3.5 million officials, most of who were temporarily seconded from the government bureaucracy, and 2 million police, paramilitary, and military forces. Loksatta60, an Indian NGO, estimates expenditure incurred by parties and candidates for Parliament and State Assembly elections to be about Rs.7000 crore. Strangely, this figure in absolute terms is comparable to the exorbitant election expenditure in the US. In the 2000 elections in the US for the presidency, both Houses of Congress, gubernatorial offices and state legislatures, the total expenditure was estimated to be about US$ 3 billion. About half of it was incurred for issue-advertising by political action committees (PACs) and pressure groups. The actual campaign expenditure was probably about $ 1.5 billion, which is almost exactly the amount spent in Indian elections! When one
  45. 45. SHANTANU BASU 45 considers the high purchasing power of the INR as opposed to its low exchange value, India‘s real expenditures are about five to six times that in the US. Yet, India‘s income per capita is nearly one-eightieth of that in the US. Adjusting for India‘s higher population, and relative to per capita income, the country‘s per capita election expenditure is several times (about 20 times in purchasing power terms and 100 times in absolute terms) than in the US! However, that the desired maturity level of Indian democracy is yet to be reached is evident from the fact that there are no meaningful laws and conventions on regulation of political party funding. Thus a legal provision that allows only public sector companies to contribute to political parties (an impossible task) while the Income-Tax law provides for limited exemptions on contributions made by corporate entities to political parties. In a highly politically fractured polity combined with the uncertainties of multi-party coalition politics, to expect any corporate entity in the private sector to identify itself with any political party is most inappropriate for reasons of vendetta at a later date. No clear cut guidelines or laws either exist to govern political party funding. It is therefore a natural phenomenon that parties and their politicians often extort finances from private companies and businessmen either by way of denial of a license, not allowing change of land end-use, environmental clearances, media advertisements from government agencies, transfers and postings of bureaucrats, budgetary support, and grants to NGOs, etc. The administrative system similarly promotes political corruption. Virtual auction of civil engineering officers‘ posts in public works departments, Project General Managers in the telecommunications sector, national highway projects, irrigation projects, out-of-turn promotions, convenient
  46. 46. SHANTANU BASU 46 placement of favourable bureaucrats, allocation of budget outlays, – the list is endless. Raking up issues relating to reservation of university seats on religious and caste basis is another ploy. Forcibly imposing quotas on admissions and reserving a part of few available seats for government nominees, directly or indirectly, government quotas on state-run railways, bus services, airlines, issue of food ration cards, driving and gun licenses, issue of all-India motor transport permits, transportation of POL products by public sector companies (the contracts) are the usual sources of corruption arising from an unholy nexus between the bureaucracy and politicians. Deregulation then, more than new and often unenforceable laws, would appear to be the sole answer to these ills. 4. Municipal administration and corruption in India The urban population has been projected to rise by India‘s Planning Commission61 to 40 per cent of a total estimated population of 1.33 billion by 2020 , i.e. over half a million from the current level of 27.80 per cent, i.e. 284 million. Such demographic growth is expected to be confined to around 60-70 large cities in the country. The following graph illustrates the growth of towns/urban areas in India during the last century:
  47. 47. SHANTANU BASU 47 5000 Number of towns/cities 4000 3000 2000 1000 0 1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001 Towns/UAs 1827 1815 1949 2072 2250 2843 2365 2590 3378 3768 4368 Source: Census of India, 2001 Concurrently, the percentage of urban population too has shown a rise as the following graph shows: 30 25 20 15 10 5 0 1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001 Source: Census of India, 2001 With liberalization of the economy, increasing reliance would have to be placed on institutional financing and capital markets for resource mobilization and on the private sector for service delivery. Given the generally poor performance track record and financial performance of most municipalities, apart from an all- pervasive public perception of being amongst the most corrupt in India, is likely to make it extremely difficult for them to raise
  48. 48. SHANTANU BASU 48 resources from the market. Issues such as those relating to reduction of urban poverty, employment, environment management, housing, water supply, energy, transportation, road decongestion, town planning, zoning, sanitation, etc. would increasingly come into focus. Financing urban services is perhaps the single major challenge that faces India‘s planners. In 2001-02 municipal revenues constituted barely 3 per cent of total government revenues although the served population was nearly 300 million. This was after a more than 10 per cent annual revenue expenditure growth rate over the last decade. Consequently, municipalities have had to depend on devolution of resources from the State governments which too did no have adequate resources. This has translated into abysmally low levels of civic services. Rampant corruption has further reduced the efficacy even of these limited resources for citizens‘ welfare. Fifty to eighty per cent of all municipal resources are consumed by salaries while operations and maintenance expenditure account for 20-40 per cent of the total expenditure of a municipality. Some metro area municipalities such as those in Bombay, Calcutta and Delhi are unmanageably large and have fallen victim to priorities of the elected representatives that head them. Here too the unholy nexus between municipal officers and employees and their political masters has contributed in some measure to the quality and distortion of urban development plans. Some municipalities have become unmanageably large and have indisciplined and huge departmental work forces that are recruited in much less than transparent manner poorly educated and virtually untrained. Efforts to break-up these monolithic entities have not succeeded for a variety of reasons.
  49. 49. SHANTANU BASU 49 5. Education administration and corruption India is home to 17 per cent of the world‘s total population accommodated in an area which is 2.4 per cent of the world‘s total area. Of 2820 languages in the world, as many as 325 languages are effectively used in India alone. The country has witnessed phenomenal educational development – both in quantitative and qualitative terms, since independence. The country has also made significant strides in higher and technical education. India spent a nominal 4.02 per cent of its GDP on education during 2001-2002 but about 44 per cent of its adult population still remains to be made literate62. The following statement compares the population, area, density, literacy rates and level of public expenditure on education in India and some of its neighbouring countries: Particulars Population Area Density Percentage Percentage Public expr. (millions) (Sq. Kms) to world of adult on (2000) illiterate education Population as %age of 2000 GNP (1996) World 6055.0 * 135604354 45 100 100 20.6 NA Afghanistan 21.2 # 652090 33 0.48 0.35 63.7 N.A. Bangladesh 129.2 143998 897 0.11 2.13 59.2 2.2 China 1277.6 9596961 133 7.08 21.10 15.0 2.3 India 1027 $ 3287590 312 2.42 16.96 44.2 3.2 Indonesia 212.1 1904569 111 1.40 3.50 13.0 1.4 Japan 126.9 377801 336 0.28 2.10 NA 3.6 Myanmar 46.4 676578 69 0.50 0.77 15.3 1.2 & Nepal 22.5 # 140797 160 0.10 0.37 58.6 3.2 @ Pakistan 156.5 796095 197 0.59 2.58 56.7 2.7 @ Sri Lanka 18.8 # 65610 286 0.05 0.31 8.4 3.4 Thailand 62.0 # 513115 121 0.38 1.02 4.4 4.8 SOURCE: Statistical Yearbook, 1999 UNESCO * Estimated population for 2000, # Reference year 1999, $ Reference year 2001 & Reference year 1994, @ Reference year 1997 Note: The area figures of India exclude area under illegal occupation of Pakistan and China. The following chart shows the slow trend of public expenditure on education as part of GDP in India during the period 1951-52 to 2001-2002:
  50. 50. SHANTANU BASU 50 4.02 4.5 3.8 4 2.92 3.5 3 2.25 2.5 1.52 2 1.5 0.64 1 0.5 0 1951-52 1961-62 971-72 1981-82 1991-92 2001-02 Source: Adapted from data available at Another chart would show the growth of educational facilities in India during the same period: 2000-01 1990-91 1980-81 1970-71 1960-61 1950-51 0% 20% 40% 60% 80% 100% Primary Upper Primary + High Colleges Universities Source: Adapted from data available at Colonial rule introduced concepts of a modern state, economy and an education system. By linking entrance and advancement in government service to academic education, colonial rule contributed to the legacy of an education system geared to preserving the position and prerogatives of the more privileged (Lall)63. In order to correct this and provide for more broad-