Corruption in India, public and private affairs


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Corruption in India, public and private affairs

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Corruption in India, public and private affairs

  2. 2. INTRODUCTION  Corruption in India is a major issue and adversely affects its economy.A study conducted by Transparency International in year 2005 found that more than 62% of Indians had firsthand experience of paying bribes or influence peddling to get jobs done in public offices successfully. In its study conducted in year 2008, Transparency International reports about 40% of Indians had first hand experience of paying bribes or using a contact to get a job done in public office  In 2012 India has ranked 94th out of 176 countries in Transparency International‘s corruption perception index, tied with Benin, Colombia, Djibouti, Greece, Moldova, Mongolia, and Senegal  Most of the largest sources of corruption in India are entitlement programmes and social spending schemes enacted by the Indian government. Examples include Mahatma Gandhi National Rural Employment Guarantee Act and National Rural Health Mission. Other daily sources of corruption include India's trucking industry which is forced to pay billions in bribes annually to numerous regulatory and police stops on its interstate highways
  4. 4. INDIAN COAL ALLOCATION SCAM  Coal allocation scam or Coalgate, as referred by the media, is a political scandal concerning the Indian government's allocation of the nation's coal deposits to public sector entities (PSEs) and private companies by Prime Minister Manmohan Singh. In a draft report issued in March 2012, the Comptroller And Auditor General Of India(CAG) office accused the Government Of India of allocating coal blocks in an inefficient manner during the period 2004–2009  The essence of the CAG's argument is that the Government had the authority to allocate coal blocks by a process of competitive bidding, but chose not to. As a result both public sector enterprises (PSEs) and private firms paid less than they might have otherwise. In its draft report in March the CAG estimated that the "windfall gain" to the allocates was {INR|10,67,303|c}.The CAG Final Report tabled in Parliament put the figure at {INR|1,85,591|c}On 27 August 2012 Indian prime minister Manmohan Singh read a statement in Parliament rebutting the CAG's report both in its reading of the law and the alleged cost of the government's policies.
  5. 5. 2G Spectrum Scam  We have had a number of scams in India; but none bigger than the scam involving the process of allocating unified access service licenses. At the heart of this Rs.1.76-lakh crore worth of scam is the former Telecom minister A Raja – who according to the CAG, has evaded norms at every level as he carried out the dubious 2G license awards in 2008 at a throw-away price which were pegged at 2001 prices
  6. 6. Commonwealth Games Scam  Another feather in the cap of Indian scandal list is Commonwealth Games Loot. Yes, literally a loot! Even before the long awaited sporting bonanza could see the day of light, the grand event was soaked in the allegations of corruption. It is estimated that out of Rs. 70000 crore spent on the Games, only half the said amount was spent on Indian sportspersons.  The Central Vigilance Commission, involved in probing the alleged corruption in various Commonwealth Games- related projects, has found discrepancies in tenders – like payment to non-existent parties, will-full delays in execution of contracts, over-inflated price and bungling in purchase of equipment through tendering – and misappropriation of funds
  7. 7. Uttar Pradesh NRHM scam  Uttar Pradesh NRHM Scam is an alleged corruption scandal in the Indian state of Utter Pradesh , in which top politicians and bureaucrats are alleged to have siphoned off a massive sum estimated at 100 billion (US$1.5 billion) from the National Rural Health Mission, a central government program meant to improve health Care Delivery in rural areas. At least five people are said to have been murdered in an attempt to cover up large-scale irregularities. Several former ministers of then ruling party, Bahujan Samaj Party are being investigated by the CBI  The NRHM scam came to the limelight after two Chief Medical Officer (the top health functionary of the district) were successively murdered in posh localities of the state capital, Lucknow. Dr. Vinod Arya (Oct 2010) and Dr. B. P. Singh (April 2011) were shot dead in broad daylight outside their houses, by motorcycle-riding killers, using the same weapon. Deputy-CMO Y.S. Sachan, who is thought to have had a role in the murders, was arrested, but died mysteriously in prison. Subsequently, three other functionaries who were under investigation have also been murdered or died under suspicious circumstances
  8. 8. Satyam Scam  The Scam At Satyam Computer Centre is something that will shatter the peace and tranquillity of Indian investors and shareholder community beyond repair. Satyam is the biggest fraud in the corporate history to the tune of Rs. 14000 crore.  The company’s disgraced former chairman Ramalinga Raju kept everyone in the dark for a decade by fudging the books of accounts for several years and inflating revenues and profit figures of Satyam. Finally, the company was taken over by the Tech Mahindra which has done wonderfully well to revive the brand Satyam.
  9. 9. SARADHA GROUP FINANCIAL SCANDAL The Saradha Group financial scandal is a financial scam that was caused by the collapse of a Ponzi Scheme run by Saradha Group, a consortium of Indian companies that was believed to be running a wide variety of collective investment schemes (popularly but incorrectly referred to as Chit Fund) in Eastern India. The group collapsed in April 2013, causing an estimated loss of INR 200–300 billion (US$4–6 billion) to over 1.7 million depositors. In the aftermath of the scandal, the State Government Of West Bengal set up an inquiry commission to investigate the collapse and also set up a fund of INR 5 billion (92 million USD) to ensure that low-income investors are not bankrupted.The Union Government through the Income Tax Department also launched a multi-agency probe along with the CBI to investigate the Saradha scam, as well as other similar Ponzi schemes
  10. 10. IPL scam  Sharad Pawar and his immediate family held over 16% equity in one of the bidders for an IPL cricket team. The Pawars own 33.6 lakh shares (out of 2.07 crore shares) in City Corporation, a Pune-based construction company which bid Rs 1,176 crore for a franchise in March. The Pawar family's shares are held through two companies, Lap Finance and Consultancy Pvt Ltd and Namratta Film Enterprises Pvt Ltd, which are 100% owned by the NCP supremo and Union agriculture minister, his wife Pratibha and daughter Supriya Sule.  IPL Commissioner Lalit Modi revealed that Tharoor's friend (later his wife) Sunanda Pushkar had equity stakes in Rendezvous Sports World (RSW), heading the consortium that owns the Kochi team. It was later disclosed that Pushkar got sweat equity of the value of Rs 70 crore. Shashi Tharoor maintained that the amount had nothing to do with his active campaigning and mentoring for the Kochi team. This was less convincing as he had specifically mentioned that he had no specific gains from RSW winning Kochi Franchisee.
  11. 11. The Fodder Scam  If you haven’t heard of Bihar’s fodder scam of 1996, you might still be able to recognize it by the name of “Chara Ghotala,” as it is popularly known in the vernacular language  In this corruption scandal worth Rs.900 crore, an unholy nexus was traced involved in fabrication of “vast herds of fictitious livestock” for which fodder, medicine and animal husbandry equipment was supposedly procured
  12. 12. BOFORS SCAM  The Bofors Scandal is known as the hallmark of Indian corruption. The Bofors scam was a major corruption scandal in India in the 1980s; when the then PM Rajiv Gandhi and several others including a powerful NRI family named the Hindujas, were accused of receiving kickbacks from Bofors AB for winning a bid to supply India’s 155 mm field howitzer  The Swedish State Radio had broadcast a startling report about an undercover operation carried out by Bofors, Sweden’s biggest arms manufacturer, whereby $16 million were allegedly paid to members of PM Rajiv Gandhi’s Congress  Most of all, the Bofors scam had a strong emotional appeal because it was a scam related to the defence services and India’s security interests.
  13. 13. Impact of Corruption on Indian Businesses IMPACT OF CORRUPTION ON GDP SOURCES:- KPMG INDIA
  14. 14.  Almost 68% people attribute corruption to be induced by the private sector; even as wide majority of us put the blame on the government enterprises  India has seen stupendous growth in mergers and acquisitions. But, here could be a small hump in the tale. Nearly 37% of respondents felt that corruption could impact the valuation of a company thereby denying shareholders a fair price  Needless to say, real-estate industry has remained as the most corrupt industry, as told by 32% respondents, which is highest quantification going industry-wise.
  15. 15. Impact of corruption on business SOURCES:- KPMG INDIA
  16. 16.  Half of those surveyed felt that India corruption may hit the investment sentiment and render India less attractive destination for foreign investment  Respondents to the extent of whopping 90% felt that corruption would also translate into increased stock market volatility and prevent institutional investors from making long-term commitments  99% of respondents opined that the biggest impact of corruption on business is its tendency to skew level playing field and attract organizations with lesser capability to execute projects. This could create inefficiencies in the system and hence increase the cost of operations.
  17. 17. Perception of most corrupt industries SOURCES:- KPMG INDIA
  18. 18.  its telecommunications sector – especially, after recent 2G spectrum allocation scam, 17% of those surveyed felt this sector is fraught with corruption issues  Most significantly, when it comes to anti-corruption measures, a majority 84% of those surveyed opined that Indian government failed to effectively enforce anti-bribery and corruption laws
  19. 19. How will corruption scenario in India change in the next 2 years? SOURCES:- KPMG INDIA
  20. 20.  Interestingly, when asked as to how will corruption scenario in India change in the next 2 years – 46% felt that corruption is here to stay in the system, while 15% opined that corruption shall continue to thrive and increase irrespective of the legislation
  21. 21. Top Corrupt Countries in Asia
  22. 22.  The report released by Transparency international, which is based on input from 13 different experts and business surveys, further indicates that the global financial crisis took a toll on people’s views of corruption in government  Notable among decliners over the past one year are some of the countries most affected by the financial crisis precipitated by transparency and integrity deficits. The survey highlighted the fact that few of the improvers were from the Organization for Economic Cooperation and Development (OECD)
  23. 23. India 87th on corruption list – Will we ever improve?  The corruption will most likely find its roots dug deep into the system. It is literally under every stone you turn. And, by now, most of us in India have learned to live with corruption as a part and parcel of our life  In India, the tentacles of corruption are spread far and wide in all horizons of life and not just limited to government organizations. Recent instances of IPL scam and the Commonwealth Games underscores as to how a big moolah can attract corruption even in a Gentleman’s game  Moreover, corruption is not just limited to India. It is a massive phenomena and a real cancer destroying the benefits of globalization in many poor countries  The 2010 Corruption Perception indexs hows that three quarters of the 178 countries in the index have fared miserably in terms of corruption problem.
  24. 24. Campus Ahmedabad Campus: Karnavati Knowledge Village, A/907,Uvarsad, S.G.Highway, Gandhinagar Kolkata Campus: Infinity Benchmark Tower 10th Floor, Plot - G1, Block - EP& GP, Sec - V, Salt Lake, Kolkata. Reg. Office: 407, Zodiac Square, 4th Floor Opp. Gurudwara, S.G. Road, Bodakdev, Ahmedabad.