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Nuances of Corruption
and Development
Mahesh Kumar
ChennaiNEXT & Satta Panchayat Iyakkam
India’s Current Position
• Human Development Index
• Ease of Doing Business Index
• Gender Gap Index
• Press Freedom Index
• Per Capita GDP
• Global Innovation Index
• Environment Performance Index
India’s RANK
Corruption Related Index
• Corruption Perception Index : 85/174
• Global Competitiveness Index : 51/139
• Index of Economic Freedom 2011 : 124/183
• Economic Freedom of the World : 94/ 141
• Ease of Doing Business: 132/183
Global Competitiveness Index
• World Economic Forum
• Diversion of Public Funds: 71/139
• Trust in Politicians: 88/139
• Bribes : 83/139
• Ethical behavior of Private Firms: 70/139
• Efficacy of Corporate Boards: 76/139
History
• Ancient
• Mentions in Rig Veda (Around 1500 BCE)
• Arthsashtra ( 2nd Century BCE)
• Modern
• Singapore
• Hong Kong
• USA
Corrupt Indians??
• Amendment to PCA Act
• Indians Vs Rest of Country
• Indians in other countries
Corrupt Indians??
• Readers Digest Experiment
• 2006: 12 wallets each in 16 cities around the world ( $50) – 2nd best with 9 returned
• Except for Hungary, more honest than USA, Russia, England, Brazil, and Switzerland.
• 2007: 30 mobile phones each in 32 cities – India Rank : 5/32
• Rule of 80:10:10
• Role of Institutions
• “The proper function of a government is to make it easy for people to do good and
difficult for them to do evil” – William Gladstone
Types of Corruption
• Coercive
• Ipaidabribe.com
• 1.23 Lakh reports since 2010
• Rs.500 for passport verification or Rs.50000 for eKatha
• Collusive
• 2G Scam
Corruption – Penalty elsewhere
• US - Rod Blagojevich Saga
• Governor of Illinois, contribution to his political fund, in exchange for a seat
• arrested – Dec 2008, indictment – Aug 2010
• Retrial : April 2011, Conviction – Dec 2011
• Impeachment: Jan 2009, barred from public office
• 14 years in Jail
• Singapore and Hong – Kong
Corruption Since Independence
• Areas where reduced
• Railways
• Telephone
• Natural Resource Allocation
• Cement, Sugar and Steel
• Passport
• Income Tax
Corruption Since Independence
• New Areas started
• Permit ( Educational Institutions)
• Appointments and Transfers
• Real Estate
• Auction & Tenders etc
• Loans in PSU
• PPP
Poor – Disproportionately affected
• Welfare Measures
• PDS
• 46.7% leakage = Rs 48,000 Cr at 2012 , Rs 61,000 Cr at 2015
• NREGA
• Average Annual Outaly Rs 40,000 Cr – Similar leakage as PDS – NSS Survey
•
Poor – Disproportionately affected
• Informal Sector
• Hafta or Mamool :
• Street Vendors in Delhi : 5000 License for 5 Lakh Vendors
• Hafta : 20% to 50% of Revenue
• Frequent raids + use of force
• Licensing : Cycle Rickshaw in Delhi
• 1 Lakh License for 5 Lakh Vehicle
• Bribe – 5 to 20% of Cost ,
• Renewal every 3 year – Half of license bribe
Poor – Disproportionately affected
• Tenders : Jharkand
• Good Roads increase rural income by 18%
• Expenditure on Roads : 54% Commission
• Agriculture Growth – Twice faster in elimination of poverty than other sectors
• Irrigation project : 48% Commission
BPL
CORRUPTION RANK –
DEPARTMENT WISE
SLUMS
Corruption and Developement
• Bribes – 3% of World GDP
• GDP growth and Corruption Co-relation in G20 Countries
• Ease of Doing Business Index
• Jobs and Indian in next decade
CORRUPTION - FORMULA
•Corruption = (Monopoly + Discretion) -
(Accountability + Integrity + Transparency)
Equilibrium of Corruption
• Politician
• Bureaucrat
• People/Voters
• Election Expenditure
• Politics

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Nuances of corruption and development

  • 1. Nuances of Corruption and Development Mahesh Kumar ChennaiNEXT & Satta Panchayat Iyakkam
  • 2. India’s Current Position • Human Development Index • Ease of Doing Business Index • Gender Gap Index • Press Freedom Index • Per Capita GDP • Global Innovation Index • Environment Performance Index
  • 4. Corruption Related Index • Corruption Perception Index : 85/174 • Global Competitiveness Index : 51/139 • Index of Economic Freedom 2011 : 124/183 • Economic Freedom of the World : 94/ 141 • Ease of Doing Business: 132/183
  • 5. Global Competitiveness Index • World Economic Forum • Diversion of Public Funds: 71/139 • Trust in Politicians: 88/139 • Bribes : 83/139 • Ethical behavior of Private Firms: 70/139 • Efficacy of Corporate Boards: 76/139
  • 6. History • Ancient • Mentions in Rig Veda (Around 1500 BCE) • Arthsashtra ( 2nd Century BCE) • Modern • Singapore • Hong Kong • USA
  • 7. Corrupt Indians?? • Amendment to PCA Act • Indians Vs Rest of Country • Indians in other countries
  • 8. Corrupt Indians?? • Readers Digest Experiment • 2006: 12 wallets each in 16 cities around the world ( $50) – 2nd best with 9 returned • Except for Hungary, more honest than USA, Russia, England, Brazil, and Switzerland. • 2007: 30 mobile phones each in 32 cities – India Rank : 5/32 • Rule of 80:10:10 • Role of Institutions • “The proper function of a government is to make it easy for people to do good and difficult for them to do evil” – William Gladstone
  • 9. Types of Corruption • Coercive • Ipaidabribe.com • 1.23 Lakh reports since 2010 • Rs.500 for passport verification or Rs.50000 for eKatha • Collusive • 2G Scam
  • 10. Corruption – Penalty elsewhere • US - Rod Blagojevich Saga • Governor of Illinois, contribution to his political fund, in exchange for a seat • arrested – Dec 2008, indictment – Aug 2010 • Retrial : April 2011, Conviction – Dec 2011 • Impeachment: Jan 2009, barred from public office • 14 years in Jail • Singapore and Hong – Kong
  • 11. Corruption Since Independence • Areas where reduced • Railways • Telephone • Natural Resource Allocation • Cement, Sugar and Steel • Passport • Income Tax
  • 12. Corruption Since Independence • New Areas started • Permit ( Educational Institutions) • Appointments and Transfers • Real Estate • Auction & Tenders etc • Loans in PSU • PPP
  • 13. Poor – Disproportionately affected • Welfare Measures • PDS • 46.7% leakage = Rs 48,000 Cr at 2012 , Rs 61,000 Cr at 2015 • NREGA • Average Annual Outaly Rs 40,000 Cr – Similar leakage as PDS – NSS Survey •
  • 14. Poor – Disproportionately affected • Informal Sector • Hafta or Mamool : • Street Vendors in Delhi : 5000 License for 5 Lakh Vendors • Hafta : 20% to 50% of Revenue • Frequent raids + use of force • Licensing : Cycle Rickshaw in Delhi • 1 Lakh License for 5 Lakh Vehicle • Bribe – 5 to 20% of Cost , • Renewal every 3 year – Half of license bribe
  • 15. Poor – Disproportionately affected • Tenders : Jharkand • Good Roads increase rural income by 18% • Expenditure on Roads : 54% Commission • Agriculture Growth – Twice faster in elimination of poverty than other sectors • Irrigation project : 48% Commission
  • 17. SLUMS
  • 18. Corruption and Developement • Bribes – 3% of World GDP • GDP growth and Corruption Co-relation in G20 Countries • Ease of Doing Business Index • Jobs and Indian in next decade
  • 19. CORRUPTION - FORMULA •Corruption = (Monopoly + Discretion) - (Accountability + Integrity + Transparency)
  • 20. Equilibrium of Corruption • Politician • Bureaucrat • People/Voters • Election Expenditure • Politics