Sify finance:Black hole
Business Standard | 2010-11-05 01:20:00
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Indians will be ashamed but unsurprised that India has slipped three notches in Transparency International's latest global Corruption Perceptions Index. The country is now ranked at 87 out of 178 countries from 84 in 2009. Many would argue that 2010 does not really signify a major deterioration of an already appalling situation. But two points are worth noting in this context. One, China, which is often cited as a major culprit, is not only way ahead of India at rank 78, it has also improved its position one notch from 79 in 2009. Second, India's ranking was skewed by the globally publicised unauthorised wealth creation in the run-up to the Commonwealth Games (had the Adarsh Society scandal involving the defence forces and politicians in Mumbai broken when the survey was being conducted, India's ranking might well have been worse).
It is possible to argue, as some cynically do, that corruption doesn't matter in the larger scheme of things, that despite its pervasiveness, India, like China, is one of the world's fastest growing economies. Also, had it not been for a global crisis induced by the western banking system, India could well have maintained its 8 to 9 per cent growth record. It has also been pointed out that the contretemps surrounding the Commonwealth Games are no indicator of India's true potential. Constructing the Games infrastructure was the handiwork of government agencies, not a measure of the kind of private sector execution capabilities that have put India on the map. All this is undeniably true but it is possible to highlight the obverse: consider how much farther India could have progressed had corruption not been a fact of life. And even accounting for the admitted flaws in a global survey based on perceptions, it is to indices like these that foreign investors turn when they weigh long-term investment decisions.
There is, however, a larger message in the numbers and that has to do with the quality of government intervention in public life. A 2009 report by US non-profit Trace International, an online reporting tool entitled Business Registry for International Bribery and Extortion (BRIBEline, for short) showed that 91 per cent of the reported bribe demands originate from government officials — with national-level government officials in the lead at 33 per cent and the police 30 per cent. Again, more than half the bribes were for the delivery of timely services to which the recipient was entitled. Although the sample size was small — 96 reports — for a period covering July 1, 2007 to October 30, 2008, Indians are unlikely to disagree with its broad findings. Tellingly, the report also shows that the bulk of the bribes are below the value of $20, reinforcing the petty nature of Indian corruption that flourishes when systems and processes of governance are flawed. Since corruption is a uniquely disenfranchising exercise, it is the poor who suffer the worst.
The UPA government's solution to the poverty issue is to throw money at huge government-administered entitlement programmes for the poor instead of attacking the structural issues that thwart growth-spurring enterprise — from education to physical infrastructure — and keep Indians in the circle of poverty and vulnerability to corruption. Technocrats like Sam Pitroda and Nandan Nilekani say technology is the answer to the problem. That's still unproven on a large scale. The first challenge in India is to remove the incentives for corruption, something only meaningful reform can achieve.
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Business Standard | 2010-11-05 01:20:00
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Indians will be ashamed but unsurprised that India has slipped three notches in Transparency International's latest global Corruption Perceptions Index. The country is now ranked at 87 out of 178 countries from 84 in 2009. Many would argue that 2010 does not really signify a major deterioration of an already appalling situation. But two points are worth noting in this context. One, China, which is often cited as a major culprit, is not only way ahead of India at rank 78, it has also improved its position one notch from 79 in 2009. Second, India's ranking was skewed by the globally publicised unauthorised wealth creation in the run-up to the Commonwealth Games (had the Adarsh Society scandal involving the defence forces and politicians in Mumbai broken when the survey was being conducted, India's ranking might well have been worse).
It is possible to argue, as some cynically do, that corruption doesn't matter in the larger scheme of things, that despite its pervasiveness, India, like China, is one of the world's fastest growing economies. Also, had it not been for a global crisis induced by the western banking system, India could well have maintained its 8 to 9 per cent growth record. It has also been pointed out that the contretemps surrounding the Commonwealth Games are no indicator of India's true potential. Constructing the Games infrastructure was the handiwork of government agencies, not a measure of the kind of private sector execution capabilities that have put India on the map. All this is undeniably true but it is possible to highlight the obverse: consider how much farther India could have progressed had corruption not been a fact of life. And even accounting for the admitted flaws in a global survey based on perceptions, it is to indices like these that foreign investors turn when they weigh long-term investment decisions.
There is, however, a larger message in the numbers and that has to do with the quality of government intervention in public life. A 2009 report by US non-profit Trace International, an online reporting tool entitled Business Registry for International Bribery and Extortion (BRIBEline, for short) showed that 91 per cent of the reported bribe demands originate from government officials — with national-level government officials in the lead at 33 per cent and the police 30 per cent. Again, more than half the bribes were for the delivery of timely services to which the recipient was entitled. Although the sample size was small — 96 reports — for a period covering July 1, 2007 to October 30, 2008, Indians are unlikely to disagree with its broad findings. Tellingly, the report also shows that the bulk of the bribes are below the value of $20, reinforcing the petty nature of Indian corruption that flourishes when systems and processes of governance are flawed. Since corruption is a uniquely disenfranchising exercise, it is the poor who suffer the worst.
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