| Corruption
Corruption can be defined as use of governmental power for
private gain.
There are two kinds of corruption: Extortionary Corruption
and Collusive Corruption.
Extortionary Corruption can be defined as corruption where
money has to be paid to acquire services that are legitimately
due and honestly entitled.
Collusive Corruption implies bribe given or bribe taken to
give something that is not legitimately due and here the bribe
taker and bribe give, collude to transact a resource, that honest
means would not have entitled.
Corruption can also be categorized as: Political Corruption
and Retail Corruption.
Political corruption is corruption by elected representatives.
Retail Corruption is corruption by government officials.
Often corruption in India is accepted. However there is a cost
to corruption.
India’s growth rate could be higher by 2% if India’s corruption
level is contained. So if corruption is not contained India’s
GDP could be half in 3 decades.
It is difficult to estimate the quantum of corruption in India.
But in a GDP of national economy of Rs. 60 lakh crores, almost
3 lakh crores – 5 lakh crores is routed through corruption.
Thus almost 5% of GDP is routed through corruption.
The World Bank estimates that almost 5% of global GDP is lost
due to corruption around the world and this may be as high as
25% in some African countries.
If these estimates seem a little high, consider this there
are 4 million trucks. Each truck has to pay Rs. 200 a day. Thus
almost Rs. 100 crore a day or Rs. 35000 crore a year is routed
through corruption only in truck sector.
Consider registration of housing, one has to pay amount equal
to registration fees for corruption and this may amount to as
much as 1% of cost of housing. Thus real estate sector could
significantly add to corruption.
Enterprises have to pay some amount, even when paying appropriate
legitimate taxes. Thus even to do legitimate dealing, one has
to pay an illegal component.
These are examples of retail corruption. But there is considerable,
political corruption too. Expenditure on elections is huge.
While there is expenditure limit of Rs. 25 lakh on Parliamentary
elections and Rs. 10 lakh on Assembly elections, it is reasonable
to estimate that these expenditure limits are exceeded by 10-100
times, depending upon the state and nature of constituency.
Clearly politicians spending huge amount of money in election,
will want to get a good rate of return. C K Prahalad, the late
management guru estimated that almost Rs. 2.5 lakh crore is
earned by politicians over a 5 year term. This calculation stems
from an estimate that almost Rs. 8000 crore is spent on Union
Parliamentary elections by political parties. If assembly elections
are included, the expenditure could easily exceed Rs. 25000
crore. Clearly for this kind of ‘investment’ a return of at
least 10 times would be expected. Hence it is not unreasonable
to estimate that almost Rs. 2.5 lakh crores is earned by politicians
over 5 year period. That would mean almost Rs. 50,000 crore
per annum.
Thus out of total corruption of Rs. 3 lakh crore, anywhere
between Rs. 50,000 crores to Rs. 75,000 crores(including local
government corruption) is political corruption and almost 80%
of corruption is retail corruption. Thus though political corruption
attracts most attention, retail corruption cannot be neglected
as it almost forms 70-80% of all corruption. Indeed while there
are mere 5000 politicians there are almost 20 million government
employees.
Election expenditure, that are in excess of ceiling limit are
usually indulged in to buy votes, through enticement. Some people
estimate that almost 20-60% of votes are bought by politicians
by providing liquor or giving cash of some goods. Most poor
class votes or even lower middle class votes are purchased.
Voters may even take money from multiple candidates.
Since Indian elections operate on principle of first past the
post system, every single vote is invaluable. And hence politicians
are willing to spend huge amount of money to acquire the marginal
vote because it is so valuable.
Indeed the political class presumes, that while spending on
elections does not ensure victory, not spending on election
almost certainly guarantees loss. Considering the enormous importance
of money in elections, political parties are compelled to field
candidate with money spending power and hence by definition,
politicians, who are more likely than not likely to be corrupt.
However, very few, if any people, much less politicians are
punished for corruption. Indeed not a single politician has
been jailed for prolonged period for corruption, though it is
realistic to presume that a very large percentage of politicians
are corrupt. There is also very scant and not strong enough
action against retail corruption. Hence both retail corruption
and political corruption continue to thrive unchecked by law.
Challenges.
There are several challenges in checking corruption such as
1. Lack of strict enforcement and strong punitive action.
2. Weak enforcement of law.
3. Tolerance of corruption
What should corporates do?
Corporates should realize that corruption is not merely
moral issue but actually an economic one. Corporates should
at least pay due taxes. Corporates should use international
instruments to check corruption in the nation.
What should common people do?
Common people should use RTI to expose corruption. With
informed collective assertion, common people can over years
transform the extent of corruption in India. Common people should
elect clean politicians.
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