No Honest Business In India
Background:
India has been hit by a string of huge corruption scandals including a multi-billion dollar telecom licenses scam in 2008, alleged financial malpractices associated with the Commonwealth Games in 2010 and an illegal mining scandal in Karnataka state during 2006-2010.
India ranked 87th place out of 178 countries in Transparency International's Corruption Perceptions Index (CPI) in 2010, down from 84th place in 2009. The index refers to perceptions of the degree of corruption as seen by business people and country analysts. With this ranking, corruption in India is seen to be worse than in China and Brazil, but still less severe than in Russia and Indonesia.
The World Bank has identified corruption as among the greatest obstacles to economic and social development.
A KPMG bribery and corruption survey in 2011 found:
- 68 percent of respondents believe that in many cases corruption is induced by the private sector. A large number of respondents (31 percent) to the KPMG India Fraud Survey 2010 stated that organisations pay bribes to win and retain business.
- It was not long ago that the Indian market was saddled with excessive regulations and protectionist government policies that significantly limited foreign investment and stifled competition. The business culture in this environment was one in which corruption was prevalent and in many cases, it became a normal pricing mechanism in the economy. From what started as petty payments demanded by ‘babus’ during the license raj days, corruption has taken a much larger form and scale today.
- Despite the importance that infrastructure development has in a nation’s progress, the level of bribery and corruption in the sector is relatively high. The main reasons that could be attributed to providing bribes would include obtaining routine administrative approvals, obtaining and retaining business and covering up inconsistencies in quality of work and documentation.
A 2010 report by Global Financial Integrity: - The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008
From 1948-2010, India has lost a total of $462 billion in illicit financial flows or illegal capital flight. This illicit flow was the result of corruption, bribery and kickbacks, criminal activities and efforts to shelter wealth from a country’s tax authorities.
EFFORTS TO COMBAT CORRUPTION
The Right to Information Act 2005, has emerged as one of the most effective initiatives in fighting corruption. It follows the adoption of the Bill on Public Interest Disclosures and Protection of Informer (Whistle blower resolution) and the Central Vigilance Commission (CVC). Many of the large scams in recent years have been unearthed as a result of these Bills.
A Gallop Poll released on 8 May 2012 found that Indians are starting to see less corruption in government and business.
The key findings of the poll are:
- Majorities of Indians continue to see corruption as widespread in their country's government and business
- 73% in early 2012 saying it is pervasive in their government and 67% saying it is widespread in business
- However, Indians are less likely to feel this way this year than they have been in several years, which may reflect rising optimism about the government and citizen efforts to fight the country's corruption problems
- Perceptions of widespread corruption within the business community are particularly high among current business owners (72%) and those who plan to start a business within the next 12 months (80%). This likely puts a serious roadblock in the path of investment and business development
- The beginning of 2012 shows signs of what could be the start of a positive turnaround in Indians' perceptions of corruption. If the trend continues, it may signal a more favorable business climate for investment and economic growth.
Among other serious allegations of corruption in early 2011, India's telecommunications minister Andimuthu Raja was arrested for selling publicly owned mobile phone frequency licenses to entrepreneurs at cut-rate prices. And Indians rallied last year around Anna Hazare, a social activist who went on a hunger strike to call attention to India's endemic corruption problems and pressure the government to enact anti-corruption legislation. On Feb. 2 this year, before Gallup started conducting interviews, India's Supreme Court revoked the illegally awarded telecom licenses -- possibly giving hope to millions of Indians that their government may be prepared to rein in corruption.
The Lokpal Bill
The Lokpal Bill sets up an independent ombudsman with the power to prosecute politicians and civil servants. The bill was tabled in parliament in August 2011, but was sent to a panel of MPs after protests from anti-corruption activists who said it was too weak. It is still to be passed into legislation.
Anti-corruption movement
Anti-corruption campaigners, including social activist "Anna" Hazare, have gathered support in their efforts to force the government to deal with corruption. The anti-corruption fight has gone online and there have been dramatic street protests.