Thursday, April 26, 2012


By K P C Rao., 
Practising Company Secretary

“Just as it is impossible not to taste the honey or the poison that finds itself at the tip of the tongue, so it is impossible for a government servant not to eat up, at least, a bit of the king’s revenue. Just as fish moving under water cannot possibly be found out either as drinking or not drinking water, so government servants employed in the government work cannot be found out (while) taking money (for themselves).”


India inherited a legacy of corruption from its ancient rulers[1] who always expected some gifts (in the form of the nazarana) from their subjects. One of the important aspects of the employers’ function in those days was to extract money from the common folks to enrich the treasury of the rulers. Appointments to the key positions were made on family considerations.

Most often, a "prime minister's son succeeded his father, a governor's son the governor, a judge's son a judge, a village headman's son the headman. Replacing relatives in good positions, irrespective of merit, gained merit in the eyes of the people".[2] Thus, nepotism as an evil was an acceptable concept in those days and the vocabulary had no proper word for it.

Corruption in India is also a legacy of the colonial system. As colonial governments were generally regarded as alien and hence illegitimate, consequently cheating and deceiving such an alien power was considered a fair game. The roots of political corruption in developing states thus lie in the colonial order or native tyrannical rule from which they have emerged as independent democratic states. In colonial times, the government was carried on by the aliens, and the citizens developed an attitude of irresponsibility and felt obliged to thwart the government in every possible way, including cheating and other corrupt methods. The cheating of foreign rulers in government came to be admired as a patriotic virtue.

Before Independence from colonial rule, corruption was nourished in a number of developing countries by the colonial officials themselves, who encouraged it by accepting expensive gifts, jewels, money, favours and undue hospitality from the influential elite native groups to grant them undue favours either against other similar groups or to individuals for their own private gains. However, it was during World War II that the spectre of corruption raised its head when there was sudden increase in administration, opportunities for corruption due to large scale purchases and procurement of defence material and constructions, manipulation, and intrigues of foreign financial and business powers.[3] But when that colonial system was replaced by an independent democratic system, the former attitude did not disappear at all, but has percolated down to the post independence period with greater vengeance, and thus today cheating government is not generally considered by many as any immoral act. The value system of people in modern times has now declined to such a low ebb as makes any exceptionally honest official behaviour appear as a pleasant surprise.

Consequently, in India, corruption has become a social phenomenon. It is widespread and has increased at a fantastic pace. There is hardly any area of activity that has remained wholly free from the impact of corruption. In fact, corruption has now become institutionalised and a commonly accepted way of life. In India, acceptance of bribes, commissions, under-the-table payments, and gifts, by the politicians or the bureaucrats are no longer frowned upon, and even subtle ways have been discovered to create a legitimate veneer and consider these as a part of normal life activities. In short, such an ethos has been created in the society that corruption has ceased to be regarded as a crime any longer.

Meaning of the word ‘Corruption’
There is no universal definition of what constitutes a corrupt behaviour. The definition of corruption and corrupt practices varies from country to country. The World Bank and other multilateral institutions refer to it as “the abuse of public office for private gain[4]. It involves the seeking or extracting of promise or receipt of a gift or any other advantage by a public servant in consideration of the performance or omission of an act, in violation of the duties required of the office. Mark Philip, a political scientist, identified three broad definitions of corruption, viz., public office centered, public interest centered and market centered.[5]
Judicial Interpretation of Corruption
Corruption in our country has a historical perspective of its own. In the case of State of M.P. vs. Ram Singh[6],  the Supreme Court  observed that “the menace of corruption was found to have enormously increased by the First and Second World War conditions. Corruption, at the initial stages, was considered to be confined to the bureaucracy, which had the opportunities to deal with a variety of State largesse in the form of contracts, licences and grants. Even after the war, the opportunities for corruption continued as large amounts of government surplus stores were required to be disposed of by public servants. As a consequence of the wars, the shortage of various goods necessitated the imposition of controls and extensive schemes of post-war reconstruction involving the disbursement of huge sums of money which lay in the control of the public servants, giving them a wide discretion, with the result of luring them to the glittering shine of wealth and property”. The Court observed that “in order to consolidate and amend the laws relating to prevention of corruption and matters connected thereto, the Prevention of Corruption Act, 1947 was enacted which was amended from time to time. In the year 1988 a new Act on the subject, being Act 49 of 1988, was enacted with the object of dealing with the circumstances, contingencies and shortcomings which were noticed in the working and implementation of the 1947 Act.” In the same case, the Supreme Court further observed :
“Corruption is termed as a plague which is not only contagious but if not controlled, spreads like a fire in a jungle. Its virus is compared with HIV leading to AIDS, being incurable. It has also been termed as royal thievery. The socio-political system exposed to such a dreaded communicable disease is likely to crumble under its own weight. Corruption is opposed to democracy and social order, being not only anti people, but aimed and targeted against them. It affects the economy and destroys the cultural heritage. Unless nipped in the bud at the earliest, it is likely to cause turbulence – shaking the socio- economic-political system in an otherwise healthy, wealthy, effective and vibranting society”.
Public Perception of Corruption
Corruption in India has passed through three different stages “(a) gaining legitimacy (b) widespread indulgence, and (c) shameless  defence”.[7] Apart from other social and economic compulsions, it has grown due to a steep fall in the standards of political leadership and an overall decline in the moral and ethical standards in the society.
Thus corruption in India has become a way of life in all fields of activities - more so in the field of politics. It has not only gained a widespread legitimacy and indulgence, but is now being defended shamelessly. Prime Minister Indira Gandhi’s statement on corruption in the late 1960s that “It was a worldwide phenomenon” heralded that dawn of the first stage of indulgence.
Corruption has now became the hallmark of Indian politics and administration. Its tentacles spread everywhere and tainted the reputation of even the Head of the Government. The last few years have seen the emergence of shameless defence of corruption, when attempts are being made to cover it up. Examples abound.
Thus corruption in political life in India has assumed almost criminal proportions and has ceased to provoke also shock and disgust as it would have three decades ago[8]. Corruption exists not only in the ruling party alone. But has also infected the opposition and all other political parties in equal measures. Not even the ‘Left’ ensconced in its closely guarded precincts can claim to be immune to it. Some of the popular parties of the regional level seem to be wallowing in corruption totally unashamed and uninhibited. Inevitably, the administrative machinery including the top bureaucrats in many places have practically adjusted themselves to a corruption-laden regime. In fact corruption at the political level goes hand in hand with corruption at the bureaucratic level.
Political corruption has invariably resulted into a sustained and systematic politicisation of the bureaucratic structure. It has liquidated the command and control structures of the services, leading to indiscipline, inefficiency and unaccountability among the ranks. Being used as tools for executing unlawful orders and as agents to collect funds for their political masters, a progressively growing number of employees in every sphere of functioning have amassed fortunes through corruption. As a result of the politicisation of the administrative machinery, the law-enforcing agencies have got mixed up with the very elements whose unlawful activities they are expected to check and control. As the latter enjoy the patronage and protection of politicians, a frightening triangular nexus has evolved between criminals, government functionaries and politicians. In addition political instability and the progressive decline in the values of the polity have over the years seen the degradation of the Parliamentary system, damage to the functioning of the Cabinet, disregard of the Constitution and the rule of law, and a continuing erosion of the integrity of the civil service.
Corruption Perception Index- Rankings by Transparency International
The Transparency International is an international body founded in 1993 and publishes Global Corruption Reports annually. It also publishes a Corruption Perception Index (CPI). The Index refers to the rankings of various countries from the least corrupt to the most corrupt.  The latest report is of 2010 and it refers to serious cases of corruption in several countries in the world, including India.
The Corruption Perception Index (CPI) was first published by the Transparency International in 1995. The Index for the year 2010 is based on several surveys conducted in various countries. In a list of 187 countries for the year 2010, India stands at No. 87 with a score of 2.33 out of 10.
Causes of corruption
Money is the root cause of many evils like corruption, black marketing, smuggling, drug trafficking, tax evasion. People are crazy for money. Majority wants to  become rich and money has become the basic goal. The more developed the nation, the more the standard of living of the people. People want more money to cater to their needs and at a point of time they don’t hesitate to have money from any source (black or white who cares). That is how the concept of money laundering enters and prospers.
There are many causes of corruption at both institutional and individual levels. Experts of different specialities have highlighted various factors, e.g., decline in religious beliefs or in public morality, uncertainty in the standards of appropriate behaviour, divergence between the formal and informal rules governing behaviours in the public sector, value conflicts in the post colonial settings where the standards and practices embedded within traditional relationship differ from the institutions left behind by the departing colonial power.

Of late, Corruption in India has grown to alarming proportions because of policies that have created enormous incentives for its proliferation, coupled with the lack of an effective institution that can investigate and prosecute the corrupt. Under the garb of liberalisation and privatisation, India has adopted policies by which natural resources and public assets (mineral resources, oil and gas, land, spectrum, and so on) have been allowed to be privatised without transparency or a process of public auctioning. Almost overnight, hundreds of memorandums of understanding (MoUs) have been signed by governments with private corporations, leasing out large tracts of land rich in mineral resources, forests and water. These allow the corporations to take away and sell the resources by paying the government a royalty, which is usually negligible per cent of the value of the resources.

Effects of corruption
It is an established fact that corruption or corrupt practices have detrimental or corrosive effects especially in developing countries. However, a debate on the effect of corruption on economic development went on for long. One view is that corruption may not be incompatible with development and at times may even encourage it by serving as an effective method of cutting the red tape and clearing projects for development. A bribe can be regarded as a market payment to ensure that resources are allocated to those persons who are most likely to use them efficiently.
The other view maintains that corruption detracts from development because of its undermining competitive processes, focusing on short term profits in place of sustainable and broad based development. Further, as Gunnar Myrdal pleaded, corruption creates incentives for officials to erect additional bureaucratic obstacles with a view to increasing opportunities for more bribes.[9]
Thus, it is clear that corruption exacts heavy economic costs, distorts the operation of free markets and slows down economic development.
Besides economic consequences, the rampant corruption tends to undermine the legitimacy of state institutions and governments. When a public official pursues his own interest without regard to the interest attached to his public function, the balance of authority both among government entities and between the State and the civil society is effectively damaged. If the general population assumes that public officials are not bound by the restraints of their public functions, it will be less likely to obey the laws of the society. In such a situation, there is a need to combat corruption effectively because it is one of the root causes of destabilizing the rule of law.
Corruption also casts a negative influence on the efforts to deal with the incidence of poverty. It has become a mechanism by which a neo-nich class has been developed in many developing countries. It can affect morals by the ‘perversion’ or ‘destruction’ of integrity in the discharge of public duties by bribery or favour or the use or existence of corrupt practices. Thus it destroys the ability of institutions and bureaucracies to deliver services that society may expect thereby posing a serious threat to the democratic institutions and the very existence of social order. Corruption in defence purchase and contracts tends to undermine the very security of the State.

The crucial question then is why corruption in India abounds despite numerous institutional arrangements and a plethora of legislation. Could it be due to the impossible human nature, as Kautilya observed above?

India did not invent corruption, but it seems to excel in it. Preoccupation with the subject is almost ancient. Among the plethora of reasons for failure to combat corruption, it may be concluded that the more important ones are the inadequate and inefficient enforcement mechanisms, lack of political will, and more importantly the cultural context of social tolerance and easy forgiveness. Any outrage that is there is largely confined to rhetoric, not action. Despite some helpful developments such as the newly conferred freedom of information, active investigative media and engaged civic groups, reasons for optimism appear to be minimal. The need seems to be a serious effort to develop sound norms by changing the societal culture, which places the premium on the shoulders of political parties.

The recommendations to curb corruption are made ad infinitum but no concrete steps are taken. For example, appointment of a Lokayukta (Ombudsman) was recommended by the first Administrative Reforms Commission in 1969 and is repeated nearly forty years later by ARC-2 in 2007 as nothing happened since the first recommendation. Only a shallow debate goes on whether the office of the Prime Minister be subjected to the authority of such an Ombudsman. The manner in which Anna Hazare's recent fast put pressure on the Government, will definitely create an atmosphere to pass the much awaited Lokpal Bill in the near future. The people of India, has now to wait and see how far the proposed Lokpal Institution would be an effective instrument to check the corruption.

Indians have always valued a world beyond the material and have embraced spiritualism as a way of life. Instances abound in our epics of good behaviour, of the triumph of good over evil, of the wisdom of sages. Stories of the honesty, generosity and piety of legendry kings such as Vikramaditya, are told to our children even today. There is no reason why Ram Rajya cannot be attempted.

In modern India, poverty, insufficiency and class conflicts are slowly giving way to a confident, inclusive, empowered India. On the Transparency International’s Corruption Index, India’s position has improved significantly, and hopefully will continue to do so. The vigilance of our enlightened people will ensure this.

[1] Corruption in Ancient India by Upendra Thakur
[2] Corruption in India by Khushwant Singh
[3] Corruption and Destiny of Asia by Husein Altas.
[4] Financial Times September 16, 1997.
[5] Mark Philip, “Defining Political Corruption” political studies, Vol.45 No.3, special issue 1997.
[6] State of M.P. vs. Ram Singh; 2000 (5) SCC 88
[7] S.K. Sinha, “Combating Corruption: Need for Honest Political Leadership and Reforms”, in Indian Express, November 17, 1993.
[8] Nikhil Chakravarty, “Bofors, Big Bull and Corruption in High Places”, in Pioneer,June 16, 1993.
[9] Gunnar Myrdal, Asian Drama: an inquiry into the Poverty of Nations, Vol.II, New York Pantheon, 1969.

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