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Project Report on
“Corruption is morally bad, but
Beneficial for a nation’s prosperity”
Submitted by: - submitted to:-
Sangeeta Singh Jasnidhi kaur ma’am
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ACKNOWLEDGEMENT
I am highly obliged to ‘Indian Institute of Planning and Management’ who
gave me golden chance through this project “CORRUPTION IS MORALLY BAD,
BUT ECONOMICAL BENEFICIAL FOR A NATION’S PROSPERITY”.
I am very grateful to my ma’am Jasnidhi Kaur for showing in me and
providing information to work on this project and also gave me precious
time, guidance and cooperation for making this project without which the
project could not have been possible. Lastly thanks to my friends who
encouraged me duration of this project. Finally I thanks to my parents.
Sangeeta Singh
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ABSTRACT
The philosophical analysis of corruption from the ethical and moral
perspectives. It discusses some of the major causes of corruption as being
rooted in our borrowed contemporary materialistic, capitalistic and
individualistic philosophical outlook, as well as in the resultant socio-cultural,
political and economic situations we have created for ourselves. The paper
also sees corruption as being the consequence of the many years of hardship
and the high level of poverty that have become the way of life here . It
identifies some of the effects of corruption to include: poverty, reduction in
economic growth and efficiency, underdevelopment and a general collapse of
the social structures that make for a healthy society. As a way out of
corruption, this paper put forward principles that draw impetus from ethics
and morality, from our traditional African cultural values, from modern
socio-economic, political and legal practices that have been of comparative
relevance and workability in other developed and developing nations, and
subsequently challenges us to be collectively involved in the fight against
corruption.
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CONTENTS
S.no. Contents Page
1. Introduction 4
2. Literature Review On corruption 6
3. Corruption In India 10
4. Anti- Corruption In India 16
5. Effects Of Corruption 18
6. Economic Concerns Of corruption 18
7. Causes Of Corruption 19
8. Consequences Of Corruption 21
9. Top 10 Scams 23
10. Legalizing Corruption 27
11. Why Worry About Corruption 29
12. World’s Biggest Scam In India 31
13. Mythology And Data Collection 34
14. Description Of Data 35
15. Results 36
16. Concluding Remarks 36
17. Bibliography 37
18. Appendix 1 38
19. Appendix 2 39
20. Appendix 3 40
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INTRODUCTION
Corruption is a global problem and no country of the world is totally free of
its menacing grip. However, it is the level of its prevalence on the one hand
and the honest, committed readiness of the people in eradicating it on the
other hand, that differentiates one country from another in the scale of
corruption perception index. Here in Nigeria, corruption has been entrenched
in our national ethos, politics, civil society, public and private sectors of
business and commerce. Our educational system, moral preferences and the
whole economic machinery of our society stink and ooze with the stench of
corruption. Every level of our Nigerian society has been deeply permeated by
a pervasive and debilitating culture of corruption. Nigeria has been rated as
one of the most corrupt nations in the world. This prevalence of corruption
betrays a latent decay in our ethical values and orientation. It shows our
futile attempt to build a political society without a foundational reference to
the religious ethical principles of justice, transparency, altruism,
accountability and a service-oriented notion of leadership. It shows a
leadership praxis that promotes the selfish interests of a selected few at the
expense of the common good which have generally been acclaimed by
philosophers as the essence of the formation of political society (Undoing
women 201).The effects of this pervasive corruption stare mockingly at our
faces. We see them in the bad state of our roads, hospitals, school systems,
poor infrastructures, increasing crime wave, looting of the Analysis of
Corruption from the Ethical and Moral Perspectives 467 government treasury
etc. Sad enough, there has not been an accompanying readiness and
committed effort on our part to stamp out corruption or bring it to a
manageable degree. Our many anti-corruption slogans, initiatives and
institutions are sterile and empty of integrity; they are also selective and
hypocritical.
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This paper attempts to give an analysis of corruption from the ethical and
moral perspectives, with a view to articulating an ethical road map for an
effective reduction or complete eradication of corruption from our societies.
Etymologically, the word corruption comes from the Latin word “corrumpo”
which literally means to decompose, or to disintegrate, to lose value, to
become putrid and useless. In other words, corruption simply means to lose
purity or integrity. This broad understanding covers both objects and things –
animate and inanimate. However, when applied to human actions, or to a
free moral agent, the word corruption assumes an added meaning. The
Advanced Oxford Dictionary defines corruption as ‘an act of dishonesty or an
illegal behavior aimed at using public office for one’s private gain’ (261).
Maurice Coker shares this view when he states that corruption is the “misuse
of power for private benefit or advantage. This power may, but need not
reside in the public domain. Besides money, the benefit can take the form of
promotion, special treatment, commendation, or the favours of women or
men… In ordinary parlance corruption simply means asking, giving or taking
a fee, gift or favours as a condition for performance of one’s legal or assigned
responsibility” (91). This definition brings out the fundamental link between
bribery and corruption. These two are twin concepts always associated with
each other.
Corruption is a universal human practice and no known society exists without
some form of corruption. However, the incidence of corruption seems to be
more prevalent in some societies than in others. Though minor differences
exist as to what constitutes corrupt practices or the extent of repugnancy of
corrupt practices among different nations, there is a universal agreement to
the fact that corruption itself is an anti-social behavior that portends danger
to the cohesive fabric that holds a society together and to the integral growth
and development of any society. It is, therefore, immoral and harmful to
engage in corrupt acts. According to Uduigwomen “The effects of corruption
are legion: It… induces unlawful accumulation of personal wealth, causes
inequitable distribution of goods and services… all to the detriment of the
people’s welfare and national unity” (199).
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LITERATURE REVIEW ON CORRUPTION
The literature on corruption is as vast as the topic is complex, testifying to the
intractable nature of a problem that societies have been struggling with for
thousands of years. Until recently, most corruption-related material focused
solely on the incidence of bribery; some even argued that bribery could be
beneficial to development. Now other types of corruption, many more
deleterious than bribery, are starting to be recognized, and their
consequences for sustainable development ascertained. In this respect, our
technical understanding of corruption has greatly improved with new efforts
to quantify actual political, social, and economic costs associated with
corruption. This development points to the overall discernable trend in recent
years to examine corruption not simply as an essentially moral issue related
to the unfair distribution of a country’s wealth, but as a major distortion of
political, social, and economic decision making.
The new literature that has emerged over the past several decades cuts
across three central issues. The first addresses why policymakers, business
leaders, and private citizens should concern themselves with the existence
and elimination of corruption. Though the empirical evidence indicates that
corruption hinders economic development, corruption was not absent in the
highly successful East Asian economies. In fact, these economies were built
around collusive relationships that facilitated growth by aligning business
interests with government objectives. However, these same arrangements
now seem to be undermining the sustainability of economic growth.
The second issue is how and when political, social, and economic forces
contribute to the reduction of corruption. Lessons from past instances of
successful counter corruption campaigns can be instructive in understanding
how and when these forces actually result in counter corruption drives. For
example, one conclusion that has emerged is that a sincere commitment by
high-level leadership to counter corruption efforts is a crucial component of
successful campaigns. It is not clear, however, why some leaders choose to
back counter corruption efforts, with all the political costs and risks
associated with them. In some instances, the occurrence of elite struggles to
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consolidate power at the political center compels the leadership to embark on
an anticorruption campaign. In others, the need to establish political
legitimacy motivates anticorruption activities. In general, the literature
indicates that a form of political cost-benefit analysis on the part of a
country’s leaders seems to determine the existence or lack of an official policy,
and actual action, on corruption.
A third broad category focuses on what types of policies effectively counter
corruption. Three types of reforms have been effective anticorruption
instruments:
1) Changing policies which induce or provide opportunity for corruption,
2) Reform of incentive structures operating in administrative and political
institutions, which encourage corrupt behavior on the part of state officials,
and
3) Reform of legal institutions to create enforcement capacity and strengthen
the rule of law. The most successful anticorruption strategies are
comprehensive, drawing from all three categories.
It is important to note a fundamental distinction between the technical steps
to address and reduce corruption and the strategies to build political will and
leadership commitment to take those steps. This distinction is not always
clear in the literature. Most of the current literature focuses on the technical
side of the issue; political will is either ignored or assumed to already be in
place.
However, many questions still remain concerning the mobilization of public
pressure for anticorruption reform. How is it that some states are able to
make significant economic progress despite the presence of corruption, while
in others it is a major obstacle to development? How is it that regimes which
are notoriously corrupt stay in power? Why is there an apparent lack of
correlation between the length of time leaders retain their offices and the
quality of their policies? Consequentially, how is it possible to build political
will for anticorruption reform in places where corruption has been shown to
be a successful strategy for maintaining political authority?
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Understanding development within the context of these corruption issues is
critical to formulating a strategy for mobilizing demand and building
political will to counter corruption. First, the ability to articulate the adverse
consequences of corruption on economic, political, and social systems is a
crucial tool for engaging interest groups in anticorruption efforts and
building coalitions for reform. Secondly, understanding why political
leadership chooses on occasion to address issues of corruption is essential to
deconstructing existing collusive arrangements. Finally, a better
understanding is needed of how demand can be mobilized and a commitment
by leadership secured and sustained for specific policy and institutional
changes to address specific kinds of corruption. This requires knowledge of
the types of policies that are most effective in reversing incentive structures
that lead to corrupt behavior.
Given its embedded and intractable nature, efforts to analyze corruption
abound, not only in the fields of economics and political science, but also in
law, anthropology, sociology, and even psychology. This literature review,
however, is not a comprehensive examination of the vast literature or
academic debates on corruption. Instead, it focuses specifically on political
economy approaches to corruption, concentrating on understanding the
fundamental causes and costs of corruption with a view to developing
practical policy solutions. The ensuing discussion of the different trends in the
political economy literature, the existing empirical data, and policy
implications is meant to provide a quick reference and useful starting point
for formulating specific reform agendas, whether at the national or local
level.
The next section reviews the principal debates in the political economy
literature on corruption. How should corruption be defined? Are standards of
corruption universal or culturally specific? What are the causes of
corruption?
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What are the effects of corruption on political development and economic
growth? And, finally, which policies effectively address corruption? Section III
introduces a typology of corruption and the causes, consequences, and
potential solutions for each form, including: bribery, theft or pillaging of state
assets, distortion of government expenditure, patronage, and cronyism.
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CORRUPTION IN INDIA
History
The economy of India was under socialist-inspired policies for an entire
generation from the 1950s until the late 1980s. The economy was
characterized by extensive regulation, protectionism, and public ownership,
policies vulnerable to pervasive corruption and slow growth. License Raj was
often at the core of corruption.
The Vohra Report, submitted by the former Indian Union Home Secretary,
N.N. Vohra, in October 1993, studied the problem of the criminalization of
politics and of the nexus among criminals, politicians and bureaucrats in
India.
The report contained several observations made by official agencies on the
criminal network which was virtually running a parallel government. It also
discussed criminal gangs who enjoyed the patronage of politicians — of all
political parties — and the protection of government functionaries. It
revealed that political leaders had become the leaders of gangs. Over the
years criminals had been elected to local bodies, State Assemblies, and even
the Parliament. The unpublished annexures to the Vohra Report are believed
to contain highly explosive material.
According to Jitendra Singh, "in the bad old days, particularly pre-1991, when
the License Raj held sway, and by design, all kinds of free market mechanisms
were hobbled or stymied, and corruption emerged almost as an illegitimate
price mechanism, a shadowy quasi-market, such that scarce resources could
still be allocated within the economy, and decisions could get made. ... These
were largely distortions created by the politico-economic regime. While a sea
change has occurred in the years following 1991, some of the distorted
cultural norms that took hold during the earlier period are slowly being
repaired by the sheer forces of competition. The process will be long and slow,
however. It will not change overnight." One of the major problems and
obstacles to development that many developing countries face is corruption
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by greedy, power-hungry politicians, which is endemic in certain parts of the
world.
Politics
As of December 2008, 120 of India's 523 parliament members were facing
criminal charges. Many of the biggest scandals since 2010 have involved very
high levels of government, including Cabinet Ministers and Chief Ministers,
such as in the 2G spectrum scam, the 2010 Commonwealth Games scam and
the Adarsh Housing Society scam, mining scandal in Karnataka and cash for
vote scam.
Bureaucracy
A 2005 study done by Transparency International (TI) in India found that
more than 50% of the people had firsthand experience of paying bribe or
peddling influence to get a job done in a public office. Taxes and bribes are
common between state borders; Transparency International estimates that
truckers pay annually US$5 billion in bribes. A 2009 survey of the leading
economies of Asia, revealed Indian bureaucracy to be not just least efficient
out of Singapore, Hong Kong, Thailand, South Korea, Japan, Malaysia,
Taiwan, Vietnam, China, Philippines and Indonesia; further it was also found
that working with India's civil servants was a "slow and painful" process.
Land and property
Officials often steal state property. In cities and villages throughout India,
consisting of municipal and other government officials, elected politicians,
judicial officers, real estate developers and law enforcement officials, acquire,
develop and sell land in illegal ways.
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Medicine
In Government Hospitals, corruption is associated with non
availability/duplication of medicines, getting admission, consultations with
doctors and availing diagnostic services.
Income tax department
There have been several cases of collusion of officials of the income tax
department of India for a favorable tax treatment and relaxed prosecutions in
return for bribes.
Tendering processes and awarding contracts
Government officials having discretionary powers in awarding contracts
engage in preferential treatment for selected bidders and display negligence
in quality control processes. Many state-funded construction activities in
India, such as road building, are dominated by construction mafias, which are
groupings of corrupt public works officials, materials suppliers, politicians
and construction contractors. Shoddy construction and material substitution
(e.g. mixing sand in cement while submitting expenses for cement) result in
roads and highways being dangerous, and sometimes simply washed away
when India's heavy monsoon season arrives.
Preferential award of public resources
As detailed earlier, land in areas with short supply is relatively common with
government entities awarding public land to private concerns at negligible
rates. Other examples include the award of mining leases to private companies
without a levy of taxes that is proportionate to the market value of the ore.
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Driver licensing
A study conducted between 2004 and 2005 found that India’s driver licensing
procedure was a hugely distorted bureaucratic process and allows drivers to
get licenses despite their low driving ability through promoting the usage of
agents. Individuals with high willingness to pay make a significant payment
above the official fee and most of these extra payments are made to agents,
who act as an intermediary between bureaucrats and applicants. The
average license getter paid Rs 1080, approximately 2.5 times the official fee
of Rs 450, in order to obtain a license. On average, those who hired agents
had a lower driving ability, with agents helping unqualified drivers obtain
licenses and bypass the legally required driving examination. Among the
surveyed individuals, approximately 60% of the license holders did not take
the licensing exam and 54% of those license holders failed an independent
driving test.
Agents are the channels of inefficient corruption in this bureaucratic driver
licensing system, facilitating access to licenses among those who are
unqualified to drive. Some of the failures of this licensing system are caused
by corrupt bureaucrats who collaborate with agents by creating additional
barriers within the system against those who did not hire agents.
Black money
Black money refers to money removed from the official economy (via
corruption, bribery, tax evasion, etc.) and stored outside of the country. A
November 2010 report from the Washington-based Global Financial Integrity
estimates that India lost at least US$462 billion in illicit financial flows,
another word for black money, from 1948 through 2008. The report also
estimated the size of India's underground economy at approximately US$640
billion at the end of 2008 or roughly 50% of the nation's GDP.
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Black Money in Switzerland
According to a 2010 The Hindu article, unofficial estimates indicate that
Indians had over US$1456 billion in black money stored in Swiss banks
(approximately USD 1.4 trillion). While some news reports claimed that data
provided by the Swiss Banking Association Report (2006) showed India has
more black money than the rest of the world combined, a more recent report
quoted the SBA's Head of International Communications as saying that no
such official statistics exist. Another report said that Indian-owned Swiss
bank account assets are worth 13 times the country’s national debt. The
current investigation is undertaken by the Income Tax Department.
Judiciary
According to Transparency International, judicial corruption in India is
attributable to factors such as "delays in the disposal of cases, shortage of
judges and complex procedures, all of which are exacerbated by a
preponderance of new laws".
Armed forces
The Indian Armed Forces have witnessed corruption involving senior armed
forces officers from the Indian Army, Indian Navy and Indian Air Force. A
number of scandals in the 2000-2010 period damaged the military's
reputation; such scandals included skimming of armed forces money, re-
selling of government property, and faking combat missions.
Right to Information Act
The Right to Information Act (2005) and equivalent acts in the states, that
require government officials to furnish information requested by citizens or
face punitive action, computerization of services and various central and
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state government acts that established vigilance commissions have
considerably reduced corruption or at least have opened up avenues to
redress grievances. The 2006 report by Transparency International puts
India at the 70th place and states that significant improvements were made
by India in reducing corruption.
Whistleblowers
Whistleblowers play a major role in the fight against corruption. India
currently does not have a law to protect whistleblowers, which was
highlighted by the assassination of Satyendra Dubey. Indian courts are
regularly ordering probe in cases of murders or so-called suicide of several
whistle blowers. One of the latest cases of such murder is of V Sasindran
Company Secretary of Palakkad based Malabar Cement Limited, a
Government company in Kerala and his two minor children, Kerala High
Court ordered CBI probe on 18 February 2011. Initially, CBI showed its
unwillingness for probing into such cases citing over-burden as a reason.
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ANTI-CORRUPTION IN INDIA
Anti-Corruption Laws in India
Public servants in India can be penalized for corruption under
• The Indian Penal Code, 1860
• The Prevention of Corruption Act, 1988
• The Benami Transactions (Prohibition) Act, 1988 to prohibit benami
transactions.
• Prevention of Money Laundering Act, 2002
India is also a signatory (not ratified) to the UN Convention against
Corruption since 2005. The Convention covers a wide range of acts of
corruption and also proposes certain preventive policies.
Anti-corruption police and courts
The income tax department of India, Central Vigilance Commission and
Central Bureau of Investigation all deal with anti-corruption initiatives.
Certain states such as Andhra Pradesh (Andhra Pradesh Anti-corruption
Bureau) and Karnataka (Lokayukta) also have their own anti-corruption
agencies and courts.
Anti-corruption organizations
A variety of organizations have been created in India to actively fight against
corrupt government and business practices. Notable organizations include:
• Bharat Swabhiman Trust established by well known Yog Guru Swami
Ramdev running a large campaign against black money and
corruption since last 10 years.
• 5th Pillar is most known for the creation of the zero rupee notes, a
valueless note designed to be given to corrupt officials when they
request bribes.
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• India Against Corruption is a movement created by citizens from a
variety of professions and statuses to work against corruption in India.
It is currently headed by Anna Hazare.
• Jaago Re! One Billion Votes is an organization originally founded by
Tata Tea and Janaagraha to increase youth voter registration. They
have since expanded their work to include other social issues, including
corruption.
• Association for Social Transparency, Rights and Action (ASTRA) is an
NGO focused on grass-roots work to fight corruption in Karnataka.
One organization, the Lok Satta Movement, has transformed itself from a civil
organization to a full-fledged political party, the Lok Satta Party. The party
has fielded candidates in Andhra Pradesh, Tamil Nadu, and Bangalore. In
2009, it obtained its first elected post, when Jayaprakash Narayan won the
election for the Kukatpally Assembly Constituency in Andhra Pradesh.
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EFFECTS OF CORRUPTION
According to a report by KPMG, "high-level corruption and scams are now
threatening to derail the country's credibility and [its] economic boom".
ECONOMIC CONCERNS
Corruption may lead to further bureaucratic delay and inefficiency as
corrupted bureaucrats may introduce red tape to extract more bribes. Such
inadequacies in institutional efficiency could affect growth indirectly by
lowering the private marginal product of capital and investment rate. Levine
and Renelt showed that investment rate is a robust determinant of economic
growth. According to the neoclassical growth model, institutional variables
contribute to determining steady-state per capital income levels and speed of
convergence to its steady state, hence affecting its growth rate.
Bureaucratic inefficiency could also affect growth directly, such as through
misallocation of investments in the economy. When a country’s economy is
below its steady-state income level, higher corruption could result in lower
growth, for a given level of income.
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CAUSES OF CORRUPTION
Since much public corruption can be traced to government intervention in the
economy, policies aimed at liberalization, stabilization, deregulation, and
privatization can sharply reduce the opportunities for rent-seeking behavior
and corruption. Where government regulations are pervasive, however, and
government officials have discretion in applying them, individuals are often
willing to offer bribes to officials to circumvent the rules and, sad to relate,
officials are occasionally tempted to accept these bribes. Identifying such
policy-related sources of corruption is obviously helpful in bringing it under
control. The following sources have for some time been well known.
* Trade restrictions are the prime example of a government-induced source
of rents. If importing a certain good is subject to quantitative restriction (for
example, only so many foreign automobiles can be imported each year), the
necessary import licenses become very valuable and importers will consider
bribing the officials who control their issue. More generally, protecting a
home industry (such as plywood manufacturing) from foreign competition
through tariffs creates a semi-monopoly for the local industry. Local
manufacturers will lobby for the establishment and maintenance of these
tariffs and some may be willing to corrupt influential politicians to keep the
monopoly going. Studies have shown that a very open economy is
significantly associated with lower corruption. In other words, countries tend
to be less corrupt when their trade is relatively free of government
restrictions that corrupt officials can abuse.
* Government subsidies can constitute a source of rents. Studies show
corruption can thrive under industrial policies that allow poorly targeted
subsidies to be appropriated by firms for which they are not intended. The
more such subsidies are available to industries, the higher the corruption
index.
* Price controls, whose purpose are to lower the price of some good below its
market value (usually for social or political reasons), are also a source of
rents and of ensuing rent-seeking behavior. Price controls create incentives
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for individuals or groups to bribe officials to maintain the flow of such goods
or to acquire an unfair share at the below-market price.
* Multiple exchange rate practices and foreign exchange allocation
schemes lead to rents. Some countries have several exchange rates--one for
importers, one for tourists, one for investors, for example. Differentials among
these rates can lead to attempts to obtain the most advantageous rate,
although this rate might not apply to the intended use of the exchange.
Multiple exchange rate systems are often associated with anti-competitive
banking systems in which a key bank with government ties can make huge
profits by arbitraging between markets. Some countries have little foreign
currency and distribute what they have through various schemes, with
varying degrees of transparency. If, for example, state-owned commercial
banks ration scarce foreign exchange by allocating it according to priorities
established by government officials, interested parties may be willing to bribe
these officials to obtain more than their fair share.
* Low wages in the civil service relative to wages in the private sector are a
source of low-level corruption. When civil service pay is too low, civil servants
may be obliged to use their positions to collect bribes as a way of making ends
meet, particularly when the expected cost of being caught is low.
In addition to government regulations as an occasion for corruption, other
reasons for corruption have been identified.
* Natural resource endowments (oil, gold, exotic lumber) constitute a
textbook example of a source of rents, since they can typically be sold at a
price that far exceeds their cost of extraction and their sale is usually subject
to stringent government regulation, to which corrupt officials can turn a
blind eye. Resource-rich economies may be more likely to be subject to
extreme rent-seeking behavior than are resource-poor countries.
* Sociological factors may contribute to rent-seeking behavior. An index of
ethno linguistic fractionalization (societal divisions along ethnic and
linguistic lines) has been found to be correlated with corruption. Also, public
officials are more likely to do favors for their relatives in societies where
family ties are strong.
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CONSEQUENCES OF CORRUPTION
Among the many disagreeable aspects of corruption is evidence that it slows
economic growth through a wide range of channels.
* In the presence of corruption, businessmen are often made aware that an
up-front bribe is required before an enterprise can be started and that
afterwards corrupt officials may lay claim to part of the proceeds from the
investment. Businessmen therefore interpret corruption as a species of tax--
though of a particularly pernicious nature, given the need for secrecy and the
uncertainty that the bribe-taker will fulfill his part of the bargain--that
diminishes their incentive to invest. Empirical evidence suggests that
corruption lowers investment and retards economic growth to a
significant extent.
* Where rent seeking proves more lucrative than productive work, talent will
be misallocated. Financial incentives may lure the more talented and better
educated to engage in rent seeking rather than in productive work, with
adverse consequences for the country's growth rate.
* Of particular relevance to developing countries is the possibility that
corruption might reduce the effectiveness of aid flows through the diversion
of funds. Aid, being fungible, may ultimately help support unproductive and
wasteful government expenditures. Perhaps as a result, many donor countries
have focused on issues of good governance, and in cases where governance is
judged to be especially poor, some donors have scaled back their assistance.
* When it takes the form of tax evasion or claiming improper tax exemptions,
corruption may bring about loss of tax revenue.
* By reducing tax collection or raising the level of public expenditure,
corruption may lead to adverse budgetary consequences. It may also cause
monetary problems if it takes the form of improper lending by public
financial institutions at below-market interest rates.
* The allocation of public procurement contracts through a corrupt system
may lead to lower quality of infrastructure and public services.
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* Corruption may distort the composition of government expenditure.
Corruption may tempt government officials to choose government
expenditures less on the basis of public welfare than on the opportunity they
provide for extorting bribes. Large projects whose exact value is difficult to
monitor may present lucrative opportunities for corruption. A priori, one
might expect that it is easier to collect substantial bribes on large
infrastructure projects or high-technology defense systems than on textbooks
or teachers' salaries.
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TOP TEN SCAMS IN INDIA
1) 2G Spectrum Scam
We have had a number of scams in India; but none bigger than the scam
involving the process of allocating unified access service licenses. At the heart
of this Rs.1.76-lakh crore worth of scam is the former Telecom minister A
Raja – who according to the CAG, has evaded norms at every level as he
carried out the dubious 2G license awards in 2008 at a throw-away price
which were pegged at 2001 prices.
2) Commonwealth Games Scam
Another feather in the cap of Indian scandal list is Commonwealth Games
loot. Yes, literally a loot! Even before the long awaited sporting bonanza
could see the day of light, the grand event was soaked in the allegations of
corruption. It is estimated that out of Rs. 70000 crore spent on the Games,
only half the said amount was spent on Indian sportspersons.
The Central Vigilance Commission, involved in probing the alleged corruption
in various Commonwealth Games-related projects, has found discrepancies in
tenders – like payment to non-existent parties, will-full delays in execution of
contracts, over-inflated price and bungling in purchase of equipment through
tendering – and misappropriation of funds.
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3) Telgi Scam
As they say, every scam must have something unique in it to make money out
of it in an unscrupulous manner- and Telgi scam had all the suspense and
drama that the scandal needed to thrive and be busted.
Abdul Karim Telgi had mastered the art of forgery in printing duplicate
stamp papers and sold them to banks and other institutions. The tentacles of
the fake stamp and stamp paper case had penetrated 12 states and was
estimated at a whooping Rs. 20000 crore plus. The Telgi clearly had a lot of
support from government departments that were responsible for the
production and sale of high security stamps.
4) Satyam Scam
The scam at Satyam Computer Services is something that will shatter the
peace and tranquility of Indian investors and shareholder community beyond
repair. Satyam is the biggest fraud in the corporate history to the tune of
Rs. 14000 crore.
The company’s disgraced former chairman Ramalinga Raju kept everyone in
the dark for a decade by fudging the books of accounts for several years and
inflating revenues and profit figures of Satyam. Finally, the company was
taken over by the Tech Mahindra which has done wonderfully well to revive
the brand Satyam.
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5) Bofors Scam
The Bofors scandal is known as the hallmark of Indian corruption. The Bofors
scam was a major corruption scandal in India in the 1980s; when the then PM
Rajiv Gandhi and several others including a powerful NRI family named the
Hindujas, were accused of receiving kickbacks from Bofors AB for winning a
bid to supply India’s 155 mm field howitzer.
The Swedish State Radio had broadcast a startling report about an
undercover operation carried out by Bofors, Sweden’s biggest arms
manufacturer, whereby $16 million were allegedly paid to members of PM
Rajiv Gandhi’s Congress.
Most of all, the Bofors scam had a strong emotional appeal because it was a
scam related to the defense services and India’s security interests.
6) The Fodder Scam
If you haven’t heard of Bihar’s fodder scam of 1996, you might still be able to
recognize it by the name of “Chara Ghotala ,” as it is popularly known in the
vernacular language.
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In this corruption scandal worth Rs.900 crore, an unholy nexus was traced
involved in fabrication of “vast herds of fictitious livestock” for which fodder,
medicine and animal husbandry equipment was supposedly procured.
7) The Hawala Scandal
The Hawala case to the tune of $18 million bribery scandal, which came in
the open in 1996, involved payments allegedly received by country’s leading
politicians through hawala brokers. From the list of those accused also
included Lal Krishna Advani who was then the Leader of Opposition.
Thus, for the first time in Indian politics, it gave a feeling of open loot all
around the public, involving all the major political players being accused of
having accepted bribes and also alleged connections about payments being
channelled to Hizbul Mujahideen militants in Kashmir.
8) IPL Scam
Well, I am running out of time and space over here. The list of scandals in
India is just not ending and becoming grave by every decade. Most of us are
aware about the recent scam in IPL and embezzlement with respect to
bidding for various franchisees. The scandal already claimed the portfolios of
two big-wigs in the form of Shashi Tharoor and former IPL chief Lalit Modi.
9, 10) Harshad Mehta & Ketan Parekh Stock
Market Scam
Although not corruption scams, these have affected many people. There is no
way that the investor community could forget the unfortunate Rs. 4000 crore
Harshad Mehta scam and over Rs. 1000 crore Ketan Parekh scam which
eroded the shareholders wealth in form of big market jolt.
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LEGALIZING CORRUPTION
Democracy is flawed. How else would you explain the perverted incentive
system that plagues democracies? We call this plague corruption. The Lok
Sabha election of 2009 Costa whopping Rs. 10,000 crore (1.8 billion USD).
That makes Indian election $ 200 million more expensive than the American
elections. Of this exorbitant amount, election candidates are expected to raise
Rs. 4,350 crore. Now how does an MP whose annual salary was recently
raised to Rs. 20 lakhs a year do that?
Assuming that an MP saves100% of his/her salary (which he/she could easily
do considering the various amenities he/she receives), it will amount to Rs. 1
crore. Of the Rs 1 crore, MPs have to donate to the party fund and run their
own campaign. Simple math tells me that the demand for money far exceeds
the supply of salary. Now is it as surprising to see or hear about corruption?
In Indian politics, the rise of big money is relatively new. But the perception
of political leaders being affiliated to business remains morally blasphemous
in society. While fundraising isn’t illegal in India, it highly discouraged in our
social practices. Instead, when businesses approach political leaders, it has to
be in the shady night. The consequence: 2G scandal.
Undoubtedly the Rs 3,000 crore that A. Raja pocketed from the scam was
wrong but from an economists perspective it was only a matter of time before
cabinet ministers and political leaders started engaging in corrupt behavior.
Seeking financial support from business houses is not regulated and therefore
a political leader can exploit the system. Similarly businesses too, can ask for
the sky from political leaders. Inevitably political leaders swindle away
hundreds of crores, unworthy businesses houses makes hundreds of crores
while the country loses thousands of crores.
In Florida, when I worked for a state Senator, I came across a solution to this
problem. It was called lobbying. For all practical purposes lobbying can be
thought of as controlled corruption. Businesses register as interest groups
and approach political leaders with their plans. Any transaction that takes
place between the politician and the lobbyist is recorded and made available
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upon request. You don’t see hoards of money floating around because
interactions are regulated (or American politicians are particularly good at
hiding the money). This doesn’t mean that America isn’t haunted by lobbying
issues but they are better at dealing with it. A World Bank economist
commented on the current corruption crisis by saying “even greed needs to
regulate.”
In India, regulated lobbying doesn’t exist. When news breaks about
corruption there is chaos.
Eventually, individuals like Nira Radia are identified. They are mocked till
the next scandal emerges. Rather than identifying the core issues and dealing
with them, we are often taken aback by the audacity of political leaders to
ally with business houses. Is it that big of a surprise to know that the major
industrialists of India employ a group of people to lobby politicians at all
time? Maybe it is time to take corruption out of the murky undergrounds,
exposed it to the daylight of regulation and recognizes that money and
politics will also be intermingled. It is about time to regulate this
phenomenon so that such high level exploitation does not occur.
The more central issue when discussing corruption is also our expectation
from political leaders and public servants. A political leader has tremendous
power and to counter that we have placed checks and balances internally and
externally so that we can ensure power is not misused. However, how do we
incentivize the individual not to exploit their position? After all, elected
officials and selected IS officers spend a lot of time and energy to get in to
office and recognize that they have only a limited time in office. So wouldn’t
they want to make hay while there is still light? Could a similar regulation
like lobbying even combat corruption to its fullest? Or is it time to renounce
the democracy and come up with the next best political system?
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WHY WORRY ABOUT CORRUPTION?
Corruption has been around for a very long time and will be around in the
future unless governments can figure out effective ways to combat it. This is
not going to be easy. Although the study of the causes and consequences of
corruption has a long history in economics, going back 30 years to seminal
contributions on what economists call rent seeking, related empirical work
on quantifying the extent of corruption and putting a dollar sign on its
economic effects has been limited. This is hardly surprising since most
corruption is clandestine. Also, determining just how efficient government
institutions are is not what would be called an exact science. As a
consequence, corruption is notoriously hard to measure and empirical
economic research on the question is fairly meager. This paper focuses
exclusively on corrupt public practices--illegal activities that reduce the
economic efficiency of governments. It does not address private corruption,
such as that practiced on individuals and private enterprises by organized
crime.
Wide publicity surrounding the statements at the multinational financial
institutions' 1996 Annual Meetings by the Managing Director of the
International Monetary Fund that governments must demonstrate their
intolerance for corruption in all its forms and by the President of the World
Bank that the "cancer of corruption" must be dealt with has stimulated
renewed interest in the topic. Researchers have begun to look at so-called
corruption indices, which are produced by private rating agencies and are
typically based on replies by consultants living in the countries to
standardized questionnaires. Obviously the replies are subjective, but the
correlation between indices produced by different rating agencies is very
high, suggesting that most observers agree more or less on ranking countries
according to how corrupt they seem to be. The high prices paid to the rating
agencies by their customers (usually multinational companies and
international banks) constitute indirect evidence that the information is
useful and can have tangible economic effects. On the other hand, the
judgment of the consultants who produce these indices may be skewed by the
economic performance of the countries they monitor. Substandard economic
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performance by itself does not argue to pervasive corruption, nor is economic
success an infallible sign of innocence of corruption. It is therefore important
in analyzing the relationship between perceived corruption and economic
variables to be cautious about interpreting correlations as cause-effect
relationships. An additional drawback of these indices is their failure to
distinguish among various types of corruption: high-level versus low-level
corruption or well-organized versus poorly organized corruption. Despite
these limitations, the indices provide a wealth of useful information.
This paper has two goals. First, it lists a number of possible causes and
consequences of corruption, derived from a review of recent empirical studies
that use cross-country regressions to determine the strength of the links
between corruption and its causes and consequences. (A regression is a
statistical technique for estimating the equation that best fits sets of
observations. In this case, regressions point to the most probable causes and
the most probable consequences of corruption.) Although data limitations
subject empirical work to many uncertainties, these studies provide tentative
evidence that corruption may seriously inhibit economic performance.
Second, the paper presents recent evidence on the extent to which corruption
affects investment and economic growth and on how it influences
governments in choosing what to spend their money on. It finds that
corruption discourages investment, limits economic growth, and alters the
composition of government spending, often to the detriment of future
economic growth.
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WORLD’S BIGGEST SCAM IN INDIA VALUED TO $40
BILLION [INFO GRAPHIC]
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The 2g spectrum scam not just 1 lakh but 1.7 lakh crores!
If put in figure, a whole lot of 1, 70, 00,00,00,00, 000
Do you think a telecom minister can earn this much? Or is this his father’s
property? Sure it isn’t. Or you are wondering if this belongs to Mr.
Karunanidhi who has been supporting him all along? Sure not!
Raja, the Telecom Minister, made a loss of around 2 lakh crores to Indian
government by selling the 2g spectrum for cheap bucks to corporate that
have no standard at all.
With the Auditor General and comptroller charging Mr. Raha, the telecom
minister, against the 2g spectrum scam has raised high the country. He was
being held as personally responsible for the loss of over 1.7 lakh crore to the
country selling 2g spectrum at dead cheap rates in 2008.
This incident blasted the issue more seriously adding to the intense
interrogation by the civil society, Supreme Court and the Telecom watchdog
against Raja.
This has been the biggest scam in India and in the world. This has
substantially marked a dead black spot in the history of scams. Until now, the
value of all the scams is not more than 20 lakh crore rupees (RS: 20, 00, 00,
00, 00, 00,000) that made this a big buzz in the world of scams.
Countries like America and Europe were almost were shocked to the 2g
spectrum scam which is over a “whole 40 billion dollars”.
No rules in the game! His game is the only rule.
He played with dates and changed everything that can make his story strong
and bring him all the money.
Sold completely surrender to money and selling the country to cheap hands.
No proper auction followed
Above all, the highlights are his ignorance to Prime Minister Mr.Manmohan
advice, TRAI who recommended to auction 2g spectrum properly at market
rates and not the dead rates!
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Finally, he was completely sold to lobbyists!
Wondering how much we can do with this money to a country?
4 golden square projects connecting metropolitan cities like Delhi, Mumbai,
Chennai, Kolkata
23 samshabad airports
30 lakh buses
11 crores buffaloes to raithlu
Construct 1868 dams just like nagarjuna sagar
25 lakh hospitals
65 lakh ambulances
30 laksh schools
35 crores computers
504 fighter jet airplanes
Society is fighting for its right and gets back the money to the government.
Should hold all the 2g spectrum projects
A national campaign is being held against corruption and everybody can
make their contribution through the online voting system and let the higher
officials know society is aware of the facts
Postal cards to kill corruption are being sent to Prime Minister in the hope of
taking strict action against the persons involved in the scam.
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MYTHOLOGY AND DATA COLLECTION
I did a randomly survey on “corruption is bad, but economically beneficial for
a nation’s prosperity”. In this i came to corruption is or not? What are the
causes and effects of corruption? How it affect our economic growth? We
came to know every day there is new scam. Worlds biggest is happened in
India itself. We read about which sectors are most corrupted in our country.
Now India has become most corrupted nation in the whole world. Corruption
affects financial resources of our country. Due to corruption, our country is
still a developing country. We had also collected some interviews i.e. public
interview, high authority person interview etc
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DESCRIPTION OF DATA
1. Do you think corruption bad?
In this question, most of the people are saying that corruption is morally
bad.
2. Is India is most corrupted?
In this case, people saying India is corrupt is very near about people who
are saying India is not corrupt. But still most of the people are saying that
India is most corrupted nation.
3. As corruption is legalized in some countries. What do you think corruption
should be legalized in our country or not?
In this case, most of the people are saying that corruption should not be
legalized in our country.
4. Are you supporter of Anna Hazare?
Almost everyone is the supporter of Anna Hazare.
5. Do higher wages for Bureaucrats Reduce Corruption?
In this case, most of the people think that higher wages for Bureaucrats do
not reduce corruption.
6. Does corruption affect growth?
Most of the people are saying, corruption affects growth of the country.
7. Do you think corruption is beneficial for us to some extent?
Corruption is not beneficial for us.
8. Is Indian government is doing something for elimination of corruption?
Everyone knows corruption is bad but still government doing nothing for
elimination of corruption.
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RESULTS
From that survey we came to know that corruption is very bad and it should
be eliminated from our country. As corruption is legalized in other countries
but it should not be legalized in our country. But still our government doing
nothing for elimination of corruption. Due to which our country still “a
developing country”.
CONCLUDING REMARKS
This paper has analyzed a number of causes and consequences of public
corruption. It has provided a synthetic review of recent studies that estimate
empirically some of these links. In addition, though data limitations imply
that the results must be interpreted with caution, it has presented evidence
that corruption may have considerable adverse effects on economic growth,
largely by reducing private investment, and perhaps by worsening the
composition of public expenditure. The paper has presented evidence of a
negative and significant relationship between corruption and government
expenditure on education, which is a reason for concern since previous
literature has shown that educational attainment is an important
determinant of economic growth. A possible interpretation of the observed
correlation between corruption and the composition of government
expenditure is that corrupt governments find it easier to collect bribes on
some expenditure items than on others.
