Corruption in India
A million rupees now
Congress drags its feet over tackling graft. It may pay a high price
Mar 10th 2011 | BANGALORE AND UVARSAD | from the print edition
THE prime minister's loyalty to his friends looks to be ever more a fault. This week parliament grilled Manmohan Singh over his latest failure to fight corruption and his habit of sticking with compromised allies. The grilling concerned P.J. Thomas, the man Mr Singh appointed to lead India's fight against corruption.
Mr Thomas was, to put it politely, an unorthodox choice to lead the national "vigilance" commission. A former official in the scandal-besmirched telecoms ministry, he faces a longstanding charge over an import scam. He has done himself few favours by pointing out that 28% of sitting lower-house members of parliament also face criminal charges or inquiries. Worse was the government's claim that a vigilance chief need not have an impeccable character (presumably on the grounds that it takes one to know one). On March 3rd the Supreme Court forced him out. The prime minister fended off opposition demands that he should resign.
His poor judgment over Mr Thomas fits a pattern. Nobody says the prime minister is personally corrupt. But he looks weak by seeming to let others steal. Last year the Supreme Court ticked him off and the opposition called for him to quit over the government's failure to look into suspicious licensing of the 2G telecom spectrum. Now the Central Bureau of Investigation is starting an inquiry into corruption at the highest levels over the shoddily run Commonwealth games. Mr Singh, again, is bound to be embroiled.
The Supreme Court has its tail up. Its rulings refer ever more often to corruption'over 50 did so last year. Now it lambasts the government for failing to take on crooks who funnel "black money" overseas. Some say that $450 billion of ill-gotten gains or untaxed earnings are sitting in foreign banks. The court seems to imply that the Congress party, which heads the government coalition, has protected powerful friends.
On March 7th the hyperactive Supreme Court justices scored another victory, with the arrest of Hasan Ali Khan. A flamboyant horse-owner, he has been charged with money laundering, which he denies. He is alleged to have $8 billion stuffed in Swiss bank accounts.
India's "season of scams" was launched late last year, thanks to the breakdown of an unspoken political truce in which no party fussed too much about corruption, allowing all to prosper from it. Now the opposition Bharatiya Janata Party (BJP) has broken ranks, betting that it can tap into widespread fury over corruption and so dent Mr Singh's clean image, if not topple him. The BJP may be on to a good thing: over 80% of Indians tell pollsters that graft is worse than ever.
Though a general election is not due until 2014, and despite facing corruption scandals of its own, the BJP is pushing on. By boycotting parliament, it closed most of the winter session, until it won the inquiry into graft that it had demanded. In turn the press, the courts and street protesters picked up the campaign. The opposition may be keeping in mind an earlier defeat for Congress, in 1989, when voters punished the party over huge kickbacks that flowed from an arms deal with Bofors, a Swedish company.
In response, Mr Singh and his (and Congress's) boss, Sonia Gandhi, say they will soon announce sweeping reforms. These may include state funding for political parties, the removal of discretionary powers abused by politicians and civil servants, and the ratification of a UN corruption convention. They might do well to look, too, at Bihar state, where elected officials and civil servants must now publish a list of all their private assets. Even more importantly, they could push on with cleaner ways to help the poor. By one estimate, two-fifths of state paraffin subsidies are stolen, earning a "fuel mafia" $2 billion a year. In Uttar Pradesh reportedly over $40 billion of food and other subsidies have been bilked over five years.
From the grassroots up
How all this will shake out at the polls will become clearer next month, when four states'West Bengal and Assam in the east, Tamil Nadu and Kerala in the south'hold assembly elections. Perhaps voters will punish dirty politicians. Too often, though, for all their harrumphing about ghotala (Hindi for scams), voters are swayed during election campaigns by candidates' gifts of rice, rupees, saris and television sets.
Yet hopeful initiatives do exist among those truly fed up with corruption. Technology looks to provide especially promising solutions. Last year Swati Ramanathan helped to found a website, www.ipaidabribe.com. Indians post details of how they are forced to bribe. "Rather than moralise about corruption," she says, "we need first to know the details of what is happening, and uncover its market price."
In seven months the site has lodged 5,000 reports of paying bribes. On March 9th, for example, someone in Belgaum, Karnataka, admitted shame after giving 200 rupees ($4) to pass a driving test. In Mumbai it costs 1,000 rupees to register a baby. Bigger bribes are usually paid when land is at stake. Perhaps when Indians are better informed they will feel more empowered and refuse to pay. Reportedly, Bangalore's transport commissioner likes the site too, as it lets him see how corrupt his junior officials have become.
More hopeful yet are reforms that take away the chance for officials to behave improperly. Gujarat's anti-graft commissioner, Manjula Subramaniam, praises a tendering system where companies bid online for public contracts, for example for road-building. This helps her anti-graft department spot anything suspicious. She can also watch funds that sit unused in state coffers, and move them before any light-fingered officials get there.
For ordinary people, more obviously valuable is a four-year-old system for homeowners to assess property tax online, rather than have crooked inspectors visit their homes. And the benefits of technology are spreading fast, as every village in Gujarat has been hooked up to broadband and to state databases.
In one of them, Uvarsad, a farming district, a privately managed local e-government office allows Suryakant Patel to print off the title deeds to his 20-acre wheat and rice farm. It takes two minutes and a ten-rupee fee. Then he walks around the corner to a bank, to raise a loan to buy a new irrigation pump. In the past, he says, getting the deed would have taken days, and might have depended on the whim of a civil servant. Change can come fast, he reckons. Mr Singh, take note.
Corruption in India
A rotten state
Graft is becoming a bigger problem'and the government should tackle it
INDIANS' anger over rising corruption has reached feverish levels. What people are calling a "season of scams" includes the alleged theft of billions by officials behind last year's Commonwealth games in Delhi; $40 billion in revenues lost from the crooked sale of 2G telecoms licences; and over $40 billion stolen in Uttar Pradesh alone from schemes subsidising food and fuel for the poor. Foreign businessmen, who have slashed investment over the past year, rank graft as their biggest headache behind appalling infrastructure. Now India's anti-corruption chief has been forced out over, well, corruption (see article).
Graft is hardly new in India: the Bofors scandal brought down the government in 1989. But there seems to be more of it about than ever, if only because India is getting richer fast, and the faster the economy grows, the more chances arise for mind-boggling theft. The government says that in the next five-year plan period, which starts next year, $1 trillion will be spent on roads, railways, ports and so on, with billions more on re-equipping the armed forces and welfare. Add in an insatiable appetite for scarce land, water and minerals and a monsoon of bribes is forecast.
Some are inclined to shrug their shoulders. After all, corruption does not seem to be stopping India from growing. Yet imagine how much better the country would be doing without it. Corruption raises costs not just to Indians, but also to the foreigners whose capital India needs. Thanks in part to those scandals, India's stock market was the worst-performing outside the Muslim world over the past year.
To its credit, the government has begun to take action against powerful individuals. Maharashtra state's chief minister was forced out over a property scandal. Police have quizzed Suresh Kalmadi, the politician who ran the Commonwealth games. Most strikingly, Andimuthu Raja, the cabinet minister who oversaw the 2G telecom licences, was arrested.
A 2005 act giving the right to information is welcome, as are auctions for public goods, such as last year's lucrative sale of the 3G telecom spectrum. Technology is helping. In some states, bids for state contracts are being run online, allowing anti-corruption bodies to monitor them. Gujarat does this for all contracts over 500,000 rupees ($11,000). It also puts land records and death certificates online, cutting down on one form of petty graft. Websites, led by ipaidabribe.com, reveal the cost of graft by publicising the sums demanded for everything from registering a baby to fixing a broken water supply.
The central government should now implement a plan for a universal, computerised ID scheme. It would allow welfare payments to be paid into individuals' bank accounts, hindering theft by state workers.
The licence Raj lives on
Most of all, India must redouble its efforts to liberalise. The state could outsource official tasks, cut red tape and sell wasteful and corrupt state-owned firms (why does the government make watches?).
For all that the "licence Raj" was supposedly scrapped two decades ago, it can still take nearly 200 days to get a construction permit and seven years to close a business. Regulations are not, by and large, deterrents to corruption, but a source of it.