Corruption in India

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Following the 1947 revolution and subsequent independence from British colonialism, the Indian government began to institute a domestic and foreign policy of strong central planning. Under the leadership of Prime Minister Jawaharlal Nehru, the legislature strictly regulated domestic and international commercial developments via an extensive bureaucratic system of licenses. While Nehru’s vision was intended to secure domestic economic interests from risky investments and rash decisions, by requiring large amounts of paperwork in order to accomplish relatively simple tasks this policy effectively stifled free market competition and the possibility for infrastructure expansion. This overprotective regime - often referred to as the ‘Permit Paj’ - was primarily responsible for India’s lengthy period of economic stagnation that lasted from the 1950s until the 1990s. Fortunately, India has been taking large steps in the past several decades to repeal many of the stifling requirements that characterized the Permit Raj. However, even as Indian free market expands in response to widespread financial deregulation, the traditions of corruption produced by Nehru’s policy of central planning continue to weaken the nation’s already unsteady logistic infrastructure.

Corruption is a major institutional weakness responsible for the slow growth rate of Indian national infrastructure over the past fifty years. The World Bank defines corruption as “the abuse of public office for private gain,” and goes on to suggest that it “leads governments to intervene where they need not, and it undermines their ability to enact and implement policies in areas in which government intervention is clearly needed” (‘Corruption’). The most common forms of such grafting in India include a) local agents taking bribes to expedite government services, b) administrators improperly allocating state contracts and c) politicians overtly engaging in illegal activities. Furthermore, all three methods of corruption have contributed to the lethargic rate of commerce and administration that characterizes India’s weak logistic infrastructure.

On local and state levels, bribery is typically performed for the purpose of what Pranab Bardhan calls ‘speed money’: “which reduces delay in moving files in administrative offices and in getting ahead in slow-moving queues for public services” (Bardhan). In some area of India, bribes are seen as a necessary and ubiquitous staple of financial interaction, and are therefore often referred to with the Hindi word ‘dasturri’ (meaning customary payment) while the act of backdoor payment is frequently termed “doing the needful” (Gould, Tillen). While these financial incentives may accelerate public sector transactions for individuals in the short term, they have a tendency to make commercial interactions slower and less efficient overall as “corrupt officials may, instead of speeding up, actually cause administrative delays in order to attract more bribes” (Bardhan).

A second form of corruption that damages logistic infrastructure in India is the selling of state contracts. While some might argue that buying is simply another method by which the contractors with the lowest overhead costs are selected to perform state services, the unintended ramifications of these deals can severely cripple a nation’s ability to efficiently and thoroughly construct public works. Nirvikar Singh, in his article “The Trillion Dollar Question” asserts that in such backdoor deals frequently result in structural inefficiency, creating a condition in which

The ones who get the rights [i.e., receive government contracts] do so because they are most corrupt, or most able to bribe, not because they will be the most efficient users of those assets. Resources are misused, and output is lower than it could and should be… Then the cost of corruption can be a multiple of the transfer payments. (Singh)

An example of how such the selling of government contracts can detrimentally affect logistical infrastructure came when, in 2012, the World Bank’s Institutional Integrity determined that the contractors responsible for building and repairing Indian highways were “fraudulent and corrupt” (Sarin). This misallocation of government funds subsequently resulted in both widespread embezzlement and shoddy (even potentially dangerous) workmanship (Bhattacharya). This highly publicized scandal vividly illustrates how a legacy of corrupt government leadership has damaged India’s logistic infrastructure.

In rural Indian provinces such as Haryana, Bihar and Uttar Pradesh, charismatic criminals from the higher castes will often attract widespread popular support in spite of - or perhaps because of - a reputation for corruption and violence (Barry). According to a study conducted by the Association for Democratic Reforms, roughly one third of currently elected Indian politicians have some form of criminal record, and that statistic rises to nearly sixty percent among those officials who represent the rural poor and untouchables (Bairwal). Although corruption has been a salient feature of Indian politics since the time of the British Raj, politicians’ blatant flouting of legal norms is a more recent development. According to an article published by the London School of Economics, “a new type of charismatic political leader emerged during the 1970s that broke with the ‘statesman’ model of the Congress Party, and was valued for their willingness to dirty their hands on behalf of their constituents” (Sanchez). Although these criminal political figures are often lionized in the eyes of lower class Indian citizens, their existing reputations for breaking the law often translate into a willingness to accept bribes and sell government contracts - ultimately repeating the cycle of corruption that has traditionally throttled the country’s logistic infrastructure.

In recent years, some Indian politicians have made a concerted effort to counteract the widespread corruption that has historically marred their nation’s economic landscape. Despite these attempts, however, the practices of bribery, contract selling, and electing criminals cannot be stopped until the Indian populace and legislature come together to engage in a national conversation and form new norms of commercial integrity. Until then, corruption will continue to stifle India’s logistic infrastructure - systematically slowing the efficiency of federal services, compromising the quality of public works, and generating a pervasive distrust of elected parliamentary officials.

Works Cited

Bairwal, Anil. "Press Release for March 19th." Google Groups. Association for Democratic Reforms, 19 May 2013.

Bardhan, Pranab. "Corruption and Development: A Review of Issues." Journal of Economic Literature 35 (1997): 1320-341.

Barry, Ellen. "In India’s Politics, Jail Time Is a Badge of Honor." The New York Times. N.p., 13 Oct. 2013.

Bhattacharya, Prasenjit. "Road Building Still Tarred With Corruption." India Realtime. The Wall Street Journal, 4 May 2012.

"Corruption and Economic Development." The World Bank Group. N.p., n.d.

Gould, William. "A Brief History of Corruption in India." The India Site. N.p., n.d.

Sanchez, Andrew. "Corruption In India." London School of Econonics. N.p., n.d.

Sarin, Ritu. "World Bank Cries Fraud, Graft in Highways Projects." The Indian Express. N.p., 3 Apr. 2012.

Singh, Nirvikar. "The Trillion-dollar Question." The Financial Express. N.p., 19 Dec. 2010.

Tillen, James G., and Sonia M. Delman. "A Bribe By Any Other Name." Forbes. Forbes Magazine, 28 May 2010.