Corruption as defined by the World Bank refers to the abuse of public office
for private gain and covers a wide range of behaviour, from bribery to theft of
public funds. It not only harms the political fabric of the society but also
affects its economic growth and morality. It persists across various levels of
government and can exist in many forms from petty (to lower and mid-ranked
public officers) to scandals that involve high-profile figures. This paper
explores the nature of the causes, consequences, and remedies.
Historical Context
Corruption has always been and remains to be, one of the major problems that
India has faced, and it will continue to persist if the government coupled with
the people of India cannot figure out measures that are effective enough to deal
with it. It is impossible to define the extent of corruption- both
quantitatively and qualitatively because corruption is, obviously, covert.
Even
though a lot of research has been conducted, it still is subjective. That said,
one thing is clear- it's necessary to curb corruption as it leads to
consequences that this paper will try to outline. Corruption occurs in multiple
forms- bribes, embezzlement, extortion, fraud, money laundering, nepotism, etc.
It is commonly believed that nobody can know the exact place where corruption
started, but the origin of Indian corruption can be speculated from its medieval
period. It is evident that corruption persisted around the Khilji rule among the
lower officials, and the cause that was found was the low salaries of the
officials. But even after the wages were increased, the problem did not
disappear, making the ruler take punitive measures.
The next instance can be found in the Tughlaq dynasty when nepotism when Feroz
Shah Tughlaq ignored the merit criteria for people getting into office. This was
followed by the reign of Muhammad Bin Tughlaq, when undertakers were paid large
sums of money to launch new projects, but then appropriated this money for their
use when they found it difficult to survive.
A more recent example can be found in the Industries Act of 1951, when licensing
for each industrial operation was required, leading to bribery becoming a
significant part of life. It was well known that the economy of the time was
such that the poor suffered the most, as the revenue that was to be directed
towards social welfare was diverted because of the presence of corruption.
In legal terms, the history of corruption in India is long and complex. One of
the first laws that dealt with corruption (that too, at a broad scale) was the
Criminal Law (Amendment) Ordinance, 1944 under the Government of India Act, of
1935
.
But the first law that dealt with corruption directly and in a unified manner
was the Prevention of Corruption Act, 1947 which added to the provisions of IPC.
However, this act has been subject to various changes over the years, as it is
necessary to evolve laws as society evolves.
The government also set up the Santhanam Committee after the Mudhra corruption
scandal and one of the outcomes of this Committee was the setting up of the
Central Vigilance Commission as an apex anti-corruption body. Additionally, the
government also established The Comptroller and Auditor General of India in 1971
to prevent corruption instances by auditing the public finances of the
institutions.
Causes Of Corruption
Historical Factors
To understand the nature of and question why corruption exists, it's important
to know the historical causes and how it started. The corruption under British
colonial rule as a result of their administrative practices in India, has been
considered to be one of the most important reasons why corruption started.
Corruption by the East India Company, particularly by its servants affected the
middle and lower-class citizens as they were exploited and their wages were
reduced for the company's gain.
They were asked to produce commercial crops,
leading to a reduced area for producing food crops thus affecting the
self-sufficiency of the farmers. The corruption was so brutal that it raised
public indignation in England itself, although the reasons were more about their
fear of the power of the company than the worry for Indian citizens. It was
feared in the UK Parliament that since the servants of the East India Company
took part in corrupt activities like bribes and extortion of money, they would
become wealthy enough to form an unbeatable East Indian interest and would
threaten the Parliament of Britain.
All of these activities of the EIC have been proven to have contributed to
excessive poverty, famine, and political instability and have been blamed as one
of the first causes of corruption in India.
The transition to Indian independence was not situated in economic stability as
The Indian government brought in license raj. The goal was to regulate
production and promote industries in backward areas, but the severely suppressed
competition encouraged bribery and created a black market coupled with the
smuggling of goods.
The New Economic Policy introduced in 1991 abolished licensing and quotas which
resulted in removing many corrupt practices that were visible in the license raj,
but forms of corruption were still visible in sectors like minerals and other
natural resources. A lot of the old forms of corruption were reduced due to
delicensing and deregulation, especially in manufacturing, but a great cause of
concern arose in the innovative methods employed for rent-seeking.
Thus, the most significant historical factor that contributed to Corruption
practices was the brutal administration of the East India Company Under British
Colonial rule and the inefficiency of the company's governance. The second
aspect is the Indian transition to independence, where the inexperienced Indian
government established a license raj, and even though the intentions were
understandable, they could not be applied effectively, thus leading to
corruption in the forms of bribes, nepotism, appropriation of funds, and more.
Finally, the new economic policy that was forced to be adopted because of the
economic debt that the country faced led to deregulation and delicensing, along
with abolishing quotas and tariffs, thus reducing the corruption in industrial
and manufacturing sectors but on the other hand, corruption in rent-seeking
increased.
Political Factors
Indian authorities have the power to stop any individual in the name of "regular
checks to for prevention of criminal activities". While in some cases this may
be justified, they do not need to secure a warrant or provide any reason for why
they stopped a specific individual.
This creates the opportunity to extract
bribes, as for most individuals it's easier to pay the bribe and not go to the
length of due process. Another cause of corruption can be found in the high
penalties and fines, especially in traffic police cases. Bribes then become a
simple and cheaper way of "getting free of the police". While it's easier for
the individual, it becomes a private gain for the official, which affects the
revenue generation for the government.
Another example of bribery can be found in the high capital gains tax for the
real estate industry, while Indian politics continue to face the problem of
nepotism. It was found that 100 percent of MPS in the current lower house of
Parliament under the age of 30 are from families with a political background.
One reason for this can be the leading example of the Congress Government, where
a dynasty has been turned into a governing principle.
Economic Factors
Another cause of corruption lies in the economic aspect where the wages a
government official gets become a factor in corruption. The less pay a
government official gets, the more the incentive is for them to engage in
corruption activities, especially bribery.
As in the case of India where the
average salary of a government official is around 7 lakh per year (cite), a
greater incentive exists to partake in activities that can supplement their
income. More often than not, highly paid officials do not have the motivation to
undertake such activities and there's a greater risk involved in the loss of
jobs.
Legal Factors
The Prevention of Corruption Act has always been the major consolidated law that
aims to combat corruption. The first act was the Prevention of Corruption Act of
1947 amended twice in 1988 and 2018. The 1947 Act was criticized as being
ineffective and putting the accused at a disadvantage. Section 5(3) of the act
introduces a presumption that where an accused or any person on his behalf is in
possession of pecuniary resources or property disproportionate to his known
source of income, he will be deemed to be guilty of misconduct unless he has
satisfactorily explained.
This puts the burden of proof on the accused instead
of the prosecution, while criminal cases require the accused to be proven guilty
without any doubt. Another criticism was that the definition of a public servant
by the act was too narrow, thus it did not appropriately cover all the
corruption offenses committed by public officials.
The Act was amended in 1988
and while a lot of problems that were present in the original act were tried to
be solved, it took the act to another extreme where it is argued that
prosecution of corruption cases becomes harder by making the requirements of a
prosecution of the official more stringent. It asks for evidence of intention
and limits misappropriation and unlawful enrichment by public officials to only
two clauses. It also did not define the punishment of commercial corruption
activities.
The Act has been added and repealed numerous times, the latest being in 2018
which made numerous positive contributions like defining the punishment for
bribery and imposing stricter penalties for corruption offices while also
including various provisions relating to commercial organizations and persons
who have undue advantage. The amendment also shifted the burden of proof on the
prosecution.
Criticisms of the act are such that it does not properly define the
degree of fine for commercial organizations and narrows the scope of public
servants as well as what constitutes a corrupt public official.
Being the most important and the only consolidated law that exclusively focuses
on corruption, the Act needs to have expansive scope and well-defined sections.
Lack of that leads to:
- Unreported corruption offences
- Fake cases of corruption (since the 1947 Act put the burden on the defendant itself, it was easier to prove conviction)
- "Getting a free pass" (as the scope was not expansive and the sections are, though better, but still not well established and the degree of fines, at times, is also not specified). This eventually counters the main issue of curbing corruption and instead can increase the number of corruption cases, thus becoming a cause for the rise in corruption.
Consequences Of Corruption
Economic Consequences
Empirical evidence suggests that corruption lowers investment and retards
economic growth to a significant extent. Rent-seeking, which is another form of
corruption leads to the misallocation of talent, as greater financial gain that
can be achieved through corruption can become the incentive for talented and
more educated people to seek more rent. This has adverse consequences for the
country's economic growth rate.
Corruption in the form of bribery also helps
individuals evade taxes or claim improper tax exceptions bringing about a loss
of tax revenue, thus leading to adverse budgetary consequences and lower
infrastructure quality and lower quality of public services. Corruption may also
motivate public officials to allocate government expenditure on such areas that
can help maximize the extortion of bribes, rather than assigning it to areas to
increase public welfare.
Uneven distribution of wealth, income inequality, and increasing poverty levels
are also important impacts of corruption. This is because most of the country's
wealth becomes aggregated in the hands of corrupt public officials and the
people who are backing them, making the economy have a disproportionate small
middle class and significant divergence between the living standards of upper
and lower classes.
Political Consequences
Corruption has several consequences, some of them being in the political domain.
It undermines democratic institutions and reduces the accountability of
political figures. It reduces the trust of the citizens in the figures who are
supposed to listen to their needs and wants, thus also adding a moral aspect
simultaneously. The Social Contract Theory provides the mythological contract
between the government and the state, that gets undermined due to the presence
of corruption.
Corruption has been proven to increase political instability as
it also fuels social unrest. While at times, it provides an easier alternative
to paying higher taxes and penalties but this leads to the distorted
representation of policymaking. It encourages the feeling of authoritarianism as
it empowers public officials who rely on bribes and patronage to maintain power.
Social Consequences
Corruption leads to social issues like poverty, income inequality and removes
access to basic services which include health and education. The public sector
works primarily on the goal of social welfare (or at least, it's supposed to).
Corruption in the public sector provides benefits to the rich, thus declining,
or at the least reducing a poor person's access to social services as it
increases the delivery service of these services.
Corruption leads to the funds
allotted for the welfare of the citizens in the pockets of public officials. The
people who are coerced to pay bribes cannot go to court and follow due process
as India's legal system is too complex, especially for people who cannot afford
lawyers.
This also leads to the phenomenon of have and have-nots, where the rich
become richer and the poor become poorer as the people who become subject to
corruption procedures and cannot afford it are denied access to the most basic
services. As already mentioned in the paper, it also removes the trust of the
people in government officials. Not getting access to needs that are required
for survival, namely health and education also leads to the fuel of social
unrest.
Environmental Consequences
Numerous crimes can affect the environment, corruption being a major one. This
is because corruption can abet these crimes while allowing the criminal to
commit, hide, and evade conviction. Additionally, it deprives the government of
the revenue that is to be generated. It is often considered that the impact of
corruption is limited to financial losses, but this is not correct as corruption
fuels biodiversity loss, destruction of natural habitats, and also threatens the
existence of endangered species.
Remedies Of Corruption
A report posted by PIB Delhi states that the measures, in pursuance of the
"Zero Tolerance Against Corruption" include the following:
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Systemic improvements and reforms to provide transparent citizen-friendly services and reduce corruption. These, inter alia, include:
- Disbursement of welfare benefits directly to the citizens under various schemes of the Government in a transparent manner through the Direct Benefit Transfer initiative.
- Implementation of E-tendering in public procurements.
- Introduction of e-Governance and simplification of procedure and systems.
- Introduction of Government procurement through the Government e-Marketplace (GeM).
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The All-India Services (Disciplinary and Appeal) Rules and Central Civil Services (Classification, Control and Appeal) Rules have been amended to provide for specific timelines in the procedure related to disciplinary proceedings.
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The Prevention of Corruption Act, 1988 has been amended on 26.07.2018. It clearly criminalizes the act of giving bribes and will help check big-ticket corruption by creating a vicarious liability to senior management of commercial organizations.
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Central Vigilance Commission (CVC), through various orders and circulars, recommended the adoption of an Integrity Pact to all the organizations in major procurement activities and to ensure effective and expeditious investigation wherever any irregularity/misconduct is noticed.
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The institution of Lokpal has been operationalized by appointment of a Chairperson and Members. Lokpal is statutorily mandated to directly receive and process complaints as regards alleged offenses against public servants under the Prevention of Corruption Act, 1988.
While it's important to note that the government has taken serious measures to
combat the disease that is corruption, it's also necessary to analyse the
remedial measures in place to know how and what to improve.
Already mentioned in the article, the Prevention of Corruption Act meant to be a
consolidated law to fight corruption has been amended numerous times to fit in
with the needs of the society. The common notion is that the latest amendment of
2018 has solved all of the problems associated with the act. This seems to only
be true to an extent. The Preventive Detention Act has made the investigation
process more difficult as the act has added the requirement of a prior sanction
to initiate a probe on any public officer- both former and current, thus
strengthening the shield of the accused.
As already mentioned in the paper, the Prevention Of Corruption Act still does
not specify the quantum of fines for commercial organizations.
Central Vigilance Commission (CVC) is the apex body for vigilance and is the
main agency that leads the fight against corruption in India. Although, prima
facie, it plays such a major role it is subject to a lot of criticism. One of
them is that it has a limited scope of adjudication because it has no control
over state-level institutions. In India, a major part of corruption occurs at a
lower level and the apex body not having that control can lead to a gap in
anti-corruption measures. It is often considered to be just an advisory body
that lacks enforcement powers which leads to limitation in taking action against
corrupt practices.
Finally, there are also doubts about the body's autonomy as its functioning
raises a question of political interference, thus making a reasonable person
doubt its unbiasedness and credibility.
Conclusion
Corruption is not an issue to be taken lightly. It affects every aspect of
society, including political, social, moral, economic, and environmental in a
detrimental manner. Numerous causes have been identified that lead to an
increase in this phenomenon and many have not been because corruption is a
clandestine disease. It's difficult to collect evidence and know the exact
degree of corruption present in any country.
That said, several consequences
have been identified that prove it necessary to curb it as soon as possible. The
existing remedies in place do provide an answer to the problem, but only to an
extent. Many critics provide reasons why the remedies are not sufficient as
corruption is a widespread problem and it requires well-set measures in place
for the country to be able to fight it.
Suggestions
Some important suggestions are as follows:
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Providing the Central Vigilance Commission (CVC) with the power to regulate state as well as government institutions. This will help the body to fight the problem of corruption from the ground level itself as a majority part of corruption happens at lower levels. It also needs to be given enforcement powers that can help to take action against the government and be given more autonomy to take decisions of its own.
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The wages of public officials should be such that they can live comfortably without having to resort to corrupt practices like coercion, extortion, and bribery. Since this will increase the revenue generation of the government, it will become easier to keep paying the salaries.
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Increased access to public welfare facilities to people who cannot afford it. One of the main contentions of corruption is of the form that it limits access to basic services like education and health to people who cannot afford to partake in paying extra in forms of bribery and extortion. Hence, there is a need to provide these facilities directly to the people through modes that do not require public officials to act as "middlemen".
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The laws enacted to prevent corruption, like the Prevention Of Corruption Act, need to have well-defined sections and specified degrees of fines and compensation to be payable along with the punitive measures that would come into place.
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