Will India be free of corruption?

Tue, 14 Dec Pre-Open

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That corruption is a way of life in India is a foregone conclusion. So ingrained is this in the minds of the average Indian, that any new scam or scandal that erupts is scarcely greeted with more than the raising of an eyebrow. The sums involved are huge and beyond the understanding of most of us.

India's economy, over the past few years, has grown at a scorching pace. Not just that, Indian companies have also been making waves due to the entrepreneurial spirit and the acquisition of companies abroad in a bid to become multinationals themselves. Despite this, one will dispute that the eradication of two big problems will go a long way in not only enhancing India's growth but also in sustaining it.

These two big problems are lack of infrastructure and corruption. Some progress, albeit gradual, is being made with respect to the former. The government has realised the importance of good infrastructure and has been setting aside funds for ramping up the same. Execution, alas, has been the issue.

But the other problem - corruption - is a much trickier issue. With it being rampant across businesses and government, tackling it becomes difficult because of vested interests of a lot of parties. In fact, in recent times, corruption in India has taken on new dimensions altogether. Take the much earlier license raj period for instance. Although there was considerable corruption during that time, it was probably much more benign in hindsight. Why? Because aspects of the controlled regime, such as granting of licences, price controls, and the like gave opportunities for decision makers to seize rents for personal gains.

More importantly, the structure was such that it gave the government not only monopoly power but also greater discretion to exercise that power. Then, abolition of this system was the only way to trample corruption. And so the license raj was dismantled.

But more than 2 decades on, there has hardly been any noticeable drop in corruption. The reasons for this are several. For starters, quality and depth of reforms have been poor. Also, as pointed out in an article by the Mint, the 'benign' corruption caused by 'controls' was 'cost reducing' for the briber. Now we have what is known as 'subversive' corruption, which is 'benefit enhancing' for him. Frequent coalition governments have also sowed the seeds of corruption in India. The only solution seems to be to accelerate the pace of economic reforms and build stronger institutions. But that may seem easier said than done.