(my assignment for next week)
On April 8th 2011 Government of India was under intense pressure from the millions of people who were protesting in the street in support for the hunger strike led by a person named Anna Hazare. His demand was that the government of India should pass Lok Pal bill (Ombudsman bill) as soon as possible. It is an anti corruption bill which will give rights to an independent body with the powers to prosecute politicians and bureaucrats without prior government permission. The government didn’t expect that the people would turn out in huge number had to cave in eventually to the demands of Anna Hazare and assured the bill would be passed. As of now Aug 15
th 2011 is been set as the target date to pass the bill. If this bill get passed successfully I think this might be the second big thing happened in the country after independence.
India tops the list for black money in the entire world with almost US$1.456 trillion in Swiss banks in the form of black money. According to the data provided by the Swiss Banking Association Report (2006), India has more black money than the rest of the world combined. India is known for institutionalizing corruption, there is saying for an Indian citizen from the day he is born till his death he has to endure corruption at various stages in his life by paying money starting for his birth certificate and eventually for his death certificate. Though India and Indonesia has same levels of corruption the economic performance is much better in Indonesia than in India because in Indonesia corruption is more centralized and thus more predictable. But in India corruption has been decentralized at every level of the government organizations. As Bardhan points out in his paper this decentralization leads to more fragmented often anarchic system of bribery. Thus decentralization leads to inefficiency in the system and delays the way things get done in the country which there by hinders the economic development of the country. Corruption not only reduces the efficiency of the system but affects the investment the country can attract. When public resources are diverted to benefit private individuals the first thing which gets compromised is the country’s growth. Transparency International estimates that truckers in India pay annually US$5 billion in bribes, there are some projects which are riddled with inefficiencies of the government such that the roads which are supposed to last for minimum 5 years lasts only till the next rainy season, power projects which are required to be completed within the scheduled are delayed such that the country could never produce enough electricity to satisfy the ever increasing demand. Paolo Mauro (1995) finds that there is a negative correlation between corruption index and investment rate, a one standard deviation improvement in corruption is estimated to be associated with an increase in investment by about 3% of GDP.
In Asian countries gift exchange is a major social norm in business transactions and allegiance to kinship based or clan based loyalties often take precedence over public duties even for salaried public officials. Public opinions polls indicate that corruption is at the top of the problems cited by respondents but most of the people do not hesitate at all in abusing public resources when it comes to helping out people belonging to their own kinship network. Jean Tirole(1996) has mentioned one shot reduction in corruption may have no lasting effect. It may take minimum number of periods without corruption to return to a path leading to the low corruption steady state.
There are some policy issues which the country could take to reduce corruption. Klitdaard(1988) notes that when Hong Kong legalized off track betting police corruption fell significantly, when Singapore allowed duty free products corruption in customs vanished. The regulations in the system are the ones necessary to protect the citizens but in most cases it is designed to patronage dispensing power of politicians and bureaucrats. When a scarce food item is subsidized so that poor people can have access to it, the ration officials are prone to be corrupt. As long as these officials are able to sell the rationed products in black market less than the market price consumers will prefer to get food from corrupt system rather from the market. Since social objectives take precedence getting rid of corrupt public distribution systems has been politically unpopular. In most of the developing countries anti corruption initiatives are targeted at small fry and mostly big fishes are exempted. So there is need to institutionalize various kinds of accountability mechanisms like having an independent public auditing system. Ombudsman ( Lok Pal) law when passed would create an independent authority which checks for accountability in political and bureaucratic sections Few studies have suggested that the incentive based pay structure is an effective way to weed out corruption. Robert Clive in British India mentioned, “It is absurd to give power to officials and expect them to live in penury”. Singapore and Hong Kong have shown the way by rewarding public officials with a great deal of success. In fact in Singapore wages are higher than that of private sectors. One should keep in mind that today’s rich countries had beaten the worst corruption in their history to be where they are now and the basic policy they adopted was their civil servants were substantially paid and incentives were there to be corruption free.
Judiciary system of the country is also a major factor in determining the amount of corruption which happens in the country. Daniel Treisman has found that common law countries have lower rate of corruption. But in India I think one of the major causes for corruption is due to the outdated judiciary system the country has with huge backlogs. For instance, the Delhi High Court has a backlog of 466 years according to its chief justice, it takes on an average more than 10 years to file a charge against a person and most of the time the politicians and bureaucrats who knows in and out of the system escapes free when the judgment is finally given. Corruption is rampant in the judicial system of India. 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". In Bihar fast track courts were initiated by the Chief Minister in 2006, altogether 46,836 persons have been convicted by courts by way of speedy trials. For many year people had lost hope about the future of this state but the law and order situation has improved a lot and the state has started growing back in track. Judiciary has a major role to play in these developments. If this model can be replicated to other states in India the corruption can be reduced. It is easy to suggest few policies which can be good for the country which eliminates corruption but implementing those would take lots of courage and skills. There would be pressure from political and bureaucratic authorities to make sure any such reforms don’t pass through. So a country needs strong policy makers who are diligent enough to make sure these reforms get passed through the system and implemented effectively. India needs such statesman who has overcomes these obstacles and design policies which helps in transforming the country into a developed nation.
