Corruption in India

[[]]

Corruption is an issue which adversely

affects India's economy of central, state
and local government agencies. Not only
has it held the economy back from
reaching new heights, but rampant
corruption has stunted the country's
development.[1] A study conducted by
Transparency International in 2005
recorded that more than 62% of Indians
had at some point or another paid a bribe
to a public official to get a job done.[2][3] In
2008, another report showed that about
50% of Indians had first hand experience
of paying bribes or using contacts to get
services performed by public offices,
however, in 2018 their Corruption
Perception Index ranked the country 78th
place out of 180, reflecting steady decline
in perception of corruption among
people.[4][5]

The largest contributors to corruption are

entitlement programs and social spending
schemes enacted by the Indian
government. Examples include the
Mahatma Gandhi National Rural
Employment Guarantee Act and the
National Rural Health Mission.[6][7] Other
areas of corruption include India's trucking
industry which is forced to pay billions of
rupees in bribes annually to numerous
regulatory and police stops on interstate
highways.[8]

The media has widely published

allegations of corrupt Indian citizens
stashing millions of rupees in Swiss
banks. Swiss authorities denied these
allegations, which were later proven in
2015–2016. The Indian media is largely
controlled by extremely corrupt politicians
and industrialists who play a major role by
misleading the public with incorrect
information and use the media for mud-
slinging at political and business
opponents.[9][10]

The causes of corruption in India include

excessive regulations, complicated tax
and licensing systems, numerous
government departments with opaque
bureaucracy and discretionary powers,
monopoly of government controlled
institutions on certain goods and services
delivery, and the lack of transparent laws
and processes.[11][12] There are significant
variations in the level of corruption and in
the government's efforts to reduce
corruption across different areas of India.

Politics

Sole philosophy pages on all norms and guidelines to

clear mess, but now placed below plates
Corruption in India is a problem that has
serious implications for protecting the rule
of law and ensuring access to justice. As
of December 2009, 120 of India's 542
parliament members were accused of
various crimes, under India's First
Information Report procedure wherein
anyone can allege another to have
committed a crime.[13]

Many of the biggest scandals since 2010

have involved high level government
officials, including Cabinet Ministers and
Chief Ministers, such as the 2010
Commonwealth Games scam
(₹70,000 crore (US$10 billion)), the Adarsh
Housing Society scam, the Coal Mining
Scam (₹1.86 lakh crore (US$27 billion)),
the Mining Scandal in Karnataka and the
Cash for Vote scams.

Bureaucracy
A 2005 study done by the Transparency
International in India found that more than
92% of the people had firsthand
experience of paying bribes or peddling
influence to get services performed in a
public office.[3] Taxes and bribes are
common between state borders;
Transparency International estimates that
truckers annually pay ₹222 crore
(US$32 million) in bribes.[8][14]

Both government regulators and police

share in bribe money, to the tune of 43%
and 45% each, respectively. The en route
stoppages at checkpoints and entry-points
can take up to 11 hours per day. About
60% of these (forced) stoppages on roads
by concerned authorities such as
government regulators, police, forest,
sales and excise, octroi, and weighing and
measuring departments are for extorting
money. The loss in productivity due to
these stoppages is an important national
concern; the number of truck trips could
increase by 40%, if forced delays are
avoided. According to a 2007 World Bank
published report, the travel time for a
Delhi-Mumbai trip could be reduced by
about 2 days per trip if the corruption and
associated regulatory stoppages to extract
bribes were eliminated.[14][15][16]

A 2009 survey of the leading economies of

Asia, revealed Indian bureaucracy to be not
only the least efficient out of Singapore,
Hong Kong, Thailand, South Korea, Japan,
Malaysia, Taiwan, Vietnam, China,
Philippines and Indonesia, but that
working with India's civil servants was a
"slow and painful" process.[17]
Land and property

Officials are alleged to steal state property.

In cities and villages throughout India,
groups of municipal and other government
officials, elected politicians, judicial
officers, real estate developers and law
enforcement officials, acquire, develop
and sell land in illegal ways.[18] Such
officials and politicians are very well
protected by the immense power and
influence they possess. Apart from this,
slum-dwellers who are allotted houses
under several housing schemes such as
Pradhan Mantri Gramin Awaas Yojana,
Rajiv Awas Yojna, Pradhan Mantri Awas
Yojna etc., rent out these houses to others,
to earn money due to severe
unemployment and lack of a steady
source of income.

Tendering processes and awarding

contracts

A 2006 report claimed state-funded

construction activities in Uttar Pradesh,
such as road building were dominated by
construction mafias, consisting of cabals
of corrupt public works officials, materials
suppliers, politicians and construction
contractors.[19]
Problems caused by corruption in
government funded projects are not
limited to the state of Uttar Pradesh.
According to The World Bank, aid
programmes are beset by corruption, bad
administration and under-payments. As an
example, the report cites that only 40% of
grain handed out for the poor reaches its
intended target. The World Bank study
finds that the public distribution
programmes and social spending
contracts have proven to be a waste due
to corruption.[20]

For example, the government implemented

the Mahatma Gandhi National Rural
Employment Guarantee Act (MGNREGA) on
25 August 2005. The Central government
outlay for this welfare scheme is
₹400 crore (US$58 million) in FY 2010–
2011.[21] After 5 years of implementation,
in 2011, the programme was widely
criticised as no more effective than other
poverty reduction programmes in India.
Despite its best intentions, MGNREGA
faces the challenges of corrupt officials
reportedly pocketing money on behalf of
fake rural employees, poor quality of the
programme infrastructure, and unintended
destructive effect on poverty.[7][22]
Hospitals and health care

In government hospitals, corruption is

associated with non-
availability/duplication of medicines,
obtaining admission, consultations with
doctors and receiving diagnostic
services.[3]

National Rural Health Mission is another

health care-related government
programme that has been subject to large
scale corruption allegations. This social
spending and entitlement programme
hoped to improve health care delivery
across rural India. Managed since 2005 by
the Ministry of Health, the Indian
government mandated a spending of
₹2.77 lakh crore (US$40 billion) in 2004–
2005, and increased it annually to be about
1% of India's gross domestic product. The
National Rural Health Mission programme
has been clouded by a large-scale
corruption scandal in which high-level
government appointed officials were
arrested, several of whom died under
mysterious circumstances including one in
prison. Corruption, waste and fraud-related
losses from this government programme
has been alleged to be ₹1 lakh crore
(US$14 billion).[23][24][25][6]
Science and technology

CSIR, the Council of Scientific and

Industrial Research, has been flagged in
ongoing efforts to root out corruption in
India.[26] Established with the directive to
do translational research and create real
technologies, CSIR has been accused of
transforming into a ritualistic, overly-
bureaucratic organisation that does little
more than churn out papers.[27][28]

There are many issues facing Indian

scientists, with some, such as MIT
systems scientist VA Shiva Ayyadurai,
calling for transparency, a meritocratic
system, and an overhaul of the
bureaucratic agencies that oversee
science and technology.[29][30][31] Sumit
Bhaduri stated, "The challenges of turning
Indian science into part of an innovation
process are many. Many competent Indian
scientists aspire to be ineffectual
administrators (due to administrative
power and political patronage), rather than
do the kind of science that makes a
difference".[32] Prime minister Manmohan
Singh spoke at the 99th Indian Science
Congress and commented on the state of
the sciences in India, after an advisory
council informed him there were problems
with "the overall environment for
innovation and creative work" and a "war-
like" approach was needed.[33]

Income tax department

There have been several cases of

collusion involving officials of the Income
Tax Department of India for preferential
tax treatment and relaxed prosecutions in
exchange for bribes.[34][35]

Preferential award of mineral

resources

In August 2011, an iron ore mining scandal

became a media focus in India. In
September 2011, elected member of
Karnataka's legislative assembly
Janardhana Reddy, was arrested on
charges of corruption and illegal mining of
iron ore in his home state. It was alleged
that his company received preferential
allotment of resources, organised and
exported billions of dollars' worth of iron
ore to Chinese companies in recent years
without paying any royalty to the state
government exchequer of Karnataka or the
central government of India, and that these
Chinese companies made payment to
shell companies registered in Caribbean
and north Atlantic tax havens controlled by
Reddy.[36][37]
It was also alleged that corrupt
government officials cooperated with
Reddy, starting from government officials
in charge of regulating mining to
government officials in charge of
regulating port facilities and shipping.
These officials received monthly bribes in
exchange for enabling the illegal export of
illegally mined iron ore to China. Such
scandals have led to a demand in India for
consensually driven action plan to
eradicate the piracy of India's mineral
resources by an illegal, politically corrupt
government officials-business nexus,
removal of incentives for illegal mining,
and the creation of incentives for legal
mining and domestic use of iron ore and
steel manufacturing.[36][37]

Driver licensing

A study conducted between 2004 and

2005 found that India's driver licensing
procedure was a hugely distorted
bureaucratic process and allows drivers to
be licensed despite their low driving ability
through promoting the usage of agents.
Individuals with the willingness to pay
make a significant payment above the
official fee and most of these extra
payments are made to agents, who act as
an intermediary between bureaucrats and
applicants.[38]

The average licensee paid Rs 1,080,

approximately 2.5 times the official fee of
Rs 450, in order to obtain a license. On
average, those who hired agents had a
lower driving ability, with agents helping
unqualified drivers obtain licenses and
bypass the legally required driving
examination. Among the surveyed
individuals, approximately 60% of the
license holders did not even take the
licensing exam and 54% of those license
holders failed an independent driving
test.[39]
Agents are the channels of corruption in
this bureaucratic driver licensing system,
facilitating access to licenses among
those who are unqualified to drive. Some
of the failures of this licensing system are
caused by corrupt bureaucrats who
collaborate with agents by creating
additional barriers within the system
against those who did not hire agents.[38]

Trends

Professor Bibek Debroy and Laveesh

Bhandari claim in their book Corruption in
India: The DNA and RNA that public
officials in India may be cornering as
much as ₹921 billion (US$13 billion), or
1.26 per cent of the GDP through
corruption.[15] The book claims most
bribery is in government delivered services
and the transport and real estate
industries.

Bribery and corruption are pervasive, but

some areas tend to more issues than
others. A 2013 EY (Ernst & Young)
Study[40] reports the industries perceived
to be the most vulnerable to corruption as:
Infrastructure & Real Estate, Metals &
Mining, Aerospace & Defence, and Power
& Utilities. There are a range of specific
factors that make a sector more
susceptible to bribery and corruption risks
than others. High use of middlemen, large
value contracts, and liasioning activities
etc. drive the depth, volume and frequency
of corrupt practices in vulnerable sectors.

A 2011 KPMG study reports India's real

estate, telecommunications and
government-run social development
projects as the three top sectors plagued
by corruption. The study found India's
defence, the information technology
industry and energy sectors to be the most
competitive and least corruption prone
sectors.[11]
CMS India claims in its 2010 India
Corruption Study report that socio-
economically weaker sections of Indian
society are the most adversely affected by
government corruption. These include the
rural and urban poor, although the study
claims that nationwide perception of
corruption has decreased between 2005
and 2010. Over the 5-year period, a
significantly greater number of people
surveyed from the middle and poorest
classes in all parts of India claimed
government corruption had dropped over
time, and that they had fewer direct
experiences with bribery demands.[41]
Whereas in reality corruption has
increased ten folds since 2010 and
continues to grow relentlessly on a daily
basis.

The table below compares the perceived

anti-corruption effort across some of the
major states in India.[12] A rising index
implies higher anti-corruption effort and
falling corruption. According to this table,
the states of Bihar and Gujarat have
experienced significant improvements in
their anti-corruption efforts, while
conditions have worsened in the states of
Assam and West Bengal. Consistent with
the results in this table, in 2012 a BBC
News report claimed the state of Bihar has
transformed in recent years to become the
least corrupt state in India.[42]
Index trends in major states by respective anti-corruption effort[12]
State 1990–95 1996–00 2001–05 2006–10

Bihar 0.41 0.30 0.43 0.88

Gujarat 0.48 0.57 0.64 0.69

Andhra Pradesh 0.53 0.73 0.55 0.61

Punjab 0.32 0.46 0.46 0.60

Jammu & Kashmir 0.13 0.32 0.17 0.40

Haryana 0.33 0.60 0.31 0.37

Himachal Pradesh 0.26 0.14 0.23 0.35

Tamil Nadu 0.19 0.20 0.24 0.29

Madhya Pradesh 0.23 0.22 0.31 0.29

Karnataka 0.24 0.19 0.20 0.29

Rajasthan 0.27 0.23 0.26 0.27

Kerala 0.16 0.20 0.22 0.27

Maharashtra 0.45 0.29 0.27 0.26

Uttar Pradesh 0.11 0.11 0.16 0.21

Odisha 0.22 0.16 0.15 0.19

Assam 0.21 0.02 0.14 0.17

West Bengal 0.11 0.08 0.03 0.01

Black money
Black money refers to money that is not
fully or legitimately the property of the
'owner'. A government white paper on
black money in India suggests two
possible sources of black money in
India;[9] the first includes activities not
permitted by the law, such as crime, drug
trade, terrorism and corruption, all of
which are illegal in India and secondly,
wealth that may have been generated
through lawful activity but accumulated by
failure to declare income and pay taxes.
Some of this black money ends up in illicit
financial flows across international
borders, such as deposits in tax haven
countries.
A November 2010 report from the
Washington-based Global Financial
Integrity estimates that over a 60-year
period, India lost US$213 billion in illicit
financial flows beginning in 1948; adjusted
for inflation, this is estimated to be $462
billion in 2010, or about $8 billion per year
($7 per capita per year). The report also
estimated the size of India's underground
economy at approximately US$640 billion
at the end of 2008 or roughly 50% of the
nation's GDP.[43]

Indian black money in Switzerland

India was ranked 38th by money held by
its citizens in Swiss banks in 2004 but
then improved its ranking by slipping to
61st position in 2015 and further improved
its position by slipping to 75th position in
2016.[44][45] According to a 2010 The Hindu
article, unofficial estimates indicate that
Indians had over US$1,456 billion in black
money stored in Swiss banks
(approximately US$1.4 trillion).[46] While
some news reports claimed that data
provided by the Swiss Banking
Association[47] Report (2006) showed
India has more black money than the rest
of the world combined,[48][49] a more
recent report quoted the SBA's Head of
International Communications as saying
that no such official Swiss Banking
Association statistics exist.[50]

Another report said that Indian-owned

Swiss bank account assets are worth 13
times the country's national debt. These
allegations have been denied by Swiss
Bankers Association. James Nason of
Swiss Bankers Association in an interview
about alleged black money from India,
holds that "The (black money) figures were
rapidly picked up in the Indian media and
in Indian opposition circles, and circulated
as gospel truth. However, this story was a
complete fabrication. The Swiss Bankers
Association never published such a report.
Anyone claiming to have such figures (for
India) should be forced to identify their
source and explain the methodology used
to produce them."[10][51]

In a separate study, Dev Kar of Global

Financial Integrity concludes, "Media
reports circulating in India that Indian
nationals held around US$1.4 trillion in
illicit external assets are widely off the
mark compared to the estimates found by
his study." Kar claims the amounts are
significantly smaller, only about 1.5% of
India's GDP on average per annum basis,
between 1948 and 2008. This includes
corruption, bribery and kickbacks, criminal
activities, trade mispricing and efforts to
shelter wealth by Indians from India's tax
authorities.[43]

According to a third report, published in

May 2012, Swiss National Bank estimates
that the total amount of deposits in all
Swiss banks, at the end of 2010, by
citizens of India were CHF 1.95 billion
(₹92.95 billion (US$1.3 billion)). The Swiss
Ministry of External Affairs has confirmed
these figures upon request for information
by the Indian Ministry of External Affairs.
This amount is about 700-fold less than
the alleged $1.4 trillion in some media
reports.[9] The report also provided a
comparison of the deposits held by
Indians and by citizens of other nations in
Swiss banks. Total deposits held by
citizens of India constitute only 0.13 per
cent of the total bank deposits of citizens
of all countries. Further, the share of
Indians in the total bank deposits of
citizens of all countries in Swiss banks has
reduced from 0.29 per cent in 2006 to 0.13
per cent in 2010.

Domestic black money

Indian companies are reportedly misusing

public trusts for money laundering. India
has no centralised repository—like the
registrar of companies for corporates—of
information on public trusts.[52]

2016 Evasion attempts after note ban

A jewellery store in a shopping mall with a notice "We

accept ₹500 and ₹1000 notes", even after they were
no longer valid banknotes.

Gold purchases

In Gujarat, Delhi and many other major

cities, sales of gold increased on 9
November, with an increased 20% to 30%
premium surging the price as much as
₹45,000 (US$650) from the ruling price of
₹31,900 (US$460) per 10 grams
(0.35 oz).[53][54]

Donations

Authorities of Sri Jalakanteswarar temple

at Vellore discovered cash worth
₹4.4 million (US$64,000) from the temple
Hundi.[55]

Multiple bank transactions

There have also been reports of people

circumventing the restrictions imposed on
exchange transactions and attempting to
convert black money into white by making
multiple transactions at different bank
branches.[56] People were also getting rid
of large amounts of banned currency by
sending people in groups to exchange
their money at banks.[57] In response, the
government announced that it would start
marking customers with indelible ink. This
was in addition to other measures
proposed to ensure that the exchange
transactions are carried out only once by
each person.[58][59][60] On 17 November, the
government reduced the exchange
amount to ₹2,000 (US$29) to discourage
attempts to convert black money into
legitimate money.
 Railway bookings

As soon as the demonetisation was

announced, it was observed by the Indian
Railways authorities that a large number of
people started booking tickets particularly
in classes 1A and 2A for the longest
distance possible, to get rid of
unaccounted for cash. A senior official
said, "On November 13, 42.7 million
passengers were nationally booked across
all classes. Of these, only 1,209 were 1A
and 16,999 for 2A. It is a sharp dip from
the number of passengers booked on
November 9, when 27,237 passengers had
booked tickets in 1A and 69,950 in 2A."[61]
The Railways Ministry and the Railway
Board responded swiftly and decided that
cancellation and refund of tickets of value
₹10,000 and above will not be allowed by
any means involving cash. The payment
can only be through cheque/electronic
payment. Tickets above ₹10,000 can be
refunded by filing ticket deposit receipt
only on surrendering the original ticket. A
copy of the PAN card must be submitted
for any cash transaction above ₹50,000.
The railway claimed that since the Railway
Board on 10 November imposed a number
of restrictions to book and cancel tickets,
the number of people booking 1A and 2A
tickets came down.[61][62]
 Municipal and local tax payments

As the use of the demonetised notes had

been allowed by the government for the
payment of municipal and local body
taxes, leading to people using the
demonetised ₹500 and ₹1,000 notes to
pay large amounts of outstanding and
advance taxes. As a result, revenue
collections of the local civic bodies
jumped. The Greater Hyderabad Municipal
Corporation reported collecting about
₹1.6 billion (US$23 million) in cash
payments of outstanding and advance
taxes within 4 days.[63]

Axis Bank
Income Tax officials raided multiple
branches of Axis Bank and found bank
officials involved in acts of money
laundering.[64][65][66]

Business and corruption

Public servants have very wide
discretionary powers offering the
opportunity to extort undue payments
from companies and ordinary citizens. The
awarding of public contracts is notoriously
corrupt, especially at the state level.
Scandals involving high-level politicians
have highlighted the payment of kickbacks
in the healthcare, IT and military sectors.
The deterioration of the overall efficiency
of the government, protection of property
rights, ethics and corruption as well as
undue influence on government and
judicial decisions has resulted in a more
difficult situation for business
environment.

Judiciary
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".[67] Over
the years there have been numerous
allegations against judges, and in 2011
Soumitra Sen, a former judge at the
Kolkata High Court became the first judge
in India to be impeached by the Rajya
Sabha, (Upper House of the Indian
Parliament) for misappropriation of
funds.[68]

Anti-corruption efforts
Right to Information Act

The 2005 Right to Information Act required

government officials to provide
information requested by citizens or face
punitive action, as well as the
computerisation of services and the
establishment of vigilance commissions.
This is considerably reduced corruption
and opened up avenues to redress
grievances.[3]

Right to public legislation

Right to Public Services legislation, which

has been enacted in 19 states of India,
guarantee time bound delivery of services
for various public services rendered by the
government to citizen and provides
mechanisms for punishing the errant
public servant who is deficient in providing
the service stipulated under the statute.[69]
Right to Service legislation is meant to
reduce corruption among the government
officials and to increase transparency and
public accountability.[70]

Anti-corruption laws in India

Public servants in India can be imprisoned

for several years and penalised for
corruption under the:

Indian Penal Code, 1860

Prosecution section of Income Tax Act,
1961
The Prevention of Corruption Act, 1988
 The Benami Transactions (Prohibition)
Act, 1988 to prohibit benami
transactions.
Prevention of Money Laundering Act,
2002

Punishment for bribery in India can range

from six months to seven years of
imprisonment.

India is also a signatory to the United

Nations Convention against Corruption
since 2005 (ratified 2011). The Convention
covers a wide range of acts of corruption
and also proposes certain preventive
policies.[71]
The Lokpal and Lokayuktas Act, 2013
which came into force from 16 January
2014, seeks to provide for the
establishment of the institution of Lokpal
to inquire into allegations of corruption
against certain public functionaries in
India.[72][73]

Whistle Blowers Protection Act, 2011,

which provides a mechanism to
investigate alleged corruption and misuse
of power by public servants and also
protect anyone who exposes alleged
wrongdoing in government bodies,
projects and offices, has received the
assent of the President of India on 9 May
2014, and (as of 2 August) is pending for
notification by the Central
Government.[74][75]

At present there are no legal provisions to

check graft in the private sector in India.
Government has proposed amendments in
existing acts and certain new bills for
checking corruption in private sector. Big-
ticket corruption is mainly witnessed in the
operations of large commercial or
corporate entities. In order to prevent
bribery on supply side, it is proposed that
key managerial personnel of companies'
and also the company shall be held liable
for offering bribes to gain undue benefits.
The Prevention of Money Laundering Act,
2002 provides that the properties of
corrupt public servants shall be
confiscated. However, the Government is
considering incorporating provisions for
confiscation or forfeiture of the property of
corrupt public servants into the Prevention
of Corruption Act, 1988 to make it more
self-contained and comprehensive.[40]

A committee headed by the Chairman of

Central Board of Direct Taxes (CBDT), has
been constituted to examine ways to
strengthen laws to curb generation of
black money in India, its illegal transfer
abroad, and its recovery. "The Committee
shall examine the existing legal and
administrative framework to deal with the
menace of generation of black money
through illegal means including inter-alia
the following: 1. Declaring wealth
generated illegally as national asset; 2.
Enacting/amending laws to confiscate and
recover such assets; and 3. Providing for
exemplary punishment against its
perpetrators." (Source: 2013 EY report on
Bribery & Corruption )

The Companies Act, 2013, contains

certain provisions to regulate frauds by
corporations including increased penalties
for frauds, giving more powers to the
Serious Fraud Investigation Office,
mandatory responsibility of auditors to
reveal frauds, and increased
responsibilities of independent
directors.[76] The Companies Act, 2013
also provides for mandatory vigil
mechanisms which allow directors and
employees to report concerns and
whistleblower protection mechanism for
every listed company and any other
companies which accepts deposits from
public or has taken loans more than 50
crore rupees from banks and financial
institutions. This intended to avoid
accounting scandals such as the Satyam
scandal which have plagued India.[77] It
replaces The Companies Act, 1956 which
was proven outmoded in terms of handling
21st century problems.[78]

In 2015, Parliament passed the Black

Money (Undisclosed Foreign Income and
Assets) and Imposition of Tax Bill, 2015 to
curb and impose penalties on black money
hoarded abroad. The Act has received the
assent of the President of India on 26 May
2015. It came into effect from 1 July 2015.

Anti-corruption police and courts

The Directorate General of Income Tax

Investigation, Central Vigilance
Commission and Central Bureau of
Investigation all deal with anti-corruption
initiatives. Certain states such as Andhra
Pradesh (Anti-Corruption Bureau, Andhra
Pradesh) and Karnataka (Lokayukta) also
have their own anti-corruption agencies
and courts.[79][80]

Andhra Pradesh's Anti Corruption Bureau

(ACB) has launched a large scale
investigation in the "cash-for-bail" scam.[81]
CBI court judge Talluri Pattabhirama Rao
was arrested on 19 June 2012 for taking a
bribe to grant bail to former Karnataka
Minister Gali Janardhan Reddy, who was
allegedly amassing assets
disproportionate to his known sources of
income. Investigation revealed that India
Cements (one of India's largest cement
companies) had been investing in Reddy's
businesses in return for government
contracts.[82] A case has also been opened
against seven other individuals under the
Indian Penal Code and the Prevention of
Corruption Act.[81]

Civic anti-corruption organisations

A variety of organisations have been

created in India to actively fight against
corrupt government and business
practices. Notable organisations include:
[Bharat Swabhiman Trust], established
by Ramdev, has campaigned against
black money and corruption for a
decade.
5th Pillar is most known for the
creation of the zero rupee note, a
valueless note designed to be given to
corrupt officials when they request
bribes.
India Against Corruption was a popular
movement active during 2011–12 that
received much media attention. Among
its prominent public faces were Arvind
Kejriwal, Kiran Bedi and Anna Hazare.
Kejriwal went on to form the Aam Aadmi
Party and Hazare established Jan Tantra
Morcha.[83]
Jaago Re! One Billion Votes was an
organisation founded by Tata Tea and
Janaagraha to increase youth voter
registration.[84] They have since
expanded their work to include other
social issues, including corruption.[85]
Association for Social Transparency,
Rights and Action (ASTRA) is an NGO
focused on grass-roots work to fight
corruption in Karnataka.
The Lok Satta Movement, has
transformed itself from a civil
organisation to a full-fledged political
 party, the Lok Satta Party. The party has
fielded candidates in Andhra Pradesh,
Tamil Nadu, and Bangalore. In 2009, it
obtained its first elected post, when
Jayaprakash Narayan won the election
for the Kukatpally Assembly
Constituency in Andhra Pradesh.

Electoral Reforms

A number of ideas have been in discussion

to improve the efficiency and
effectiveness of electoral processes in
India.

Factors contributing to
corruption in India
In a 2004 report on Corruption in India,[11]
one of the world's largest audit and
compliance firms KPMG notes several
issues that encourage corruption in India.
The report suggests high taxes and
excessive regulation bureaucracy as a
major cause; India has high marginal tax
rates and numerous regulatory bodies with
the power to stop any citizen or business
from going about their daily affairs.[11][86]

This power of Indian authorities to search

and question individuals creates
opportunities for corrupt public officials to
extract bribes—each individual or business
decides if the effort required for due
process and the cost of delay is worth
paying the bribe demanded. In cases of
high taxes, paying off the corrupt official is
cheaper than the tax. This, according to
the report, is one major cause of
corruption in India and 150 other countries
across the world. In the real estate
industry, the high capital gains tax in India
encourages large-scale corruption. The
KPMG report claims that the correlation
between high real estate taxes and
corruption is high in India as it is other
countries including the developed
economies; this correlation has been true
in modern times as well as throughout
centuries of human history in various
cultures.[11][86]

The desire to pay lower taxes than those

demanded by the state explains the
demand side of corruption. The net result
is that the corrupt officials collect bribes,
the government fails to collect taxes for its
own budget, and corruption grows. The
report suggests regulatory reforms,
process simplification and lower taxes as
means to increase tax receipts and reduce
causes of corruption.[11][86]

In addition to tax rates and regulatory

burdens, the KPMG report claims
corruption results from opaque process
and paperwork on the part of the
government. Lack of transparency allows
room for manoeuvre for both demanders
and suppliers of corruption. Whenever
objective standards and transparent
processes are missing, and subjective
opinion driven regulators and
opaque/hidden processes are present,
conditions are ripe for corruption.[11][87]

Vito Tanzi in an International Monetary

Fund study suggests that in India, like
other countries in the world, corruption is
caused by excessive regulations and
authorisation requirements, complicated
taxes and licensing systems, mandated
spending programmes, lack of competitive
free markets, monopoly of certain goods
and service providers by government
controlled institutions, bureaucracy, lack of
penalties for corruption of public officials,
and lack of transparent laws and
processes.[12][88] A Harvard University
study finds these to be some of the
causes of corruption and underground
economy in India.[89]

Impact of corruption
Loss of credibility
In a study on bribery and corruption in
India conducted in 2013[40] by global
professional services firm Ernst & Young
(EY), a majority of the survey respondents
from PE firms said that a company
operating in a sector which is perceived as
highly corrupt may lose ground when it
comes to fair valuation of its business, as
investors bargain hard and factor in the
cost of corruption at the time of
transaction.

According to a report by KPMG, "high-level

corruption and scams are now threatening
to derail the country's its credibility and
[its] economic boom".[90]
Economic loss

Corruption may lead to further

bureaucratic delay and inefficiency if
corrupted bureaucrats introduce red tape
in order to extort more bribes.[91] Such
inadequacies in institutional efficiency
could affect growth indirectly by lowering
the private marginal product of capital and
investment rate.[92] Levine and Renelt
showed that investment rate is a robust
determinant of economic growth.[93]

Bureaucratic inefficiency also affects

growth directly through misallocation of
investments in the economy.[94]
Additionally, corruption results in lower
economic growth for a given level of
income.[92]

Lower corruption, higher growth

rates

If corruption levels in India were reduced

to levels in developed economies such as
Singapore or the United Kingdom, India's
GDP growth rate could increase at a higher
rate annually. C. K. Prahalad estimates the
lost opportunity caused by corruption in
terms of investment, growth and jobs for
India is over US$50 billion a year.[1]
See also
Economic history of India
List of scandals in India
Licence Raj
Mafia Raj
Uprising 2011, Indians Against
Corruption

Anti-corruption:

2012 Indian anti-corruption movement

2011 Indian anti-corruption movement
Jan Lokpal Bill
Right to Public Services legislation
Lok Ayukta
General:

Corruption Perceptions Index

Rent seeking
Socio-economic issues in India

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Further reading
Khatri, Naresh. 2013. Anatomy of Indian
Brand of Crony Capitalism.
http://papers.ssrn.com/sol3/papers.cfm
?abstract_id=2335201
Kohli, Suresh (1975). Corruption in India:
The Growing Evil. India: Chetana Pvt.Ltd.
ISBN 978-0-86186-580-2.
Dwivedy, Surendranath; Bhargava, G. S.
(1967). "Political Corruption in India".
Gupta, K. N. (2001). Corruption in India.
Anmol Publications Pvt Ltd. ISBN 978-
81-261-0973-9..
Halayya, M. (1985). "Corruption in India".
Affiliated East-West Press.
Guhan, Sanjivi; Paul, Samuel (1997).
"Corruption in India: Agenda for Action".
Vision Books.
Vittal, N. (2003). Corruption in India: The
Roadblock to National Prosperity .
Academic Foundation. ISBN 978-81-
7188-287-8.
Somiah, C.G. (2010). The honest always
stand alone. New Delhi: Niyogi Books.
ISBN 978-81-89738-71-6.
Kaur, Ravinder. "India Inc. and its Moral
Discontents" . Economic and Political
Weekly.
Sharma, Vivek Swaroop. "Give
Corruption a Chance" in The National
 Interest 128, November/December 2013:
38–45. Full text available at:
https://www.researchgate.net/publicatio
n/279587155_Give_Corruption_a_Chan
ce .
Arun Shourie (1992). These lethal,
inexorable laws: Rajiv, his men and his
regime. Delhi: South Asia Books.
ISBN 978-0836427554

External links
CIC – The Central Information
Commission is charged with interpreting
the Right to Information Act, 2005.
DoPT – The Department of Personnel
and Training, Ministry of Personnel,
 Public Grievances, and Pensions, is
charged with being the nodal agency for
the Right to Information Act, 2005. It has
the powers to make rules regarding
appeals, fees, etc.

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