“CORRUPTION AND IT’S EFFECTS ON INDIAN ECONOMY AND NATIONAL DEVELOPMENT”
“CORRUPTION AND
IT’S EFFECTS ON INDIAN ECONOMY AND NATIONAL DEVELOPMENT”
Dr.
INTRODUCTION
The purpose of this paper is to reveal what are the causes of
corruption and the factors that create opportunities for corruption, what
are effects of corruption on economic and political development in India and in
different nations. And according to these findings and the experience of other
countries that have succeeded in their fight against corruption suggest the
policies for reducing corruption in India.
WHAT IS THE CORRUPTION
As one of the oldest and most perplexing the phenomenon in human society, political corruption exist in every country in the
contemporary world and it is not exclusively a problem of developing countries.
The classical concept of corruption as a general disease of the body politics
was stated by ancient political philosophers Plato and Aristotle. Plato in his
theory of the "perverted" constitutions-Democracy, oligarchy, and
tyranny-worried that these regimes instead of being guided by the law were serving
the interest of the rulers. "These fundamental general notions of
corruption all practically define corruption as dysfunctional.
For it is seen as destructive of a particular political order,
be it monarchy, aristocracy, or polity, the latter a constitutionally limited
popular rule, and thus by definition devoid of any function within a political
order."
This classic conception of corruption
continued into modern times and is central to the political thought of
Machiavelli, Montesquieu, and Rosseau. For Machiavelli corruption was process by
which the virtue of the citizen was undermined and eventually destroyed.
"Since most men are weak and
lacking in the virtue of the good citizen except when inspired by a great leader,
the process of corruption is ever threatening. And when virtue has been
corrupted, a heroic leader must appear who in rebuilding the political order
infuses this virtue into the entire citizenry."
According to Rosseau political
corruption is a necessary consequence of the struggle for power. Then he
argued "that man had been corrupted by social and political life. It is
not the corruption of man which destroyed the political system but the political
system which corrupts and destroys man."
Arnold Heidenheimer (1993 p. 25) There
is an agreement between the views of Rosseau and Lord Acton that "all
powers tends to corrupt and absolute powers corrupts absolutely."
Lord Acton is focused on the moral
depravity which power is believed to cause in man, "they no longer think
about what is right action or manner, but only about which is expedient action
or manner." Arnold Heidenheimer (1993 p. 16) According to Carl Fredrich (1972
p.18) "Corruption is a kind of behavior which deviates from the norm
actually prevalent or behaved to prevail in a given context, such as the
political. It is deviant behavior associated with a particular motivation,
namely that of private gain at public expense." So he started the concept of
corruption in a way that constitutes a break of law or of standards of high
moral conduct.
Jacob Van Klavaren (1954, p.25) defines
corruption as the exploitation of the public. And he brought very interesting
explanation taking a public official as an economic subject who, as every
economic subject, tries to maximize his gain or income. Supposing that the
income derived from the free-market agreement with the functional-economic
income.
Thus the "corruption is always exploitation of the public, which can occur only because of the civil servants
occupy a constitutionally independent position vis-a-vis the public."
Considering the conflict that can arise
between an abstract definition of corruption and its application to a complex
real-world some writers have distinguished between what can crudely be called
good, bad and ambiguous corruption. For example, Katsenelinbogen (1983, p236) identifies
two basic types of corruption.
"1.Actions whose harmful effects on
society are questionable. According to Katsenelinbogen, this form of corruption
involves redesigning the system and legalizing the appropriate actions of
people in it.
2.Actions that unambiguously harm
society. Such acts should be treated as corrupt and criminal."
It is evident from the above discussion
that there is a wide range of definitions of corruption. For our further
discussion about the forms of corruption we take the definition given by Leslie
Palmier (1983, p.207) use of
public office for private gain.
Bribes
are one of the main tools of corruption.
The Oxford English Dictionary defines a bribe as “ a reward given to pervert the
judgment or corrupt the conduct.”
A bribe consists of an offer of money by
an outside party to secure desired action from the governmental officials.
Bribes can influence the choice of private parties to supply public goods and
services and the exact terms of those supply contracts.
Another type of corruption is the misuse of public property and funds.
Control of property provides opportunities
for mismanagement and corruption. An extreme form is the large-scale “spontaneous”
privatization of state assets by enterprise managers and other officials in
some transition economies.
Theft of
government financial resources
is another form of corruption.
Robert Thobabeen (1991, p.63) brings
another form of corruption Influence
Peddling. "There is money to be made through sale of
access, the arrangement of contracts and timely intervention to secure
favorable disposition of regulatory decisions and government contract. The use
of these kinds of connections for personal gain is usually described as
influence peddling."
Patronage
is another form of corruption.
Corruption in a society can be rare or
widespread. If it is rare, consisting of a few individual acts, it is
straightforward to detect and punish. In such cases non corrupt behavior is the
norm, and institutions in both the public and private sector support integrity
in public life such institutions, both formal and informal, are sufficiently
strong to return to a non corrupt, equilibrium In contrast, corruption is
systemic where bribery, or a large or small scale, is routine in leading
between the public sector and firms or individuals. Where systemic corruption
exists, formal and informal rules are at odds with one another bribery may be
illegal but is understood by everyone to be routine in transactions with the
government. There are many countries in which bribery characterizes the rules
of the game in private-public interactions.
So it should be now clear that there are
a number of ways of defining corruption.
The term corruption can not be defined satisfactorily, similarly, it is
not possible to provide a classification that is suitable for all. In this paper
tried to focus the types, concepts, and definitions of corruption existing in
the world.
CAUSES OF CORRUPTION
Now I will focus on the factors which
maybe causes of corruption and which may create appropriate conditions or
opportunities for corruption as in the world as well as in India.
Leslie Holmes (1993 p.157) the causes of
corruption divides into three categories, cultural, psychological, and system-related.
Cultural
factor: “In many countries certain types of
corruption are more or less acceptable often depending on the scale in the
traditional political culture.” Some countries have more of a reputation for
corruption particularly because of traditional attitudes towards family,
kinship, etc.
The other factor of causing corruption
is a psychological factor.
There are number of psychological factors that help to explain some types of
corruption. Taking into account the internal factors of individuals some
individuals are "naturally evil" and will commit criminal acts,
including corrupt ones in any type of system.
The external factors, individual's
relationship to the group is also important. According to Holmes (1993, p. 165)
“the power of both peerpressure and peer-comparison can be great, for instance
in the words of one artist “when the best of people take bribes, isn't it the
fool who doesn't?” In other words, if individuals see others around them
benefiting from corruption, they may well choose to indulge too.”
The psychological factor may have some role of
causing corruption in India. People who work in a position that can take bribes
and don't use their chance they will be considered by their coworkers as stupid
men. So under the pressure of this factor, many public officials during some
period of time become corrupted. But in
many cases, because people choose their new job depending on the scale of
opportunity for taking bribes and they
know they should take bribe because this is the way of life.
Human
weakness also may cause corruption. Some
people find it difficult to reject offers from a person of a
"generous" nature. Some officials will accept gifts because they know
they have been particularly helpful to someone and either feels they
"deserve" a reward (that is they feel that a reward is not inappropriate),
or else genuinely do not want to offend or embarrass a grateful supplicant.
System
related factors: One of the factors that
distinguishes post-communist states from transitional societies elsewhere is
that they have been undergoing multiple and simultaneous transitions since the
collapse of communist power in 1989-1991. In addition, they had to introduce
fundamental economic, legal, ideological and social change. Many also had to
redefine their boundaries and identities, and realign themselves in international
military and trading block.
The sheer scope of attempted change is
one significant reason why most post-communist states have suffered a severe
legislative lag in the past decade. This lag has meant that laws have often been
either in essence non-existence or else vague and contradictory. This situation is ripe for both corruption and
organized crime.
The civil society's role and power also can give the
opportunity for corruption particularly the role of media.
In India, this factor is very actual.
Unemployment is at very high level, many people have no regular source of
income and for most of those who have a regular income typically is too low to support
a family.
At the same time, prices have been liberalized
since the independence. Thereby significantly raising the cost of living for
most Indians. So given the relative to the wage rate, it is inevitable that
many employs will look for any means to supplement their meager ventures, such
as bribes.
The poor drafting of laws and regulations also
creates many opportunities for corrupt acts.
High tax
rates also
can also give an opportunity for corruption.
Thus
I discussed the variety of causes and opportunities of corruption as in
the world as well as in India from which I would like particularly to emphasize
the low wages, foreign aid, weak civil society, dependent media and weak,
dependent judicial system.
THE
EFFECTS OF CORRUPTION ON ECNOMIC AND POLITICAL DEVELOPMENT
The purpose is to show the impacts that
corruption has on the economic and political development of India considering
the experiences of other countries. But before the beginning the discussion I
would like to speak a bit about the question -What is the development? If in
the case of economic development we have some units and scale by which is possible
to measure development, in politics however, there is agreement neither on the
units nor on a single scale to measure development. Political development
cannot be defined only by one definition. According to many authors, political
development has a various definition.
According to many authors’ investigations the
excessive tolerance of corruption can have serious negative effects on economic
and political development.
According to John L. Mikesell (1995 p.65) “Not only is the budget a
financial accounting of the receipts and expenditures of the government, it
also sets forth a plan for allocating resources – between public and private
sectors and within the public sector – to meet national objectives. Budget
preparation, discussion, and approvement thus must be at the heart of public
decision making.”
According to Tanzi (1995) "the
widespread corruption in the investment budget will not only reduce the rate of
return to new investment in a country, but will also affect the rate of return
the country gets from its existing infrastructure."
Corruption not only affects the budget
investments but also reduces the budget revenues, which is very crucial for
further development. As we know corruption can lead to tax evasion and poor tax
administration. In many cases tax collections is much lower than estimated tax
bases. Tax evasion takes place when taxpayers manipulate their accounts or
their declarations to reduce their tax payments. However some tax evasions
exist because of corruption.
In India there are cases that
businessmen pay bribes to senior tax or custom officials, to secure a formal certificate
of exemption from tax duty. Sometimes businessmen just pay bribes to low level officials
to secure the same treatment.
According to World Bank Development
(1997) foreign direct investment may still flow to countries in which
corruption is systemic but only if bribery is affordable and results are predictable.
Corruption can have a negative effect on foreign investment.
For most foreign firms corruption is a
cost of doing business to be recouped from revenues. If the costs become too
high or unpredictable, foreign firms will disengage.
Or foreign investors may shun the
country altogether. High levels of corruption add to the risk of a country
being marginalized in the international economy.
So uncertain environment, big
bureaucratic red tape and poor tax and customs administration reduce not only
domestic investments but also Foreign Direct Investments (FDI) which is very crucial the factor for economic development for any country.
Thus as we have seen high and rising
corruption by effecting on the effectiveness of social spending; eroding the
tax and customs administrations; and destroying the legitimacy of existing political the system may effect very negatively on the political and economic development.
HOW
TO COMBAT AGAINST CORRUPTION
I
will concentrate mainly on the policies reducing corruption taking into account
the experience of other countries, which have succeeded in their fight against
corruption. And according to these findings, there will be suggested policies
for the reduction of corruption existing in India.
In thinking about how can be corruption
lowered there are many policies suggested by the World Bank, International
Monetary Fund, and Transparency International and etc. According to the World Bank, the
institutional strengthening is a key part of country anti-corruption strategies.
One of the most important institutions is a professional and well-motivated civil service. The
selection and promotion in civil service should be merit based rather than
patronage. Pay of civil servants is also a very important issue. In some
countries including Armenia pay is one of the major causes of corruption.
The longer the pay remains inadequate,
the more bureaucratic corruption becomes entrenched. For example, we have the
experience of Singapore which had dramatically reduced corruption by increasing
salaries.
And Singapore is the only Asian country, which
is in the 'top ten' least corrupt countries by Transparency international's
Index. In civil service should be established Ethics codes and institutional
values, which help to protect a civil service's integrity and professionalism.
The civil service should be protected from the unwarranted political
interference. Such civil service would not only be a protection against corruption
but would also guarantee that goods and services would be delivered
efficiently.
Thus civil service reform is one of the
most important parts in fighting against corruption. The other important
institution that needs to be reformed is the judicial system. Enforcement of anti-corruption legislation
requires an efficient, accountable judiciary. Reform of judicial system should
concentrate on the independence of this branch. The procedures for selection
and removal of judges should be defined properly, should be improved court
administration and case flow management which in some countries may last
months. The courts will be effective if there are strict mechanisms to enforce
judgments. The strict enforcement of rules and regulations is very important
combating corruption. If an officer knows that rules and regulations are
strictly and consistently enforced he/she will less likely engage in corrupt behavior.
Should be reduced exparte communication between judge and litigants. Courts
decisions should be published. Regular of consultation documents about the new
laws is good practice everywhere. So anticorruption bodies appear to be
promising if there is a strong and independent judiciary.
The Budget Reform is the other factor combating
corruption. Government should undertake only what it can do well within its
resource constraints. Government should develop well functioning budget
processes, allocate resources strategically, and enable programs and projects to
be implemented efficiently and effectively. The publication of government
budgets and their availability in easy-to read summary form also may help to
control corruption.
Good a financial management system is also a powerful instrument for preventing, discovering, or facilitating the punishment
of fraud and corruption.
Audit
and control are viewed as a
valuable instrument for improving government fiscal management and for
increasing the efficiency in the allocation of public financial resources.
Tax and
customs departments as we have seen are the
locus of major fraud and corruption and thus are candidates for inclusion in
national strategies to control corruption.
Civil
society and the media are crucial to creating
and maintaining an atmosphere in public life that discourage fraud and
corruption, Indeed, they are arguably the two most important factors in
eliminating systemic corruption in public institutions. They may play an important role as watchdogs of the public sector.
The state should launch anticorruption campaigns. Several
post-communist states – including Bulgaria, Czech, Poland, Russia and Slovakia
- have launched so-called 'Clean Hands' campaigns. Such campaigns can have a
legitimizing effect, in that they usually suggest that the state is serious
about fighting corruption.
There are some countries that have
succeeded in their anti-corruption fight. For example Hong Kong and Singapore
have shifted quickly from being very corrupt to be relatively clean. In addition
to this Bostwana is regarded as one of the least corrupt countries, Chile,
Malysia and Portugal have undergone significant improvements over the past
years. And also Bolivia, the Philippines, Poland and Uganda have also scored
successes recently.
The main policies implemented by those
countries in their fighting against corruption were the creation of anti-corruption
bodies, such as the Independent Commission Against Corruption in Hong Kong, reform
of the civil service, strengthening the auditor general's office and
implementing anti-corruption public information campaign. But the survey
respondents in those countries did not think highly of such anticorruption
bodies. To be credible, they felt, such institutions had to go hand in hand
with a good example set by honest leadership. Otherwise anticorruption bodies are
easily rendered useless or, worse, misused for political gain.
According to the Transparency
International's Index India is one of
the most corrupted countries. In India all the branches and all the
institutions of government are highly corrupted. For India, all above-suggested
policies are very important for effectively combating corruption but I would
like to stress some preconditions for implementing successful anti-corruption
campaign.
Thus honest leader, public awareness,
and free and fair elections are the preconditions for the effective beginning
of anticorruption campaign in India .
CONCLUSION
We have seen that high levels of
corruption have very harmful effects on economic and political development as
in other countries as well as in India. Corruption is deeply rooted in Indian
society. Indeed, It is coming from British
times, when people had no power and the government decided everything. So
people during the past two centuries learned not to make any decision. People
lost their ability to think and make decisions for themselves.
But the democratic system is not
something that gives everyone everything that they want, but it demands the
participation of everyone, people should fight for their well-being themselves.
They should learn the ways to control the government.
Yes I stress the fair and free elections
because if people sell their power of electing they will lose their power to
demand anything from the elected officials. For controlling corruption is very
important consolidated democratic institutions especially free and fair
elections, people should understand that this is the basic decision they
may make. So the democratic institutions are very important for combating corruption.
Only by having established democratic institutions we may win the fight against
corruption.
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