18 August 2011

The last Transparency International Corruption Perceptions Index placed India 87th of the 178 countries surveyed. More than 45% of Indians report paying bribes to receive services from public sector agencies. Corrupt practices linked to the Commonwealth Games last year gained attention of the international media.

Part of the “season of scams” at that time included $40 billion in revenues lost from the crooked sale of 2G telecoms licences; and over $40 billion was stolen in Uttar Pradesh from schemes subsidising food and fuel for the poor. In March the Economist described India as “a rotten state”.   The Indian Parliament was told this week that the economy has lost an estimated $462 billion in illicit transfers. That provides background to a dramatic mobilisation this year of communities across India seeking an effective response to corruption.

A growing movement has formed about Anna Hazare, an Gandhian type of activist, who has being using hunger strikes for publicity. His prominence is a reflection of cynicism about the government’s commitment to controlling corruption. Proposed official action is decried as being likely to produce an ineffectual series of committees that will enable the political and commercial elites to continue transferring assets out of India. Many of the largest corruption incidents currently in the news, involving about $25 billion, are linked to prominent members of the ruling Congress Party.

The movement’s leaders are promoting legislation that will criminalise the transfer of funds. They want any  investments banked offshore (estimated to involve up to U$1400 billion) on which tax was not first paid, declared to be the “wealth of the nation”. Demonstrations, unconnected with existing political parties, are occurring across India. Hazare was detained this week on charges of inciting disorder as he began a hunger strike.  More demonstrations led to government intervention and his release.

The harm done by corruption in India is illustrated in the World Bank Ease of Doing Business Index. New Zealand is the 3rd easiest place to do business based on the 9 index components. India is at 134th place.