Truckloads of rupees

Coercive forces grip India


“Urgently wanted: Scores of incorruptible financial experts with experience in infrastructure projects. Proof of bravery will be an advantage.”

That’s one advertisement we’ll never see in The Times of India. But it’s the kind of person the World Bank is looking for as it pursues a campaign to keep the sticky fingers of politicians, businesspeople, bankers and other criminals out of the development funds it disburses annually.

Having seen much of this money disappear into the hands of the “Mafia Raj” – local gangs with connections that control road-building and other infrastructure projects – Robert Zoellick has got serious about the stupefying levels of corruption holding up the economy. The bank’s plan is to place people of integrity along the funding pipeline to make sure money reaches its intended destination.

It’s a great idea and we have to hope it works, as the World Bank is probably India’s best hope of escaping a culture of bribery. The bank’s deep pockets would be sorely missed were it to pull the plug. India is the bank’s largest single borrower and roughly half of those loans are interest-free, like the latest $1bn cheque to clean up the Ganges River.

Certainly, there’s not much hope of any Indian agency cleaning up the Augean stable, however well-intentioned it may be. Nearly every attempt over the best part of half a century has failed and the situation is getting worse, as chief justice K.G. Balakrishnan admits. At a conference on corruption, he cited a whole string of practices that amount to an epidemic of corruption. And even when no money changes hands, he bemoaned, there’s still corruption. “The quality of governance suffers when decisions are made on account of extraneous considerations related to political patronage, kinship or caste and linguistic identity among other factors.”

Bribery is a way of life. A World Bank study last year revealed that it was almost routine for firms to be “asked” for cash gifts or in kind to get almost any kind of public service, even a phone connection. Hardly surprising that integrity watchdog Transparency International ranks India at eighty fourth on the Corruption Perception Index, right down with Guatemala and Panama. Justice Minister M. Veerappa Moily understands the damage this is doing long-term, warning that “corruption is an impediment for integration with the global economy.”

You can’t even drive a truck without a fistful of rupees. Truckers pay $5bn a year just to get goods across state boundaries, reports Transparency International. Legendary businessman Azim Premji, founder of international software giant Wipro, sums it up: “Bribing is a transaction cost and it is not cheap.” Also a member of the board of the Reserve Bank of India, Dr Premji says it’s time the business community woke up to the commercial benefits of straight-dealing. “If people just stop giving bribes you cut down corruption. You pay a short-term price for it, not a long-term price.”

Unfortunately, it’s getting worse. India’s Central Bureau of Investigation has no less than 9,310 pending corruption cases, many against public servants and their “associates”. But pending is a big word – about 2,000 of those cases have been pending for over a decade.

Elected and public officials hide behind a quaint law called Article 311 which effectively stymies many investigations. Under 311, investigators need “prior sanction” from a “competent authority” before proceeding with a case. If the competent authority fears the consequences, sanction won’t be forthcoming. And since hundreds of state MPs have criminal records, they’re not exactly in a rush to put a noose around their necks. An eminent economist suggests that the best way to tackle corruption is from the bottom up rather than wait for action from the top. Given India’s record, this seems sensible and it puts the ball squarely in the court of the business community. As Azim Premji says, just stop paying bribes. But don’t wait up.