Effect of Corruption on India’s Economy.
Introduction
In simple terms Public Corruption can be defined as the misuse of public office for private gain.Corruption is an outcome and reflection of a country’s economic,legal,cultural and political institutions. Transparency International(2005,2008) found that more than 65% of Indians had a first hand experience of paying bribes and nearly 45% used contacts to get job done.Institutionalised Corruption has long been prevalent in India.Big Business and individuals dictate bureaucratic norms by breaking law,paying off public servants just to gain access to elements of governance.
In 2012,Transparency International’s Corruption Perceptions Index ranked India 94th out 176 countries. "It is not about petty bribes (bakshish) any more, but scams to the tune of billions of rupees that highlight a political/industry nexus which, if not checked, could have a far reaching impact”(KMPG,2012).Corruption poses a risk to India’s GDP growth and continual level of Corruption will lead to a volatile political and economic environment.Almost half of India’s economy runs in the informal or black market sector, ‘shadow economies’ permeate the lives of every citizen.What seems on the surface as broken,dysfunctional system,operates smoothly with ease for those with money and power.Whereas,for an Average citizen, access is limited and a reminder of a failed democracy.In this essay I will be looking more deeply into the issues of Corruption and how it has impacted the Indian economy.
“India was a latecomer to economic reforms, embarking on the process in earnest only in 1991, in the wake of an exceptionally severe balance of payments crisis”(Ahluwalia 2002).The idea being simple ,there was a need to ...
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...ng an acceptable form of transaction.Governments need to be more transparent to the public.A lot of ‘under table’ transaction take place in the most basic everyday services(passport,license, tax).Such services has the capability to go online reducing the red tape as money is only used via online transaction.
In this essay,we have seen evidence that corruption leads to instability in the economy,increases the transactional cost,decreases efficiency, hinders the growth of a healthy marketplace and harms the social and economic development.Therefore,it’s fair to say that Corruption has had a serious effect on the Indian Economy.If left unchecked,India is bound to lose FDI investments as investors will lose trust in the economy. “Lost opportunities caused by corruption in regards to growth,jobs and investment; India has lost up to $45-50 billion a year”(Singh 2010).
The runaway corruption in the country harms the business environment and causes collapse of various established institutions and industries.
In Annawadi, the slum setting of the book “Behind the Beautiful Forevers,” nearly everything falls under the law of the free market. Things that most countries deem “basic rights,” the Indian people of Annawadi have to pay for. Clean water, education, and medical attention from hospitals are just a few things that are exploited by police officers, gangs and slumlords. The liberalization of India caused the country to begin a process of economic reform. People from the countryside flocked to the cities to find work in the new booming economy that no longer depended on its agriculture. With the increase in population around the bustling cities, came competiveness for opportunity. This competiveness made poverty rates skyrocket, making corruption (and corrupt activities) in Annawadi the only clear way of making it out of the slums. “In the West, and among some in the Indian elite, this word, corruption, had purely negative connotations; it was seen as blocking India’s modern, global ambitions. But for the poor of the country where corruption thieved a great deal of opportunity, corrupti...
When dealing with corruption, first question to ask or to clarify is what corruption is. NSW Research (2002) describes corruption anything from gaining materialistically by virtue of position (for eg. getting a special discount at stores) to engaging in ‘direct criminal activities’ (eg. selling drugs). Newburn (1999) believes that there is a thin line between the definition of ‘corrupt’ and ‘non-corrupt’ activities as at the end, it is an ethical problem. For common people, however, bribery generalises corruption.
Corruption is an individual and institutional process where there is a gain by a public official from a briber and in return receives a service. Between the gain and the service, there is an improper connection, (Thompson p.28). The two major categories of bribery is individual and institutional corruption. Receiving personal goods for the pursuit of one’s own benefit is personal fraud. An example of individual distortion is the financial scandal involving David Durenberger. Organizational corruption involves “receiving goods that are useable primarily in the political process and are necessary for doing a job or are essential by-products of doing it,” (Thompson p.30). An instance of institutional fraud is the Keating Five case. There are also times where there is a mixture of both individual and organizational corruption in a scandal. An example of this diverse combination is James C. Wright Jr. actions while he was the Speaker of the House.
Corruption is something that is motivated by greed and fraud. It’s a very threatening personality that controls and destroys people’s lives and makes them the kind of person other people don’t want to associate with.
Though the world economy as a whole has grown in recent years, a factor that is not taken into account is that the number “of the poor in the world has increased by 100 million” (Roy 3). In other words, the gap between rich and poor is widening. For India, this has startling implications. Though it is a nation that is developing in many ways, it also is a nation blessed with over one billion citizens, a population tally that continues to grow at a rapid rate. This population increase will greatly tax resources, which can create a setback in the development process. The tragedy, of course, is that the world is full of resources and wealth. In fact, Roy quotes a statistic showing that corporations, and not even just countries, represent 51 of the 100 largest economies in the world (Roy 3). For a country struggling to develop, such information is disheartening. However, there is also a more nefarious consequence of the growing disparity between rich and poor, and power and money being concentrated in the hands of multinational corporations: war is propagated in the name of resource acquisition, and corruption can reign as multinationals seek confederates in developing countries that will help companies drive through their plans, resulting in not only environmental destruction but also the subversion of democracy (Roy 3).
Corruption in society: Throughout Balram’s life, he was exposed to corruption. Ranging from the domestic shopkeeper selling his employer’s votes
Subramanian, Arvind. India’s Economy is stumbling? The New York Times. August 31, 2013: A19. Print.
Corruption consists in the illegitimate agreement between a corruptor and a corrupted, in which they abuse of their public power in order to obtain personal benefit. Bribery and corruption is something that has been going on for years. According to Allen, “officials perceive themselves as immune to any penalties for demanding and receiving bribes” which she states that it is one of the main reasons for bribery and corruption in underdeveloped countries. According to Transparency International, an organization committed exclusively to end corruption, three of the most corrupt countries in the world are Somalia, North Korea and Afghanistan. This does not mean that corruption is only seen in underdeveloped countries. In international business, corporate employees often find themselves dealing with corruptors in foreign countries and, in most cases, they will give in.
Political instability and corruption is a major impact on growth. The rule of law and appropriate enforcement is needed to create an established system of honesty and loyalty in society. Corruption is people acting in an official capacity of trust and responsibility misusing their position for private gain. When there is this sense of corruption many things are affected. Corruption discourages investment due to lack of business ethics.
“Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men,” quoting historian Lord Acton. Before reading the quote, I never noticed the relationship between power and corruption in the real world. I thought of power as a form of recognition for hard work, that in turn is a positive outcome. After putting some thought into it, I realized my mistake
Krishna, Jai R.. “India’s Poor Hurt More by Corruption.” Wall Street Journal (10 Dec. 2010)
Montesh, M. (n.d.). Conceptualizing Corruption: Forms, Causes, Types and Consequences. Retrieved May 4, 2014, from
Corruption is one of the worst evils to enter society; it has seemed to become a type of faith on its own. The way it is evil is that corruption has blinded society by the way we think and act, it allows people in society to think that doing evil things is an ok thing to do. The reason corruption has changed the way society thinks is, when we hear that it has not only led to the breaking of the managerial system and weak authority, but also some serious causes like poverty. Which, has led to the society’s disability to think and act freely, allowing for evil to take over. Although, the evil is not done face to face, it is more of a silent evil that involves money and destruction, done by the wealthy to profit off of the poor. It has changed all of our values and has destroyed the reminince of our morality. With weak authority anyone can get away with what they do. Humans are fill with temptation and the hottest commodity right now is cash, the politicians and police taking bribes to let people do the evils they commit. This happens every day, behind the walls. Hence, Corruption is considered one of the biggest factors holding back our society and it is how easy for anyone with a little money or fame is able to get away with breaking the law, while regular citizen’s right are taken away from them every day in these police states and are thrown into these mega jails to become over worked, under paid, sweatshop labourers.
This essay will attempt to explore the relationship between the two from the definitions, causes, consequences and the solutions. Corruption can be defined as the abuse of public power for private gain. (World Bank, 2004) Corruption is attracting a lot of attention around the world, and is a growing international and regional concern. According to Corruption Around the world (Tanzi, 1998), in its end-of-year editorial on December 31, 1995, The Financial Times characterized 1995 as the year of corruption.