CORRUPTION AND DEVELOPMENT – A PERSPECTIVE
INTRODUCTION:
The term was derived from the Latin word “Corruptus” which means “to break”. It symbolizes
a breakdown of ethical and moral values of systems and institutions of governance, societal
traditions and personal behaviours. On the other hand, development stands for the integrity and
strength. On the face of it, one can make out that both concepts are antithetical. However, let
us examine the concepts in depth and evaluate the chemistry between the two phenomena on
various aspects of a country.
The common desire to most of the countries worldwide is to see their countries achieve the
highest level of development through sustainable development which meets the needs of the
present without compromising the ability of future generations However, this desire is
undermined by corruption. Corruption impacts economy directly by reducing economic
investments, hindering competition, distorting markets and increasing income inequalities. It
also erodes the institutional capacity of governments to deliver quality public service and
diverts public investment away from major public needs into capital projects whereby bribes
can be thought, and increase budgetary pressures on governments. The invasion of corruption
to the country’s development destroys the government’s desire of raising the sustainable level
of living of the poor people and hinders the provision of the opportunities to develop their
fullest potential. The only solution seems to be useful to a country to achieve the sustainable
development is to devote much of efforts to fight corruption by either find the way of its control
or eradication.
ASPECTS OF CORRUPTION:
The traditional definition of corruption is myopic in the sense that it considers corruption a sin
of government and public servants, and does not take into account the fact that corruption also
prevails in the private sector. Recently, UNDP began to use the broader definition of corruption
to accommodate corruption in the private sector also. Corruption is now commonly defined as
the ‘misuse of entrusted power for private gain’.
The most common forms of corruption are Bribery, Fraud, Money Laundering, Extortion,
Kickbacks, Cronyism, Nepotism, Patronage, Insider Trading, Speed Money, Embezzlement,
abuse of public property etc.
ASPECTS OF DEVELOPMENT:
The concept of development has undergone many changes over the years. Development is a
complex process that is not limited to economic elements, but encompasses all sociological,
psychological and political aspects of society. Development is ever continuous process always
striving to maximize the potential of the society.
Development can be broadly viewed under three main spheres viz. Economic, Social and
Political Spheres.
The economic sphere deals with the use of limited resources. An economically sustainable
system enables continuous output of goods and services, avoiding sectoral inequalities that
threaten agriculture and industrial production, and ensuring sustainability in the effective
management of a country's internal and external debt.
The social sphere focus on development of people. A socially sustainable system can ensure
an adequate and equal distribution of social services such as education and health care, gender
equality, political responsibility and participation.
The political sphere focus on creating an institutional framework consisting of organizations
and procedures for solving an ever-widening range of country’s problems. It aims for multidimensional development, modernization, mobilization, and political participation.
DEVELOPMENT AND CORRUPTION:
Development and Corruption are two different terms but with different effects on each other.
Some scholars argue that corruption can be bad or good to the development of a particular
country depending on the effectiveness of the institutions. Corruption which is uncorrelated
with other governance characteristics is directly related to the growth of gross domestic product
in countries with poor institutions. He also added that bad corruption which is associated with
poor institutions has negative effect on gross domestic product growth . The good corruption
usually fosters economic growth especially when there is inefficient bureaucracy and rigid
regulations. It can also soften the wheels by allowing individuals to overcome red tapes and
improve efficiency only in the case when the private costs associated with regulation outweigh
the social benefits.
On the other side, corruption affects the lives of people and their development in many ways
e.g. most of governments diverts their budgets from social valuable goods like education and
health and tends to increase public spending on capital intensive investments that’s resulted
into more opportunities for kickbacks such as defense contracts and undermines public service
delivery. Corruption therefore has direct consequences on both economic and governance
(political) perspectives.
The examination of the relationship between Corruption and Development can be done under
three perpectives viz. Economic perspective, Governance perspective and Corruption &
Human Development perspective.
ECONOMIC PERSPECTIVE:
Increased corruption is likely to lead to reduced economic growth and increased income
inequality. Corruption is a real enemy to economic development because it gives the particular
country poor image and uncertainty in interpersonal and business relationship. Corruption
affects foreign and domestic investment as it reduces incentives to both foreign and domestic
investors as part of revenues goes to individuals instead of being added to the government
revenue The development is also threatened by poor collection of taxes and now companies
operate under informal procedures because of corruption; the effect comes when taxes are
reduced in exchange for payoffs of tax officers.
Corruption distorts market and hurts entrepreneurship among other businesses. This hinders
development of both themselves and government, as the revenue diverts from the public into
individuals for personal gain and not for the public interest. Corruption increases the cost of
business through the price of illegal payments, the management cost of negotiating with
officials and the risk of breached agreements detection.
Income inequality and corruption
Corruption which is evidenced to be the source of income inequality within the society leads
the class formation between those who have and who don’t have. The classes create unequal
distribution of income where by scarce goods and services tend to allocated to those who have
They also foresee the biasness in tax systems as the factor for income inequality. This is caused
by the poor administration and exemptions favouring the well-connected people. World Bank
concluded that the underdevelopment is highly correlated with administrative corruption which
is associated with lower economic growth rates and as a result it cause income inequality.
Market misallocation and inefficiency
The tactics that corrupt officers use to demand corruption affects service delivery directly.
Officials may intentionally refuse to serve clients or disclose some important business
information like tenders; privatization projects unless a bribe is paid.
Corruption distorts the allocation of funds on production and consumption in the market which
again cause economic inefficiency and hinders development. The funds which are misallocated
just because of corruption are not in really case going to be allocated to investment sectors or
development projects. They can probably be transferred to the foreign bank accounts and such
transfer represent a capital leakage to domestic economy hence underdevelopment.
GOVERNANCE PERSPECTIVE:
Corruption affects development by influencing governance factors. It shows the connection
between the increased corruption in the country and the reduced governance capacity which
automatically results into high rate of corruption and hence forms vicious circle. Increased
corruption deduces governance capacity which in turn increases poverty. Corruption tends to
lower the compliance with construction, environmental, and other regulations which are part
of governance and reduces the quality of government services and infrastructure. Social capital
and trust have been reduced just because of corruption and as a result hinders the economic
growth and reduce government capacity to help innocent citizens
Governance and corruption
Corruption weakens political institutions and mass participation in good governance which in
turn destroys the development. Government institutions with the highest levels of corruption
tend to provide lower quality services. Lower quality service indicates the poverty and
underdevelopment.
Failure to lead by example
Corruption tends to lower respect for constituted authority and so the legitimacy of
government. If the elite politicians and senior civil servants are widely believed to be corrupt
why then the public should not be corrupt? The results to this situation shall be
underdevelopment because anyone would need to be corrupt.
Development, the impaired social capital, and less public trust in government
There is a very close relationship between development, social capital and trust. As corruption
rises, it tends to damage the public trusts in government institution. The trust again is very
important aspect in strengthening social capital and the social capital helps people to regain
trust and be willing to invest in productive activities to boost up development. So if people
distrust their government and the social capital is destroyed then the investment in productive
activities will be ruined, because in order for people to invest there must be a trust. Various
studies proved that trust correlated highly with the economic growth. The impact of trust on
growth is significantly higher for poorer countries. Trust is essential especially, where legal
systems and financial markets are less well developed.
Corruption and Human Development
Good governance intervention is very important here because it controls the misuse of power
so as to sustain overall human development. Corruption increases; infant mortality rates,
percentage of low birth weight babies, and reduces life expectancy and literacy. Human
development can directly be affected by corruption as it may affect education services and
health care by increasing the cost or lowers the quality of services.
RELATIONSHIP AND INTERACTIONS AMONG CORRUPTIONS AND VARIOUS
ASPECTS AND INDICATORS OF DEVELOPMENT .
Let us now understand and decimate how corruption interacts with various aspects of
development such as Economic Growth, Poverty, Human Rights, Gender equality,
Governance, Conflict, Human Development etc. Also, wherever possible we will understand
interplay from Global and Indian Perspective with available data.
Corruption and Economic Growth:
Although some literature cites what is considered to be positive impacts of corruption, such as
a reduction in transaction costs, corruption is likely to reduce economic growth in the long run.
Corruption discourages foreign and domestic investment by increasing opportunities for rentseeking, creating uncertainty and reducing incentives for both foreign and domestic
investors.
Although corruption is detrimental to business for all companies, SMEs in particular
experience corruption as a major business obstacle The World Bank Investment Climate
Survey shows that the smaller the firm, the more likely it is to be affected by corruption.
Corruption lowers the quality of public infrastructure by diverting public resources to private
uses and also by waiving standards. It also decreases tax revenue because tax officials
reduce taxes in exchange for payoffs.
Although the economic costs of corruption vary according to the scale and frequency of
corrupt transactions, many correlation analyses clearly show that corruption almost always
negatively impacts growth and income. (GDP and Corruption Index)
Further, higher levels of corruption results in lower levels of competitiveness measured in
terms of the institutions, policies and factors that sustain current and medium-term levels of
economic prosperity.
Corruption and Poverty:
Corruption and poverty usually reinforce each other. Countries afflicted by structural poverty
are likely to be suffering from systemic corruption because corruption is among the
exacerbating conditions of poverty in countries already struggling with the strains of
economic growth and democratic transition.
Furthermore, corruption is likely to aggravate income inequality which is associated with
slower economic growth. The burden of petty corruption falls disproportionately on poor
people (e.g., petty corruption in public health or the police service). Often, income inequality
widens by allowing some to benefit more than others by distorting the economic as well as
legal and policy frameworks.
corruption reduces governance capacity — it weakens political institutions and citizen
participation and leads to lower quality government services and infrastructure. Corruption
erodes the institutional capacity of government to deliver quality public services, diverts
public investment away from major public needs into capital projects, and lowers compliance
with safety and health regulations, thus worsening poverty.
Corruption and Human Rights:
The right to a society free of corruption is inherently a basic human right because the right to
life, dignity, equality and other important human rights and values depend significantly upon
this right. Thus, fighting corruption and protecting human rights are inextricably linked. When
the government of a country fails to curb or contain corruption, it also fails to fulfill its
obligation to promote and protect the human rights of its citizens.
Similarly, corrupt judicial systems are proven to violate the basic right to equality before the
law and deny procedural rights guaranteed by the Universal Declaration of Human Rights
and other international human rights conventions. Thus, corruption is a major obstacle to
fulfilling a state’s obligation to protect and promote the right of people to have full and fair
access to human rights such as social services and to the judicial system
The Declaration on the Right to Development adopted by UN General Assembly resolution
41/128 of 4 December 1986 states that ‘the right to development is an inalienable human
right by virtue of which every human person and all peoples are entitled to participate in,
contribute to, and enjoy economic, social, cultural and political development, in which all
human rights and fundamental freedoms can be fully realized’. By preventing the full
realization of economic, political and social rights, a corrupt governance system directly
contradicts the right to development in this declaration.
Corrupt political systems also deny the fundamental right to democratic participation by
obstructing civil and political rights. For example, the self-censorship of the press, induced
by corrupt practices, may infringe upon the right to freedom of expression. Similarly,
corruption in an electoral process, such as vote buying, can deny the right to vote.
Corruption and Gender:
There are two important guiding questions on the linkages between gender and corruption:
does corruption impact men and women differently? Are women less corrupt than men or
vice versa? Are women more effective than men in fighting corruption or vice versa?
Although there is no compelling evidence to prove that women are less corrupt than men,
women generally experience corrupt practices and behavior differently. The effects of
corruption can be particularly harsh on women, for many reasons.
Women often face social, cultural, political and institutional discrimination, including the
denial of access to, or deprivation of control over productive resources such as land, credit
and education. Corruption can easily make it more difficult for women to access public goods
and services.
Corruption also impacts child mortality, maternal health and combating disease including
HIV/AIDS and malaria. Misallocated resources may lead to poorly staffed and poorly
resourced hospitals.
Gender bias in the judicial system hurts women Severely.
Trafficking is more likely in a corrupt environment. The trafficking of women and girls is
more likely to lourish in a corruption-ridden environment, particularly when such states have
weak enforcement mechanisms against human trafficking Sexual corruption in the workplace
affects women more. The close link between corruption and gender is made clear in sexual
exploitation in the workplace in both public and private institutions. It is endemic in many
countries and administrative cultures. Many reports from sub-Saharan African countries
show that female subordinates in a hierarchy have been frequently forced to render sexual
services by male superiors, who decide on their employment, remuneration, career or
dismissal. This conduct is a clear form of corruption since the superiors abuse their position
of power for private purposes (GTZ2004).
Corruption and Governance:
In spite of differences in the mandates, perspectives and priorities of different countries,
members of the development community are increasingly in agreement that there is a causal
connection between governance and development. Corruption is increasingly seen as the
product of poor governance, and a common language has been evolving in recent years
linking the issues of corruption with governance and development. Governance is broadly
understood as the process of making and implementing decisions. It is defined as a set of
values, policies, processes and institutions through which a social group manages its
economic, political and social affairs including interactions between the state, civil society
and the private sector (UNDP 2007). Thus, ‘good governance’ and democratic governance
are marked by the following important characteristics: participation, transparency,
effectiveness and efficiency, responsiveness, accountability, consensus, equity and
inclusiveness, and the rule of law.
weakening institutional foundation and diluting the accountability, transparency and integrity
of public institutions.
Moreover, corruption and poor governance reinforce each other. A policy paper for
Organisation for Economic Cooperation and Development / Development Assistance
Committee (OECD/DAC) recognizes that corruption is a symptom of unresolved governance
problems, resulting from incompetence in the process of building an effective and
accountable state (OECD 2006).
There is evidence that highly developed, long established liberal democracies, with a free
and widely read press, a high share of women in government, and a history of openness to
trade are perceived as less corrupt (Treisman 2007). Political institutions are crucially
important in determining the incidence of corruption. The political structure, which includes
the balance of powers and electoral competitiveness, is likely to determine the incentives
for those in office to be honest as well as to punish the misbehaviour of those who are not
(Lederman etal 2005).
direct correlation between corruption and the measures of governance such as the electoral
process and pluralism, political participation and civil liberties. Countries with better
indicators of governance are more likely to report lower incidences of corruption. Flawed
democracies, hybrid regimes and authoritarian regimes are more likely to foster a more
corrupt environment when they try to build trust among sectoral elites taking advantages of
opportunities for rent-seeking. On the other hand, democracies are better able to control
corruption, since regular elections, political participation, the political culture and civil liberties
provide checks and balances and also punish corrupt politicians.
Corruption and conflict
Corruption and Human Development:
Human development (HD) is a development paradigm that is about much more than the rise
or fall of national incomes. It is about creating an environment in which people can develop
their full potential and lead productive, creative lives in accordance with their needs and
interests. According to the Human Development Report (HDR) of the UNDP, HD is about
expanding people’s choices. The most basic capabilities for human development are to lead
long and healthy lives, to be knowledgeable, to have access to the resources needed for a
decent standard of living and to participate in the life of the community. Human development
is measured by weighting equally the measures of health, educational attainment and
income. Since 1990, when the first HDR was launched, UNDP has been working to promote
sustainable human development.
Corruption and Sustainable Development:
Corruption impedes sustainable development by threatening environmental sustainability.
Corruption can reduce the stringency of environmental regulations, through bribe-taking and
other corrupt practices of public officials, resulting in the lost livelihood, illness and social
displacement of millions
Challenges of anti corruption programming:
Building bridges between prevention and combating of corruption. UNCAC and other
international norms and standards regard the prevention and combating corruption not
as ends in themselves, but as vital factors in promoting good governance, which in turn
is a crucial precondition for reducing poverty, meeting the MDGs and promoting sustainable
development. National anti-corruption policy frameworks as well as donors of anti-corruption
interventions face a twofold challenge: On the one hand, they need to link the realms of
corruption prevention and combat of corruption; on the other, they need to link anticorruption efforts as a whole with broader political and economic reform.
Building strong partnerships and mainstreaming anti-corruption principles in donor
assistance. UNCAC constitutes a unique international legal framework for anti-corruption
policies. Its strength lies in its comprehensiveness as it addresses both preventive and
enforcement measures. Thus, given principles of alignment as mentioned in the Paris
Declaration on Aid Effectiveness, the challenge for donors is to adhere to UNCAC provisions
as a common basis for their policy dialogue with partner countries on governance and
anti-corruption. Fighting corruption requires strong partnerships of donors with governments,
the private sector and civil society, partly because there is limited expertise in the area of
anti-corruption.
Designing a comprehensive approach. It is increasingly realized that any support for
fighting corruption needs to be centred on more comprehensive initiatives at the country
level because stand alone projects are likely to be less effective and are often only shortterm remedies. However, many donors operate under their own rules of engagement and
have their own set of conditions that make a holistic approach difficult. Moreover, the
competing interests of donors, multi-mandates among international players and the lack of
leadership among donors at the country level also hinder the effectiveness of anti-corruption
efforts.
• Securing political will. The major challenge for anti-corruption interventions is securing
the political will for designing strategies and implementing them. In many countries,
politicians in power are usually reluctant to do so. Very often, anti-corruption
initiatives are politicized and used against political rivals. Moreover, changes in
government and leadership also lead to competing and changing agendas. Thus, a
comprehensive anti-corruption approach should understand that securing political will
is fundamentally important to local policy ownership and the commitment to country-led
strategies.
• Approaching anti-corruption programming from a development prospective. Most of the
time, grand corruption steals the headlines and ’petty corruption’, which is more likely to
have adirect impact on the poor, is not emphasized by donors. A number of anti-corruption
programmes address grand corruption and forget the fact that the poor who have very
limited resources lose more than the rich who can afford to bribe. From the perspective of
poverty alleviation, anti-corruption programmes must not just look at grand corruption but
also at corruption in the service delivery sector that affects the poorest groups. Moreover,
approaching corruption from a development perspective could help develop programmes
without the ‘anti-corruption’ label and thus could prevent anti-corruption programmes from
being overly politicized.
Limited resources. Donors often have to face many challenges in allocating their resources
for many competing demands. In some cases, large sums of money go to favoured countries
with little capacity (e.g., Afghanistan). In other cases, there is insufficient funding to
implement a comprehensive programme and sustain it in the long run. Experience shows
that newly established, specialized anti-corruption agencies in many developing countries
are doomed to fail partly because of a lack of resources and adequate staffing.
Poor monitoring. In order to make anti-corruption programmes and approaches work
effectively, a strong monitoring mechanism and methodologies are essential, which are often
lacking in many countries.
Strategy to fight corruption:
(A) Gap and risk analysis
Before designing a comprehensive anti-corruption approach, many countries need to
conduct a gap and risk analysis.15 This will help to assess the political will, find out gaps and
risks, define entry points for interventions, and prioritize and sequence interventions. For
example, in those countries which have already ratified UNCAC, the challenge is to ensure
its implementation. Similarly, in some countries the entry point could be to establish
oversight institutions, whereas in other countries, the entry point could be to strengthen the
existing oversight institutions.
(B) Strategy development
Most anti-corruption programmes should be executed after a situational analysis, with entry
points clearly identified. Most ambitious strategies do not work because they involve too
many activities, and governments often establish inter-ministerial task teams which work on
anti-corruption on a part-time basis. UNCAC requires that the development of an anticorruption strategy should be done in a transparent and inclusive way. Public participation
should be encouraged as much as possible. There needs to be a buy-in from political
players while avoiding the politicization of the programme
(C) Identifying partners
The following are the key UNDP partners in the
area of anti-corruption.
• UNODC, the specialized agency dealing with
corruption. It is also the secretariat to the
Conference of State Parties to UNCAC.
• Other UN agencies such as the United
Nations Department of Economic and Social
Affairs (UNDESA), UNESCO International
Institute for Educational Planning (IIEP),
United Nations Office of Internal Oversight
Services (OIOS), United Nations Public
Administration Programme (UNPAN), and the
United Nations Economic Commission for
Africa (UNECA)
OECD, which works on coordinating donor
activities in the area of anti-corruption
• Transparency International, the leading NGO
in the area of anti-corruption
• International finance institutions such as
World Bank, ADB, AFDB and Asia
Development Bank, the main funders of
anti-corruption programmes. They also
implement some projects.
• National counterparts (including CSOs
and media)
• Local authorities
• Human rights institutions
• Academic institutions such as
Basel Centre and the Raouil Wallenberg
Institute
• Anti-corruption Resource Centre (U4) ,
which offers focused research products
and a rich array of online resources
Identifying potential partners in governments
depends on the country. Where there is little
willingness to even talk about corruption at the
government level, it will be difficult to engage in
explicit anti-corruption activities. Choices might then
be limited to less ‘controversial’, less politicized
measures. However, there might be champions of
anti-corruption who could be a catalyst for
developing anti-corruption intervention.
In addition, during election campaigns, candidates
and political parties may want to ‘attach’ the good
governance tag to their campaigns and this may
create an opportunity for anti-corruption
programming when a new government is formed.
(D) Monitoring and evaluation
To successfully implement anti-corruption projects,
it is important to have built-in monitoring and
evaluation mechanisms through regular onsite
visits, regular meetings of stakeholders, and a review
of both compliance with the original plan and the
impact of the project. A set of indicators is needed
to measure impact and monitor the project’s
progress. Examples of such indicators of progress
are:
Legal framework
International conventions and initiatives
The United Nations Convention against Corruption (UNCAC) and the United Nations Convention
against Transnational Organised Crime (UNTOC) were ratified by India in 2011 (UNODC 2022).
The country is not a signatory to the OECD Convention on Combating Bribery of Foreign Public
Officials in International Business. India is a member of the G20 Working Group against
Corruption (GAN Integrity 2020).
Legal framework
International conventions and initiatives
The United Nations Convention against Corruption (UNCAC) and the United Nations Convention
against Transnational Organised Crime (UNTOC) were ratified by India in 2011 (UNODC 2022).
The country is not a signatory to the OECD Convention on Combating Bribery of Foreign Public
Officials in International Business. India is a member of the G20 Working Group against
Corruption (GAN Integrity 2020).
Indian Penal Code (IPC), 1860: deals with the unlawful purchase of property and criminal breach
of trust in public servants25 (PRS n.d.).
The Benami Transactions (Prohibition) Act, 1988: prohibits any Benami transaction – the
purchase of property in the name of another person or under a false name26 (PRS n.d.).
The Prevention of Money Laundering Act, 2002: delineates the definition of money laundering,
which takes place when a “person is a party to any process connected with the proceeds of
crime and projects such proceeds as untainted property”. The law also calls for the maintenance
and verification of all customer records by banks, financial institutions and intermediaries and its
provision of this information to relevant authorities (PRS n.d.).
Companies Act, 2013: outlines rules for companies27 operating in the country and has elements
to counter private sector corruption. For example, the law highlights mechanisms for the
protection of whistleblowers, industry codes of conduct and the appointment of independent
directors to company boards (GAN Integrity 2020). The law calls for a “vigil mechanism” for
directors and employees of listed and other companies.28 The audit committee is tasked with
scrutinising financial records as well as acting as an “ethics watchdog” (Kapoor and Kanuga
2021).
Whistle Blowers Protection Act, 2014: drafted in 2011, the law was renamed The Whistleblowers
Protection Act, 2014 and was passed by both houses of parliament, but it has not been notified in
the official gazette as yet (Arora and Chawla 2020; Kapoor and Kanuga 2021). The act is limited
to public servants and public sector undertakings (Kapoor and Kanuga 2021). Anonymous
complaints are not allowed, and penalties can be levied for providing false information (Rana
2021).
In practice, the legal framework for whistleblower protection is aimed largely at listed companies
and works through the companies act as well as the Securities and Exchange Board of India
(SEBI) regulations, which incentivise employees to report insider trading (Kapoor and Kanuga
2021).
Lokpal and Lokayuktas (Amendment) Act, 2016: the original ombudsman law passed in 2013
was to “provide for the establishment of a body of Lokpal for the Union and Lokayukta for States
to inquire into allegations of corruption against certain public functionaries” (Ministry of Law and
Justice 2014). Amendments to the act have diluted the law. For example, while public servants
are required to declare their assets, the form and manner of doing so will be prescribed by the
central government (PRS 2016).
The Prevention of Corruption (Amendment) Act, 2018: criminalises “attempted corruption, active and
passive bribery, extortion, abuse of office and money laundering”29. However, the law does not cover
facilitation payments (GAN Integrity 2020).
The amended law includes “undue advantage”, which has been defined to mean any gratification
other than legal remuneration30 (Biswas and Narasimhan 2018). The amendment also
criminalises bribe giving unless the transaction is reported within seven days to the appropriate
authorities. The erstwhile law contained a provision that a person could not be prosecuted for
abetment if, during the course of a corruption trial, they provided a statement of having given an
undue advantage to a public official. The 2018 amendment does away with this provision,
creating a situation wherein there is a potential risk for bribe givers to testify against corrupt
public officials, and they can be discouraged from coming forward as witnesses (Prakash et al.
2018).
Prior sanctions of the appropriate government31 was required before prosecuting any government
official for corruption in the earlier version of the law. The amendment now expands this
protection to public officials by requiring prior approval for investigation prior to prosecution
(Prakash et al. 2018). Thus, on one hand, private citizens who do not report corrupt transactions
as per the amendment are in a position to be prosecuted without difficulty, while public officials
accused of corruption can receive protection.
Corporate entities have been tasked with tightening their compliance processes and actively
preventing their employees from engaging in any acts of corruption or fraud. Anti-corruption
agencies have had their mandate broadened to investigate and prosecute a company along with
its director, managers and other officers who participated in the acts of corruption or fraud
(D’Andrea & Partners 2021).
Right to Information (Amendment) Act, 2019: originally passed in 2005, the law was hailed as an effective
anti-corruption tool wielded by citizens and activists alike. It is widely used by “the poorest and the most
marginalised who have understood the tremendous potential of the law to empower them to access their
basic rights and entitlements like rations, pensions and healthcare” (Bhardwaj and Johri 2020).
Institutional framework
A challenge noted in the Indian context is the adequate working of key institutions, which “often
fall prey to quarrels among the particularistic interests of political actors, or alternately to abuse
of office” (Bertelsmann Stiftung 2020, 38). Bertelsmann Stiftung (2020, 38) notes that anticorruption discourse as a part of the current “populist agenda” needs to be “accompanied by
substantive policy measures”.
The main institutions dealing with corruption are as follows:
Lokpal (Ombudsman)
The Lokpal and Lokayuktas Act, meant to tackle corruption of senior government officials through
the creation of independent ombudsman institutions at the union (Lokpal) and state (Lokayukta)
levels, was originally passed after a struggle in 2014.
Central Vigilance Commission (CVC)
The CVC is the “apex vigilance institution” for monitoring corruption cases against the central
government. It also advises various central government authorities in planning, executing,
reviewing and reforming their vigilant work (CVC 2019). The institution’s website provides
detailed guidelines for filing complaints and has an online form to submit and track complaints
(CVC 2019).
The commission comprises a central vigilance commissioner who acts as chairperson and not more
than two vigilance commissioners (members). The CVC directs the Central Bureau of Investigation
(CBI) on matters relating to the Prevention of Corruption Act and those offences that deal with
Central Bureau of Investigation (CBI)
The CBI is the “premier investigative agency, with a dual responsibility to investigate grievous
cases and provide leadership and direction in fighting corruption to the police force across the
country”. It functions under the Department of Personnel, Ministry of Personnel, Pension and
Public Grievances, Government of India. It collects information in three areas (CBI 2022):
•
• anti-corruption: this includes cases of corruption and fraud pertaining to government
departments, public sector undertakings and financial institutions at the central level
•
• economic crimes: these include fraud, financial fraud, import-export and foreign
exchange violations, large-scale smuggling of narcotics, antiques, cultural property and
smuggling of other contraband items, among others
•
• special crimes: pertaining to “cases of terrorism, bomb blasts, sensational homicides,
kidnapping for ransom and crimes committed by the mafia/the underworld”
With respect to the jurisdiction of the CBI and state police, the former only investigates cases at
the central government level, have interstate or international impacts or are large cases of fraud
(CBI 2022).
Enforcement Directorate (ED)
Operating under the Department of Revenue, Ministry of Finance, Government of India, the ED
is a specialised financial investigation agency implementing the following laws (ED n.d.):
•
• Foreign Exchange Management Act,1999 (FEMA): it conducts investigations into
“suspected contraventions of the foreign exchange laws and regulations” and imposes penalties
on offenders
•
• Prevention of Money Laundering Act, 2002 (PMLA): the ED is tasked with examining
suspected cases of money laundering and tracing assets “derived out of the proceeds of crime”,
consequently freezing or confiscating the same traced asserts, and arresting and prosecuting
those engaged in money laundering.
The institution is headed by the director of enforcement. It is headquartered in Delhi and has five regional,
16 zonal and 13 sub-zonal offices (ED n.d.).
Election Commission of India (ECI)
The ECI is an “autonomous and permanent constitutional body responsible for organising free
and fair elections in the union and states of India”. It has a constitutional mandate for the
“direction, superintendence, and control of elections to parliament, state legislatures, the office of
president of India and the office of vice-president of India” (Business Standard n.d.). There is one
chief election commissioner and two other election commissioners. The body has several powers,
including but not limited to (Laxmikanth 2019):
•
• establishing electoral constituencies’ territorial areas throughout the country
•
• registering all eligible voters, and preparing and regularly revising electoral rolls
•
• recognising parties and giving them the status of a national or regional party depending
on their poll performance
•
• determining a code of conduct for parties and the candidates during elections
•
setting limits of expenditure by candidates during elections and collecting details on
candidates assets at the time of submission of nomination papers
Comptroller and Auditor General of India (CAG)
The office of the CAG, along with the Indian Audit and Accounts Department (IAAD) reporting to
the CAG, constitute the supreme audit institution of the country. The body is tasked with auditing
“all receipts and expenditure” of the central and state governments. It also audits public sector
undertakings, as well as independent bodies that the Indian government finances. CAG reports
are presented to national and state-level legislatures (CAG 2021).
Judiciary
Indian judiciary operates via a single integrated system. The constitution divides the institution into
superior judiciary (the supreme court and the high courts) and the subordinate judiciary (the lower courts
under the control of the high courts). While the supreme court is the apex court, the high courts have
jurisdiction limited to one or more states and union territories (Bhan and Rohatgi 2021). The independence
of the judiciary is provided by law; however, the institution faces challenges in the form of delays, capacity
issues and corruption (US Department of State 2020, 14).
Other stakeholders
Media
The Indian government “rarely, if ever, used to exercise censorship” (Pillai and Lindberg 2021; VDem 2021, 13). Nevertheless, now there is widespread censorship of journalists and academics
criticising the government, many of whom are then labelled as “anti-national” (Prabhu 2017;
Pillai and Lindberg 2021; V-Dem 2021, 13). While journalists regularly face harassment and
violence, the threat to female journalists is “particularly acute” (US Department of State 2020,
24).
Journalists reporting on corruption and against the government are particularly at risk. A news
Civil society
Civil society is “being muzzled” in the Indian “autocratisation process” (Pillai and Lindberg 2021;
V-Dem 2021, 20). The government is using “security, defamation, sedition, and hate speech laws,
as well as contempt-of-court charges, to quiet critical voices” (Freedom House 2021). One such
example is the Unlawful Activities (Prevention) Act (UAPA) of 1967, subsequently amended in
2019, which is being used to “harass, intimidate, and imprison political opponents,” as well as
ordinary citizens that are organising protests against the government. By targeting academia and
punishing students and activists engaging in protests against the CAA and agricultural reforms,
the law is being actively used to stifle dissent (Pillai and Lindberg 2021; V-Dem 2021, 20;
Sachdev 2020).
Legal observers suggest that a critical point to note about UAPA is that it is designed in a way to
allow denial of bail for undertrials even when there is “little to no reasonable evidence against a
person” (Sachdev 2020). For example, Umar Khalid, a well-known government critic arrested
under UAPA for his alleged involvement in the 2020 Delhi Riots, has remained in jail without a
trial since September 2020 “despite several loopholes” in the investigation by Delhi Police
(Dahiya 2021; Philipose 2021; Mandhani 2021).
Other laws being used include Jammu and Kashmir Public Safety Act, which allows administrative
detention without judicial intervention for up to two
Conclusion:
Regional Variation
Corruption is more or less everywhere in India but it is usually higher in
less developed regions like East India and North India than in West India
and South India. Poorer states, such as Jharkhand, Bihar, Orissa, West Bengal, and Uttar Pradesh,
are comparatively more affected by corruption
than prosperous states, such as Gujarat, Tamil Nadu, and Kerala. High
poverty and high illiteracy may be responsible for higher corruption in the
eastern and northern states. However, there are also exceptions. Prosperous
states like Punjab, Haryana, Delhi, Maharashtra, and Karnataka are also
corrupt.
Reasons for corruption
Firstly, one of the main reasons for corruption in India is the supplydemand
mismatch. Supply is lower than demand. This supply-demand
mismatch is mostly artificial. For example, nowadays more and more
Indians are travelling abroad. So, there is more and more demand for
passports. However, the passport counters in the passport office are not
proportionate to the demand. There is a very long queue in the passport
office. In order to avoid the long queue, people pay bribes. Secondly,
political leaders are elected, but elections themselves are full of corruption.
Almost all political parties issue tickets to candidates after taking huge
money. How can these candidates be expected not to be corrupt once they
become ministers? And where the ministers are corrupt, the bureaucrats will
follow suit. Thirdly, Indian people not only tolerate but also promote
corruption. It is rare that people protest against corruption. They accept it as
a normal part of affairs. People also willingly offer bribes to government
officials as a sign of gratitude. Fourthly, in the rush for development, the
Indian education system has become technical and job-oriented. Moral
education has significantly declined in schools and colleges. Family does
not play an important role in urban areas. Values and ethics are not so
emphasized by family or schools anymore. Money-making has become the
goal of life. Fifthly, laws and procedures are very complex in India. It is not
easy for an aam admi to understand laws and procedures. This necessitates
middlemen. Sixthly, the salary of government officials is comparatively low
in India. They do not feel satisfied with their incomes and are tempted to
resort to corruption. Finally, illiteracy is also one of the main reasons for
corruption. It is easy to cajole illiterate people into paying bribes by scaring
them with the law.
In order to eradicate corruption, transparency in administrative
processes needs to be maximized, and fundamental measures must
be taken to eliminate bureaucratic red tape. Consequently, companies will be able to do
business and compete with one another in a fair environment, and increased
efficiency of the overall economy will result in more investment, leading to
economic growth. This will provide a foundation for reduced economic
inequality, creating a virtuous cycle of economic growth. The Indian
government has set a target of 9% economic growth in its 12th Five-Year
Plan. There is growing consensus that achieving this target will be difficult
without eradicating corruption.
Corruption, which is closely related to increased investment costs and
uncertainty in decision-making, eventually results in a decrease in
investment. Bribes that investors pay to get approvals and licenses for
projects lead to a rise in project costs and eventually to falling profitability.
As it is hard to predict the size and outcome of bribes, uncertainty in
decision-making also mounts.
Corruption is also standing in the way of addressing economic
inequality and poverty. Even though the Indian government implements
various policies to solve the problems of inequality and poverty, corruption
among the public officials who implement these policies reduces what
rightfully belongs to the people.
In addition, government expenditure tends to be concentrated in projects
prone to bribery and corruption (e.g. weapons procurement and
infrastructure construction), rather than in policies that address economic
inequality (e.g. social welfare and education). The loop of corruption not
only impedes economic growth by creating mayhem out of government
policies, but it also magnifies political and social instability.
In fact, India’s corruption level has declined significantly since the
economic reform of 1991, because regulations on foreign currency,
monopoly and oligopoly, industry permission, and import approvals have
been lifted. However, unnecessary regulations are still ubiquitous in India.
People are raising their voices, saying that corruption will lessen when the
red-tape disappears.
S. P. Hinduja, the chairman of Hinduja Group, a non-resident Indian
(NRI) company, believes that corruption influences corporate governance,
and also has a negative impact on social engagement, inclusive economic
growth, FDI inflow into India, and domestic security. For this reason, he
argues vehemently that efforts should be made to break collusion among
politicians, public officials, and businessmen, who have been the only ones
to benefit from India’s rapid growth so far. He has proposed practical
alternatives to corruption: for example, that the construction of social
infrastructure, including education, public health, and water management
infrastructure, should be a prerequisite of granting approval for mega-sized
industrial projects.
KPMG suggested preventive mechanisms that organizations could adopt
in order to curb corruption: a comprehensive and strictly enforced code of
conduct, communicating zero tolerance for corruption; a structured whistle
blowing mechanism for reporting potential bribery and corruption issues; a
comprehensive and periodic risk assessment mechanism, including third
party audits with specific reference to corruption related risks; a regular
monitoring mechanism to address issues arising from bribery and corruption.
KPMG believes that social control is the best way to prevent any form
of unethical practice, including bribery and corruption. Following are key
examples of social control: adequate training for employees who enumerate
unacceptable practices; strong communication mechanisms that enable
bottom-to-top feedback and voicing of concerns; and promotion of an
ethical culture in the organization.
PAPER: Corruption and eduction
Corruption is widely believed to be detrimental to economic performance. However,
little empirical evidence has been presented to assess its consequences on education.
The results suggest that high and rising
corruption decreases significantly access to schooling. A unit increase in corruption reduces
enrollment rates by almost 10 percentage points. These findings are robust to the use of alternative
measure of corruption and other sensitivity analysis.
The most obvious argument is that corruption is
inimical for the development of an economic and institutional environment that enhances education
expansion and high-quality human capital formation
Increased poverty and income inequalities constitute a further mechanism through which
corruption could affect education. This may happen when wealthy population groups tend to
lobby the government to bias social expenditures toward the provision of particular kinds of
educational services that better favour their own interests. The writers argued that corruption diminish
the positive impact of social programs and stimulate the misappropriation of public funds allocated to
poor people, resulting in limited poverty reduction efforts and reduced resources available for
expanding access and improving education quality
Corruption could also adversely affect education through its impact on public spending, more
specifically public education expenditures. On the one hand, corruption may engender a substantial
decrease in the resources allocated to education by affecting tax revenue and hence the volume of
funds available to the government for allocation.
On the other hand, corrupt practices accompanying the
processes of affectation, distribution and allocation of education expenditures are likely to reduce the
amount of funds allocated to education.
Corruption undermines democracy and the rule of law. It leads to violations of
human rights. It erodes public trust in government. It can even kill — for example,
when corrupt officials allow medicines to be tampered with, or when they accept
bribes that enable terrorist acts to take place.
Corruption hurts the poor disproportionately by diverting funds intended for
development, undermining a government’s ability to provide basic services,
feeding inequality and injustice, and discouraging foreign investment and aid.
While there is a large consensus in the literature on the negative impact of corruption on economic growth,
some researchers continue to argue that the effect of corruption on growth is context specific and associated
with factors such as the country’s legal and institutional framework, quality of governance and political regime.
They conclude that, in some highly regulated countries that do not have effective government institutions and
governance systems, corruption can compensate for red tape and institutional weaknesses and “grease the
wheels” of the economy.
This argument does not stand up to scrutiny when looking at the long-term corrosive impact of
corruption on economic growth, equality and the quality of a country’s governance and institutional
environment. Evidence indicates that corruption is likely to adversely affect long-term economic growth
through its impact on investment, taxation, public expenditures and human development. Corruption is
also likely to undermine the regulatory environment and the efficiency of state institutions as rentseeking distorts incentives and decision-making processes.
Not only does corruption affect economic development in terms of economic efficiency and growth, it also
affects equitable distribution of resources across the population, increasing income inequalities, undermining
the effectiveness of social welfare programmes and ultimately resulting in lower levels of human development.
This, in turn, may undermine long-term sustainable development, economic growth and equality.
Given the findings of Shleifer and Vishny (1993) and Mauro (1995) that corruption distorts
the allocation of resources from investments in health and education towards those where the
detection of corruption is more complex, a vicious circle is created. Poorer municipalities with
lower literacy rates are those with the highest rates of corruption in Brazil. Higher corruption rates
tend to further distort the allocation of public resources, affecting more severely the poorest
population, which depends primarily on public provided services, increasing socio-economic
inequality (GUPTA, DAVOODI, ALONSO-TERME, 2002; GLAESER, SAKS, 2004). With lower
educational attainment, the local population is not able to exercise social control over the local
public officials, generating further incentives for corruption to increase.
It now includes elements such as sustainable development, structural change in
production methods, technological innovation, social, political and institutional
innovation, and the improvement of people's living conditions.
The solutions – What can be done?
Preventing and combating corruption requires a comprehensive approach, but only in a climate of transparency,
accountability and participation by all members of society is this possible. Governments, the private sector, the
media, civil society organizations and the general public need to work together to curb this crime. Here are some
examples of how these sectors of society can make a difference.
Governments
At the international level important conventions have been put into place to combat corruption such as the United
Nations Convention against Corruption and the United Nations Convention against Transnational Organized
Crime, as well as regional and sectoral instruments such as the OECD Convention on Combating Bribery of
Foreign Public Officials in International Business Transactions. At the national level, Governments can stimulate
legislative reform that will establish legislative and institutional frameworks against corruption with robust
enforcement and punitive measures.
Private sector
Companies should take a zero-tolerance attitude towards corruption and put policies in place covering issues such
as gifts, supply chains and whistleblowers, in order to promote a fair and just environment. Through their actions
and attitudes towards corruption, the business community can promote fair competition by working together and
supporting countries in developing and strengthening the public anti-corruption infrastructure.
Media
By using the often unique position that they occupy in society, the media can provide checks and balances on
Government and private sector involvement in corrupt practices. The media also offer an essential service in
informing the public about the positive progress being made and giving support to those who take a stand in the
fight against corruption.
Citizens and civil society
Many civil society organizations are working hard to raise awareness, channel information from citizens to the
State and exert pressure for political commitment against corruption.
As people become increasingly weary of corrupt leaders, they are demanding more accountability. Ordinary
citizens, including many young people, are increasingly showing they are committed to fighting corruption in
their communities and Governments.
As part of this process, people can – and should – inform themselves about what their Governments are doing to
tackle corruption and hold elected officials responsible for their actions. Actions are also key – reporting
incidences of corruption to the authorities, teaching children that corruption is unacceptable, and refusing to pay
or accept bribes.
Our common purpose
We all have a stake in fighting corruption.
Corruption undermines Governments’ ability to serve their people by corroding the rule of law, public institutions
and trust in leaders. Corruption acts as a brake on development, denying millions of people around the world the
prosperity, rights, services and employment which they desperately need – and deserve.
When corruption prevails, democracy, a prerequisite for development, is threatened. Sustainable development is
therefore not only an aim in itself, but the most effective antidote to corruption.
With the United Nations Convention against Corruption, the world has a powerful tool to fight a global ill. Let
us use the Convention’s far-reaching measures to help kick-start development, lift countries out of poverty and
build fairer, more just societies.
Poor countries may not be able to devote sufficient resources to setting up and enforcing
effective legal frameworks. Similarly, people in need are also more likely to abandon their
moral principles