Overview
To understand corruption in India today it
is useful to analyze it along two dimensions.
Economic and Institutional.
The
main Economic categories (from a
corruption perspective) are, (i) Government purchase of Goods and Services
(including government employment). (ii) Production and sale of Goods and
Services by Departmental Public Undertaking and Public Sector Units. (iii) Natural Resource Rents: Natural
resources include all minerals (including
coal, oil & gas), Land and Electromagnetic Spectrum. (iv) Natural
and Artificial (policy created) Monopolies & PPP contracts related to these.
Networks such as electricity T&D
& rail lines, airports, major ports and dams are natural monopolies. State
Electricity production, Railway services (INR), Coal India, Dual use items of
Defense production are monopolies created by policy & can be made
competitive by policy change. PPP contracts for these as well as for Social
services exclusively produced & supplied by government take on the
character of artificial monopoly when good auction procedures are not
used.
The
main Institutional dimensions are,
(a) The “Lower Bureaucracy:” The ‘State government’ machinery dealing with
repeated routine economic & social activities. This is the machinery we
deal with as citizens, as workers, as employees, as self-employed, as small
businesses, as NGOs and large corporations as tenants or house owners, as land
owners or rentiers. This is the
government whose functionaries, often referred to as “babus,” we all interact with, in one way or another, in every
sphere of activity. Also includes the entire local government (Nagarpalikas
& Panchayats) & a part of the Central bureaucracy (non-IAS, IPS) that
operates at State-City level (e.g. Customs, Income tax, Central excise). (b) The
“Higher Bureaucracy”(Officers of the central services like IAS, &
equivalent parts of State services) The
decision making process for deciding on policy and implementing one off or
unique procedures that have to decided anew every time. This is more high level
decision making. (c) The criminal justice system. This is the notorious
“politician-criminal-police” nexus that actively thwarts the “rule of law,” and
believes it is above the law and behaves as if the constitution of India does
not apply to it. Judges who take bribes to give knowingly wrong decisions should
perhaps be seen as part of this.
With
some danger of over-simplification, much of the first two economic categories
of corruption is institutionally carried out by the lower bureaucracy, with
systemic payments (bribe shares) moving up the system, while much of the third
and fourth economic categories of corruption is done at the Higher bureaucracy
level (with Lower Bureaucracy involvement only when needed) either with
knowledge of or under the direction of the political bosses.
Economic Dimensions
There are four major categories or
sources of government related corruption in India.
Govt. Expenditures/G&S Purchases
Goods and Services Purchases that constitute the expenditure side of the budget of
government at every level. This includes wages & salaries and
therefore hiring and recruitment and contracts for construction and maintenance
of roads etc. My informal inquires & reading suggests that the cut
that government as a whole takes (shared between the functionaries & the
bosses) has gone up progressively from about 15% in the 1960-70s to a range of
30% to 50% in the 2000s (% depends on nature of the G&S).
Public Production & Sale of items that can be produced by private producers and sold
in market. These include all the Cetral
government and State government owned.
There is a massive system of
corruption in government expenditures and purchases in which all levels of
workers are involved, from the lowliest
sweeper & chaprasis, through petty
clerks, dealing hands inspectors & superintendents
through officers and politicians. In
this well oiled machinery the unchanging faceless bureaucracy collects the bribes
and shares it up to the officer and political level. It is my understanding that a new politicians
or concerned State minister does not have to ask for anything, it would be
delivered to him whether he wants it or not. This is the part which is so pervasive
and systemic that only a major
institutional reform can reverse the
process.
Natural Resource Rents
Natural
Resources such as Urban Land, minerals/oil, Spectrum, Aquifers. Theoretically
these resources are the common property of the citizens. With few exceptions
government at different levels [Local (Nagarpalika, Panchayat) State, Central]
control all natural resources through multiple means and can manipulate
policies, rules, procedures & enforcement to extract resource rents for
themselves and those who help them cheat the people out of these resources.
These are
generally large case by case decisions and are therefore likely to be
controlled at relatively higher levels of State, Central Governments. An economically sound way to reduce natural
resource related corruption is to make it compulsory for government to sell or
lease all natural resources through an auction procedure that is designed to
facilitate a large number of bidders. These
auction procedures have to be simple, well designed and understood, otherwise
the corrupt will manipulate these auctions too.
There are a host of complication related to Urban land that have to
addressed separately in detail. One of the most critical is the way “Land use”
is determined and changed. Manipulation of this aspect can be source of massive
corruption.
PPP for Natural (or Created) Monopolies
PPP Contracts related to "Natural Monopolies" or
artificially created "monopolies".
Manipulation of terms and conditions and the contracting process can be
used to give contracts to favored parties. In some cases, an honest person
knows that the strict terms of the contract cannot be fulfilled without making
losses. The dishonest know that they can later bribe and get terms changed and
therefore apply.
Institutional Dimensions
Lower and Upper Bureaucracy: To deal effectively with corruption,
it is necessary to distinguish between the lower bureaucracy and the institutionalized-routineised,
entrenched corruption that has become a way of life for the ‘Babus’ and the case
by case corruption at the higher levels in which manipulation decisions have to
be made case by case or for groups of cases.
The latter involves the active participation of the government
ministers.
Violations
of Law: (a) Major violations include violations of criminal law that come
under the rubric of "Politician-Criminal-Police"
nexus. Also include violations of govt.
rules & regulations that could cost human lives or cause serious damage to
health. (b) Other violations are related to violation of government rules,
regulations and procedures on day to day economic and personal activities.
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