Corruption Chaos in India

(Asia Sentinel) Cleaning out the stables

The Indian Parliament has been gridlocked for the past two weeks, or almost its entire winter session, by a belligerent opposition that is demanding a joint parliamentary committee probe into an avalanche of corruption scams that have hit the ruling United Progressive Alliance government.

Trouble began for the Sonia Gandhi-led UPA coalition with the Commonwealth Games uproar last month. The sporting extravaganza brought to light the murky dealings of politicians and sports officials who had forged papers, bought equipment and materials at inflated prices and generally cooked the books. The budget eventually ballooned to around US$6 billion, even as it was hit by delayed venues and organizational problems.

Then came the Adarsh Housing Society building in Mumbai. In this, the former Maharashtra chief minister Ashok Chavan, who was forced to resign, along with retired senior army officers and politicians had helped themselves freely to apartments meant for widows of soldiers killed in the Kargil war of 1999 with Pakistan, which took the lives of 527 Indian soldiers.

The third scam has been the most mind-boggling of the lot. In this, the Telecommunications Minister Andimuthu Raja, who was recently forced to resign, undersold 2G spectrum mobile licenses to 85-odd global firms at a throw-away price, losing the exchequer Rs1.76 trillion. Wags point out that the number of suitcases Raja would have needed to fill that loot, if laid end-to-end, would reach from Delhi to the southern city to Chennai (a distance of 2,177 km).

While the scams have already claimed the scalp of senior ministers in the beleaguered UPA government, more heads – including those of senior bureaucrats and other cabinet members – are expected to roll in the days to come.

In a flurry of arrests earlier this week, the Central Bureau of Investigation also cracked down on Commonwealth Games Organizing Committee joint director general T. S. Darbari and deputy director general Sanjay Mahendroo for their misconduct in handing out contracts at "exorbitant rates" for the games-related events.

"This highly charged, scam-a-minute scenario has highlighted debilitating and shocking graft in the ruling government," said a party functionary of the right-wing Bharatiya Janata Party,

The three scams have not only put the heat on the UPA government but also on Prime Minister Dr. Manmohan Singh who, many feel, has been complicit in the 'conspiracy of silence' that surrounds his government.

"How can it be that the PM had no clue of his ministers' misdeeds?" ask political observers. Obviously, they infer, the PM could not afford to displease his coalition partners, whose votes are crucial for his coalition to survive.

Nobody believes that Singh profited personally – given his squeaky clean image -- but many do hold him guilty of retaining corrupt ministers. In an unprecedented move, the Supreme Court has also questioned the reason for the PM's "silence and inaction" on his tainted colleagues.

Adding to the discomfiture of the UPA government was top industrialist Ratan Tata's recent admission about corruption in the Indian executive. He said that he wanted to start an air service with the collaboration of Singapore but the minister then in charge of Civil Aviation demanded Rs 150 million as bribe. "I abandoned the venture because I did not want to pay the bribe," the tycoon said.

Sociologists say corruption is the prime vehicle to power and wealth in the world's largest democracy. It begins with the symbiotic relationship between the ambitious rich and the aspiring poor. No wonder, even six decades after independence, India ranks an abysmal 87th on Transparency International's latest Corruption Perceptions Index, even below Ghana and Rwanda.

This month, the Washington-based think tank Global Financial Integrity (GFI) published the results of a study on India's underground economy. It that says through the 60 years from 1948 to 2008, Indians illegally ferreted away more than US$460 billion overseas. Another US$178 billion is stashed away within the country. GFI believes this number could be just the tip of the iceberg as it's impossible to measure transactions from cross-border criminal activity or hawala trades.

The study, quoted in an Indian business daily, states that GFI estimates that much of the money illegally sent overseas goes through mispricing of trade: imports are overpriced and exports are underpriced. Both ensure that a lot of cash which should have flowed into India stays back.

The study also points out that as India opened up to more trade flows, the avenue to spirit money away illegally has grown exponentially. It estimates that the size of the underground economy was about 27 percent of the greater economy in the pre-reform years of 1948-1990. Thereafter, when the economy looked up from 1991 onwards, the underground economy bloated to about 43 percent.

Ironically, there is no dearth of laws and institutions to check corruption in India. The Central Bureau of Investigation brings corrupt bureaucrats, politicians and policemen to book. Then there's the Central Vigilance Commission, helmed by an independent head. Government ministries have their set of vigilance officers while states tap the services of anti-corruption bureaus manned by police officers. A landmark Right To Information law also proposes to bring in more accountability into the government.

Even so, India has a sorry record in prosecuting people for corruption. The BBC recently pointed out that there are more than 9,000 cases brought by the CBI pending in various courts. More than 2,000 of these cases have been pending for more than a decade. Furthermore, India has a conviction rate of an abysmal 40 percent, one of the lowest in the world.

The all-pervasiveness of corruption in India became evident recently when the Supreme Court questioned the controversial appointment of P J Thomas as the country's Central Vigilance Commissioner, head of an apex body which probes corruption in the country. Thomas has himself been embroiled in two major corruption scams. Yet, in its haste to ensure that the vigilance commission was one it could approve, the Congress "disregarded the spirit of the law and weakened the institution of the CVC" critics point out.

Why blame the Congress alone when the opposition itself is far from being above board. The BJP-ruled southern state of Karnataka is currently in the throes of a crisis triggered by allegations that the BJP chief minister B S Yedyurappa has been signing over government land to his relatives, who are building businesses on these plots. "All Chief Ministers do it," was Yedyurappa's angry response to a journalist.

When the BJP pressured Yedyurappa to resign, the desperate minister threatened to pull down the state government by claiming the support of 45 MLAs. Clearly, Yeddyurappa's continuation as the state CM undermines the BJP's attack on corruption in the UPA government, but it certainly doesn't prevent it from doing so.

What then is the solution to the problem to India's all-pervasive corruption problem? Analysts have often suggested that if trade and election reforms are made more stringent, things can improve. The former would deter illegal money transfers overseas and make India an easier, hassle-free place to do business in legally.

"Tax rules in India are terribly complex and cluttered with exemptions, surcharges and cesses. These need to be straightened out," says Vivek Brahmin, a Washington-based financial analyst.

Cleaning up election funding could also help. "If the government can change the rules by which political parties and election costs are funded in India, many of the larger corruption issues in India can be addressed. Election rules in India encourage political parties to accept cash due to which business houses offer cash rewards to politicians and parties. This is the starting point of trouble," Brahmin added.

Regulatory bodies like the Election Commission make things worse by capping election spends at ridiculously low levels," he said. "Legitimizing contributions of businesses to political parties can work greatly to minimize corruption."