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Friday, february 26, 2021, fighting against corruption.

  Why in news?

Recently Odisha government declared that all public servants are mandatorily required to file their property returns with the Lok Ayukta.

• In India, politico-bureaucratic nexus is the cause for systematic corruption & the preventive aspect of it is often neglected.
• Lokpal and Lok Ayuktas Act, 2013 which fights against corruption is existing for more than half a decade.
• But its implementation is uneven and the deadline to file the property declarations is constantly deferred.
• Initially it was set at September 15, 2014, but later this date was extended for six times.

What causes corruption?

• Information asymmetry is the primary culprit behind illegal wealth acquired by bureaucrats and political functionaries.
• Now Odisha government stated that all political and bureaucratic functionaries have to publicly declare their assets at the end of every year.
• This baseline data-base of assets provides significant insights into the asset ownership pattern of officials at different positions.
• It also creates transparency between the citizens and those in power at every level, reduces information asymmetry.
• Moreover lack of accountability is another cause for corruption.

How accountability can be promoted?

• According to Robert Klitgaard, systemic corruption is due to monopoly (M), discretion (D), accountability (A) which can be denoted in formula as C = M + D - A.
• But people’s participation (P) is also critical in preventing, detecting and reducing corruption in the system.
• Hence this formula can be rearranged as C = M + D – A – P.
• Odisha declaration can enhance people’s participation and more the people’s participation; less is the likelihood of corruption.
• People’s participation can also be increased if more information about assets of public officials is published regularly.
• The Odisha government has adopted technology and online transactions to reduce discretion.
• In the last one year alone, state government has either dismissed, removed or compulsorily retired 100’s of non cooperative government servants.

What more can be done?

• Though this declaration is a good preventive step but this cannot alone deter the corrupt.
• Currently monitoring practices rely only on inspections, raids, intelligence reports which has to be a institutional approach in identifying targets of those inspections.
• Randomised audits using technology and artificial intelligence without any human bias in the selection of auditee can be another logical step.
• The anti-corruption exercise should promote and safeguard whistle-blowers & the existing  Whistle Blower Protection Act, 2014  needs to be operationalised.
• Hence Odisha Lok Ayukta should nurture a safe environment for whistle-blowers by maintaining their anonymity.
• It can also notify a separate framework for protection of whistle-blowers.
• Those who enjoy power may try to find ways to escape through family or proxies and they should be subjected to the  Prohibition of Benami Property Transactions Act, 1988 .

What are the takeaways from this?

• According to the UN estimates, developing countries lose approximately $1.26 trillion every year due to corruption, bribery, theft and tax evasion.
• Moreover, government can lose the trust of citizens if the officials and the political masters are not held accountable for wrongdoing.
• Hence public disclosure of information about the officials’ assets, protecting whistle-blowers and certainty of punishment can create conducive environment for clean and efficient governance.

Source: Business Line

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• August 22, 2022

Ethics , Governance

Context: The CBI and Delhi Police’s Economic Offences Wing (EOW) are investigating allegations that the Delhi excise department that allowed a waiver of Rs 144.36 crore to the liquor cartel on the tendered licence fee, and that funds were ‘diverted to public servants’ .

• The CBI has named 15 individuals in its FIR filed in connection with the now-scrapped Delhi excise policy.
• then Delhi Excise Commissioner and two other senior excise department officials were instrumental in recommending and taking decisions pertaining to excise policy for the year 2021-22 without approval of competent authority with an intention to extend undue favours to the licencees post tender.

Corruption in India

“Just as it is impossible not to taste the honey that finds itself in the tip of the tongue, so it is impossible for a government assistant not to eat up, at least a bit of King’s revenue.” – Kautilya

Corruption is dishonest behavior by those in positions of power. It starts with the tendency of using public office for some personal benefit. Moreover, it is unfortunate that corruption has, for many, become a matter of habit. It is so deeply entrenched that corruption is now considered a social norm. Hence, corruption implies the failure of ethics .

Status of corruption in India

• India ranks 85 th rank in corruption perception index of 2021 .
• Country’s score has remained stagnant over the past decade, some of the mechanisms that could help reign in corruption are weakening.
• CPI highlighted that unfair and opaque political financing, undue influence in decision-making and lobbying by powerful corporate interest groups, has resulted in stagnation or decline in the control of corruption.

Causes of corruption

Legacy issues

• Rampant poverty and empty coffers of the government at the dawn of independence leading to chronic low salaries of the government officials
• Pre liberalization license permit raj catered by Monopolies and restrictive trade practices facilitated the corruption.
• The lack of economic freedom led to abuse of the system.
• Necessities of development overshadowed vigilance procedures.

Political system

• Use of black money in elections to win at any cost creates the need for the recovery of that cost through malpractices.
• Election funding is not transparent making it prone to the usage of black money and funding based on quid pro quo.
• It leads to crony capitalism , an unholy nexus between politicians and corporates.
• Criminalization of politics- when the rule-breakers become rule makers, the casualty is the rule of law .

Economic structure

• Low levels of formalization (merely 10%) of the economy breed black money.
• Stringent compliance rules for entry and exit for businesses result in bribery.
• Unequal distribution of wealth – Transparency International data suggests that corruption is directly proportionate to the economic gap in a nation.

Legal lacunae

• Archaic laws like IPC 1860 don’t capture the complexities of administration and lead to the escape of wrongdoers.
• Lacunae in the Lokpal act and delays in the appointments both at the state and central levels
• Dilution of the RTI act and political misuse of CBI and other agencies.

Administrative lacunae

• Loopholes give discretionary powers to the officials making working prone to corruption.
• Lack of resources, funding, infrastructure and manpower in the vigilance institutions.
• Lack of incorporation of standard practices by organizations like Banks, sports organizations which results in multi-billion-rupee scams.
• g. Punjab National Bank scam, commonwealth scam.

Judicial delays

• Lack of protection to good Samaritans
• Targeting of upright and non-corrupt officials and rewards to corrupt officials
• Near non-existent whistleblowers protection

Social problems

• The mindset of the citizenry that doesn’t look at the problems seriously and even accepts it as a necessary part of the system.
• Increasing consumerism in the new middle class that is ready to bribe to get things done.
• Failure of social morality, education system to inculcate the values

Impacts of corruption

Hindrances to developmental process

• Loss of wealth due to corruption and siphoning away of taxpayers’ money leave little to spend in the social sector.
• Corruption in the social sectors like PDS, health and education schemes lead to demographic disadvantage.

Economic loss

• Undermines ease of doing business.
• Corruption in the public services sector carries high risks for conducting good businesses.
• Companies are likely to unwanted red tapes, petty corruption, bribes for finalizing any procedures or deals.
• Wrong allocation policies result in undervaluation of resources like Coal blocks, Hydrocarbon projects, Spectrum allocation. Eg. 2G scam, Coalgate.
• This mismanagement of resources leads to environmental degradation and exploitation.
• Corruption of financial sector officials like Banks, the stock market erodes the strength of the economy. E.g. PNB scam, PMC scam, Harshad Mehta scandal

Social sector losses

• Corruption in government projects targeting poor and vulnerable section of the society increases the economic gap between the rich and the poor
• The corrupt system denies the poor a chance to improve their status rendering them eternally poor

Legal Framework for Fighting Corruption:

• Prevention of Corruption Act, 1988 provides for penalties in relation to corruption by public servants and also for those who are involved in the abetment of an act of corruption.
• Amendment of 2018 criminalised both bribe-taking by public servants as well as bribe giving by any person.
• The Prevention of Money Laundering Act, 2002 aims to prevent instances of money laundering and prohibits use of the ‘proceeds of crime’ in India.
• The Companies Act, 2013 provides for corporate governance and prevention of corruption and fraud in the corporate sector.
• The term ‘fraud’ has been given a broad definition and is a criminal offence under the Companies Act.
• The Indian Penal Code, 1860 sets out provisions which can be interpreted to cover bribery and fraud matters, including offences relating to criminal breach of trust and cheating.
• The Foreign Contribution (Regulation) Act, 2010 regulates the acceptance and use of foreign contributions and hospitality by individuals and corporations.

Regulatory Framework:

• The Lokpal and Lokayuktas Act, 2013 provides for an establishment of an ombudsman for the central and state governments (Lokpal and Lokayuktas, respectively).
• These bodies are required to act independently from the government and have been empowered to investigate allegations of corruption against public servants, which include the prime minister and other ministers.
• The Central Vigilance Commission is mandate is to oversee the vigilance administration and to advise and assist the executive in matters relating to corruption.

Way forward

There is a need for windfall reforms in each and every section of the system to fight the menace. Every aspect of governance must be improved for efficiency, economy, and effectiveness .

Electoral reforms

• Imposing limits on the overall expenditure of the political parties .
• Making state funding of elections a reality.
• Empowering ECI by giving legal force to MCC and making paid news a criminal offence.
• Strengthening of autonomous institutions
• Protecting the autonomy of CIC-giving him/her a constitutional status
• Eliminate overlapping of jurisdiction- e.g. Lokpal and CBI

Administrative reforms

• Establishing the Civil Service Board to curb the excessive political control over the administration.
• Conducting periodic sensitivity training for the civil servants.
• Simplifying the disciplinary proceedings and strengthening preventive vigilance within the departments to ensure corrupt civil servant do not occupy the sensitive position.
• Police and judicial reforms – implementation of Prakash Singh recommendations .

Governance reforms

• e-gov apart from advancing the good governance objectives of accountability and transparency also seeks to reduce the manual interface between state and citizen thus preventing the incidences of bribery
• Drives like Digital India projects like Government e-Marketplace must be implemented.
• Enactment of the right to service act. E.g. Rajasthan social accountability bill

Economic reforms

• Negating legal lacunae in banking, stock market legislations.
• Improving corporate governance by implementing corporate governance committee reports
• Formalization of the economy

Social sector improvements

• Awareness of citizenry by training them in RTI act, Citizens charter, social audits .
• Increasing democratization of the masses .
• Curriculum reforms to inculcate values even in higher education by which youngsters acquire high standards of ethical mindset.

Integrity, transparency, and fight against corruption have to be part of the culture. They must be thought of as fundamental values of the society we live in. In India, some recent anti-corruption initiatives have been taken. For example, various Supreme Court’s ruling in pursuit of curbing criminalization of politics, many e-governance initiatives will improve transparency and accountability. These measures are indeed steps in the right direction, but bringing behavioural change in society will act as the most potent weapon against corruption.

Source: Indian Express

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(Essay) An Essay: Corruption in India

An Essay: Corruption in India :

Introduction Power tends to corrupt, and absolute power corrupts absolutely.      It is not easy to define corruption. But in a narrow sense, corruption is mostly concerned with ‘bribery’ and it takes several forms. Corruption is a global phenomenon and it is omnipresent. Corruption has progressively increased and is now rampant in our society. National scenario      Corruption in India is a consequence of the nexus between Bureaucracy, politics and criminals. India is now no longer considered a soft state. It has now become a consideration state where everything can be had for a consideration. Today, the number of ministers with an honest image can be counted on fingers. At one time, bribe was paid for getting wrong things done but now bribe is paid for getting right things done at right time. Effects of corruption      Indian administration is tainted with scandals. India is among 55 of the 106 countries where corruption is rampant, according to the Corruption Perception Index 2004 Report released by Transparency International India. Corruption in India leads to promotion not prison. It is very difficult to catch ‘big sharks’. Corruption in India has wings not wheels. As nation grows, the corrupt also grow to invent new methods of cheating the government and public. Causes of corruption      The causes of corruption are many and complex. Following are some of the causes of corruption. · Emergence of political elite who believe in interest-oriented rather than nation-oriented programmes and policies. · Artificial scarcity created by the people with malevolent intentions wrecks the fabric of the economy. · Corruption is caused as well as increased because of the change in the value system and ethical qualities of men who administer. The old ideals of morality, service and honesty are regarded as an achronistic. · Tolerance of people towards corruption, complete lack of intense public outcry against corruption and the absence of strong public forum to oppose corruption allow corruption to reign over people. · Vast size of population coupled with widespread illiteracy and the poor economic infrastructure lead to endemic corruption in public life. · In a highly inflationary economy, low salaries of government officials compel them to resort to the road of corruption. Graduates from IIMs with no experience draw a far handsome salary than what government secretaries draw. · Complex laws and procedures alienate common people to ask for any help from government. · Election time is a time when corruption is at its peak level. Big industrialist fund politicians to meet high cost of election and ultimately to seek personal favour. Bribery to politicians buys influence, and bribery by politicians buys votes. In order to get elected, politicians bribe poor illiterate people, who are slogging for two times’ meal. Measures to combat corruption      Is it possible to contain corruption in our society? Corruption is a cancer, which every Indian must strive to cure. Many new leaders when come into power declare their determination to eradicate corruption but soon they themselves become corrupt and start amassing huge wealth.      There are many myths about corruption, which have to be exploded if we really want to combat it. Some of these myths are: Corruption is a way of life and nothing can be done about it. Only people from underdeveloped or developing countries are prone to corruption. We will have to guard against all these crude fallacies while planning measures to fight corruption. · Foolproof laws should be made so that there is no room for discretion for politicians and bureaucrats. The role of the politician should be minimized. Application of the evolved policies should be left in the hands of independent commission or authority in each area of public interest. Decision of the commission or authority should be challengeable only in the courts. · Cooperation of the people has to be obtained for successfully containing corruption. People should have a right to recall the elected representatives if they see them becoming indifferent to the electorate. · Funding of elections is at the core of political corruption. Electoral reforms are crucial in this regard. Several reforms like: State funding of election expenses for candidates; strict enforcement of statutory requirements like holding in-party elections, making political parties get their accounts audited regularly and filing income-tax returns; denying persons with criminal records a chance to contest elections, should be brought in. · Responsiveness, accountability and transparency are a must for a clean system. Bureaucracy, the backbone of good governance, should be made more citizen friendly, accountable, ethical and transparent. · More and more courts should be opened for speedy & inexpensive justice so that cases don’t linger in courts for years and justice is delivered on time. · Local bodies, Independent of the government, like Lokpals, Lokadalats, CVCs and Vigilance Commissions should be formed to provide speedy justice with low expenses. · A new Fundamental Right viz. Right to Information should be introduced, which will empower the citizens to ask for the information they want. Barring some confidential information, which concerns national and international security, other information should be made available to general public as and when required. Stringent actions against corrupt officials will certainly have a deterrent impact. Conclusion      Corruption is an intractable problem. It is like diabetes, can only be controlled, but not totally eliminated. It may not be possible to root out corruption completely at all levels but it is possible to contain it within tolerable limits. Honest and dedicated persons in public life, control over electoral expenses could be the most important prescriptions to combat corruption. Corruption has a corrosive impact on our economy. It worsens our image in international market and leads to loss of overseas opportunities. Corruption is a global problem that all countries of the world have to confront, solutions, however, can only be home grown. We have tolerated corruption for so long. The time has now come to root it out from its roots.

Courtesy : rediff blogs

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• Recently the International Anti-Corruption Day-2022 was organised by the CBI on ‘Anti-Corruption efforts – A sine qua non for Development and Security .

About the Corruption

• Corruption refers to misusing public power for personal gain. It can be done by an elected politician, civil servant, journalist, administrator of a school, or anyone in authority. 
• Thus, the corruption definition applies to different forms .
• Corruption in India is not limited to collusive high-level scams. Petty corruption, which affects the delivery of basic services and rights to people, is rampant.
• India has the highest rate of bribery and use of personal links to access public services such as healthcare and education in Asia, according to a survey released by global civil society Transparency International .
• India is in the 85th position among 180 countries in the Corruption Perception Index, 2021 .

Issues Linked to it 

• Corruption has a disproportionate impact on the poor and most vulnerable, increasing costs and reducing access to services, including health, education and justice.
• Corruption encourages dysfunctionality in government, perpetrates economic inefficiency and can be a serious threat to national security .
• the impact of corruption is especially heavy on common citizens, and even more on poorer and vulnerable persons in communities.
• With technological development, there are opportunities to prevent corruption but also areas where corruption can be much more difficult to trace, particularly in fields like cryptocurrency .

Government initiatives:

• Indian government has constituted a Special Investigation Team (SIT) on black money.
• It has enacted a comprehensive and more stringent new law – the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 . 
• There’s also a Benami Transactions (Prohibition) Amendment Act , 2016, which empowers the authorities to attach and confiscate benami properties. 
• Law enforcement agencies such as CBI have done a great deal to reduce corruption.
• The Prevention of Corruption Act, 1988 is an Act of the Parliament of India enacted to combat corruption in government agencies and public sector businesses in India.
• As the Prevention of Corruption Act saw limited success in preventing corruption in Government departments and prosecuting and punishing public servants involved in corrupt practices, an amendment was enacted (Amendment Act) and brought into force in 2018. 
• The Amendment Act attempted to bring the Prevention of Corruption Act in line with United Nations Convention against Corruption 2005, which was ratified by India in 2011.
• The intent behind the enactment of the Act is to promote transparency and accountability in the working of Public Authorities. 
• The Act seeks to protect whistleblowers, i.e. persons making a public interest disclosure related to an act of corruption, misuse of power, or criminal offense by a public servant.
• It is provided by the Right To Information Act, 2005, it has been an important weapon for whistleblowers in previous years.
• The RTI Act, 2005 is also called as a ‘twin sister’ of whistleblowing.
• The Lokpal and Lokayukta Act, 2013 provided for the establishment of Lokpal for the Union and Lokayukta for States.
• The Lokayukta is an anti-corruption authority constituted at the state level.
• It investigates allegations of corruption and mal-administration against public servants and is tasked with speedy redressal of public grievances.
• The Bill amends the Lokpal and Lokayuktas Act, 2013 in relation to the declaration of assets and liabilities by public servants. 
• It requires a public servant to declare his assets and liabilities, and that of his spouse and dependent children. 

Suggestions & way ahead

• Different steps can help in managing corruption and bringing it down. 
• Education is one of the most critical steps. It can help in reinforcing the correct business practices.
• Mandatory education courses like anti-money laundering must be introduced. 
• Accountability mechanisms can also help in curbing corruption.
• Furthermore, it can be easier to reduce corruption if reporting it becomes simple.
• The senior employees in the management department must lead by example and cultivate an open and transparent culture.
• Similarly, rewards and incentives must be granted to encourage people to cultivate an ethical culture. 
• There is a the need for real-time information sharing between law enforcement agencies. 

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What do you understand by corruption?

Corruption is a practice performed by an individual or organization. Corrupt practices include bribery, patronage, nepotism, embezzlement, influence peddling, use of one‘s public position for self-enrichment, partiality, absenteeism, abuse of public property, leaking and/or abuse of information, and the like.

In the Corruption Perception Index, India was ranked 85 among 180 countries.

Table of Contents

Types of Corruption in Civil Services

The typical manifestations of corruption in the civil service in developing countries like ours include:

Bribery is the act of promising, offering or providing a benefit in such a way as to improperly influence a public servant’s actions or decisions. Bribery is frequently seen as the most prevalent kind of corruption.

Bribes can influence the allocation of monetary benefits such as credit subsidies and favored prices, and exchange and can speed up the granting of permission, licenses, and permits to carry out perfectly legal activities. This is the so-called―grease money.

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Extortion entails pressuring a person or group to give something to a public servant (or employees) in exchange for acting (or not acting) in a specific way. The only difference between it and bribery is the use of violence or the threat of violence to extract money.

Embezzlement

When public employees who have been given the authority and responsibility over public resources steal those resources, whether they are financial or not, it is called embezzlement.

Fraud is a public servant’s actions or behaviors that mislead other people or organizations (such as the government, NGOs, or private enterprises) into giving the public servant a benefit that they would not otherwise receive.

Fraud is regarded as an economic crime that involves some form of deception for the benefit of oneself or another group.

Abuse of Power

Abuse of power occurs when a public employee uses their position of trust to improperly benefit another public employee, individual, or group. Additionally, it may involve a public employee discriminating against other public employees, people, or entities by abusing his or her positional authority.

Therefore, using discretion improperly for personal gain without outside coercion or extortion implies abuse of power.

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Conflict of Interest

Cases involving conflicts of interest include circumstances in which a public servant acts or fails to act on an issue in which the public servant’s interest or the interest of people or entities connected to the concerned official is directly or indirectly affected.

Insider Trading/Abuse of Privileged Information

Abuse of privilege or insider trading refers to the use of confidential information or knowledge that a public official has access to as a result of holding a public office to further their interests or the interests of entities or people close to them.

Favoritism is the practice of granting preferential treatment or favors by a person in a position of trust based on preconceived notions such as friendship, racial or ethnic prejudice, or even family relations.

Obstruction of Justice

When the natural course of justice or fairness is obstructed for the benefit of a select group of affluent, influential, and well-connected people and groups at the detriment of the general public, this is known as obstruction of justice. A good example of this would be the selective application of regulations.

Influence Peddling

Influence peddling often referred to as trading in influence, is the practice of using one’s power to improperly influence a person, organization, or government in exchange for money, loyalty, or any other tangible or intangible unfair advantage.

Causes of Corruption in Civil Services

Government officials’ lack of responsibility, unethical behavior, and corrupt practices are all included in the term “corruption in the civil service.”

Developing nations like India are more likely to experience the effects of corruption for several reasons, including:

• The widespread poverty and poor wages in the public sector
• The absence of any risk mitigation strategies, such as insurance, and a developed market
• Opportunities provided by complex, ill-defined, and inadequate laws and regulations
• Absence of properly established regulations, rules, or codes of behavior that apply to public officials, as well as a lack of enforcement agencies
• Lack of watch-dog agencies

Reason for the Prevalence of Corruption in Civil Services

Although the drivers of corruption are numerous, the most common reason for the prevalence of corruption in civil service include:

• The politicization of the Civil Service
• A highly politicized civil service is the creation of unethical civil officials who are willing to forgo the interests of the public to appease their political masters.
• Lack of Accountability in Public Organizations
• The colonial history and the absence of a full-fledged democratic system are the two primary causes of the extremely poor quality of accountability in government.
• The politicization of the state, institutional instability, and patrimonial economic management and incentives—wherein political and personal loyalty and obedience were rewarded more than merit.
• Weak Institutions for Enforcing Accountability and Ethical Standards
• Excessive and Opaque Regulations

Corruption is principally a governance issue – a failure of institutions and a lack of capacity to manage society using a framework of social, judicial, political, and economic checks and balances. Implementing and enforcing laws and regulations that guarantee accountability and transparency becomes more challenging when these formal and informal systems fail.

Way Forward

Strengthening Rewards and Penalties System: Rewarding integrity and punishing illegal behavior is perhaps the simplest strategy for fighting corruption.

Restructuring Bureaucracies: The moment has come to change the way that bureaucracies operate. About bureaucratic structure, there are seven sets of anti-corruption policies:

• decentralization
• bureaucratic discretion
• bureaucratic competition
• staff rotation
• whistleblowing
• streamlining regulation
• electoral incentives

Educational Campaigns: Informational anti-corruption interventions have a long history and gained popularity when Hong Kong’s Independent Commission Against Corruption (ICAC) used educational campaigns with remarkable effectiveness in the 1970s.

Enumerate Ethical and Public-Spirited Civil Servant: When listing the characteristics of an ethical and public-spirited civil servant, an ideal official should ensure that there are no open cases within his jurisdiction, exhibit the greatest levels of probity and integrity while in office, be proactive in communicating government policies to the public, and, most importantly, have compassion for the suffering of marginalized groups.

Reflecting on the importance of ‘good institutions’ for ‘good governance’: There is a need to re-engineer our institutions and streamline the processes to cut down delays and ensure timely delivery of the services.

Read:  Challenges of Corruption

Article Written By: Priti Raj

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Back to main page, corruption in india – causes, effects of corruption in india and types.

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Introduction

• Corruption in India is a consequence of the nexus between Bureaucracy, politics and criminals.
• India is now no longer considered a soft state.
• It has now become a consideration state where everything can be had for a consideration.
• Today, the number of ministers with an honest image can be counted on fingers.
• At one time, bribe was paid for getting wrong things done but now bribe is paid for getting right things done at right time.

What is Corruption?

• Corruption is the misuse of public power (by elected politician or appointed civil servant) for private gain.
• In order to ensure that not only public corruption but also private corruption between individuals and businesses could be covered by the same simple definition
• Corruption is the misuse of entrusted power (by heritage, education, marriage, election, appointment or whatever else) for private gain.

Causes of Corruption in India

• Low Pay Scales And Wages
• Lack of Stick And Fast Punishments
• Lack of Unity in Public
• Lack of Fundamental Rights Awareness in People of India
• Lack of Transparency in Deals and Affairs
• Lack of Independent detective agency
• Lack of enough powers to the judicial system in India
• Lack of Accountability
• Unhealthy Competition Encouragement in India
• Lack of Effective Management and Implementation
• Lack of Economic Stability In India
• Lack of Effective Leadership in India
• Lack of Autonomy
• Unemployment
• Poverty And Hunger
• Very Less Educational Institute and Medical Infrastructure .
• Vast Size of Population in India Is Biggest Cause of Corruption In India .
• Another Big Cause of Corruption In India Is nexus between political parties and Industrialist.
• Emergence of political elite who believe in interest-oriented rather than nation-oriented programmes and policies is Another Big reason of Corruption in india .
• Tolerance of People Towards Corruption is a Another big reason for Corruption In India.

Consequences of Corruption

• Rise in Unemployment
• Rise in Hunger and poverty
• Loss of Indian Economy Wealth
• Fall in growth of Indian Economy
• Power and Authority in Wrong hands
• Brain Drain is Biggest Consequence for India
• Psychological And Social Disorder
• Corruption is also the main cause of Poverty as Rich are getting richer & poor are getting poorer. Not all the packages, compensation announced by government reach the minorities and backward communities.

How can We Cure Corruption in India

• Give Good salary to Government Employees
• Bring transparency In Indian Economic System
• Try To make Indian Society Cashless
• More Number of Online transactions and provide bill For Every transactions
• Bring Political parties Under RTI
• Set Eligibility For Indian Politician
• Increase in Digital And E Governance
• Transparent tax structure by clean and clear enforcement
• More Police reforms and Power Full Judiciary
• Blacklist Corrupt Businessmen
• Bring More Transparency In Govt Job Recruitment
• Keep Inflation low
• Speed up the judgement and increase the courts
• Citizenship cancellation could be a highest level of punishment if their crime score reaches a certain extent.
• Disrespecting the dishonest

8 Effects of Corruption

• Lack of quality in services
• Lack of proper justice
• Chances of Unemployment
• Poor Health and hygiene
• Low growth rate of Economy
• Low Foreign Direct Investment
• Low Development Rate
• Low Standard of Living

Steps taken by Indian government

• The biggest step is demonetization i.e. banning 500 and 1000 rs notes which is the route of all evil, be it Corruption, Black Money, Terrorism.
• Under “Right to Information Act (RTI)“, citizens can now ask government about how out ta money is spent.
• With “Jan Dhan yojana” & “Direct Benefit Transfer” schemes, bank accounts of millions of people were opened so that they can get subsidies and benefits directly into their account.
• E-Auctions for spectrums and natural resources is a good step towards a corruption less India.
• Government is focusing more on Digitizing, which will lead to more transparency in functioning of government.
• Government introduced self-attestation of certificates and has removed interviews from lower posts, so no one can bribe their way through interview to jobs.
• Another potent check on corruption is Central Vigilance Commission (CVC). It was setup by the Government to advise and guide Central Government agencies in the areas of vigilance.

Anti-corruption laws in India

• Indian Penal Code, 1860
• Prosecution section of Income Tax Act, 1961
• The Prevention of Corruption Act, 1988
• The Benami Transactions (Prohibition) Act, 1988 to prohibit benami transactions.
• Prevention of Money Laundering Act, 2002.

Shameful Statistics That Prove How India Is The Most Corrupt Country In Asia

1.38% of land and property deals in india involve bribes.

• In India, 38% of land deals involve some form of bribes, mostly because for the buyer, that’s the only option left.
• The entire nexus of government officials, politicians, judicial officers, real estate developers and law enforcement officials control the property trade, wherein they acquire and sell land illegally.

More than 60 Percent Enforcement Officials takes Bribes

• The police actually collect the highest amount of bribes. Passport verification make up 30% of the average bribe paid by a regular Indian in a year, while traffic violations make up 25%.
• The methods are numerous and the amounts far-reaching, ranging from botched breathalyser tests charging Rs. 2500 to Rs. 500 for passport verification.

60% of road stops for truckers are for extorting money

• According to Transparency International, truckers pay ?222 crore in bribes every year. Authorities such as government regulators, police, forest and sales and excise force stoppages on roads, and 60% of these are for extorting money.These delays lead to an egregious loss in productivity.
• 60% of people who got their driving license from an agent haven’t taken the driving exam
• 31% of members of parliament have criminal cases against them
• Just about 40% of grain intended for the poor reaches them.

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Demonetisation – A Success or a Failure?

From Current Affairs Notes for UPSC » Editorials & In-depths » This topic

The government under the prime ministership of Narendra Modi on November 8, 2016, had announced that the largest denomination of Rs 500 and Rs 1000 were demonetised with immediate effect ceasing to be a legal tender. Even though people suffered during demonetisation to get cash and exchange the banned notes, it gave a big boost to digital currency.

This topic of “Demonetisation – A Success or a Failure?” is important from the perspective of the UPSC IAS Examination , which falls under General Studies Portion.

What is Demonetisation?

• Demonetization refers to the decision of the government to revoke the legal tender status of a currency note. (Note- All the currencies issued by RBI are used as a legal tender because the value they bear is assured by the RBI).
• Once the currency note is demonetised, it cannot be used anymore.
• Central banks all over the world follow a practice where older currency notes are revoked and new currency notes with better features are issued.

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Was this the first time the government is demonetising?

• India opted for demonetization two times before the 2016 monetisation.
• The first instance of demonetisation by the government was implemented in 1946 when the RBI demonetised Rs 1,000 and Rs 10,000 notes.
• Later, higher denomination bank notes (Rs 1000, Rs 5000 and Rs 10000) were re-introduced in 1954.
• However, the Morarji Desai government demonetised these notes in 1978 .
• According to data provided by RBI Rs 10,000 note was printed in 1938 and 1954 and was subsequently demonetised in 1946 and 1978 respectively.
• Demonetisation has been implemented in India primarily because of economic and political issues like hyperinflation, hostilities, political turmoil, or other sensitive states of affairs like corruption , etc.

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What were the main motives behind 2016 demonetisation?

Government and RBI had many intentions behind this. The major objectives of the demonetisation drive are as follows:

• Curb Corruption: Cash and corruption are correlated. By reducing the cash circulation one can control the corruption as well.
• Eliminate Counterfeiting/Fake currency: The Annual Report of RBI shows that during the year 2016-’17, Rs 41.5 crores worth of fake currency notes in the form of old Rs 500 and Rs 1,000 notes were detected in the banking system. The estimate of the total fake currency in the system was Rs 400 crores.
• Tackle Terrorism: High denomination notes like Rs. 500 and Rs. 1000 are often used in terrorist/naxalist activities, drug, and human trafficking. In addition, these notes constitute a huge percentage of money spent during general elections by political parties and candidates in India.
• Eradicate Black Money : The accumulation of black money generated by the income that has not been declared to tax authorities (tax evasion). Demonetisation would bring back those black money in the form of high-value notes into the banks which otherwise would not have any value.
• Improve digital transactions.
• Lower Cash-to-GDP ratio.

What are the positive impacts of demonetisation?

Increase in tax collection:

• Due to the demonetisation drive, there is a considerable increase in the number of Income Tax Returns (ITRs) filed.
• The number of Returns filed as on August 2017 registered an increase of 24.7% compared to a growth rate of 9.9% in the previous year.

Tackling Black Money:

• Transactions of more than 3 lakh registered firms are under the radar of suspicion while one lakh companies were struck off the list.
• The government has identified more than 37000 shell companies which were engaged in hiding black money and hawala transactions.
• About 163 companies which were listed on the exchange platforms were suspended from trading due to the pending submission of proof documents.

Impacts on terrorism, Naxalism, and trafficking:

• Due to demonetisation, terrorist and Naxalite financing has stopped almost entirely. The surrender rate has reached its highest since the demonetisation is announced.
• According to the Nobel laureate Kailash Satyarthi and several others working to fight human trafficking, the note ban had led to a huge fall in sex trafficking.
• Since demonetisation, no high-quality fake currency notes were found/seized by intelligence operations, including at the Indo-Bangladesh border.
• Furthermore, it also affected the hawala operators and dabba trading venues.

Increase in digital transactions:  

• In 2015-16, the value of transactions for debit and credit cards was ₹1.6 lakh crore and ₹2.4 lakh crore, respectively; in 2016-17, it was ₹3.3 lakh crore for each.
• Thus digital transactions have increased by around 50-55% points since demonetisation.
• Increase in digital transactions = RBI has to print fewer notes = save printing costs of the government.
• In addition to demonetisation, digital transactions have also been boosted by the launch of BHIM and UPI App.
• Increase in digital transactions could also improve the e-commerce business due to a decline in Cash On Delivery (COD) demand which could cut down their costs.

What are the concerns/negative impacts of demonetisation?

Poor Planning:

• At the time of demonetisation, the high-value notes constitute 87.5% of the currency value which is certainly a huge percentage of currency in the economy.
• Therefore, the same amount of currency should have been printed and made ready for the circulation in the economy once the demonetisation drive started.
• However, India went for demonetisation without having done this which led to many repercussions.

Economic impacts:

• Jobs: As people ran out of money, they could not be able to pay = economic activity slowed down & supply-chain affected particularly in the informal sector = A lot of people have lost their jobs. In a recent report by Azim Premji University, around 50 lakh people lost their jobs since demonetization was launched in November 2016.
• Savings: Households are now holding far more of their savings in cash than in the year prior to demonetisation = setback to the attempt at financialising household savings.
• Govt expenditure: by RBI cost the government around Rs 8000 crore during the period between July 2016-June 2017.
• GDP: During the Demonetisation, many industries were not able to continue their production activities due to the decrease in consumption demand. This is the reason why the country’s growth rate, which was 7.5% in September 2016 declined to 5.7% in June 2017. It means the demonetisation caused a reduction of 1.5% in the Indian GDP.

Tax Evasion/Black Money: One of the main motives behind demonetisation was to get people to pay taxes and eradicate black money.

• But cash is only one component of black wealth (about 1% of it). Black money is produced by different means which are not affected by the one-shot squeezing out of cash as it can quickly regenerate.
• Also, People very quickly found ways around the system to evade taxes.
• Many converted the unaccounted money into legal tender. Thus demonetisation itself became a tool for turning the black money into white.
• Moreover, there were logistical difficulties in penalising all of them = whole purpose gets defeated.

Corruption: It was claimed that the drive would reduce corruption by bringing to light the corrupt rich and by reducing the cash flow. But it is apparent that the corruption has not yet suppressed since demonetisation.

Fake notes: The number of fake notes in the banking system jumped by 20.4 % during 2016-17 compared to the previous year. Apart from this, we have heard the news of the fake notes coming out of ATM across the country.

Cash-GDP ratio:

• The cash-GDP ratio has reached levels similar to the period before demonetisation.
• Hence the government’s expectation of bringing behavioural changes among the people in terms of holding cash was not realised.

Agriculture:

• Reports of stress in agriculture have begun to appear because of demonetization.
• It is because, cash is the dominant mode of transaction in the agriculture sector from Sale, transport, marketing, and distribution of ready produce to wholesale centres or mandis.

Other impacts:

• Real-estate – It was badly affected as it is highly cash-dependent and has long been a favourite asset for holding black wealth.
• Banks – Banks are not in a position to considerably increase lending; their net interest income has decreased, thus, worsening their capital situation and their NPA situation got worse .
• Stock market –  Demonetisation hasn’t really affected the overall stock market much and investors believe the impact is temporary, with lower interest rates and more government spending offsetting any adverse effects.
• Foreign investors – Foreign investors were major sellers of equities because they feared an economic slump, resulting in the slump in the stock market.

To summarize, the main benefit that the demonetisation brought about was the considerable increase in the number of income tax returns filed and the resultant tax collections. It also led to a formalisation of the economy.

However, these could have been achieved by other policy initiatives as well and not necessarily by demonetisation.

Tax reforms and effective monitoring of suspicious transactions could be a viable alternative for resolving the issues that the policy-makers sought to fix through demonetisation.

Another benefit is that digital transactions have become more common. But financial savings in the form of currency notes have also increased, which means that people still value cash.

To conclude in the words of the ex-RBI governor, Raghuram Rajan, “the demonetisation is not a well-planned or well-thought-out, useful exercise”.

Demonetisation and COVID-19 pandemic

The sufferings during demonetisation and adoption of digital payments made people better prepared to survive the prolonged lockdown period during the first wave of Covid-19 pandemic. The extensive use of technology during the pandemic also provided further boost to the digitisation process.

• The petitions are challenging the government’s demonetisation of Rs 500 and 1000 currency notes.
• Government’s stand: The Centre has taken the position that, given subsequent developments and the passage of time, it has now become an academic issue.
• The court wants to look into the 2016 demonetisation decision to see if it has devolved into a “academic” exercise.
• The court has directed the Centre and the Reserve Bank of India to respond to the petitions.
• Judicial review : The Supreme Court acknowledged the “Lakshman Rekha” (limitations) on judicial review of government policy decisions. However, the manner in which it is done and the procedure can be scrutinised.

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Corruption in Public Life

Syllabus: Challenges of Corruption

Source: Indian Express

Context: The CBI has registered an FIR against former finance secretary Arvind Mayaram for alleged cheating, criminal conspiracy, and corruption.

• Previously, Jharkhand IAS officer Pooja Singhal was suspended for misappropriation of funds in MGNREGA

What is the case agains Mayaram?

He is accused of extending undue favours to the UK-based company De La Rue by giving a three-year extension to its “expired contract” for the supply of exclusive colour shift security thread for Indian currency notes when he was finance secretary.

What is Corruption?

Corruption refers to  unethical behaviour, which is characterized by misuse of public or organizational power , causing harm not only to organizations but also to society.

• The word corrupt is from the Latin word ‘corruptus’ meaning to break or destroy
• Corruption is an important manifestation of the failure of ethics
• Corruption misuse of entrusted power for private gain

The Wheel of corruption:

In India, corruption, and abuse of office are aggravated by the following factors:

• The colonial legacy of unchallenged authority , the propensity to exercise power arbitrarily – easy to deviate from ethical conduct
• Enormous asymmetry of power – eco, social inequalities, caste legacy, 90% workforce in unorganized sector
• Policies after independence – e.g. State subsidies, and beneficiary-oriented programmes in the situation of asymmetry of power converted public servants into patrons, citizens into mendicant
• Over-centralization increases corruption – a large number of functionaries b/w citizens and decision-makers diffuses accountability
• Quality of politics – criminal-politician nexus
• Politicians secure votes through money, and muscle power & criminals enter politics to interfere in crime investigation, monetary gain creates “acceptance” for criminals to enter politics

Impact of Corruption:

Two approaches to deal with corruption and abuse of office

• Overemphasis on values, and character – assume values must be restored to fight Corruption
• Have the belief that most humans are fundamentally decent but a small proportion cannot reconcile individual goals with the goals of society. For such persons, we must deal with them firmly
• The creation of institutions and the designing of incentives are crucial for promoting the ethical conduct of civil servants
• Need systemic reform Holistic approach
• Punitive measures as a deterrent
• Preventive measures to reduce opportunities

Related News:

UK-based company De La Rue kickbacks to Indian bureaucrats were revealed through Panama Paper leaks (2016). Hence it becomes important to know the different paper leaks

About Printing of Currency notes

Bank notes are printed at four currency presses , two of which are owned by the Government of India through its Corporation, Security Printing and Minting Corporation of India Ltd. (SPMCIL) and two are owned by the Reserve Bank , through its wholly owned subsidiary, Bharatiya Reserve Bank Note Mudran Private Ltd

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Q. Fighting corruption is often seen as a crucial step towards building better public institutions and improving the quality-of-service delivery. Comment. (10M)

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