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August 14, 2011




Page: 13/29

Home > 2011 Issues > August 14, 2011

Corruption: Old disease now an epidemic
By MV Kamath

THE word corruption is as old as the hills. It is not something that has suddenly erupted in Delhi during the second term of the UPA. There are references to it in one of India’s most ancient texts. Its range and intensity, naturally have varied from time to time and century to century, depending on prevailing social conditions. Afterall what does the term baksheesh imply at its lowest level? The British engaged in corruption right from the times of the East India Company. The British came to power not just by waging wars and winning them, but by other less bloody but more disputable means. Who hasn’t heard of Mir Jaffer?

Once the British came formally as the ruling power there wasn’t any need to indulge in questionable activities. Those were the times, especially after 1857 when a powerful administrative force was imposed on the state which, not long after, gained the reputation of being incorruptible. There were two main reasons for the Indian Civil Service – often referred to as the Heaven-born Service – to gain such high reputation.

In the first place, those who joined the Service were all British, not too often hailing from the upper middle classes. They were paid extremely well for their times. Besides, to administer well tney had to be not only incorruptible but had to be seen to be so. And they played their game well. In the early years of Indian Independence, the newly-formed Indian Administrative Service (IAS) sought to match its predecessor’s stature. But things began slowly to change. A major change occurred when the Government of the day imposed the Permit-License Raj on the country. It opened the door to corruption, at first imperceptibly, but as the years rolled by, more openly and daringly. Attention has been drawn to it in a classic study of Indian bureaucracy by Sanjoy Bagchi, himself a former bureaucrat, entitled The Changing Face of Bureaucracy: Fifty Years of the IAS. He speaks about the Emergency and what it did to the bureaucracy. But things had started to decline even earlier. In his middle years as Prime Minister, as the smell of corruption came increasingly to hit the nostrils, Jawaharlal Nehru had threatened “to hang every black marketeer and corrupt person on the nearest lamp post”. Sadly, no lamp post was besmirched during his lifetime. Following the political turmoil that followed Lal Bahadur Shastri’s death and Indira Gandhi’s coming to power, and especially after the Congress got divided, black money started growing fast. Bureaucrats could be bought; one even suspects that some of them were even used to raise money for fighting elections.

The Emergency that Indira Gandhi introduced brought in sycophancy and corruption on a larger scale. As Bagchi has noted: “The IAS was no longer the same when normal times returned. It tended to be highly politicised and increasingly corrupt.” Smart alecs in the business world got into action like Haridas Mundhra. Ministers, too, entered the field. Remember the case of the then Union Petroleum Minister KD Malaviya charged with favouring a businessman called Serajuddin? He had to be relieved of his office. The Mundhra Case was worse still. The Union Finance Minister, TT Krishnamachari had to resign because of it. The charge was of manipulation of Life Insurance Corporation funds. There were other causes where Chief Ministers like Punjab’s Sardar Pratap Singh Kairon, Orissa’s Harekrushna Mehtab, Jammu & Kashmir’s Bakhshi Ghulam Mohammad and Bombay’s AR Antulay had to lose their office. There were cases against Lalu Prasad Yadav. Then there is the infamous Bofors Scandal involving the Gandhi family. Much, much earlier, no less a person than VK Krishna Menon had his name blackened. And to this add the jeep scandal and the HDW submarine scam which reportedly cost the exchequer a modest Rs 32.55 crore. Chicken feed, today’s operators would say, considering the Rs 1.45 lakh crore involved in the 2G scam, under Communication Minister A Raja. That makes the loss incurred during his predecessor Sukh Ram’s time of about a mere Rs 1,200 crore as petty. It is to this sad stage that we have come.

And then there is the matter of money stashed in banks abroad notably in Switzerland by unscrupulous businessmen, either directly or through agents. It is claimed that if all the money stashed abroad is recovered, India could not only pay all its foreign debts thrice over but do away with income tax for thirty long years! Since 1956 there have been a dozen studies of the place of black money in the national economy. Nicholas Kaldor, invited by Jawaharlal Nehru to look into the issue for the first time, estimated the shadow economy at five per cent of GDP. In 1971, the Justice KN Manchoo Direct Taxes Enquiry Committee Report put black money at 5.1 per cent of GNP. Eleven years later, the percentage had escalated to as high as 48.1 per cent, according to estimates of unreported economy done by two economists, P Gupta and S Gupta.

The worst discovery was made by Dev Kar’s Emperical Study on the Transfer of Black Money from India. It stated that between 1948 and 2008, a period of sixty years, as much as $213.2 billion had been stashed in banks abroad, their current value approximating around $ 500 billion. The most recent study by Shankar Aiyar reported in The New Indian Express (June 3) is even more disconcerting. According to him, nearly half of the Rs five lakh crore spent on poverty alleviation doesn’t reach beneficiaries. A third of power generated in the country is lost to theft but no one bothers to inquire into it. Citizens pay Rs 72,999 crore a year “as rent for politicians to stay on in power”.

Similarly, Corporate Tax Exemptions are another Public Private Partnership that has cost Rs 17 lakh crore in revenue foregone. Wrote Aiyar: “Contrary to popular perception, much of the loot is in the system and not stashed in vaults. It is disguised in land holdings, stock options in infra-structure companies, ownership of airlines, non-bank finance companies and even road-toll companies that allow easy entry and exit for cash.”

On May 29 The Times of India reported that Karnataka’s Tourism and Infrastructure Minister G Janardhana Reddy sits on a gold chair worth Rs 2.2 crore, offers pooja to gold idols worth Rs. 2.58 crore and wears a belt worth Rs 13.15 lakh. The list of jewellery he owns runs into three full pages and is worth crores. Has anyone asked where the money for all this luxury has come from? Where is our bureaucracy?

In a separate context, Sanjoy Bagchi writes: “The IAS failed to distinguish between the government of the day and the political party in power. The situation was further confounded when the prime ministers demanded personal loyalty before selecting secretaries to government. From being public servants, many members of the IAS became personal servants and stooped to function like servile lackeys in a medieval court.” According to Bagchi, the deterioration in the civil service began in the 1970s in the wake of a single political party monopolising political power for a long period. The fear now is that the same degeneration may occur with the UPA having been in power for two successive terms. Thanks to an awakened public, it is unlikely that the UPA will win the next general elections. The Karunanidhi family has already lost in the Tamil Nadu State elections, even after spending reportedly a fabulous Rs 500 crore in the process. Laws can help. A powerful Lokpal Bill can, to an extent, help in reducing, not completely eliminating, corruption. But in the end it is the nature of our politics, the manner in which funds are raised to fight elecions, the manner in which politicians try to blackmail major political parties by starting their own petty parties and the accompanying cynicism that call for correction. We need strong leadership that, by example, keeps corruption at bay. Is that asking for too much? This is a challenge facing the NDA at the next election. But more specifically, it is a challenge that the BJP must facefor its own good and for the good of the nation.




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