MCQs and Answers

Since 1991, economic liberalisation in India has reduced red tape and bureaucracy, supported the transition towards a market economy and transformed the economy, with record growth rates of 9.2% in 2007 and 9.6% in 2006.

However, though the Indian economy has become the 6th largest in the world, its growth has been uneven across social and economic groups, with sections of society experiencing some of the highest levels of poverty in the world. Endemic corruption contributes to this uneven distri­bution of wealth. The cost of corruption, perceptible in public sector inefficiencies and inadequate infra­structure, is undermining efforts to reduce poverty and promote sustainable growth.

Major scandals involving high level public officials have shaken the Indian public service in recent years, with politicians and public servants regularly caught accepting bribes or mismanaging public resources.

This suggests corruption has become a pervasive aspect of Indian politics and bureaucracy. A report by Global Integ­rity provides an overview of the major corruption scandals that have hit the headlines over the past years, including:

September 2000: Former Prime Minister Rao was convicted of criminal conspiracy and corruption in the 1993 votebuying scandal and became the first Indian Prime Minister to be convicted in a criminal case. He was acquitted on appeal, however, in March 2002.

March 2001: Following the release by an Indian news website of a videotape showing 31 politi­cians, high level officials, bureaucrats and army officials taking bribes, the Defence Minister and lead­ers of the ruling BJP party were forced to resign. Four defence ministry officials were also suspended.

September 2005: Former Railway Minister Laloo Prasad Yadav was charged with misappropriating state funds in the long running “fodder scam” while he was the Bihar Chief Minister and of embezzling over US$ 40 million in state funds intended for the purchase of animal fodder. In total, 170 persons were charged in connection with this scandal.

In January 2006: A reporter in Assam writing articles accusing local forestry service officials of having links to timber smuggling was murdered.

In March 2006: The BJP’s alleged corruption in a military contract to buy six submarines from two French companies, claiming that the government overpaid by approximately US$ 113 million and used the excess to pay middle men that helped secure the deal.

In January 2009: Satyam Computer Services Ltd was barred by the World Bank from bidding for contracts for eight years and top officials were arrested after a major financial fraud over several years was disclosed.

In August 2010: The IPL scam and Madhu Koda Scam early this year and now Common Wealth Games Scam.

Though India is credited with having made considerable progress in terms of economic reform over the past few years, corruption is perceived to be widespread and entrenched at all levels of the political and administrative system. India ranks 84 from 180 countries surveyed in Transparency International’s Report.

2009 Corruption Perception Index (CPI), with a score of 3.4 (0 being the most corrupt and 10 being the last) since the first iterations of the index, India has scored between 2.7 and 3.5, indicating that – despite some progress – corruption continues to be perceived as rampant and endemic by the various CPI sources.

Similarly, the World Bank Governance Indicators suggest little change over the years. The coun­try performs consistently above average on indicators of voice and accountability, government effec­tiveness and the rule of law, but poorly in terms of regulatory quality and control of corruption. Its rating for political stability is particularly weak.

Freedom House 2010 comes to similar conclusions, noting that government effectiveness and accountability continue to be undermined by the close connections between crime and politics, weak government institutions and widespread corruption.

Global Corruption Barometer 2009: Political parties are perceived to be the most corrupt institu­tion by the Indians, according to 2009 Global Corruption Barometer. The Barometer, a global public opinion survey, released today by Transparency International (Tl), found 58 per cent of the Indian re­spondents identified politicians to be single most corrupt individuals. 45 per cent of the people sampled feel that the government is ineffective in addressing corruption in the country.

Civil servants /public officials were rated by 13 per cent of respondents as the second most corrupt institution in the country. Other institutions that were polled included the parliament/legislature, the private sector, media and the judiciary.

The survey in India, conducted at the national level between October and November last year also indicated that the perception of government effectiveness in relation to addressing corruption had im­proved from 2007. Forty two per cent of people analysed, said that government’s actions in the fight against corruption was effective.

The Barometer, now in its sixth edition, surveyed 73,132 people in 69 countries including 12 coun­tries from Asia Pacific. In India, the survey was conducted in five metros – Delhi, Mumbai, Kolkata, Chennai and Bangalore. The main findings for India are as follows:

» 10 per cent of the respondents feel that Parliament and law making bodies are corrupt

» 9 percent of those surveyed consider business and private sector to be corrupt

» 8 per cent consider that corruption in media affect the lives of people, and » 3 per cent consider the judiciary to be corrupt.

Petty Bribery and Economic Crisis Poor Punished Twice:

The 2009 Barometer shows the poorest families continue to be punished by petty bribe demand. Across the board, low-income response dents were more likely to be met with bribe demands than high-income respondents.

While only nine per cent of the respondents reported having paid bribes, Transparency International India’s (Til) Inch Corruption study 2008 that surveyed corruption in the below poverty line sector shows that the poor are forced to cough up about Rs 9000 million as bribe to avail basic and need based services.

Petty corrup­tion denies people their entitlement to basic and need based services, as a result of which the poor find themselves at the losing end of corruption.

The Indian court system consists of a supreme court, high courts at state level and subordinate courts at district and local level.

According to the Global Corruption Report 2007, the upper judiciary is considered relatively clean, with open court proceedings and free access to prosecution documents authenticated orders, etc. In the lower justice institutions, corruption is reportedly rampant and systemic.

The Global Corruption Barometer 2007 gives the judiciary a score of 3.8 on a 5 point scale, while 80% of the 2005 Tl India CMS study’s respondents perceive the judiciary as corrupt. 47% claim to have 3 paid bribes to lawyers or court officials. Court procedures are very slow and complicated, and the court system is severely backlogged and understaffed.

This results in delays in the processing of cases, and a loss of confidence in the law and in the justice system. (Freedom House 2008 estimates that there are currently 30 million civil and criminal cases pending).

There is also a high level of discretion in the processing of paperwork during trials and multiple points where court officials can misuse their power with impunity. In such contexts, people are tempted to resort to bribes, favours, hospitality or gifts not only to obtain a favourable decision but to move the case through the system and speed up the court proceedings.

The independence of the judiciary is guaranteed by the Constitution and India is ranked 26th of 131 countries on indicators of judicial independence in the Global Competitiveness Report 2007-2008.

According to the Global Corruption Report 2007, however, there have been recent cases of political interference in judicial decisions involving powerful individuals. In spite of the various legal provisions in place, the appointment of judges is not always free from political interference.

The Global Integrity Report 2007 also rates judicial accountability as weak. The weakness of the judiciary, the lack of political independence of the police and poor law enforcement contribute to a culture of impunity where few politicians or civil servants are indicted or convicted for corruption.

These findings confirm the prevalence of the bureaucratic and administrative forms of corruption that take place at the implementation end of politics, where the public meets public officials.

Bureaucratic corruption pervades the Indian administrative system with widespread practices of bribery, nepotism, and misuse of official positions and resources. The Bertelsmann Foundation 2008 report states that India is characterized by a deeply rooted patronage system and pervasive corruption at all levels of the polity and administration.

The country is further characterized by rigid bureaucratic structures, an exclusivist process of decision-making, overly centralized government, poorly-paid civil servants and the absence of effective internal control mechanisms.

Political corruption and corruption scandals involving high ranking officials and ministers periodically hit the headlines, undermining the legitimacy of democratic processes and citizens’ trust in public institutions.

Vulnerable Sectors and Institutions

Public Procurement:

Public procurement is especially vulnerable to corruption in most developing countries. In India, y there is a reasonably good framework of rules and procedures for public procurement that requires t. open tenders available to all qualified firms without discrimination, the use of non-discriminatory tender s documents, public bid openings and selection of the most advantageous tenders, taking all factors into it consideration.

These regulations are apparently poorly enforced, however, as public contracting contin­ues to be marred by major corruption scandals involving high level politicians. In the 2006 World Enterprise Survey, close to 24% of respondent firms confirmed they were expected to make a gift or to secure a government contract.

In addition, companies face different laws in different states, which complicate their operation throughout the country. According to the World Bank Country Procure- Assessment Report 2003, the Indian public procurement system is generally affected by a lack of d consistency as well as low credibility and public confidence in the system.

Corruption is perceived to be worse at the state level than at the federal level, due to the lack of qualified staff and widespread if political interference in state administration. The report further notes that the average bribe to obtain a i, public contract is estimated at 15% of the contract’s value.

Licenses and Public Utilities: 52.2% of the firms surveyed by the above-mentioned 2006 World

Bank Enterprise survey reported being expected to give gifts to secure an operating license. Corruption also affects access to public utilities such as water, phone and electricity. Compared to the 2006 edition of the Global Corruption Barometer, most utilities and departments have fared worse in terms of public process.

Close to 40% of the World Bank Enterprise survey reported paying bribes to get an electrical connection and 27% to get a water connection. According to the Global Corruption Report 2008, citi­zens believe that corruption is on the rise in these sectors.

Tax and Customs Administration: 52.3% of the firms covered by the World Bank Enterprise survey reported being expected to give gifts in meetings with tax officials. In this sector, rules and procedures are extremely cumbersome; giving tax officials wide discretionary powers to interpret the rules.

Some are suspected of deliberately stalling administrative procedures to induce facilitation payments. Bribes may be paid for an underassessment of incomes or to obtain penalty reductions or tax refunds. According to the 2005 Lt India Corruption Survey, 20% of the respondents admitted having paid bribes to the tax department, while 60% perceived the department to be corrupt.

India has a decentralised federal system of government in which state governments possess broad regulatory power. Although corruption is found to be pervasive across all states and public services, several reports indicate important regional variations in the level and impact of corruption.

A World Bank and IFC report from 2004 notes that corruption and excessive regulations are cited as major obstacles to business across all India, but that these figures rise respectively to 62% and 64% in the states of Gujarat and Karnataka. Both the 2005 and 2007 India corruption studies also point to regional variations in corruption patterns.

For example, Himachal Pradesh, Andhra Pradesh and Maharashtra are perceived to experience moderate levels of corruption while states such as Bihar, Jammu and Kashmir and Madhya Pradesh are affected by alarming levels of corruption.

In 2007, the level of corruption was found to be moderate in all services studied in Himachal Pradesh, whereas in Madhya Pradesh and Assam, the level of corruption in all services was high, very high or alarming. There are also regional differences in the sectors and institutions most affected by corruption at the state level, as illustrated by the 2005 study:

• In Gujarat, the judiciary, the police and land administration are ranked as the most corrupt ser­vices in the state.

• In Maharashtra, municipal services are perceived as most corrupt.

• In Punjab, the police, the judiciary and municipal services are perceived to be most affected by corruption.

• In Bihar, all public services are ranked among the most corrupt in India;

• According to Freedom House 2008, rebel groups operate extensive extortion networks in the North East of the country, compounding the impact of corruption in the various affected states.

There are various bodies in place for implementing anticorruption policies and raising awareness ‘ on corruption issues. At the federal level, key institutions include the Supreme Court, the Central Vigi­lance Commission (CVC), the Central Bureau of Investigation (CBI), the Office of the Controller & _f Auditor General (C&AG), and the Chief Information Commission (CIC).

At the State level, local anti- corruption bureau have been set up, such as the Anti-corruption Bureau of Maharashtra. The Supreme Court has taken a stronger stance against corruption in recent years, as confirmed by the Bertelsmann Foundation Report 2008. It has challenged the powers of states in several instances. For example, in 2007 in Uttar Pradesh, it challenged the state governor’s powers to pardon politically connected individuals based on arbitrary considerations.

In other instances, judges have taken on a stron­ger role in responding to public interest litigation over official corruption and environmental issues. In December 2006, in a landmark ruling, the Supreme Court ruled that prosecutors do not need prior permission to begin proceedings against politicians facing corruption charges.

It has also started ad­dressing corruption in the police by mandating the establishment of a police commission to look into these matters and has ruled that corrupt officers can be prosecuted without government consent.

The Central Vigilance Commission (CVC) is an independent watchdog agency established in 1964.

The CVC has the power to undertake inquiries or investigations of transactions involving certain categories of public servants. It also has supervisory powers over the Central Bureau of Investigations the CVC can investigate complaints against high level public officials at the central level, in cases where they are suspected of having committed an offence under the Prevention of Corruption Act.

The CVC is mandated to investigate public sector corruption at the federal level and not at the state level The CVC has an online whistleblower complaint mechanism available on its website. More recently, the CVC is working in collaboration with Transparency International India on introducing Integrity pacts in all state-owned public sector companies, industries and banks. In December 2007, the Commissioner issued a directive to this effect which has resulted in 32 public sector undertakings having adopted an integrity pact.

The Central Bureau of Investigation (CBI) is the prime investigating agency of the central govern­ment and is generally referred to as a credible and respected institution in the country. It is placed under the Ministry of Personnel, Pensions & Grievances and consists of three divisions: the Anti-Corruption Division, the Special Crimes Division and the Economic Offences Division.

These units have the power to investigate cases of alleged corruption in all branches of the central government, but need the per­mission of state governments to investigate cases at the state level. The Supreme and High Courts can instruct the CBI to conduct investigations. Like the CVC, the CBI has a complaint mechanism on its website.

The Office of the Comptroller and Auditor General (C & AG) is praised by the 2007 Global Integrity Report for being independent and well-staffed, with offices of Accountant Generals (AG) in all states.

The C & AG has produced several reports on state departments such as railways, telecommuni­cations, public sector enterprise, and tax administration. These reports have revealed many financial irregularities, suggesting a lack of monitoring of public expenses, poor targeting and corrupt practices in many branches of government. However, since the C & AG has no authority to ensure compliance with its recommendations, the government often fails to implement the reports proposals.

The Chief Information Commission (CIC) was established in 2005 and came into operation in 2006. It has delivered decisions instructing government, courts, universities, police, and ministries on how to share information of public interest. State information commissions have also been opened, thus giving practical shape to the 2005 Right to Information (RTI) Act.

The commissions have not been immune to criticism, however. Of India’s 28 states, 26 have officially constituted information commis­sions to implement the RTI Act. Nine pioneered access to information laws before the RTI Act was passed.

A state report card one year on complimented the quality of the law, but criticised the apathy and lack of awareness of many citizens.

E-Governance has considerably increased the speed of government services in a number of areas and reduced opportunities for bribery. A wide range of public services have been digitized such as obtaining licenses, paying taxes and clearing goods.

The National Portal of India was subsequently created and lists all the services that have been digitised. The assessment of the legal and institutional anticorruption framework points to a combination of robust institutions and lack of accountability in key areas, as emphasised in the 2007 Global Integrity Report.

Some institutions such as the Supreme Court or the Election Commission have taken a stronger stance to combat malpractice in recent years, while key pieces of legislation such as the RTI Act promote greater bureaucratic transparency, granting citizens access to public records.

Despite these emerging trends, however, the institutional anti-corrup­tion framework generally suffers from a lack of coordination, and overlapping and conflicting mandates between institutions addressing corruption.

Key institutions often lack the staff and resources to fulfil their mandate adequately and struggle to protect themselves from political interference. Often, they primarily focus on investigating alleged cases of corruption at the expense of preventive activities. Influential politicians and senior officials are rarely convicted for corruption, eroding public confidence in the political will to effectively tackle corruption.