Monday, March 17, 2014

Corruption in India

Excerpts from The Economist (noted for its credible understatements) dated 15th - 21st March are given below:

"One senior figure in the ruling Congress party worries about the feeling that “the law for the common people doesn’t apply to the political princelings and industrialists.”

For his part, the outgoing prime minister, Manmohan Singh, claims history will absolve his administration of its reputation for graft. The leader of the Congress campaign, Rahul Gandhi, a scion of India’s most famous political dynasty, says he is a reformer, though it is hard not to see his family’s secretive habits as part of the problem.

The Reddy family, which had close connections to the state’s BJP-led government, appeared to rule the roost. A businessman who visited a Reddy associate recalls being escorted by men with automatic weapons to a mansion with a Bell helicopter and a collection of 13 cars. “They were like Indian warlords,” he says.

The business interests of the present cabinet—if you believe the rumours—include a real-estate empire in Singapore and an insider-trading ring run by a minister’s son.

 54% of Indians say they paid a bribe in the last year, compared with 44% in Nigeria and 36% in Indonesia. Jobs with opportunities for extortion are sought after and a slice of the profits funnelled up the ranks.

Firms offer “speed money” to avoid red tape. “Everybody pays,” admits an executive at a firm known for its good governance. 

But India’s entry into the global economy created unprecedented opportunities for dishonesty.

 At the same time the elite cadre of the civil service, the Indian Administrative Service (IAS), has decayed. A top officer puts the clean and motivated proportion of its 5,000 members at just 10%—and adds that at the other end of the spectrum 15% are “scum”.

 Global Financial Integrity, a research organisation, estimates that gross illicit outflows from India have averaged $52 billion a year since 2007.

How much Indian money is stashed abroad? India’s tax authorities have a database of offshore-account holders given to them by the German government, but appear to be under political pressure not to release it. “They’re sitting on it,” says the anti-graft tsar in Delhi.

The banker adds that India’s big political clans may have been dealt with by a separate wing of the bank. Adding in an estimate for them, he calculates that the offshore assets of Indian residents held in all global banks as between $100 billion and $150 billion.

To hold a rally at which Sonia Gandhi, the head of Congress, appears costs up to $330,000. The buses, hats and sound-system all have to be paid for.

Illegal party funding is at the heart of corruption. But politicians are in denial, says the Congress bigwig. “Nobody wants to admit that they have taken money. It is a completely hypocritical system.” 

Some institutions are clean, too. They include the central bank and the Supreme Court, which on March 10th introduced rules to speed up trials of politicians. The banking system, despite its bad debts, has not been captured by tycoons as were those in South-East Asia and Russia in the 1990s. In February a chunk of radio spectrum was auctioned off smoothly, a process that makes impropriety harder."

The last paragraph is an acknowledgement that perhaps not all is lost. Politicians have not completed their job.

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