International Journal of Academic Research ISSN: 2348-7666; Vol.3, Issue-3(1), March, 2016 Impact Factor: 3.075; Email: [email protected]

Dr. A. Guravaiah, M.A.,M.A.,LL.M.,Ph.D., Senior Faculty in Law, Andhra Christian College of Law, Guntur, A.P

The economy of was under socialist-inspired policies for an entire was a social cancer generation from the 1950s until the late eating into our institutions of 1980s. The economy was characterized by governance. The educated youth had extensive regulation, protectionism, and major roll to play in sensitising the people public ownership, policies vulnerable to about the ill effects of corruption on the pervasive corruption and slow growth. In society and the indiduals. Corruption is 1960s, Chakravarthi Rajagopalachari one of the major burning problem for suggested License Raj was often at the developing countries like India. In 1970 core of corruption. in Hongkong had very much corruption, today Hongkong one of the most honest The Vohra Report, submitted by governance machinery. The government the former Indian Union Home of Hongkong appoints independent Secretary, N.N. Vohra, in October 1993, commission against corruption (ICAC). studied the problem of the There is no damnation authority on that criminalisation of politics and of the commission the anty corruption nexus among criminals, politicians and commission exercise the all the powers bureaucrats in India. The report without any problem. contained several observations made by official agencies on the criminal network In 17th century, during India's which was virtually running a parallel colonial era, corruption had become a government. It also discussed criminal serious issue. The British parliament gangs who enjoyed the patronage of witnessed numerous debates on politicians of all political parties and the and corruption particularly in the East- protection of government functionaries.1 India Company. International Journal of Academic Research ISSN: 2348-7666; Vol.3, Issue-3(1), March, 2016 Impact Factor: 3.075; Email: [email protected]

Corruption in India is a major issue and certain goods and services delivery, and adversely affects its economy. A 2005 the lack of transparent laws and study conducted by Transparency processes. There are significant International in India found that more variations in level of corruption as well as than 62% of Indians had first-hand in state government efforts to reduce experience of paying bribes or influence corruption across India5. peddling to get jobs done in public offices successfully. In its 2008 study, Transparency International reports In a 2011 report on Corruption in about 40% of Indians had first-hand India, one of the world's largest audit and experience of paying bribes or using a compliance firms KPMG notes several contact to get a job done in public office2. causes that encourage . The report suggests high taxes and In 2011 India was ranked 95th excessive regulation bureaucracy as a out of 178 countries in Transparency major cause. India has high marginal tax International's Corruption Perceptions rates and numerous regulatory bodies Index.We should recheck this 95th with the power to stop any citizen or because each and every public service business from going about their daily sector corrupted and private sector works affairs. This power to search and on commission basis and it is are same. question creates opportunities for corrupt Some of the largest sources of public officials to extract bribes; each corruption in India are entitlement individual or business decides if the effort programs and social spending schemes required in due process and the cost of enacted by the Indian government. delay is worth not paying the bribe Examples include Mahatma Gandhi demanded. In cases of high taxes, paying National Rural Employment Guarantee off the corrupt official is cheaper than the Act and National Rural Health Mission. tax. This, claims the report, is one major Other daily sources of corruption include cause of corruption in India and 150 India's trucking industry which is forced other countries across the world. In real to pay billions in bribes annually to estate industry, the high capital gains tax numerous regulatory and police stops on in India encourages large-scale its interstate highways3. corruption. The correlation between high real estate taxes and corruption, claims Indian media has widely the KPMG report, is high in India as well published allegations of corrupt Indian as other countries including the citizens stashing trillions of dollars in developed economies; this correlation has Swiss banks. Swiss authorities, however, been true in modern times as well as for assert these allegations to be a complete centuries of human history in numerous fabrication and false4. cultures. The desire to pay lower taxes The causes of corruption in India than those demanded by the state include excessive regulations, explains the demand side of corruption. complicated taxes and licensing systems, The net result is that the corrupt officials numerous government departments each collect bribes, state fails to collect taxes with opaque bureaucracy and for its own budget, and corruption grows. discretionary powers, monopoly by The report suggests regulatory reforms, government controlled institutions on process simplification and lower taxes as International Journal of Academic Research ISSN: 2348-7666; Vol.3, Issue-3(1), March, 2016 Impact Factor: 3.075; Email: [email protected] means to increase tax receipts and reduce the private marginal product of capital causes of corruption6. and investment rate. Levine and Renelt showed that investment rate is a robust In addition to tax rates and determinant of economic growth. regulatory burden, the KPMG report According to the neoclassical growth claims corruption results from opaque model, institutional variables contribute process and paperwork on the part of the to determining steady-state per capital government. Lack of transparency allows income levels and speed of convergence to room for maneuver for both the its steady state, hence affecting its demanders and suppliers of corruption. growth rate9. Whenever objective standards and transparent processes are missing, and Bureaucratic inefficiency also subjective opinion driven regulators and affects growth directly, such as through opaque/hidden processes are present, the misallocation of investments in the conditions encourage corruption7. economy. Additionally, corruption results in lower economic growth for a given Vito Tanzi in an International level of income10. Monetary Fund study suggests that in India, like other countries in the world, corruption is caused by excessive If corruption levels in India were regulations and authorization reduced to levels in the developed requirements, complicated taxes and economies such as the United States, licensing systems, mandated spending India's GDP growth rate could increase programs, lack of competitive free by an additional 4 to 5 percent, to 12 to markets, monopoly of certain goods and 13 per cent each year. C. K. Prahalad service providers by government estimates the lost opportunity caused by controlled institutions, bureaucracy, lack corruption, in terms of investment, of penalties for corrupt behavior by growth and jobs for India is over US$ 50 public officials, and lack of transparent billion a year11. laws and processes. A Harvard University study finds these to be some of the causes The level of corruption varies in of corruption and underground economy different parts of India. In a July 2011 in India8. report, The Economist for example, claims the state government of Gujarat has kept red tape to a minimum, does not According to a report by KPMG, ask for bribes, and does not interfere "high-level corruption and scams are now with entrepreneurial corporations. The threatening to derail the country's state, the article claims, has less credibility and economic boom". corruption, less onerous labour laws and effective bureaucracy. With growth rates matching some of the fastest growing Corruption may lead to further economic regions of China, Gujarat bureaucratic delay and inefficiency as continues to outpace growth in other corrupted bureaucrats may introduce red Indian states12. tape to extract more bribes. Such inadequacies in institutional efficiency could affect growth indirectly by lowering International Journal of Academic Research ISSN: 2348-7666; Vol.3, Issue-3(1), March, 2016 Impact Factor: 3.075; Email: [email protected]

throughout India, consisting of municipal and other government officials, elected A 2005 study done by politicians, judicial officers, real estate Transparency International (TI) in India developers and law enforcement officials, found that more than 50% of the people acquire, develop and sell land in illegal had firsthand experience of paying bribe ways15. or peddling influence to get a job done in a public office. Taxes and bribes are common between state borders; Transparency International estimates A 2006 report claimed state- that truckers pay annually 22,200 funded construction activities in Uttar crores (US$ 4.5 billion) in bribes. Pradesh, such as road building, were Government regulators and police share dominated by construction mafias, which in bribe money, each to the tune of 43% are groupings of corrupt public works and 45% respectively. The en-route officials, materials suppliers, politicians stoppages including those at checkpoints and construction contractors16. and entry-points take up to 11 hours in a day. About 60 percent of these (forced) Corruption caused problems in stoppages on road by concerned government funded projects are not authorities such as government limited to the state of Uttar Pradesh. regulators, police, forest, sales and excise, According to The World Bank, aid octroi, weighing and measuring programs are beset by corruption, bad department are for extorting money. The administration and under-payments. As loss in productivity due to these an example, the report cites only 40% of stoppages is an important national grain handed out for the poor reaches its concern. The number of truck trips could intended target. The World Bank study increase by 40%, if forced delays are finds that the public distribution avoided. According to a 2007 World Bank programs and social spending contracts published report, the travel time for a have proven to be a waste due to Delhi-Mumbai trip can be reduced by corruption17. about 2 days per trip if the corruption As an example, India enacted the and associated regulatory stoppages to so-called Mahatma Gandhi National extract bribes was eliminated13. Rural Employment Guarantee Act A 2009 survey of the leading (MGNREGA) on August 25, 2005. The economies of Asia, revealed Indian Central government outlay for this bureaucracy to be not just least efficient welfare scheme is 40,000 crore out of Singapore, Hong Kong, Thailand, (US$7.56 billion) in FY 2010–2011. After South Korea, Japan, Malaysia, Taiwan, 5 years of implementation, in 2011, the Vietnam, China, Philippines and programme was widely criticised as no Indonesia; further it was also found that more effective than other poverty working with India's civil servants was a reduction programs in India. Despite its "slow and painful" process14. best intentions, MGNREGA is beset with controversy about corrupt officials pocketing money on behalf of fake rural Officials are alleged to steal state employees, poor quality of infrastructure property. In cities and villages International Journal of Academic Research ISSN: 2348-7666; Vol.3, Issue-3(1), March, 2016 Impact Factor: 3.075; Email: [email protected] built under this program, and unintended very high levels of government, including destructive effect on poverty18. Cabinet Ministers and Chief Ministers, such as in the 2G spectrum scam, the 2010 Commonwealth Games scam and In Government Hospitals, the Adarsh Housing Society scam, Coal corruption is associated with non Mining Scam, mining scandal in availability/duplication of medicines, Karnataka and cash for vote scam21. getting admission, consultations with doctors and availing diagnostic services. According to Transparency International, National Rural Health Mission is judicial corruption in India is attributable another health care-related government to factors such as "delays in the disposal program that has been subject to large of cases, shortage of judges and complex scale corruption allegations. This social procedures, all of which are exacerbated spending and entitlement program hoped by a preponderance of new laws"22. to improve health care delivery across rural India. The program has been run since 2005 by the Ministry of Health of The Indian Armed Forces have witnessed the Indian government. The Indian corruption involving senior armed forces government mandated a spending of INR officers from the Indian Army, Indian 27,700 crores in 2004–05, and increased it Navy and Indian Air Force. A number of annually to be about 1% of India's gross scandals in the 2000–2010 period domestic product. The National Rural damaged the military's reputation; such Health Mission program has been scandals included skimming of armed clouded by a large-scale corruption forces money, re-selling of government scandal in which top government property, and faking combat missions23. appointed officials were arrested, several of whom died under mysterious circumstances including one in prison. A variety of organizations have been Corruption, waste and fraud-related created in India to actively fight against losses from this government program has corrupt government and business been alleged to be 10,000 crores (US$2 practices. Notable organizations include: billion)19. Bharat Swabhiman Trust established by well known Yog Guru Swami There have been several cases of Ramdev running a large campaign collusion of officials of the income tax against black money and corruption department of India for a favorable tax since last 10 years. treatment and relaxed prosecutions in 5th Pillar is most known for the return for bribes20. creation of the zero rupee note, a valueless note designed to be given to corrupt officials when they request As of December 2008, 120 of bribes. India's 523 parliament members were facing criminal charges. Many of the India Against Corruption is a biggest scandals since 2010 have involved movement created by a citizens from International Journal of Academic Research ISSN: 2348-7666; Vol.3, Issue-3(1), March, 2016 Impact Factor: 3.075; Email: [email protected]

a variety of professions and statuses since 2005. The Convention covers a wide to work against corruption in India. range of acts of corruption and also It is currently headed by Anna proposes certain preventive policies. Hazare. The Lokpal Bill, 2011 is a bill pending Jaago Re! One Billion Votes is an before the Rajya Sabha. organization originally founded by India's lower house of parliament voted to Tata Tea and Janaagraha to increase pass The Whistle Blowers Protection Bill, youth voter registration. They have 2011. The bill is now pending in its Rajya since expanded their work to include Sabha25. other social issues, including corruption. Association for Social Transparency, The Directorate General of Rights and Action (ASTRA) is an Income Tax Investigation, Central NGO focused on grass-roots work to Vigilance Commission and Central fight corruption in Karnataka. Bureau of Investigation all deal with anti- corruption initiatives. Certain states such One organization, the Lok Satta as Andhra Pradesh (Andhra Pradesh Movement, has transformed itself from a Anti-corruption Bureau) and Karnataka civil organization to a full-fledged (Lokayukta) also have their own anti- political party, the Lok Satta Party. The corruption agencies and courts26. party has fielded candidates in Andhra Pradesh, Tamil Nadu, and Bangalore. In The Anti Corruption Bureau 2009, it obtained its first elected post, (ABC) has launched a large scale when Jayaprakash Narayan won the investigation into the Central Bureau of election for the Kukatpally Assembly Investigation (CBI)’s involvement in the Constituency in Andhra Pradesh24. “cash-for-bail” scam.[56] CBI court judge Talluri Pattabhirama Rao was arrested on 19 June 2012 for taking a bribe to Public servants in India can be penalized grant bail to former Karnataka Minister for corruption under the Gali Janardhan Reddy, who was allegedly amassing assets disproportionate to his Indian Penal Code, 1860 known sources of income. Investigation Prosecution section of Income revealed that India Cements – one of Tax Act,1961 India's largest cement – had been investing in Reddy’s businesses in return The Prevention of Corruption for government contracts. A case has Act, 1988 also been opened against seven other The Benami Transactions individuals under the Indian Penal Code 27 (Prohibition) Act, 1988 to and the Prevention of Corruption Act . prohibit benami transactions.

Prevention of Money Laundering The Right to Information Act Act, 2002 (2005) and equivalent acts in the states, India is also a signatory (not ratified) to that require government officials to the UN Convention against Corruption furnish information requested by citizens International Journal of Academic Research ISSN: 2348-7666; Vol.3, Issue-3(1), March, 2016 Impact Factor: 3.075; Email: [email protected] or face punitive action, computerization There is also the Rs 23-crore of services and various central and state Ghaziabad PF scam in which a Supreme government acts that established Court judge (since retired), seven vigilance commissions have considerably Allahabad High Court judges, 12 judges reduced corruption or at least have of the subordinate courts and six retired opened up avenues to redress grievances. High Court judges are allegedly involved. The key accused, Ashutosh Asthana, died in jail mysteriously in October, 2009. He Corruption is eating into the had provided vital documents to the CBI vitals of our polity. No institution is free that established connivance of these of this menace. The Supreme Court’s judges. Recently, the Supreme Court observations on the rot in the Allahabad rejected the CBI’s plea for shifting this High Court are disturbing. A Bench case to New Delhi. consisting of Justice Markandey Katju Corrupt judges in the higher and Justice Gyan Sudha Misra said on judiciary can be removed only by November 26 that most judges of this impeachment. However, this method is High Court are corrupt and collude with cumbersome. The problem is not just a advocates. question of devising proposals for With a strength of 160 judges, the removal. The Judges (Inquiry) Act, 1968, Allahabad High Court has a rich history. prefaces impeachment by judicial inquiry. Remember the historic judgement of In Supreme Court Judge Justice V. Justice Jagmohanlal Sinha on June 12, Ramaswamy’s case, the inquiry indicted 1975 when he quashed Indira Gandhi’s him but the impeachment motion fell election to the Lok Sabha from Rae through in Parliament in 1992. Bareli? He declared her guilty of electoral The need for an institutional corruption and disqualified her from mechanism to deal with cases of contesting elections for six years. His misconduct against a High Court judge as bold judgement shook the country and also the question of interim led to the imposition of Emergency 13 arrangements on whether the judge be days later. assigned work pending investigation has Sadly, many High Court judges long been felt. A beleaguered judge are facing charges of corruption. The continuing in office smacks of grave cases involving Justice Soumitra Sen of impropriety. Remember how Karnataka the Calcutta High Court, Chief Justice High Court Chief Justice P.D. Dinakaran P.D. Dinakaran of the Sikkim High Court continued to attend court, took decisions (formerly of the Karnataka High Court) on the administrative side and even and Justice Nirmal Yadav of the delayed his departure for Gangtok? Uttarakhand High Court (formerly of the The government should fast- Punjab and Haryana High Court) are all track all cases of moral turpitude, at various stages. The charge that many corruption and nepotism. The process of former Chief Justices of India were impeachment of a judge should be corrupt has given a new twist to judicial speeded up with a time limit for corruption. The Supreme Court is seized obtaining the President’s sanction and of the matter (see box). impeaching him/her. International Journal of Academic Research ISSN: 2348-7666; Vol.3, Issue-3(1), March, 2016 Impact Factor: 3.075; Email: [email protected]

The Centre’s decision to set up a improve things without the force of law? National Judicial Oversight Committee They also referred to the syndrome of (NJOC) to look into complaints against “uncle judges”. The Union Law Ministry Supreme Court and High Court judges admits that this menace has spread to and impose “minor penalties” or many High Courts, including those in recommend their removal is welcome. Chandigarh, Shimla and Jaipur. In its This has been provided for in the Judicial 230th Report (2009), the Law Standards and Accountability Bill 2010 Commission has recommended that in tabled in the Lok Sabha on December 1. order to eliminate the practice of “uncle Significantly, the Bill is aimed at judges”, the judges, whose kith and kin replacing the Judges (Inquiry) Act, 1968. are practicing in a High Court, should not The NJOC will consist of a former Chief be posted in the same High Court. Union Justice of India, a Supreme Court judge, Law Minister M. Veerappa Moily should the High Court Chief Justice, an eminent help check this menace. person to be nominated by the President There is a need to change the and the Attorney-General of India (ex- method of selection of judges. The officio). collegium system has failed to attract The NJOC will send every persons of impeccable integrity. The complaint to a scrutiny panel which, in country deserves a more credible, turn, will examine it and report back to it transparent and broad-based within three months. Based on its institutional mechanism for selecting recommendation, the NJOC will get the judges. As the UK Supreme Court had complaint examined by an investigating done early this year, our apex court, too, panel. Both the scrutiny and should advertise vacancies in the investigating panels can summon people Supreme Court and High Courts in the and ask for public records. They will also newspapers. have the power of search and seizure. It is debatable whether the 1. Roy and Narayan (2011). "India executive should be given the power to Corruption Study 2010". CMS retire judges. This power should remain Transparency. in the hands of the judiciary itself to maintain the independence of the 2. David Loyn (1 March 2012). "British judiciary which is the cornerstone of the aid to India: Helping Bihar's poor". Constitution. Indeed, any amendment of BBC News. the constitutional provision of 3. Kar, Dev (2010). The Drivers and impeachment will have to pass the test of Dynamics of Illicit Financial Flows judicial scrutiny. Otherwise, the Supreme from India: 1948–2008. Washington, Court will quash it as null and void for DC: Global Financial Integrity. violating the basic structure of the Constitution. 4. "The Hindu Business Line : Black, bold and bountiful". Justice Katju and Justice Misra Thehindubusinessline.in. 2010-08-13. have directed the Chief Justice of the Retrieved 2011-10-07. Allahabad High Court to stem the rot. But can a Chief Justice alone help International Journal of Academic Research ISSN: 2348-7666; Vol.3, Issue-3(1), March, 2016 Impact Factor: 3.075; Email: [email protected]

5. There is no organization named Swiss Banking Association; there is,

however, an organization named 1 Swiss Bankers Association. For Eugene M.Maker(2007)An Americans verifiability, this wikipedia article Guide to Doing Business in India The uses the misnomer interchangeably, Swatantra Party and Indian since it was widely mentioned by Conservatism Cambridge University Indian media. Prass-P.131 2 6. "Govt to reveal stand on black money "India Corruption Study – 2008". on Jan 25 – India News – IBNLive". Transparency International. . Ibnlive.in.com. Retrieved 2011-10-07. 3 "Cops turn robbers on India's 7. "Govt To Reveal Stand On Black roads"2009. Asia Online. 27 August. Money On Jan 25 | India news, 4 "Banking secrecy spices up Indian Latest news India, Breaking news elections".2009 SWISSINFO – A member India, Current headlines India, News of Swiss Broadcasting Corporation. 14 from India on Business, Sports, May.

Politics, Bollywood and World News 5 online". Currentnewsindia.com. 2011- Debroy and Bhandari (2011). 01-25. Retrieved 2011-10-07. "Corruption in India". The World Finance Review.

8. "No 'black money' statistics exist: 6 Swiss banks". The Times of India. 13 "Corruption in India – A rotten state". September 2009. Retrieved 13 2011 The Economist. 10 March. November 2011. 7 U Myint (December 2000). "Corruption: 9. "No 'black money' statistics exist: causes, consequences and cures". Swiss banks". The Times of India. 13 (2). September 2009. 8 Anant and Mitra (November 1998). 10. Praful Bidwai. "INDIA: Legal System "The Role of Law and Legal Institutions in the Dock". in Asian Economic Development: The Case of India". Harvard University.

11Gupta, K. N. (2001). Corruption in 9 India. Anmol Publications Pvt Ltd. Mankiw, N. Geogory et. al. 1992 A ISBN 81-261-0973-4. Contribution to the Empirics of Economic Growth. The Quarterly Journal of 12Halayya, M. (1985). Corruption in Economics (May, Vol. 107, 2) India. Affiliated East-West Press 10 Mauro, Paolo. 1995 Corruption and 13Guhan, Sanjivi; Paul, Samuel (1997). Growth, The Quarterly Journal of Corruption in India: Agenda for Economics (Aug, Vol. 110, 3) Action. Vision Books 11 Nirvikar Singh (19 December 2010). 14Vittal, N. (2003). Corruption in India: "The trillion-dollar question". The The Roadblock to National Financial Express. Prosperity. Academic Foundation. ISBN 81-7188-287-0 International Journal of Academic Research ISSN: 2348-7666; Vol.3, Issue-3(1), March, 2016 Impact Factor: 3.075; Email: [email protected]

12 "Gujarat's Economy: India's 21 "A special report on India: The Guangdong".2011 The Economist. July. democracy tax is rising: Indian politics is becoming ever more labyrinthine". 13 MDRA 2007. "Corruption in Trucking . 11 December 2008. Operations in India". The World Bank. 22 Praful Bidwai. "INDIA: Legal System in 14 Indian bureaucracy ranked worst in the Dock". Asia: 2009 Survey , 3 June. 23 Chakravarty, Pratap 2010. "Indian land scandal spotlights military 15 K.R. Gupta and J.R. Gupta, Indian corruption".2011 Taiwan News. Retrieved Economy, Vol #2, Atlantic Publishers & 7 November Distributors, 2008, ISBN 81-269-0926-9. Snippet: ... the land market already 24 "Articles". Tata Tea. 2011 Retrieved 30 stands subverted and an active land May. mafia has already been created ... 25 Status of Whistleblower's Bill of India 16 "Mulayam Hits Mafia Hard". India (checked in July 2012) Today. 2006-10-16. Retrieved 2008-10-30. 26 "Karnataka Lokayukta". National Snippet: ... The road sector has always Informatics Center. Retrieved 2010-06- been the main source of income for the 24. mafia. They either ask their men directly to grab the contracts or allow an outsider 27 PTI (19 June 2012). "Andhra cash-for- to take the contract after accepting a bail scam: Suspended judge questioned". hefty commission ... a large number of The Times of India. criminals have been grabbing contracts under the protective umbrella of parties like SP, BSP, BJP, as well as the Congress ... opportunity to refurbish the image of his Government by initiating a crackdown on the mafia-contractor- engineer nexus ... 17 "India aid programme 2011 'beset by corruption' – World Bank". BBC News. 18 May. 18 Tom Wright and Harsh Gupta (29 April 2011). "India's Boom Bypasses Rural Poor". The Wall Street Journal. 19 "NRHM scam: 6 officials booked in accountant's murder - India - DNA". Dnaindia.com. 2012-02-17. Retrieved 2012-08-13. 20 "Two Income Tax officials booked for corruption". The Indian Express. India.