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What Will It Take

To Rid India Of Corruption?

By N.R. Narayana Murthy

Police paper extols the virtue of bribe", "cod to probe top IPS officer", "Notice served on Andhra MLA for fraud", "it Commissioner lands in CBI net", "mp gets jail term for tax evasion". These are only a few of the umpteen headlines on corruption that I have taken from the Indian newspapers of the past month. Corruption in India has become so pervasive that it has seeped into our most revered institutions. No wonder then, that former Chief Justice of India S.P. Barucha was compelled to remark in 2001: "About 20 per cent of the judges in the courts are corrupt; corruption among public servants has reached monstrous dimensions in India. Its tentacles have started grappling even the institutions created for the protection of the public." Even a powerful Prime Minster like Rajiv Gandhi admitted defeat on the issue, saying that "out of every Rs 100 crore allocated to an anti-poverty project, only about Rs 15 crore reaches the people. The remainder is gobbled up by middlemen, power brokers, contractors and the corrupt". Our late President K.R. Narayanan bemoaned in 2001 how even convicted criminals were getting elected to legislatures. As much as Rs 37,000 crore, about 1.5-2 per cent of the GDP, surfaced as part of the Voluntary Disclosure Scheme of 1997. Transparency International has ranked India among the most corrupt countries in the world.

Is corruption the sole prerogative of the politicians and the bureaucracy? I am afraid not. In fact, the biggest corruption cases have been outside the government. The Harshad Mehta scam of around Rs 10,000 crore and the Ketan Parikh scam of Rs 5,000 crore have put other scandals to shame. It is estimated that Non-Banking Financial Companies have swindled over 30 million small investors. Recently, it was reported that a sizeable number of software professionals in a well-known multinational had fudged their bills. This morning, I received an e-mail from an erstwhile, dismissed colleague of mine arguing why she was not all that wrong in swiping the attendance card on behalf of another colleague! The cricket match-fixing scandal is still fresh in our memories. Several years ago, I sat through a long sermon on how Indians are corrupt from an NRI in Chicago. I had no hesitation in abruptly walking away from that meeting when he whispered into my ear, asking me whether he could sell his dollars in black. The list goes on. It is very clear that corruption is now an accepted phenomenon in the psyche of Indians from all walks of life.

Corruption is not just a moral issue. It is also a powerful inhibitor of economic progress in a poor country like India. Most economists observe that corruption thrives when politicians and bureaucrats espouse the choice of unnecessary and unviable public projects, inflated costs, and the selection of incompetent contractors. The politicians who proclaim their commitment to improving the lot of the poor would do well to remember that it is really the poor that suffer most in a corrupt country. Generally, most mega projects in a developing country are intended to bring healthcare, education and nutrition to the poor. Largescale corruption resulting in spurious drugs, ill-built schools, absent and unqualified teachers and low-quality food stuff primarily affects the poor. The middle class and the rich do not depend on such services. Hence, as Bimal Jalan observed, corruption aggravates inequality in an already unequal society.

Similarly, corruption affects small business enterprises the most, because they cannot afford the increased costs due to corruption. On the other hand, larger enterprises use corruption to create monopolies or increase their market share, thereby improving their profitability. Hence, every politician who espouses the cause of the underdog and the poor must fight corruption.

It has been noted by economists that corruption reduces a nation's growth rate and productivity, discourages investment, enhances fiscal drain and debilitates the confidence of people in the economy as a whole, thus, creating a negative spiral. This is because corruption distorts economic decision-making, as payoffs prevail over other considerations while allocating resources. In fact, a well-known development economist showed that a 50 per cent reduction in corruption in a highly corrupt country has the potential to increase the GDP growth rate by 1.5 per cent. Researchers have also shown that corruption reduces the rate of investment to national income. If we had controlled our corruption, then India would have had a GDP growth rate of nearly 8 per cent during the 80s and the 90s rather than the 6.1 per cent that we achieved.

s there a solution to this seemingly unsolvable problem? Is there any hope at all? Will we ever see a corruption-free society? Can we at least work towards creating a corruption-free society for our children and grandchildren? I am an optimist and I believe that every problem can be solved. It requires leadership that is inspirational, selfless and courageous. We do have a few such people in India among our politicians, bureaucrats and corporate leaders. They have to come together to fight this scourge. Let me detail a few steps needed to fight corruption.

Fairness, transparency and accountability displayed by leaders are what instil confidence in a government, a community and in a society. Unfortunately, in our society, the government and the elite rarely practice these attributes. Only when we practice these attributes in fighting corruption among the elite and the powerful, will we succeed in rooting out the problem. In the following paragraphs, I will detail how we can enhance fairness, transparency and accountability among the elite.

Let me first talk about fairness in ensuring that everybody in the land, no matter who he/she is, gets punished if guilty of corruption. It is important to create a climate of opinion where honesty matters and the corrupt are punished swiftly and ostracised. This requires the active endorsement of honesty by not just politicians but also bureaucrats, corporate leaders and in fact, every leader from every sphere. These leaders must be ready to sacrifice their positions rather than work with tainted colleagues. Whenever there is an accusation against a person, he or she must not be allowed to hold any office until proven innocent. Swift and harsh punishment must be meted out to the guilty. To me, this is the most important instrument we have in curbing corruption.

Once we practice this for a generation among the elite, the next generation will automatically subscribe to this philosophy. This was the norm in India in the early 50s. But today, we see many ministers accused of corruption serving in the central and state cabinets. There are many reasons for this. One of them is the ambivalent message that our leaders have sent on the issue of corruption. The current thinking among various politicians in the country is that corruption is a global phenomenon. This has created the notion that corruption will be tolerated. We have been very lax in pursuing and punishing cases of corruption involving powerful politicians, bureaucrats and rich people. Such inaction in our system during the current generation has emboldened the rich and the powerful to embrace corruption with impunity.

Economist Amartya Sen noted that it is systemic corruption at high levels that causes people to regard it as part of the "established rules of behaviour". It is extremely important, therefore, for our leaders to send the right signal to the community. Let me give you an example of this. This incident happened in Delhi in the mid-80s. I met a friend of mine one evening at Ashok Yatri Niwas for dinner. He was known to be a good, honest and upright officer in one of the central ministries. That day, he was very sad and it was clear that he was facing a moral dilemma. During dinner, he confessed that he had taken a bribe for the first time in life and he was very confused. I asked him what the confusion was about, since it was clear that taking the bribe was wrong. His answer stunned me. One part of his mind justified his action since he had seen his minister taking bribes. The other part was tormenting him that he did something terribly wrong. I have no doubt at all that he represented a large number of honest officers drawn into the dragnet of corruption, thanks to the example set by their bosses. Hence, a leader must never put himself or herself in a situation which creates such moral dilemma in the minds of the people.

et me now give you a positive example of how corruption was fought in Singapore. This incident also took place in the mid-80s. A quick investigation into the corruption charges against one of Singapore's ministers showed that there was a prima facie case against him. The minister concerned met the Prime Minister to find out whether he would be protected. The Prime Minister was very clear that the minister's career was indeed over, that he would be given harsh punishment, and that he would never ever again be able to contest elections. The minister went home and put a bullet into his head. This sent a strong message to all Singaporean politicians that corruption would never be condoned.

Let me now come to transparency. The best return on investment in reducing corruption will come from reforming our election funding system. We have to adopt the German system of funding so that politicians have less incentive to be corrupt. The funding available to each candidate must be made known to the public. We must set up a whistle-blower policy so that any violation in fund inflows can be quickly and publicly investigated and appropriate action taken. The office of the Chief Election Commissioner must be strengthened. I believe that the action of the P.V. Narasimha Rao government in diluting the powers of the Chief Election Commissioner was a step backward in fighting election fraud.

Collecting data on the criminal and corruption record of each candidate and publishing them widely are extremely important in curbing corruption. The recent work of Trilochan Sastry and his associates in this area, prior to the last central and state elections, is a step that must be encouraged and adopted universally across the country. This courageous act of an MIT-educated professor has yielded significant results in exposing the shenanigans of powerful lobbies.

Corruption in government service delivery is eliminated when the government interface is removed from any activity. For example, when the government dismantled licensing of computer imports, most of the corruption that was imposed on small entrepreneurs dealing with the Department of Electronics was removed in one shot. However, the government has a tendency to create more and more new schemes which require business people to seek government approvals. In fact, it may be best if some of the services were moved from the government to organisations like the UTI. For example, the recent decision of the government to transfer the process of allotting pans to UTI has eliminated delays and chances of corruption.

Corruption opportunities are high when both the decision and delivery of the outcome of that decision rest with the same individual, and the transparency is low. Hence, if we want to reduce corruption, it is best to implement e-governance. E-governance helps us separate the decision-making and delivery of the outcome in an inexpensive manner. Secondly, we have to bring transparency to the decision-making process. If we use software with transparent workflows for every major decision-maker involved in the government, we will know who is delaying processes. Thus, pressure can be brought on the government to deliver services effectively.

The e-Seva centres in Hyderabad are an excellent example of how e-governance benefits the common people and helps eliminate corruption in state services. The e-Seva centres have helped bring transparency and speed to a wide range of state services, from the payment of utility bills to the issue and renewal of certificates, permits and licences, and even payments for firs.

Let me now talk about accountability. Swift and harsh punishment meted out to the guilty is what serves as a deterrent to corruption in developed countries. In India, most of the Lok Ayuktas have failed since they are under the control of the state governments and the quality of staff is rather poor, except in rare cases. We have to create a separate, jury-based judicial system to dispose of corruption cases quickly. A jury system will bring better visibility to such acts of crime and would also reduce the load on the judiciary.

These courts must be chaired by eminent men and women who do not owe allegiance to politicians and bureaucrats. They must be outside the purview of state legislatures and accountable only to Parliament. The punishment meted out in these cases must be very harsh, and we must not allow any further appeal once the jury has decided the case. Such a system would be a strong deterrent to corruption. In fact, it is the delay in punishing the guilty and the light punishment meted out to them which have emboldened crooks to indulge in corruption time and again.

Unfortunately, the CBI has not done a good job in tracking and punishing the guilty. It has only deterred honest officials from acting efficiently. Its success rate has been very low. The model of the CBI has to be changed drastically to reassure honest people that they will not be harassed. In fact, the CBI must be supervised by a committee of eminent citizens with executive powers, to enhance its credibility. This committee must ensure that the CBI has good, reliable data before it can file a case.

Corporate leaders have to walk the talk when it comes to honesty. Then, they will have the moral authority to take swift action when they see the transgression of values and rules. In fact, Infosys demonstrated this a few years ago when a senior member violated the value system of the company. It took us just a few hours to come to our decision and ask for his resignation.

At the end of the day, leadership is what determines the success of a corporation, community or country. If leaders from all sections of the society come together to fight this scourge, I am certain that corruption will disappear like dew on a sunny morning.

The author is Chairman of Infosys Technologies Ltd

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