Manmohan Singh, the Indian prime minister, has said that corruption is the single greatest threat to the nation’s economic prospects.
In a speech given to an anti-corruption corruption in New Delhi, Mr Singh described the damaging effect that bribes, extortion and fraud have on all levels of life in India.
He said that graft meant infrastructure projects were late, over-budget, and often poor quality, while labeling India’s opaque business practices “a fertile breeding ground for the evil of corruption.
“The pervasive corruption in our country tarnishes our image [and it] discourages investors who expect fair treatment and transparent dealings with public authorities,” he said.
The difficult task facing the country’s anti-corruption forces was emphasised when shortly afterwards judges of only two of India’s 29 states agreed to declare their assets, despite having been ordered to do so by India’s supreme court.
“What message are these judges sending out?” asked Anupama Jha, director of the Indian branch of Transparency International, an international corruption watchdog.
“Judges were once greatly respected and now these questions about judicial corruption have lowered their status. It is a sad situation.”
Nevertheless, India has the second-fastest growing economy in the world, after China.
“They would be even faster growing if they were less corrupt,” said Gareth Price, head of the Asia programme at Chatham House, a foreign policy think tank.
“The fastest growing sector of their economy is IT and that is the only sector that is completely outside the government’s control.”
He said that the history of graft in India was the product mainly of three things. “Firstly, the British bureaucratic legacy to the subcontinent. The British created so many rules that anyone could be shut down if, say, a factory inspector found that a bucket of sand was missing, making the place a ‘fire hazard’. So the inspectors would be bribed simply not to shut the place down.
“Secondly, after Independence India had a Soviet-style system of quotas, in which the licences that you received permitting you to produce a quantity of something basically determined how profitable you would be. So the government would be bribed to hand out licences.
“And the third thing is that the tax system is extraordinarily complex and condusive to corruption. Recent attempt to simplify it met with resistance mainly from business who were afraid they’d end up paying more rather than less.”
Mr Price added that graft may have become more of an issue recently due to an increase in conspicuous consumption. “Twenty years ago people in India who had wealth didn’t necessarily flaunt it.
“But over the past ten years you have seen people driving Porsches around Delhi for the first time. And if you know that someone is a civil servant and is supposed to be on a certain salary but is seen driving a Porsche, corruption becomes more of an issue.”