Corruption Challenges – Lokpal, POCA, etc

[op-ed snap] New ideas for fighting corruption in India


Mains Paper 2: Governance | Important aspects of governance, transparency & accountability

From UPSC perspective, the following things are important:

Prelims level: Not much

Mains level: Curbing corruption via innovative measures


Corruption growing instead of reduction

  1. India’s liberalization that began in the 1980s should have curtailed corruption, but the opposite happened
  2. Even as technological innovations have reduced petty bribery, it has become clear that bigger forms of corruption in India are flourishing

Measures that can help in fighting corruption

  1. Bottom-up coalitions work and work better than individual resistance
  • There can be the formation of an institution called the “business community institution” (BCI)
  • An institution like the proposed BCI is likely to be more effective than the sum total of efforts put in by individuals across the country to reduce corruption
  • The BCI should enlist the support of the media, civil society, and existing social movements like the Zero Rupee Note and the ipaidabribe site, to resonate the anticorruption message

2. Social sanctions and economic incentives work better than legal action

  • If the law is effectively enforced, its penalties are good deterrents
  • Enacting and applying strong laws against corruption is inherently problematic since politicians and officials are the main beneficiaries of corruption
  • Social sanctions can be just as effective, or more so
  • Fear of social ostracism is a powerful consideration
  • An effective system of social sanctions will allow clean firms to experience a lower cost of doing business by being able to access better talent, cheaper capital or stronger pricing power

3. Accurate, publicly available information is essential

  • If workers, consumers, and suppliers of capital are to implement a strategy of penalizing corrupt businesses, they need to know who the clean firms are
  • To achieve this, the BCI will create a transparent rating system of 1 to 3 stars, like the Michelin star system for restaurants, reflecting its assessment of how clean a firm is

4. The verdict of markets favours clean firms

  • Markets are fairly efficient and the Indian stock market has shown tremendous maturity by offering significantly lower returns from non-clean firms
  • Firms with better quality of governance and accounting have yielded higher investment returns than other firms in the recent past
  • The market has delivered this outcome without the existence of an explicit rating system on the quality of governance

5. Corruption as an ailment is similar to obesity, not cancer

  • It is essential to not to think of corruption as cancer, insisting that every malignant cell must be removed or it will come back
  • Corruption should be compared to being overweight or obese
  • The fight against it is hard and slow; victories are partial; sometimes you regress
  • But keeping up the fight by all methods and at all times can mitigate obesity

Way forward

  1. India’s culture cannot be changed, from corrupt to clean, simply by relying on the government to enact and enforce laws
  2. Such a movement can succeed only if young and idealistic workers, consumers, entrepreneurs, managers, educators and the media all play their part and constitute a coalition against corruption
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