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On the bright side

India’s effort to reduce corruption has positively affected its growth and development prospects

On the bright side
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Corruption is prevalent in all countries and can be considered as the biggest obstacle in the path of development. It affects investment, utilization of resources, decision-making ability and selection of priorities.

Being aware of its negative impact, India is constantly campaigning to reduce corruption. The positive results of its efforts are also visible. This is confirmed by a report released in November 2020 by TRACE. The TRACE Matrix list is released by TRACE International, an anti-bribery standard-setting organisation, which measures business bribery risk in 194 countries, territories, and autonomous and semi-autonomous regions.

India is placed at 77th position in the TRACE Bribery Risk Matrix 2020 with a score of 45. Its performance is better than the neighbouring nations such as Bangladesh, Pakistan, Nepal and China. Bhutan, on other hand, scored better than India and got 48th place in the list. North Korea, Turkmenistan, South Sudan, Venezuela, and Eritrea have the highest commercial bribery risk. Denmark, Norway, Finland, Sweden, and New Zealand showed the lowest bribery risk.

TRACE releases its report looking at the measures adopted by various countries to reduce corruption. There are four parameters of its analysis — transparency, trade, citizens' opinion about the status of corruption in the country, and protest against bribery in the society. India has been continuously improving its position since 2014 in terms of reducing the risks associated with bribery. In 2014, India ranked 185 in the list of 197 countries with a total of 80 points, while in 2017 India jumped 97 places to 88th position.

However, during the year 2017 to 2020, India was able to reduce its ranking by just 11 positions. This achievement came due to the campaign being run by the Government against corruption and bribery. In 2018, the Government amended the Prevention of Corruption Act 1988. Through this amendment, giving bribe was also included in the category of crime. Until this time, only bribe-takers were considered the culprit. The amendment successfully reduced corruption and bribery at the level of individual and corporate units.

The complaints received by the Central Vigilance Commission between 2008 and 2019 decreased by 32,579. However, there was a slight increase in the complaints received in the year 2016 and the year 2018. The punishment given in these cases by the Central Vigilance Commission also decreased. The transparency in the functioning at every level of administration has reduced the cases of corruption. A major reason for the decrease in the number of complaints to the Central Vigilance Commission is the promotion of innovation on the information and technology front. Buying and selling is now being done online with the help of the latest technology. E-tendering, e-procurement, reverse auction etc. are being resorted to. There is little scope for corruption in these processes.

There are different views in the country and abroad about the correlation between reduced corruption and economic growth. According to an OECD study, corruption does not cause any reduction in foreign investment, competition, government efficiency, government spending, revenue collection, human capital formation etc. That means the reduction of corruption has no direct impact on economic growth, but this concept is not uniform in all countries. Between 2012 and 2018, countries like India, England, Egypt, Greece, Italy etc. managed to improve their rank in the corruption index and because of this, the GDP of these countries in this period, recorded growth.

The benefits on the economic and social front can be clearly seen due to less corruption in India. Foreign investors' confidence in India increased due to better performance in the corruption index resulting in increased foreign direct investment (FDI) in India. FDI in India increased to USD 43.0 billion in FY 2020 compared to USD 11.8 billion in FY 2011. Thus, FDI increased by 263 per cent during this period. At the same time, FDI increased by 37 per cent from FY 2012 to FY 2018. In the current financial year, FDI increased by 27.5 per cent from April 2020 to November 2020, amounting to USD 34 billion.

Economist Dr Kaushik Basu presented a paper in the year 2011, according to which the frequency of bribing can be reduced, but for this bribe will have to be declared legally valid. That is, the bribe payer should not be punished, but legal action should be taken against the bribe taker.

By doing so, the bribe giver will share information with the government against the bribe-taker if he is free from the clutches of the law, making it easier to take legal action against the bribe taker.

People globally have different opinions about measures to reduce corruption. In the context of India, punishment for both taking and giving bribes can be successful in reducing corruption. By amending the Prevention of Corruption Act 1988 in the year 2018, the possibility of corruption has reduced by adding bribe-givers to the category of criminals. With the increasing use of information and technology, transparency is also coming in government and private works. The increasing trend of digital transactions is also helping to curb bribery. A direct correlation between corruption and economic development has been observed in India. Therefore, if there is a decrease in corruption in India, then development will also get a boost here. The positive results of reducing corruption show that due to less corruption, development in India is gaining momentum. At the same time, people's trust in good governance is also increasing.

The writer is the Chief Manager in the Department of Economic Research at the Corporate Centre of State Bank of India, Mumbai. Views expressed are personal

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