India: Corruption drives economic prosperity
Come to think of it. Over the last few years, there is more prosperity visible all around. More people have disposable incomes, more people are now travelling abroad, more people are flying around in the country, more people throng the super malls, more cars (including the luxury models) clog the roads, more restaurants are now dotting the streets, and so on. The rich have become super rich and the middle class is fast catching up.
We believe that it is all because of the unprecedented growth rate. Ever since economic liberalisation was unleashed in 1991, India seems to have found its feet. The country is witnessing an economic boom. Even at times of a global meltdown, our newspapers tell us that the growth rate would remain around an impressive 7 per cent. Isn't that surprising? After all, exports are down, manufacturing is down, industry is not looking up, business and trade are hit by recession, and agriculture is down. Than what drives the country's economic growth?
Nevertheless, let us look at the growing levels of economic prosperity. I agree that income levels in IT sector, and some other service industries, have gone up in recent past. But don't forget, IT/BPO only employs 1.7 million people. Other sectors may also have fared well and I am not discounting it, but how come the financial standard of every other household around you is suddenly in the grip of a new-found prosperity? Is it because of the higher economic growth rate?
I have often wondered as to what is the reason behind this new-found prosperity. I find that the reasons are all apparent. It is only that we refuse to acknowledge it. Why? because we are primarily the beneficiaries of a parallel economic system that has brought about this visible change in our lifestyles.
Think again. There is hardly a day when we don't read of a scandal or a corruption case in the newspapers. Forget about the big scandals, you are ripped off every day. If you are buying milk from a vendor, the chances are that you are getting synthetic or adulterated milk. You step out of your home, and the autorickshaw driver will most probably fleece you. You go to a doctor, and he never gives you a receipt for the consultancy. You go to a lawyer, and he rarely issues you a receipt.
We read every other day how money is being squandered in the name of development, how the traffic police makes money, how the government officials move the files (unless it comes weighted with money), and how the public services have to be 'paid' for. The list is endless. And this has been going on for decades now. It is not a new phenomenon.
You will also agree that what appears in the media is not even a tip of the iceberg. We are a corrupt nation, whether we like it or not. Transparency International ranks India 85th in an index of 180 countries. Transparency International's India chairperson, R H Tahiliani, says that police, politics and lower judiciary were the worst dens of corruption.
Rajiv Gandhi has once said that only 15 paise from a rupee that is allocated for the rural areas reaches the true beneficiary. Rahul Gandhi now says that it is only 10 paise. We have used these statements in our media debates but no one has ever quantified how much is the money that is squandered on the way, or in practical terms pocketed by the functionaries in the name of development. A recent news report made an effort to quantify the amount. It says in the past five years, Rs 2,394 billion, earmarked for rural development is the amount that has been siphoned off if Rahul Gandhi is correct.
This is only the money that has been officially provided for rural development in the past five years. Add to it the billions that are spent on development in the urban cities. Imagine the colossal amount that has been pocketed in the past four decades.
You will agree that not all of this has flown out of the country. In fact, only a few of us are privileged to hoard blackmoney in safe tax-havens abroad. The US-based Global Financial Integrity has ranked India fifth in a list of 160 developing countries suffering outflow of huge amounts through illicit channels. Accordingly, US $ 27 billion flows out illegally every year from India.
Now, where has the rest of the unaccounted money gone? No where. It says within the country.
Let us face it. Over the years, our relatives and friends (of course there are exceptions and a lot many honest people live simple lives) have made money by illegal means. The fact remains that if corruption is so rampant, it is quite obvious those who indulged in it are/were somebody's relative. And when economic liberalisation came, it provided an opportunity to take out the unaccounted money and invest. Real estate boomed. Stock market grew. People invested in expensive cars and expensive gadgets, dining out every other day, and frequent holidays abroad among other activities.
Corruption has really paid us well. We all crib at someone else's corruption, but we try to remain discreet when it comes to our own share.
Nevertheless, it is the tainted money, the unaccounted wealth that has propelled this country into a new-found economic prosperity. Economists will not accept this because it falls outside the gambit of their textbooks. Private sector will only tarnish the public sector as corrupt, maintaining complete silence at the massive swindles that take place while seeking government approvals and land acquisitions.
I have often said that what makes corruption in a developing country like India different from the rich and industrialised countries is that in India corruption is decentralised. Every one can make money the illegal way. In the developed countries, there is massive corruption but at the top level only. Corruption is centralised in developed countries.
Does it mean that a democratically-elected but corrupt country has a better distribution pattern for the unaccounted wealth? Does it not mean that corruption can lead to economic prosperity? Don't get me wrong, I am not pleading for legalising corruption, but all I am saying is that we need to correct our perception about economic prosperity.
Of course, it doesn't trickle down to the majority. In India, 77 per cent of the population is able to spend only Rs 20 a day. They may be victims of corruption, but certainly are not the beneficiaries. It is the remaining 23 per cent, and that includes the middle class, that has benefited. The country's economic growth is measured in terms of the purchasing power exhibited by the middle class. This is the real Shining India. Let there be no qualms about it. #
Devinder Sharma blogs at Ground Reality. This article first appeared in Deccan Herald, Bangalore.