Forms of Corruption in India

This article discusses the various forms of corruption in India, including facilitative corruption, collusive corruption, and extractive collusion. It also provides strategies to cope with corruption, such as financial incentives and performance pay, legal reforms, and deploying smart technology. The content is relevant to the subject of business ethics and can be useful for students studying this topic.

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Introduction
Corruption in India has been there for a long time and in many diverse forms. The root
cause of corruption in India is incepted from opportunistic leaders while those working on moral
principles are considered to be foolish in modern society. Corruption is a critical issue affecting
the economy of India in the local, national and state government. Following a study by
Transparency International done in 2005, it was found that more than 70 percent of Indians had
at one point or another paid bribe to a public office to receive a favorable outcome. The report by
the Transparency International global ranking on Corruption Perception Index places India at
number 78 of the most corrupt country (Ravi, 2015, pp.99). Some of the largest contributors of
corruption in India include government tendering process, the India trucking Industry, and
entitlement programs and social spending schemes such as the Mahatma Gandhi National Rural
Employment Guarantee Act and the Natural Rural Health Mission (Jauregui, 2014, pp.80). The
Indian media has overtime uncovered wide corruption scandals involving high ranking
government officials. Some of the causes of corruption in India include opaque bureaucracy,
numerous government departments, monopoly of the government, complicated tax and licensing
systems and lack of transparent laws and processes. This report will address the different forms
of corruption in India and recommend strategies that can be used to remedy the situation.
Table of Contents

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Introduction.................................................................................................................................................2
Forms of corruption in India........................................................................................................................4
Facilitative corruption..............................................................................................................................4
Collusive corruption.................................................................................................................................4
Extractive collusion..................................................................................................................................5
Strategies to cope with corruption..............................................................................................................6
Financial incentives and performance pay..............................................................................................6
Legal reforms...........................................................................................................................................7
Deploying smart technology....................................................................................................................7
Conclusion...................................................................................................................................................8
Bibliography................................................................................................................................................9

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Forms of corruption in India
Facilitative corruption
This type of corruption is one in which the majority of Indians have experienced. It
includes the payment of bribes and kickbacks in order to receive certain government services that
should otherwise be offered free. This includes payment for a driver license, ration cards, caste
certificates, and passports. According to Transparency International, Over 60 percent of Indians
who had contact with common government services office had to pay bribes to receive the
services (Dion, 2013, pp.416). In a theoretical perspective, this corruption can be categorized as
‘corruption without theft.’ The government officials in India artificially restrict the number of
services they offer so that they can be able to charge high overall price. It leads to negative
consequences and social inefficiency such as unqualified drivers getting licenses, the rich
obtaining below poverty lines cards and hampers the efficiency of service offered. This form of
corruption is highly noticed in the offering of driver licenses where the government officials
charge the applicants more than the official fees (Niehaus and Sukhtankar, 2013, pp.58). It is
established that in India, about 71 percent of the license getters just pay their way in and do not
take the driving test exams. The below poverty lines cards are used in India to provide a range of
welfare services such as subsidized food. Bribery is widespread in issuing of these cards with
about 75 percent of households reported to have paid money to acquire this benefit. Most of
these households are ineligible to receive these cards due to their ability to provide for
themselves the basic needs. The rich bribe their way into acquiring these cards.
Collusive corruption
This form of corruption occurs due to clouding and conspiring by officials to either bend
or break rules and laws. It includes such acts as fraud, misappropriation of public funds and
procurement misconduct. However, this form of corruption is difficult to document due to its

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stealth character whereby, the bribe receiver and giver have no incentives and obligations to
publicize their undertaking. This form of corruption manifested in Gujarat India in the auditing
of pollutant-emitting plants (Kato and Sato, 2014, pp.162). The firms carrying out the audits
were selected and paid by the plants resulting in a conflict of interest. The auditors end up giving
favorable reports. One critical example of this form of corruption was in the case of Abhishek
Verma (Marquette, Pavarala and Malik, 2014, pp.863). In the year 2006, he was accused of
receiving kickbacks amounting to over 200 million US dollars through a multi-billion dollar
project involving the purchase of Scorpene-class submarines by the Indian government.
Abhishek is indicted in numerous corruption cases involving government projects such as the
AgustaWestland VVIP helicopter bribery scandal where it is alleged officials in the government
received bribe exceeding 50 million Euros. Another example of collusive corruption in India was
in the Commonwealth Games scam in the year 2010. These games were marred with scandals of
conspiracy, inflated costs, bribery, and forgery. The games involve pilferage of the public coffers
amounting to over Rs 70,000 crore (Dion, 2013, pp.418). Politicians in India also participate in
collusive corruption by brokering the financing of elections by private firms especially in sectors
where the state has discretionary powers. Those private firms operating in regulated sectors are
targets for election finances since the politicians alter policies that can impact the firms.
Extractive collusion
This form of corruption involves leakage or embezzlement of public funds in instances
where the government gives some benefits such as food, medicine, shelter among others and the
officials charged with overseeing such processes steal the commodities rather than delivering
them to those intended. According to the late Indian Prime Minister Rajiv Gandhi, only about 15
percent of the benefits disbursed by the government actualizes its intended purpose (Gould,
Sherman and Ansari, 2013, pp.256). Such leakages have negative effects with oversight

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authorities allocating time to focus on curbing embezzlement rather than implementing programs
that can elevate the status of the population. An example of such leakage is in the Adarsh
Housing Society Scam where the State constructed a posh 31 storey building in Colaba for the
welfare of war widows (Lehne, Shapiro and Eynde, 2018, pp.72). In 2011, the comptroller and
auditor general uncovered various leakages noting that politicians, bureaucrats, and military
officers had bent several rules including zoning, environmental rules, and floor space index. It
was alleged that the officials had allocated the flats to themselves at below-market society rates
and grab public property for personal benefits (Sharma and Mitra, 2015, pp.842). This form also
manifests insidiously in a situation where public service employees fail to show up at work when
they are on duty or shrinking in their job. It equates to the theft of time that would have been
otherwise used in serving the public interest. Absence of workers such as teachers and health
workers in India has become increasingly the norm with statistics indicating the rate to be 25
percent for teachers and 40 percent for health workers.
Strategies to cope with corruption
Financial incentives and performance pay
Financial incentives are one of the most straightforward methods that the Indian
government can use to combat corruption. This includes increasing the pay of public workers to
match the economic trend. Most of the government officials are highly corrupt due to low pay,
enabling them to invent methods to supplement their salaries (Campbell and Saha, 2013,
pp.300). Additionally, this method can be used to motivate whistleblowers in various
government departments by giving them a token upon the successful unearthing of a corruption
scandal and successful prosecution. Performance pay should also regulate conflict of interest for
example by ensuring auditing firms are paid from a central pool rather than the firm themselves.
This facilitates the autonomy of the auditing firms and prevents biases

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Legal reforms
Legal reform is a strong anti-corruption remedy that seeks to enact new laws that curb
corruption activities and deter members of the public from engaging in corrupt dealings. The
government of India can introduce new laws that cushion members of the public from corrupt
dealings by facilitating timely delivery of critical government services and enacting a regulatory
body that will observe the conduct of bureaucrats and officials holding government offices.
Additionally, an introduction of the public procurement bill can help curb collusive corruption by
improving the transparency of the procurement process (Bhattacharyya and Jha, 2013, pp.287).
The bill should facilitate competitive bidding of government tenders and publication of all
procurement related activities. Additionally, the state should emphasize capital punishment for
corruption dealings to deter further instances of corruption. Legal reforms should also involve
auditing of court officials to remove those judges that collude with corrupt cartels to offer
favorable sentences. The justice system has been long known to obstruct the fight against
corruption occasioned by corrupt judges that receive bribes.
Deploying smart technology
Technology has simplified a lot of our day to day activities and as such, the government
of India can make use of technology to curb corruptions. This can be achieved through digitizing
of government services such as tax collection, application of ration cards and the application of
driving licenses. The Indian government can also use the technology in procurement services to
curtail red tape (Dutta, Kar and Roy, 2013, pp.368). The Indian government can emulate the
technology used in the purchase and procurement services of Chile government. Chile uses one
of the most transparent public procurement systems in the world. The system known as
ChileCompra, launched in 2003, digitizes the process of hiring, bidding and purchasing services
of the government. The system is the largest business-business systems serving over 900

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organizations with over 3 million purchases. It regulates the process of tendering by ensuring
competitiveness and award of tenders based on merits. Such a system can enable the Indian
government to streamline its tendering process.
Conclusion
The foregone corruptions type has widely affected Indian society. Persistence corruption
largely impacts the economic growth of India. The situation in India is not unique or new but it
points a reflection in the reality of situations through the many political regimes. However, from
the examples discussed, various government bodies are working tirelessly to unearth corruption.
The office of the Comptroller and the auditor general have exposed various corrupt dealings such
as the Abhishek scandal. Strategies such as the digitization of government services can limit
corruption dealing by scraping of middlemen that stand between the citizens and government
functions. The recommended strategies can enable India to curb corruption and deter other
corrupt individuals from engaging in corrupt dealings.
Bibliography
Bhattacharyya, S. and Jha, R., 2013. Economic growth, law, and corruption: Evidence from
India. Comparative Economic Studies, 55(2), pp.287-313.

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Campbell, N. and Saha, S., 2013. Corruption, democracy and Asia-Pacific countries. Journal of
the Asia Pacific Economy, 18(2), pp.290-303.
Dion, M., 2013. Uncertainties and presumptions about corruption. Social Responsibility
Journal, 9(3), pp.412-426.
Dutta, N., Kar, S. and Roy, S., 2013. Corruption and persistent informality: An empirical
investigation for India. International Review of Economics & Finance, 27, pp.357-373.
Gould, W., Sherman, T.C. and Ansari, S., 2013. The flux of the matter: loyalty, corruption and
the ‘everyday state’in the post-Partition government services of India and Pakistan. Past &
Present, 219(1), pp.237-279.
Jauregui, B., 2014. Provisional agency in India: Jugaad and legitimation of corruption. American
Ethnologist, 41(1), pp.76-91.
Kato, A. and Sato, T., 2014. The effect of corruption on the manufacturing sector in
India. Economics of Governance, 15(2), pp.155-178.
Lehne, J., Shapiro, J.N. and Eynde, O.V., 2018. Building connections: Political corruption and
road construction in India. Journal of Development Economics, 131, pp.62-78.
Marquette, H., Pavarala, V. and Malik, K.K., 2014. Religion and attitudes towards corruption in
India: A collective action problem?. Development in Practice, 24(7), pp.854-866.
Niehaus, P. and Sukhtankar, S., 2013. The marginal rate of corruption in public programs:
Evidence from India. Journal of public Economics, 104, pp.52-64.

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Ravi, S.P., 2015. Does corruption in a country affect the foreign direct investment? a study of
rising economic super powers China and India. Open Journal of Social Sciences, 3(07), p.99.
Sharma, C. and Mitra, A., 2015. Corruption, governance and firm performance: Evidence from
Indian enterprises. Journal of policy modeling, 37(5), pp.835-851.