Indian Corruption

Corruption is the hot-button issue in India these days. It took an old-fashioned Gandhian technique of a hunger fast by a respected social activist, Anna Hazare, to get the government to set up a commission to see whether they should set up an Ombudsman that is independent of the three branches of government to tackle corruption.

This because the three existing branches of government have a terrible record when it comes to fighting corruption (http://www.bbc.co.uk/blogs/thereporters/soutikbiswas/2011/04/is_india_serious_about_fighting.html ). I think the real question is why is that?

I think we need to separate ‘petty corruption’ from the big-time corruption, although both contribute to a general culture of corruption where anything goes.

For petty corruption, I have a hypothesis that I would like to test, and it boils down to very simple human behavior characteristics, and the notion of pay for performance. My hunch is that government employees in India are not ‘paid for performance’. Imagine that the clerk in the ration card office is paid a bonus in addition to his or her salary that is based on how quickly they process ration cards effectively. I am willing to bet you the instances of ‘petty corruption’ will most likely disappear. My guess is that a significant part of ‘petty corruption’ is directly linked to lack of a ‘pay for performance’ system, and the corruption in this case is an induced pay for performance mechanism. If people have thoughts on this matter, do comment, I am eager to hear what you have to say.

Then there is the big-time corruption the most recent example of which is the telecom scandal. I think this corruption can only be tackled with ruthless transparency. There have to be huge consequences for both the recipients as well as the payers. One challenge is that if there is a significant ‘black economy’ where the financial transactions cannot be tracked, it makes it difficult to have transparency.

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4 Responses to “Indian Corruption”

  1. Siva Says:

    This WSJ note (and the PDF linked to from it) are somewhat relevant to your defn of “petty corruption”. Kaushik Basu, India’s chief economic advisor, presents an argument that _giving_ bribes should be made legal in the case of “harrassment bribes”.

    http://blogs.wsj.com/indiarealtime/2011/03/30/kaushik-basu-says-make-bribe-giving-legal/

  2. Arun Says:

    Bribes happen only when the service is entrenched or captive (single provider). If you move things out to the free market bribes will go away immediately..

    Since corruption exists uniformly across the income classes I doubt paying them more for performance will help either.. They will just want some more always..

    As for Kaushik Basu’s suggestion it is way off I think…

  3. kannan70 Says:

    Arun,
    While I am a ‘free market’ person as well. I think some of the things we are talking about such as ‘passport issuing’ cannot be provided by other ‘service providers’. So, while you may have a point, I dont see it as the solution.

    In fact, what I am suggesting is that the government pay its employees like a private organization will pay its employees (i.e., on performance).

  4. Toby Says:

    I am American but I had an Indian Boss once who was very corrupt and also screwed me over. I think Bribery and Exploitation of workers are both manifestations of India’s culture of reverence to authority. Indians think that if they are in authority, they have the right to take advantage of people “under” them and no one under them has a right to question or criticize their behavior. More importantly, Indians feel that authority figures should be revered even if they commit wrongdoing and will punish those who fail to give sufficient reverence. Fairness is an antivalue for Indians. Following rules is less important for Indians than giving reverence to authority figures.

    Indian government functionaries feel that the people they are providing services to are “below” them and demand harassing bribes or, conversely, if they are providing services to someone “above” them, the functionaries will give this person the opportunity to receive special treatment.

    As an American, I hate getting Indian tech support or customer service agents, because they are so high-and-mighty, they think I should be kissing their butt! They’ve never heard of “the customer is always right”. I guess call centers are prestigious places to work over there so they think that they have status and I should be respectful of them. Americans, Canadians, Philipinos and Caribbeans understand that if I’m calling, its because something is wrong with the product, service or instructions and their job is to make it right and apologize along the way.

    This kind of reverence also exists in the United States with the same disastrous consequences such as George W. Bush, the worst president we’ve ever had. However, I would say, here, it is a minority position, maybe 30 percent of people are reverential to authority to some degree. About half of Americans are opportunistic butt kissers who will give compliments and agree with their own boss or pastor or older family members but feel free to criticize politicians or managers at the stores, post office, etc. These same people also feel comfortable bringing lawsuits or complaining if they think it will help. They give respect as a tool not out of a genuine reverence for authority. I would consider myself like this. More people in India like this would make it a better place.

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