Has liberalization unleashed forces of growth and corruption together?

Recently, corruption issue has received continuous public attention with media reporting chain of corruption scandals each passing day. Commonwealth games to Adarsh to 2G to coalgate, there seems to an unending supply. One would argue, what is so new about corruption as it had been an invincible evil since time immemorial. However, this time around the scale and magnitude of corruption cases are unprecedented and moreover there is a rising public authority and private industry nexus. It has been questioned by the critic of new economic policy about the link between liberalization and corruption. It seems to be the case of liberalization is fuelling the growth and corruption together. Corruption is something which has existed since the advent of civilization. The Arthshastra of Kautilya contain many prescription to tame the evil of corruption which is a reflection of widespread corruption in ancient Mauryan empire. Even during British rule, Gandhiji accused congress ministries of corrupt practices during their brief rule of around two year. Dr B.R Ambedhkar has said that the gram panchayats are den of corruption. Even Rajiv Gandhi had accepted leakages in most profound terms when he said that only 15 paisa out of Re 1 reach the real beneficiary. So is it really the liberalization or the growth or something else which is leading to rise in corruption? India liberalized its economy after 1991 in lieu of the balance of payment crisis. The control of the government on the means of production was gradually relaxed and prospect for private participation in the economic activities increased. India has been successful in coming out of the trap of so called hindu rate of growth and 11th plan ended with a growth rate of around 8 %. This rapid growth has led to rise in urbanization and middle class with high aspirations. There is rise in the aspirations of the people but government seems unprepared to fulfill these new rising needs of the society. The fallout can be seen in term of rise in the corruption or atleast perception of it. There has been significant lack of transparency and accountability in administrative setup and many of the government officials were found to be indulging in the rent seeking activities. There have been increasing incidences of government officials misusing their discretionary power to extend undue benefits to the private enterprises. It looks like a mutual quid pro quo where private sector offers undue benefits in lieu of the favourable government contracts. Recent CAG revelation about 1.86 lakh crore loss to government due to non transparent coal block allocation is an indicator in this direction. India has high population and limited resources with the accompanying greater competition. As there is tremendous increase in competition for the natural resources, the avenues for official discretion has increased. The obvious fallout is concentration of wealth in the hands of few with greater at deprivation grassroot level. Critic of liberalization has termed this as jobless growth to highlight the skewness in growth pattern. This has increased the inequality in the society and inpatient neo rich class is using its new found link to garner higher and faster benefits. Moreover, many of the government officials get in the trap of consumerism where they find corrupt practices justified in the name of inadequate government salaries. The sociologist sometime refers to the sanskritisation of corruption to indicate acceptance of corruption

and desire of new middle class to indulge in unfair practices. The aspiration boom is fuelling growth and corruption at the same time. Moreover, liberalization by its very nature involves greater private participation with subsequent government withdrawal. World over, liberalization has been accompanied by the commensurate administrative reforms. India has been slow in reforming its administrative system. Most of the laws are archaic written by the British with imperialist mindset. These laws have failed to serve the purpose of modern society. A recent World Bank-IFC study ranked India 132nd in 185 nations in its Doing Business 2013 report. Worse still, on starting a business, dealing with construction permits and enforcing contracts, India is placed at a dismal 173rd, 182nd and 184th respectively. This has increased the scope for power abuse and corruption. There is no denial of the fact that liberalization has improved choices to the people with high growth. There has been improvement in living standard and workforce participation in agriculture sector has reduced from around 80 to 50 percent. Even the improvements in human indicators are evident, though the pace of improvement is slow. But this new found growth momentum also calls from new response to tackle the Developmental effects like corruption. The nature of corruption has changed in this computer age and we need new mechanism and institution so as to minimize the corruption. Corruption by its very nature not only erodes the faith of people in democracy but also causes inequality, deteriorate public service delivery, fuel inflation, raise administrative cost and most importantly it effect people who are at the bottom of the pyramid, the most. A government heavy model is no more a reality anywhere in the world and public-private partnership is an important instrument for growth. But at the same time, efforts are needed to ensure that it should not led to rise in corruption which take away the benefits accrued to the society. This is the high time when government should utilize changing society mood to improve the institutional mechanism and value system. At the same time, we all must utilize opportunity offered by Vigilance awareness week to pledge again that we shall neither accept nor give the bribe and will blow the whistle when the need arise.

Pankaj Aggarwal (B041) Senior Engineer, ETD Pankaj.aggarwal@eil.co.in