Corruption costs business

Parliament has not been functioning for many days, which leads to severe costs and loss of reputation. The fight against corruption is not rhetorical matter.For decades, India has winked at corruption. The political order has fostered it and financed itself out of corruption. We are caught in a vicious circle where the private sector has to bribe ministers and civil servants if they are to carry on business. Unless all co-operate in exposing the corruption, a few will suffer and the rest will free-ride, writes Meghnad Desai in The Financial Express.

Parliament has not been functioning for many days. Leave alone the daily cost of its operation, but does anyone know or care about its effect on India’s reputation? The UPA or at least the Congress trumpets its virtue in forcing the resignation of Ashok Chavan and Kalmadi and then also belatedly Raja, but is that enough?

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But leave that aside. The CWG scam was discovered only because the British tax authorities found something dodgy in the tax claims of the company favoured by Kalmadi. This was noticed sharply in the UK. What India does with the CWG scam will affect its chances for winning future sports events contracts. So far, no one has been charged and Kalmadi’s resignation from some footling Congress post is neither here nor there.

And then we have the Raja scandal. Again, the embarrassment at non-action or, at best, delayed action is being taken out on the companies that won the contracts. Trai is threatening to cancel the dubious contracts. Surely, again, that is not only overkill but killing the wrong party. The spectrum allocations were an international event.

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The issue is simple. As Obama said, India is no longer emerging. It has emerged. With such status, go get some responsibilities. The fight against corruption is not rhetorical matter. It is not about quoting Gandhiji or claiming virtue against the BJP. For decades, India has winked at corruption. The political order has fostered it and financed itself out of corruption. This is well known. The shock at Ratan Tata’s statement that someone had asked him to bribe the minister to get a licence was not that such things go on. But that even as big an industrialist as Ratan Tata is subject to such squalid behaviour. We note that Tata has not got a licence for his airline business.

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The question is who will bell the cat? Politicians will not do it. Many in the NGO community try their best to disseminate the information. But as Tehelka’s example showed, the political system can fight viciously and destroy you. The private sector has to take the initiative. Thus far, the Indian private sector organisations have been too shy or too afraid to raise the issue. Business pays the price either in cash or in missed contracts, as Ratan Tata’s example shows. If the apex bodies such as Ficci and CII were to open up a debate on this issue and if many more businessmen were to come forward as Ratan Tata did and relate their experience, we may get some action. It is not easy to do, of course. We are caught in a vicious circle (or a degenerate equilibrium, if you like a fancy expression) where the private sector has to bribe ministers and civil servants if they are to carry on business. Unless all co-operate in exposing the corruption, a few will suffer and the rest will free-ride.

The rest of the world is watching. Remember that Raju’s scam in Satyam was spotted on the NYSE. India does not have the luxury of time. It is time for the market to work. The state has failed demonstrably.