Column : Corruption perception rises as GDP slows

Jan 10 2013, 00:47 IST
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SummaryBribe takers and givers are better off when GDP rises. When it falls is when the givers feel the pinch.

Over the last few years, there has been a lot of discussion in India about increasing corruption in the country. This discussion has been based largely on a number of high-profile cases that have hit the headlines, such as those relating to A Raja during his tenure as telecom minister and the visible failures relating to the Commonwealth Games. In this note, we use Transparency International’s Corruption Perception Index to look beneath the media headlines to see what has happened to corruption in India during the past two decades.

The graph shows the absolute value of the corruption perception index (CPI) score given by Transparency International (TI). The index is based on a collection of surveys that ask people their perception of the degree of corruption in India and other countries. A score of 100 indicates ‘non-corrupt’. As the TI CPI started in 1995, that is the earliest year in the graph.

According to this index, there was no visible trend in corruption between 1995 and 2003, as the index fluctuated and the level of perceived corruption in 2003 was almost identical to that in 1995. The index shows a sharp improvement in corruption from 2004 to 2007 and then a deteriorating trend till 2011. These two periods coincide roughly with UPA-I and UPA-II, respectively. The level of perceived corruption was significantly better at the end of the UPA-I government’s tenure than before it took over. This good performance was reversed during the UPA-II government and corruption increased steadily till 2011. However, even in 2011, the low point of UPA-II corruption was perceived to be less than at the start of the UPA-I government. In other words, the UPA surrendered only part of the gains made earlier. According to the latest CPI, which has just been released by Transparency International, the corruption situation has improved dramatically in 2012, with the score higher/better than its earlier peak in 2007. Thus, the action taken in response to exposure of corruption by the media and the Anna Hazare-led anti-corruption agitation appears to have had a positive effect in increasing awareness and bringing about moderation in the depth of corruption.

It has been hypothesised in the 1990s, including by this author, that the 1990s reforms reduced corruption in the affected departments by eliminating industrial licensing and quantitative restrictions (QRs) on imports and by simplifying and reducing customs duties, excise and income taxes. It is

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