There are two issues that dominate this furious, fractious election: good governance and corruption. It?s no surprise that both issues are being milked by the only official prime ministerial candidate so far, Narendra Modi. His attacks on the UPA are to do with corruption while he mocks his other potential rival, Arvind Kejriwal, for running away from governance. He is also tom-tomming the so-called Gujarat model, which, essentially, translates into effective governance. The truth is that, like death and taxes, corruption is almost a given in the Indian context and has been for many decades regardless of which government was in power. Coalitions have only made it worse. What makes it different this time is that it is now so brazen, so widespread, so frequent and involves so much of public money, that we have reached a tipping point.
The latest 2014 survey commissioned by Ficci among corporates in India identifies corruption, bribery and corporate frauds as the most important risks, ahead of industrial disputes and unrest as well as political instability. Corruption was listed at the fourth place in a similar survey Ficci did last year. India suffered losses of R36,400 crore due to corruption in the 12 months to September, 2013, says a survey by EY (formerly Ernst and Young) and Ficci, and this doesn?t include losses, real or notional, on account of large corruption scandals such as the 2G case or the irregular allotment of coal mines to companies. The five sectors in which bribery and other corrupt practices are most pervasive include government and public sector; infrastructure and real estate; metals and mining; aerospace and defence; and power and utilities.
The question is, does good governance translate into controlling corruption in developing economies? A recent World Bank report looked at various aspects to do with governance. One was whether good governance and anti-corruption are the same thing. Governance is defined as traditions and institutions by which authority in a country is exercised for common good. This includes the process by which those in authority are selected, monitored and replaced (the political dimension); the government?s capacity to effectively manage its resources and implement sound policies (the economic dimension); and the respect of citizens and the state for the country?s institutions. By contrast, corruption is defined more narrowly as the ?abuse of public office for private gain?.
There is also the question of whether governance and corruption can be measured. The World Bank has constructed aggregate governance indicators that cover more than 200 countries based on more than 350 variables. These include voice and accountability; political stability; government effectiveness; rule of law; and control of corruption. In the case of corruption, research suggests it is equivalent to a major tax on foreign investors. In developing countries, corruption represents a ?regressive tax? on the household sector as well: lower-income families pay a disproportionate share of their incomes in bribes to get access to public services compared with higher-income groups, and often end up with less access to such services because of corruption.
The bottomline is that improving voice and participation?including through freedom of expression and women?s rights?coupled with transparency reforms are the best way forward to reduce corruption and improve governance. The World Bank and IMF have some suggestions on how this can be achieved:
*Publicly blacklisting firms that have been shown to bribe in public procurement and ?publish-what-you-pay? by multinationals competing for major contracts
* Effective implementation of freedom of information laws, with easy access for all to government information
*Disclosure of actual ownership structure and financial status of companies, media houses and domestic banks
* Transparent (Web-based) competitive procurement procedures
* Country governance and anti-corruption diagnostics and public expenditure tracking surveys
This election, however, has produced some positive signs; namely, the voice of the people is being increasingly heard, and acted on, candidates with a dubious past are immediately signposted, the media has become fixated on exposing corruption at every level, and technology has made it possible for ordinary citizens to catch the corrupt in the act. Finally, and most important, governance, which implies a stable government, has become a high priority in this election. The next five years will tell us whether governance can be an antidote to corruption.
The writer is Group Editor, Special Projects & Features, The Indian Express
