Impact of Corruption in India

Definition:

Corruption is not just an exchange of money between two persons. It is misuse of public office for private gain. Taking money in a dowry is not a corruption its an extortion. Congress party recently accused Ramdev Baba that he is corrupt because he accepts black money and they didn’t have any explanation. Only reason they said is he accepts money in cash. Suppose a corrupt person with huge black money hires a taxi, and thus he pays the money to the taxi driver. Now since that taxi driver accepts that money cannot be called as corrupt. He doesn’t know about it and there is no misuse of office.

e.g. a) If a Police man gives you a parking ticket. Takes money and cancels your parking ticket that’s misuse of power and it is corruption. b) if a Minister gives license to a person who is not deserving. That is misuse of power and office and it is corruption.

Misuse of public office to deny the choice by merit. People who should get something on merit don’t get it. And people who don’t deserve get it because they pay money.

History:

The process of corruption started because of Jawaharlal Nehru’s wrong choice of policy of adopting Russian Soviet Union’s economic model. Which meant government control of everything.

Impact:

The impact of corruption is very wide spread and you would never image how our leaders have mastered the corruption by tweaking our laws for their own benefit. I would like to explain you certain simple examples on how corruption is eating our nation.

1.   Govt raises a tender to construct a road, and its official announces that whoever wants the tender should pay him this much money. So the person who buys the tender will not be left with a choice to put quality road material as he doesn’t have enough money left since he has already paid huge money to the official. So he will use substandard material on the road, which will be washed away in one monsoon.

a. We have horrible roads in India, not because we don’t know how to build roads. We build the best roads in the world. Like Malaysia, Nigeria, Iraq. During president Bush visit American tanks went from Basra to Baghdad, Bush not knowing that the Indians had build that road in Iraq he complimented Saddam Hussian for it. Fact is, those roads are built by Indians. We build very good roads in the world except in India because of corruption. Because of the choice is not made through merit consequently substandard materials are served to the public. Electricity is not available there is power cut because of the corruption. Electricity is being stolen and to make up for you they give power cuts. So the public suffers because of the lack of choice on merit. Those who want to do things on merit are being discouraged. This is the first impact it demoralizes the public.

2. When you get huge money, you cant use cheque to spend it. Because it will be traced. What do you do with this money? Well there are many things which is being done now. You cant build a factory, because it will come under the notice of Income Tax. So you need to spend the money. You go and dine in five star hotels. You hold big weddings. You will put AC in every room including the bathroom. You buy six Mercedes cars. Buy corporate jets. These are something which ends up promoting luxury goods industry. The highest rates of return in Indians economy today are not producing clothes for the millions. Its not in producing food grains for the people. Its not in producing consumer goods which common man uses. The highest rates of return today is in Five Start hotels, Air Conditioners, luxury cars, etc. These are the places which is getting maximum returns. Thus the market forces to propel you to invest more and more in luxury goods and less and less in common mans goods. With which whole investment priorities of a country gets distorted. Today in India over 70% of our investments goes directly/indirectly in to producing luxury goods. This is unacceptable because so many people are poor and they require better life.

a. Similarly the money is being used now because forward trading is allowed in food grains and agricultural products. So when farmers bring their crop to the market the industrialist with black money or politicians with black money prevent the grains from entering in to market. They buy it and keep it in godowns and then the prices rise they sell. Because of such activity there causes inflation in the market. India is having a growth rate of 9% per year and Inflation rate is 16% per year. This is against the laws of economics. If the supplies expand the prices should come down. But in India supplies are expanding and prices are also going up.

3. Service charges on the huge deposits of our black money in Swiss banks had become a pain to our politicians. So they used to pay money to keep their money. To overcome this our honorable ministers have come up with an idea, to earn money out of this. Thus a new financial derivative was invented by Govt of India which is called Participatory Notes. Except India, no other country had this participatory Note in the World. What is this Participatory Note? You send your money by Hawala abroad and take that cash to some investment company. With that cash you will get a participatory Note from the investment company. Participatory Note is just a piece of paper with only amount written on it. With this Participatory note you will buy shares in India. After intimating RBI about the participatory note. This will be done by mutual funds. With this money infusion came in to the stock market raises the stock market prices suddenly. Once the stock market prices reaches the peak you will sell out yours stocks. With that money you get from stock broker (in Rupees) with that Participatory Note you will go to RBI and as per the law RBI should convert the entire amount in to foreign exchange and give it to you. And you can take it abroad. A law has been passed to exempt the Participatory Note examination by SEBI (Security Exchange Bureau of India) otherwise SEBI has right to question anyone if he/she is planning to buy/sell a share, like where is the money from etc. But on Participatory Note SEBI will never question.

a. There is one problem in this, it is capital gains tax. To avoid this our honorable minister (PC) has made a exemption if the money come via Mauritius route – since Mauritius is a poor country, brotherly country, we are going to exempt Mauritius. No capital gain tax on that route. Today Mauritius is the largest supplier of foreign investment to India. Larger than United States. Mauritius has nothing just beaches and gambling casinos. How can they invest so much? It is very straight forward. It is your money going by that route and coming back.

b. Thus stock market is being ricked, agriculture market is being ricked. Investment priorities are being ricked. The whole economy is being ricked and unstable. So we see lot of stock market collapse etc. Look at the impact of corruption it is not just a minister is getting money and getting rich. It is impacting whole economy.

c. National security is also impacts. Hawala transactions are usually done with the help of foreign organizations. Thus they know who is putting money abroad. So, they know whose money it is and where it is going. They can blackmail the you and know anything which they want about your country or security. RBI buys the currency papers from a England based company called Delaru but the Intelligence Bureau said not to buy it from Delaru because they sells the currency papers to even Pakistan. Thus Pakistan can ask to print Indian forged notes and bring it in India. ISI is supplying 15% of money supply in to India through fake currency notes. Thus these money is being used for financing and nurturing terrorists. So national security is begin affected. Once greed for money is growing you are prepared to do anything to get it.

d. This is what happened in 2G spectrum case. The amount of money is enormous. 1Lakh 76k thousand rupees loss to our nation. This is the magnitude of corruption being happening in India, because of the growing economy. How and what is this 2G spectrum? When you speak on cordless phone only your voice can go, in long cycles (as waves), whereas if you want to send emails and sms you needs to have higher frequency that is nothing but (Second Generation) 2G spectrum. Many people doesn’t know what is 2G, in fact Manmohan once said what is 2G, he said SoniaG and RahulG. So its higher waves frequency for more information. If you want to send videos or see each other while talking on phone then it needs 3G, which needs even higher range of frequency. So the sky has to be partitioned for each spectrums/sections. Since it is a limited resource, the demand goes up and the price for spectrum must go up. Raja and Chidambram were empowered to decide the price of the spectrum. They decided the spectrum will be given in 2008 at the price that was prevailing in 2001. The price in 2008 was ten times more as compared to 2001 prices. If it was sold at market price in 2008 then the country would have got 1Lakh 76k crores extra.

Corruption has become so much powerful that even opposition leaders are being taken care of. They don’t do anything, they don’t object. They just do a walkout. Because of corruption today our economy is distorted, development therefore affected, financing or terrorism is becoming possible. The impact of corruption is an extraordinary serious dimension we have to fight it now.

Note: This article is based on comments of Dr. Subramanian Swamy’s lecture at Hindu Mahasabha held at Houston, US July 2011.