Corruption and NDA: Are we getting rid of corruption?

Over half of Indians believe that the NDA is doing well in fighting corruption

Corruption and NDA: Are we getting rid of corruption?
CPI ranks can be attributed to the fact that the NDA has been disciplined, and so far managed to avoid the mega corruption scandals that rocked the UPA-2.

In the Transparency International’s Corruption Perceptions Index (CPI) 2018, India’s ranking rose by three points, giving the government a much-needed boost in an election year. It’s the right time to revisit the BJP’s corruption performance during 2014-18.

In 2018, India stood at 78th, while China was ranked 87th and Pakistan 117th. Since 2015, India’s average CPI has been 78.5. CPI measures 16 different surveys based on the opinion of businesspeople and country analysts. It can be seen as an important indicator of business/investor sentiment that affects FDI. For example, AT Kearney FDI Confidence Index shows investors rank “regulatory transparency and lack of corruption” as the most important factor influencing their decision to invest. When a legal counsel is asked to advice about the business risk associated with corruption in a given jurisdiction, CPI is what he might look into.

CPI ranks can be attributed to the fact that the NDA has been disciplined, and so far managed to avoid the mega corruption scandals that rocked the UPA-2. CPI, however, does not capture the everyday experience with corruption of people. For that, we have to look to the Global Corruption Barometer (GCB) released by Transparency International in 2017. GCB found that the experience of corruption is much higher in India, with 69% of Indians having paid bribes compared to 40% Pakistanis and 26% Chinese. The state has tried to address this corruption experience through rationalising corruption sources through key economic initiatives.

For example, India’s ranking in “ease of doing business” has improved because of radical improvement in just two parameters—trading across borders, and issuance of building permits—which have been digitised and taken to single-window clearance. GST will hopefully reduce impediments to interstate commerce, introduce transparency and reduce tax evasion. Aadhaar gives people a reliable identity document. Tax evasion, interstate trade and building permits and procurement of identity documents have been traditional rent-generating areas.

The NDA, however, failed to reform other public services prone to bribery, namely public schools, public hospitals, courts and the police (GCB). When it comes to black money, the NDA’s inflated rhetoric undermines its solid achievements. It was never possible to put Rs 15 lakh in every Indian’s account. However, the NDA did manage to get declaration worth `76,000 crore under its three flagship black-money projects: Income Declaration Scheme 2016, Pradhan Mantri Garib Kalyan Yojana 2017, and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

The NDA updated anti-corruption laws. It enacted the Prevention of Corruption (Amendment) Act 16 of 2018 (criminalises offering bribe, creates corporate criminal liability, extends the definition of criminal conduct), and the Benami Transactions (Prohibition) Amendment Act, 2016 (provides for expedited procedures to deal with property held for a beneficial owner where the same is fictitious or untraceable), among others. These bring Indian law closer to the UN Convention against Corruption 2003. There has been increased prosecution under these laws in the last few years, leading to perhaps some deterrence against corruption.

The jury is still out on demonetisation—seemingly targeted at destruction of black money. Critics point out 99.3% of demonetised notes are back with RBI and India’s cash-to-GDP ratio remains almost the same. They point to the collateral damage to the economy in terms of growth and jobs. The BJP, on the other hand, points to tax compliance, as evidenced through rising income and corporate taxes collection, as a positive effect. Thus, even if demonetisation failed to destroy black money, it might have slowed its formation.

An area where even the NDA has failed to make any difference is in building appropriate enforcement institutions. The dysfunction in CBI is typical of this failure. Not only has the agency’s image suffered due to infighting, it also remains severely understaffed. There has been no serious efforts at building capacity at CBI or any other agency.
In the end, GCB finds that 53% of Indians believe that the government is doing well in fighting corruption. This level of public confidence may well be Narendra Modi’s greatest achievement in the fight against corruption so far.

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