Corruption in India is a major issue and adversely affects its economy.

[1] A 2005 study

conducted by Transparency International in India found that more than 62% of Indians had
first-hand experience of paying bribes or influence peddling to get jobs done in public offices
successfully.[2][3] In its 2008 study, Transparency International reports about 40% of Indians
had first-hand experience of paying bribes or using a contact to get a job done in public
office.[4]
In 2012 India has ranked 94th out of 176 countries in Transparency International's Corruption
Perceptions Index, tied with Benin, Colombia, Djibouti, Greece, Moldova, Mongolia, and
Senegal.[5]
Most of the largest sources of corruption in India are entitlement programs and social
spending schemes enacted by the Indian government. Examples include Mahatma Gandhi
National Rural Employment Guarantee Act and National Rural Health Mission.[6][7] Other
daily sources of corruption include India's trucking industry which is forced to pay billions in
bribes annually to numerous regulatory and police stops on its interstate highways.[8]
Indian media has widely published allegations of corrupt Indian citizens stashing trillions of
dollars in Swiss banks. Swiss authorities, however, assert these allegations to be a complete
fabrication and false.[9][10]
The causes of corruption in India include excessive regulations, complicated taxes and
licensing systems, numerous government departments each with opaque bureaucracy and
discretionary powers, monopoly by government controlled institutions on certain goods and
services delivery, and the lack of transparent laws and processes.[11][12] There are significant
variations in level of corruption as well as in state government efforts to reduce corruption
across India.
History
The economy of India was under socialist-inspired policies for an entire generation from the
1950s until the late 1980s. The economy was characterized by extensive regulation,
protectionism, and public ownership, policies vulnerable to pervasive corruption and slow
growth.[13][14][15][16] In 1960s, Chakravarthi Rajagopalachari suggested License Raj was often
at the core of corruption.[17]
The Vohra Report, submitted by the former Indian Union Home Secretary, N.N. Vohra, in
October 1993, studied the problem of the criminalisation of politics and of the nexus among
criminals, politicians and bureaucrats in India.[18] The report contained several observations
made by official agencies on the criminal network which was virtually running a parallel
government. It also discussed criminal gangs who enjoyed the patronage of politicians — of
all political parties — and the protection of government functionaries.[19]
According to Jitendra Singh, "in the bad old days, particularly pre-1991, when the License
Raj held sway, and by design, all kinds of free market mechanisms were hobbled or stymied,
and corruption emerged almost as an illegitimate price mechanism, a shadowy quasi-market,
such that scarce resources could still be allocated within the economy, and decisions could
get made. ... These were largely distortions created by the politico-economic regime. While a
sea change has occurred in the years following 1991, some of the distorted cultural norms
that took hold during the earlier period are slowly being repaired by the sheer forces of
competition. The process will be long and slow, however. It will not change overnight."[20]
One of the major problems and obstacles to development in India has been endemic
corruption and political inertia to change.
Politics
As of December 2008, 120 of India's 523 parliament members were facing criminal
charges.[22] Many of the biggest scandals since 2010 have involved very high levels of
government, including Cabinet Ministers and Chief Ministers, such as in the 2G spectrum
scam, the 2010 Commonwealth Games scam and the Adarsh Housing Society scam, Coal
Mining Scam, mining scandal in Karnataka and cash for vote scam.
[edit] Bureaucracy
A 2005 study done by Transparency International (TI) in India found that more than 50% of
the people had firsthand experience of paying bribe or peddling influence to get a job done in
a public office.[3] Taxes and bribes are common between state borders; Transparency
International estimates that truckers pay annually 22,200 crores (US$ 4.5 billion) in
bribes.[8][23] Government regulators and police share in bribe money, each to the tune of 43%
and 45% respectively. The en route stoppages including those at checkpoints and entry-points
take up to 11 hours in a day. About 60 percent of these (forced) stoppages on road by
concerned authorities such as government regulators, police, forest, sales and excise, octroi,
weighing and measuring department are for extorting money. The loss in productivity due to
these stoppages is an important national concern. The number of truck trips could increase by
40%, if forced delays are avoided. According to a 2007 World Bank published report, the
travel time for a Delhi-Mumbai trip can be reduced by about 2 days per trip if the corruption
and associated regulatory stoppages to extract bribes was eliminated.[23][24][25]
A 2009 survey of the leading economies of Asia, revealed Indian bureaucracy to be not just
least efficient out of Singapore, Hong Kong, Thailand, South Korea, Japan, Malaysia,
Taiwan, Vietnam, China, Philippines and Indonesia; further it was also found that working
with India's civil servants was a "slow and painful" process.[26]
[edit] Land and property
Officials are alleged to steal state property. In cities and villages throughout India, consisting
of municipal and other government officials, elected politicians, judicial officers, real estate
developers and law enforcement officials, acquire, develop and sell land in illegal
ways.[27][page needed][better source needed]
[edit] Tendering processes and awarding contracts
A 2006 report claimed state-funded construction activities in Uttar Pradesh, such as road
building, were dominated by construction mafias, which are groupings of corrupt public
works officials, materials suppliers, politicians and construction contractors.[28]
Corruption caused problems in government funded projects are not limited to the state of
Uttar Pradesh. According to The World Bank, aid programs are beset by corruption, bad
administration and under-payments. As an example, the report cites only 40% of grain
handed out for the poor reaches its intended target. The World Bank study finds that the
public distribution programs and social spending contracts have proven to be a waste due to
corruption.[29]
As an example, India enacted the so-called Mahatma Gandhi National Rural Employment
Guarantee Act (MGNREGA) on August 25, 2005. The Central government outlay for this
welfare scheme is 40,000 crore (US$7.28 billion) in FY 2010–2011.[30] After 5 years of
implementation, in 2011, the programme was widely criticised as no more effective than
other poverty reduction programs in India. Despite its best intentions, MGNREGA is beset
with controversy about corrupt officials pocketing money on behalf of fake rural employees,
poor quality of infrastructure built under this program, and unintended destructive effect on
poverty.[7][31]
[edit] Medicine
In Government Hospitals, corruption is associated with non availability/duplication of
medicines, getting admission, consultations with doctors and availing diagnostic services.[3]
National Rural Health Mission is another health care-related government program that has
been subject to large scale corruption allegations. This social spending and entitlement
program hoped to improve health care delivery across rural India. The program has been run
since 2005 by the Ministry of Health of the Indian government. The Indian government
mandated a spending of INR 27,700 crores in 2004–05, and increased it annually to be about
1% of India's gross domestic product. The National Rural Health Mission program has been
clouded by a large-scale corruption scandal in which top government appointed officials were
arrested, several of whom died under mysterious circumstances including one in prison.
Corruption, waste and fraud-related losses from this government program has been alleged to
be 10,000 crores (US$2 billion).[32][33][34][6]
[edit] Income tax department
There have been several cases of collusion of officials of the income tax department of India
for a favorable tax treatment and relaxed prosecutions in return for bribes.[35][36]
[edit] Preferential award of mineral resources
In early August 2011, an iron ore mining scandal became a media focus in India. In
September 2011, Janardhana Reddy – an elected member of Karnataka's legislative assembly
– was arrested on charges of corruption and illegal mining of iron ore in his home state of
Karnataka. It was alleged that his company received preferential award of resources,
organized and exported billions of dollars worth of iron ore to China in recent years, without
paying any royalty to the state government exchequer of Karnataka or the central government
of India, and these Chinese companies made payment to shell companies controlled by Reddy
and registered in Caribbean and north Atlantic tax havens. It was also alleged that corrupt
government officials cooperated with Reddy, starting from government officials in charge of
regulating mining to government officials in charge of regulating port facilities and shipping.
These officials received monthly bribes in exchange for enabling illegal export of illegally
mined iron ore to China. Such scandals have led to a demand in India for consensually driven
action plan to eradicate the piracy of India's mineral resources by an illegal-political-corrupt
government officials-business nexus, removal of incentives for illegal mining, creation of
incentives for legal mining and domestic use of iron ore and steel manufacturing.[37][38]
[edit] Driver Licensing
A study conducted between 2004 and 2005 found that India’s driver licensing procedure was
a hugely distorted bureaucratic process and allows drivers to get licenses despite their low
driving ability through promoting the usage of agents. Individuals with high willingness to
pay make a significant payment above the official fee and most of these extra payments are
made to agents, who act as an intermediary between bureaucrats and applicants.[39] The
average license getter paid Rs 1080, approximately 2.5 times the official fee of Rs 450, in
order to obtain a license. On average, those who hired agents had a lower driving ability, with
agents helping unqualified drivers obtain licenses and bypass the legally required driving
examination. Among the surveyed individuals, approximately 60% of the license holders did
not take the licensing exam and 54% of those license holders failed an independent driving
test.[40]
Agents are the channels of inefficient corruption in this bureaucratic driver licensing system,
facilitating access to licenses among those who are unqualified to drive. Some of the failures
of this licensing system are caused by corrupt bureaucrats who collaborate with agents by
creating additional barriers within the system against those who did not hire agents.[39]
[edit] Claimed trends
Professor Bibek Debroy and Laveesh Bhandari claim in their book Corruption in India: The
DNA and RNA that the public officials in India may be cornering as much as Rs.92,122 crore
($18.42 billion), or 1.26 per cent of the GDP, through corruption.[24] The book claims most
bribery is in the transport industry, real estate and government delivered services.
A 2011 KPMG study reports India's real estate, telecommunications and government-run
social development projects as the three top most corruption plagued sectors. The study found
India's defense, information technology industry and energy sectors are the most competitive
and least corruption prone sectors.[11]
CMS India claims in its 2010 India Corruption Study report that socio-economically weaker
section of the Indian society is most adversely affected by government corruption – these
include the rural and urban poor. The study additionally claims that corruption perception
nationwide has decreased between 2005 to 2010. Over the 5 year period, significantly more
number of people from the middle class as well as the poorest segments of Indian society
surveyed, in all parts of the India, claimed government corruption had dropped over time, and
they had lesser direct experiences with demands for bribes.[41]
The table below compares the perceived anti-corruption effort across some of the major states
in India.[12] A rising index implies higher anti-corruption effort and falling corruption.
According to this table, the states of Bihar and Gujarat have experienced significant
improvements in their anti-corruption efforts, while the conditions have worsened in the state
of Assam and West Bengal. Consistent with the results in this table, in 2012, a BBC News
report claimed the state of Bihar has transformed in recent years to become the least corrupt
state in India.[42]
Index trends in major states by respective anti-corruption effort[12]
State 1990–95 1996-00 2001–05 2006–10
Bihar 0.41 0.30 0.43 0.88
Gujarat 0.48 0.57 0.64 0.69
Andhra Pradesh 0.53 0.73 0.55 0.61
Punjab 0.32 0.46 0.46 0.60
Jammu & Kashmir 0.13 0.32 0.17 0.40
Haryana 0.33 0.60 0.31 0.37
Himachal Pradesh 0.26 0.14 0.23 0.35
Tamil Nadu 0.19 0.20 0.24 0.29
Madhya Pradesh 0.23 0.22 0.31 0.29
Karnataka 0.24 0.19 0.20 0.29
Rajasthan 0.27 0.23 0.26 0.27
Kerala 0.16 0.20 0.22 0.27
Maharashtra 0.45 0.29 0.27 0.26
Uttar Pradesh 0.11 0.11 0.16 0.21
Orissa 0.22 0.16 0.15 0.19
Assam 0.21 0.02 0.14 0.17
West Bengal 0.11 0.08 0.03 0.01

[edit] Black money

Black money refers to money that is not fully legitimate property of the owner. A white paper
on black money in India by the Government of India suggests two possible sources of black
money in India.[9] The first includes activities not permissible under the law, like crime, drug
trade, terrorism, and corruption, all of which are illegal in India. The second, more likely
source is that the wealth may have been generated through a lawful activity but accumulated
by failing to declare income and pay taxes. Some of this black money ends up in illicit
financial flows across international borders, such as deposits in tax haven countries.
A November 2010 report from the Washington-based Global Financial Integrity estimates
that over a 60 year period, India lost US$213 billion in illicit financial flows beginning in
1948; adjusted for inflation, this is estimated to be 462 billion in 2010 dollars, or about $8
billion per year ($7 per capita per year). The report also estimated the size of India's
underground economy at approximately US$640 billion at the end of 2008 or roughly 50% of
the nation's GDP.

Right to Information Act

The Right to Information Act (2005) and equivalent acts in the states, that require
government officials to furnish information requested by citizens or face punitive action,
computerization of services and various central and state government acts that established
vigilance commissions have considerably reduced corruption or at least have opened up
avenues to redress grievances.[3][52]

[edit] Anti-Corruption Laws in India

Public servants in India can be penalized for corruption under the

 Indian Penal Code, 1860

 Prosecution section of Income Tax Act,1961
 The Prevention of Corruption Act, 1988
 The Benami Transactions (Prohibition) Act, 1988 to prohibit benami transactions.
 Prevention of Money Laundering Act, 2002

India is also a signatory to the UN Convention against Corruption since 2005 (ratified 2011).
The Convention covers a wide range of acts of corruption and also proposes certain
preventive policies.[53]

The Lokpal Bill, 2011 is a bill pending before the Rajya Sabha.

India's lower house of parliament voted to pass The Whistle Blowers Protection Bill, 2011.
The bill is now pending in its Rajya Sabha.[54]

[edit] Anti-corruption police and courts

The Directorate General of Income Tax Investigation, Central Vigilance Commission and
Central Bureau of Investigation all deal with anti-corruption initiatives. Certain states such as
Andhra Pradesh (Andhra Pradesh Anti-corruption Bureau) and Karnataka (Lokayukta) also
have their own anti-corruption agencies and courts. Andhra Pradesh's Anti Corruption Bureau
(ABC) has launched a large scale investigation in the “cash-for-bail” scam.[57] CBI court
judge Talluri Pattabhirama Rao was arrested on 19 June 2012 for taking a bribe to grant bail
to former Karnataka Minister Gali Janardhan Reddy, who was allegedly amassing assets
disproportionate to his known sources of income. Investigation revealed that India Cements –
one of India's largest cement – had been investing in Reddy’s businesses in return for
government contracts.[58] A case has also been opened against seven other individuals under
the Indian Penal Code and the Prevention of Corruption Act.