India Corruption leads to poverty, says watchdog official

INVESTMENT flow into India could perk up by at least 12 per cent and the GDP growth rate by 1.5 per cent on an annualised basis if the country manages to bring down corruption levels to those of the Scandinavian countries, according to a top ranking official of Transparency International (TI), the Berlin-based anti-corruption watchdog. Speaking to Business Line in the specific context of the annual Corruption Perception Index (CPI), which the NGO is well known for, Dr Gopakumar Krishnan, Programme Manager, TI, said incentives for reducing corruption are many and well documented. Studies have shown that countries with high levels of corruption are likely to get lower aggregate investment by approximately five percentage points and per capita growth rates by half a percentage. For instance, Bangladesh could increase its GDP growth rate by half a per cent if profiteering practices were reduced to the level of that in Uruguay. If Pakistan were to reduce its level of corruption to be on par with Singapore, GDP growth rates could increase by two percentage points. In India, a lot was expected in the wake of liberalisation in the early 1990s, especially as the new package of reforms promised to drastically cut down arbitrariness and red-tapism and, more important, roll back corruption.

But pioneering work on this by Public Affairs Centre (PAC) in Bangalore has now revealed that the incentives do their job only at the promotional stages and once an enterprise gets going, the spectre of corruption visits it quite frequently. The annual CPI ranks countries in the increasing order of perceived corruption in governance. The CPI focuses on corruption in the public sector and defines corruption as the abuse of public office for private gain. The Table depicts the strong undercurrents linking corruption to development indices. The Table reveals that the less corrupt a country, the better its score on the human development indicators. This goes only to substantiate the fact that corruption leads to poverty and not the other way around. South Asia accounted for 30 to 40 per cent of the world's poor. An estimated 45 per cent of the region's 1.4 billion population live in poverty. The very fact that three big countries in the region - India, Pakistan and Bangladesh - figure among the poor performers in both the CPI 2002 and the HDR 2002 (published by United Nations Development Programme) has to be viewed against this stark backdrop. India has consistently figured in all these lists and in not too envious positions. --------------------------------------------------------------------------------------------------- Scary.