Doing Business in India

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Doing business in India
Doing Business in India
Culture, Conundrum, Corruption, Creativity
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Contents
1.
Historical Roots...................................................................................................... 4
2.
Cacophony / Conundrum by Design............................................................................. 5
3.
Current Scenario..................................................................................................... 6
4.
Culture............................................................................................................... 10
5.
Market Opportunity............................................................................................... 11
6.
Business Practices................................................................................................. 11
7.
Expectation Management........................................................................................ 12
8.
Unease of Doing Business Shaking Confidence Level..................................................14
9.
Creativity in Problem Solving...................................................................................15
10.
Medieval Culture, Mobocracy............................................................................... 17
11.
Power of Diversity............................................................................................. 17
12.
Corruption: Weapon of Mass Destruction and Recipe for Societal Suicide.........................17
13.
Genesis of Corruption In India...............................................................................18
14.
Power of Corruption........................................................................................... 18
15.
Catalysis for Corruption....................................................................................... 19
16.
Character of Corruption....................................................................................... 20
17.
Boundary of Corruption....................................................................................... 22
18.
Drivers of Corruption.......................................................................................... 22
19.
Role of Bureaucracy........................................................................................... 23
20.
Target Segment of Corruption................................................................................24
21.
Well-Oiled Corruption Infrastructure.......................................................................25
22.
Conspiracy in Design.......................................................................................... 26
23.
Surveys and Monitoring....................................................................................... 27
24.
Superficial Efforts at Containing Corruption..............................................................27
25.
Collateral Developments (Damages) from Corruption..................................................28
26.
Impact on Society.............................................................................................. 29
27.
Corruption in Government Employment (The Lucrative And Safe Heaven).......................30
28.
The silent approver............................................................................................. 30
29.
Conflict of Purpose and Means.............................................................................. 31
30.
Real Role of Intermediaries.................................................................................. 31
31.
Disconnect With External World............................................................................ 32
32.
Corruption and Human Values...............................................................................33
33.
Game Plan to Extract Rent.................................................................................... 34

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34.
Tackling Corruption............................................................................................ 34
35.
Consequences of Corruption in Various Spheres.........................................................35
36.
Social and Economic Cost of corruption...................................................................39
37.
Irreversible Damage to Our Psyche Emotional Costs.................................................41
38.
Institutions for Tackling Corruption........................................................................42
39.
Incapacitating the Institutions................................................................................ 43
40.
Manifestations of corrupt practices.........................................................................44
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1. Historical Roots
India inherited the colonial legacy (still living under its shadow and carrying the baggage
despite being officially independent for seven decades) whose goals were to serve the interests
of the migrant masters using tactics not in the interest of the natives. Tactics adopted by
colonial rulers included implementing policy of divide and rule, rob the natives of their selfesteem, belief in themselves, deep culture, ways and inherent capabilities; and make them
slaves of the masters not only in body but more so in mind. Slavery of mind is more
debilitating than physical slavery.
The prevailing environment caused severe damage to the psyche: loss of initiative and selfconfidence, nursing the belief that they were inferior to their masters, loss of capability to
challenge, emotionally incarcerated. The masters also orchestrated intrigue and infighting to
weaken the natives and distract them from organising and pursuing progressive / growth
objectives. The tactics of the rulers were to create a cadre of officers (Indian Civil Service
(ICS) now rechristened as Indian Administrative Service (IAS) who would implement their
devious designs, be loyal to the rulers (dignified slaves of the masters) and not serve the
interests of citizens.
The task of the ICS cadre was also to design systems, rules, schemes for the citizens to promote
the selfish interests of the masters. In the process the cadre officers also benefited (officially
and unofficially) by misuse of powers and trickling down effect; a case of cohorts in crime. The
masters had to ensure loyalty of the officers and buy their peace, by allowing them to be
subordinate parties to the loot. Obfuscation, manipulation, coercive tactics to contain free
thinking, aggression, developing a questioning mind, collaborating and criticising the masters
were part of the larger agenda.
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Colonial masters promoted intrigue, corrupt practices, deceit, covert ways, hindering enterprise
of the initiated and anything that served their own ends. Making cohorts with convenient
native leaders in the disintegrated environment and collectively brainwashing the masses
through innovative and appealing slogans such as socialistic pattern of democracy, caste
reservations, subsidies and free aids, just to ensure perpetuation of poverty of enterprise under
the shadow of free basic comforts provided by government, were all part of the larger design of
the masters.
Indoctrination and hindrances to prevent the masses attempting to strike on their own for their
progress ensured the illiterate and poor stayed where they belonged, and the masters and their
cohorts enjoyed their unhindered comforts.
2. Cacophony / Conundrum by Design
India is a concoction of proclaimed democracy, portrayed socialism and practised confusion,

euphemistically hyped as socialistic pattern of democracy, a term coined by founding fathers of
the nation that means little / anything to anyone. The term is more used for sloganeering,
playing to the sentiment of the unsuspecting masses, people who cannot accept realities and
who believe some supernatural power (in the form of government) will come to their rescue.
These contradictions have become a convenient hood to legitimise the conundrum, lack of
focus and justifying anything done. Cacophony is used as a shield to obstruct visibility into real
issues, divert attention to convenient irrelevant issues to whip up passion and indulge in
whatever suits the influential and the powerful.
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3. Current Scenario
Business environment of today has roots in historical evolution. Inherited systems, mind-set
and practices become impediments out of sync with evolution in global business needs and
impeding progress. Present ecosystem is a function of reluctantly embraced oriental
collectivism and underlying desire for individualism of the accomplished driven by contextual
convenience. Collectivism has roots in conflicting ideology of democracy and socialism,
eulogised as socialistic pattern of democracy and ending up as hypocrisy. While collectivism /
socialism are pretexts, masked individualism is the latent reality. This perennial internal
conflict is the root cause for poor enabling environment, dragging productivity and realisation
of potential. Conflict of espoused collectivism and practised individualism is fuelled by the
need to meet conflicting demands of a diverse society in a democratic set up. Exploitation of
diversity to gain power by playing socialism for the masses (illiterate, uninitiated, resource
starved, sentiment driven, backward) and practising masked individualism to exploit the
resourceful, using the power acquired, have become the less spoken norm.
Whenever ones competitiveness is low (not in a commanding / bargaining position) one
would shift towards the collectivist mode, and when one beliefs one has the resources to make
it big on ones own and finds the collectivist system to be a barrier for progress, one tends to
espouse / practise individualism; a pure opportunistic approach.
The wild swing between collectivism (socialistic ideology) and individualism (capitalistic / free
market practice) is apparent across hierarchy and all spheres of life. It is considered desirable,
humane and charitable to speak for masses but smart and enterprising to pursue individual
goals, unobtrusively. This is the reason for displayed modesty of Indians vis a vis bold
expression of those from the West (free market ideology without apology).
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Handling this internal conflict is not without its price. Indians tend to be seen as timid, unsure,
lacking confidence, not forceful and typecast as incompetent, sometimes.
The opportunity and the need to swing between collectivism and individualism erodes ones
determination and focus, allows one to fall into one of the camps during distress and take away
the best (of both) possible. Availability of an escape route kills entrepreneurship. One is never
pushed to a level (do or die) bringing out the best in the individual. Failures are easily
justified, mourned in public under collectivism, easily finding cohorts and justification for
failures; and mocked in private.
Above syndrome is rooted in the conflicting ideology of socialistic pattern of democracy that
claims to meet demands of diverse constituencies. Living with conflicts feeds conundrum
without any compulsion to clear the web. Conundrum feeds opportunistic behaviour and
innovating coping (exploitative) mechanisms by the community. Diversity, opportunism, and
coping behaviour also catalyse conundrum, characteristic of India, more evident in unease of
living and unease of doing business. Ease of doing business is subsumed in ease of living
Barriers to ease of doing business do not confine to business but spill over to ease of living,
all aspects of having to do anything with Indian ecosystem. Such barriers are not undone by
mere tweaking of policies, procedures, rules or upgrading social and physical infrastructure, as
generally resorted to by governments. Such measures are mere window dressing, underlying
issues being far deeper: the way people (citizens, administrators, government, judiciary)
respond to diverse situations: attitudes, values, beliefs, practices.
Response to situations are not necessarily guided by what the rule book says, but by what
people have engineered and learnt over time, on, how situations are handled to realise goals.
These in turn are determined by peoples belief as to how informal (real) systems work. The
ways of the silent informal system drives realisation of goals and outcomes.
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Informal systems are truly innovative to interpret rules to circumvent, go beyond the rule
book / system, manipulate, obstruct and anything, an unbounded imagination of the possible.
The true enterprise of the Indian mind is demonstrated in finding ways to beat the system. True
innovation surfaces when confronted with a rule to follow. Innovation is on how to avoid
following the rule and still achieve the purpose. This is probably the reason why Indian
managers excel in handling complexity and conundrum, as they are the real architects of
complexity and cacophony in their own land.
Innovative informal systems that evolved are not documented but learnt from observation,
practice, experience, word of mouth sharing; and over time, become the defacto way to do,
even when formal rules exist. This is akin to traditional practices of some forms of Indian
medicine that are very effective, but only inherited over generations with no documentation.
The west (global pharma industry) is now attempting to patent many of these undocumented /
unpatented traditional practices in Indian medicine and sell as modern medicine. Whether it is
advisable to replicate the same on Indian innovation on subverting systems is left to debate.
Rampancy of violation (circumventing) leads to unobtrusive acceptance of the inevitable by
administrators and enforcement agencies, simply ignoring the rule book or conveniently
interpreting the rule book to justify the violation, if it suits or if there is a potential pay-off from
doing so. This is because there is silent unanimity on the impracticality or regressive nature of
many laws in the modern growth oriented era.
While many provisions are exceptions, repeated use of the provision makes exceptions the
accepted rule. Despite muted acceptance of reality, the system doesnt amend the rule book, as
the (impractical) rule is made to satisfy some constituencies in the diverse population and any
formal change may turn to be unpopular for the elected. Violations thus adorn the character of
sympathetic acceptance. The practical way is to keep the rule book as it is and openly violate
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under some exceptional clauses or even look the other way when violations are observed. A
live and let live philosophy. So we have a rule for the rule book and another unwritten one for
practice. Not knowing the practice (not the written rule) can be a major handicap for the
innocent. Most often people outside the system find it strange and uncomfortable to violate as
they are not aware of the informal unwritten working system and violations are considered
serious offences attracting stringent punishments. Also violations are considered bad practice
and generally not condoned by society. The working system (practice) is opaque and has its
own subtle variations depending on ones creativity.
It is this unwritten knowledge, comfort level and ability to use the informal system and still
(appear to) be compliant on the template of the formal system, that drives success in doing
business in India. This process (learning and practice) can be time consuming, stressful,
frustrating and conflicting with ones beliefs and values and test of endurance. No management
program can help one gain mastery of this ways of working in India nor would one want these
on record. The less it is on record the more is the competitive advantage for those in the know
of it and having access to it.
Those in the know of the informal working system have enormous competitive advantage and
carry a premium. It makes sense to not rock the boat for those who know the ways, as this lack
of knowledge is an entry barrier for others and a competitive advantage for those who know the
ways. It suits everyone in the system who matter.
An official system for records and another that really works: the smart ones know how to strike
the fine balance between the two and be unscathed is the rule. This is one of the reasons why
western nations attach considerable value to someone with India experience, as this is a market
that cannot be ignored, despite its perceived negatives and this is also the largest growing
economy with its demographic profile and fast pace of change. The India experience cannot be
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defined or articulated, but have to be heard like a story, internalised and experienced to know
what it is and its value. So long as one is not too adventurous to right the system, this is the
path of least resistance, peaceful and generates the highest Returns on Investment (RoI). The
risk could be minor surprises, but expected payoff is positive with sporadic negatives, if at all.
To understand this country and its ways one has to spend time in India, experience the diversity
on the ground, immerse one-self into it, be open to learn (the creativities), expose ones inner
self and then realise its hidden value. Despite all the negative ratings on various counts, no
global corporation has ever left India, no International Financial institution will miss an
opportunity to lend to India; no economy will ignore India. India is the most resilient of all
economies and has successfully survived many economic turbulences, even acknowledged by
the advanced developed world of the west.
4. Culture
Indian culture is one of disguised humility, submissiveness and accommodative under the
banner of people friendliness, philanthropy and caring. The disguised over-accommodative
culture has resulted in lack of accountability under the veil of someone else taking control of
ones action, to keep that someone in good humour, a convenient mask to shift blame on the
invisible. In reality, caring for the other is an empty slogan than anything the term would
convey; masking incompetency, intrigue, irresponsibility, low accountability and escapism. It
results in dispersed dissipation of energy (accountability) among many, yielding little
substantive value and promoting a comradery of self-persecution, a regressive ecosystem of
complacency. Multi point accountability is no accountability. The fundamental principle of
unity of command is observed more in its breach and conveniently.
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5. Market Opportunity
A land of exploding business opportunities, arising from growing demand-supply gap for
delivery of Quality goods and services across the spectrum, marks India. The word Quality
encompasses several elements; Delivery being a key element of what is expected as Quality.
Quality encompasses the intrinsic quality of the product / service, meeting commitments made
(contractual obligations) as well as fitness for purpose, durability, safety, performance,
aesthetics and so on, that are generally expected though, not stated explicitly in a contract
binding the supplier. These are too fundamental to be explicitly stated.
Quality in delivery is honouring schedules as well as the explicit and implied commitments on
expectations and transaction experience. Poor experience could be unsatisfactory interaction
between supplier staff and customer, callousness in packing, damaged product, delivery at
inconvenient times, irritable supplier behaviour with customer, over friendliness, intrusive
conduct and more. India fares poorly on both (product and delivery) counts. Delivery
commitments: products, projects or service are more observed in their breach, primary reason
being low expectations, over accommodation by customer and weak customer protection
legislation. The sympathy factor is not the least of these.
6. Business Practices
Practice of businesses has been to promise what the customer expects (and even desires) and
deliver what the supplier can and the minimum he can afford to, without serious damage;
leading to promise - expectation - performance mismatch. It is not uncommon for suppliers to
promise the impossible to grab the business. Many suppliers lack the knowledge on what the
commitments mean for the customer and what it takes for the supplier to meet those
expectations. Customers therefore tend to de-rate commitments made by suppliers and tone
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down expectations; waiting for the actual experience to really draw comfort from the
transaction. Every transaction tends to be stressful (uncertainty of what the transaction will
unfold to be) keeping ones fingers crossed till the event is over.
Customers are expected to discount the promises made by suppliers for all uncertainties, risks,
and even incompetency of the supplier; and keep waiting for the supplier to deliver at his
convenience, accepting excuses for poor delivery performance, even sympathising with him for
the pains he has undergone just to meet agreed commitments. It is as if the customer is obliged
to be grateful to the supplier for meeting his commitments despite odds against him.
It is expected that customers be aware of limitations of the supplier. Falling short of
expectations is not considered something the supplier should be apologetic about. It is more
often the unwritten norm and practice. People have taken such practices for granted, till they
experience better service. The opening up of economy, global travel and increasing cross
border transactions have exposed suppliers to global customer expectations and customers as to
what is good customer experience. This eco-system is inviting for overseas investors to cash in
on the expectation / promise / performance mismatch and customer dissatisfaction.
7. Expectation Management
Poor experience has its root in consciously over-committing to strike the deal, inflated claims
and under performance on a host of areas; misleading information, over-confidence
(adventurism) of supplier and generally driving one (customer) to look for alternatives, if there
is an option. This is what makes it a country and market starved of quality goods and services
that citizens are willing to pay for, but lack businesses who can meet and exceed customer
expectations. This translates into a huge opportunity for redefining standards of performance
and business practices; with higher disposable incomes and willingness to pay for value by
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customers; a demography with growing share of young population with higher incomes,
exposure, aspirations and willingness to experiment.
The gap between promise and performance is due to lack of competition, poor standards, weak
legal systems to handle promise performance mismatch, ineffective penalties for deficiency of
service, high cost and delays in getting reliefs for deficiencies, lack of clear information and
conundrum of procedures in accessing remedies, ease of registering complaints and so on.
Driven by decades of poor experience, increasing global exposure, higher expectations, paying
capacity and the open policy of the government, citizens are open to embrace quality from any
source. Citizens are losing faith in anything Indian for its quality, purity and reliability. Of
course competition is driving domestic businesses to improve quality and service, but is at best
an unconvincing and superficial attempt.
India has an aspiring and affordable emerging class with increasing global exposure, disposable
incomes, rising aspirations, daring to break out of the past, experiment; and impatient for action
and results. India is probably the only country in the present global scenario with a healthy
GDP growth; that offers business opportunity for global and domestic investors.
What is dragging realisation of value from this fathomless opportunity are an ecosystem of
legacy mind-sets, process friction and other institutional/individual/process barriers to doing
business in a quick, efficient and transparent manner devoid of a web of impediments.
Impediments include an eco-system of conundrum: disconnects, opacity, corruption;
collectively a poor enabling environment for innocently venturing into doing business in India.
The low enabling environment is an amalgam of interconnected and influencing factors
working in isolation and jointly; leading to lower output for the collective inputs of capital,
labour, materials and time. The poor ecosystem is the barrier! This poor enabling environment
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pushes India to the low end of competitiveness and growth. This argument is endorsed by the
fact that many Indians perform as good as or even better than any other competent professional
or business man in any geography in the world. Many also successfully lead global
corporations in other geographies.
8. Unease of Doing Business Shaking Confidence Level
Simple questions that coms to ones mind while venturing into a business in India are: will I get
all approvals within a predictable and committed time frame without going through third
parties (brokers) such as consultants and fixers, can I be honest about what I plan to do and
how I propose to run the business, do I have to misrepresent my business intent to just be
compliant and get the approval, can I discuss my intent (business) with an informed and honest
officer in the agency to guide me through the process without expecting anything in return, can
I be sure that I will not be misled through a rosy path only to land in a thorny bush, do I have to
go around the law to be compliant, can I expect my papers to be processed with a positive and
open mind without hidden agenda, will the officer help me end to end without pushing me on
to several others, how many agencies will I have to visit and pursue with to be sure all my
paper work is done expeditiously, will I get correct information, can I rely on the person I am
dealing with, do I have to provide for unofficial deals, do I have to break law to be seen as
compliant, will the person I have to deal with for completing formalities mislead and drag me
into a problem situation and extort money to be extricated out of the situation? Will I get
remedy if I access a higher level official? Will they ask for more information from me to use it
later for rent seeking?
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9. Creativity in Problem Solving

The way problems: illegalities, crimes committed by celebrities, influential and powerful
people are solved, is not driven by law of the land, but by pressures built up by the public
through media action. Actions taken on crimes by the powerful or incidents that attract wide
public attention, having a bearing on popularity of the ruling party are sentiment driven.
Sentiments are more powerful than the law of the land. So more time and resources are spent
on manipulating sentiments by opposing camps to target the other, and actions taken have more
of tokenism value. These are used not for punishing the wrong doer, but as a weapon for rent
seeking from the investor or to target political opponents.
Enormous public resources are wasted in forming, manipulating and influencing public
opinion. Most often crimes committed by celebrities escape the law. Once the heat from public
pressure dissipates, the issue is forgotten, only to be overshadowed by the next event.
Seeking and getting legal remedy is an art, not necessarily driven by ones ability to legally
build, present or logically argue the case with facts and evidences.
Many legal remedies sought are for court direction to follow the rule book by government
institutions (writ petitions). This is because government institutions / officials are notorious for
ignorance and irresponsibly flouting the law, misusing rules for harassment and rent seeking.
Low penalties, delays and low conviction rates for misdemeanour by officials discourage many
victims from seeking legal remedy. Most times even penalties from adverse court rulings on
officials are paid by the institutions (their employer) from tax payers money, though it is the
official who need to be penalised for misadventure and not the institution.
Officials enjoy the privilege of having the cake and eating it too. If the court ruling goes in
their favour they stand to benefit (counter party seeking compromise to settle issue), if it goes
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against them, the institution pays and not the official. Thus the official can gamble without
paying for it. It is always a positive sum (win-win) game, expected payoffs are positive, an
encouragement for misadventure by officials and the extra constitutional power centres.
Knowing the nature of outcome, most often citizens avoid challenging officials despite
reasons to the contrary. Media trial is the slogan of the season. Media makes hay from any
celebrity / government institution centred illegality from TRPs and consequential ad revenue.
The job of the media is to hype and pump up passion using another set of paid celebrities, the
so called experts on the matter. These celebrities (experts) de facto become the unofficial
(peoples) court delivering the judgments through media. Though such trials have no legal
sanctity they have the potential to damage reputation and celebrity value.
Once the heat subsidises, the issue is quietly buried and the culprit gets away scot free. He/she
only has to bear the media generated heat for s short time and pay the price for engaging
counter celebrities to speak in their favour, just to contain the damage. Citizens seem to have
enough time to witness this media trial, as they would like to educate themselves on the
practical ways to handle such problem situations. Media trials are also free entertainment!
Problems are solved more often by attention diversion, bringing in irrelevant considerations
into the argument distracting from the central issue, managing public (gallery class) opinion
and distraction. Noise is the solution for most problems, that drowns all facts and logic.
Distraction creates cacophony and helps creating an easy escape route. If a celebrity gets closer
to being punished, he/she changes tack using followers, middlemen and media available for a
price; to buy peace. The poor victim becomes helpless in this scenario where the prosecutor
and the judge join hands. All these happen behind the scenes.
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10. Medieval Culture, Mobocracy

Under the name of democracy, public sentiment and mob power override application of law of
the land and logic. A new term mobocracy describes this new self-styled institution. In some
parts of the country (North West) Khap Panchayats (a kind of peoples court) that effectively
override the official courts functioning under supervision of the judiciary. These Panchayats
decide punishments for misdemeanours and crime (what are considered as crime by them). The
procedures and punishments meted out resemble medieval times, uncivilized branding of acts
as crimes that are perfectly legal in the formal system. The official legal machinery quietly
keeps away from reining these illegal courts and victims suffer for no crimes committed.
11. Power of Diversity

India is a diverse country with each region (state) having a distinct character different from
another. Some of the states are rated on par with any developed country on several social
indicators while others lag considerably. One needs to be conscious of this diversity and the
opportunities each of these regions has to offer. India is not a country of snake charmers or
back office support agents, it is diverse but due to our subdued nature, gets skewed visibility
and branding
12. Corruption: Weapon of Mass Destruction and Recipe for Societal Suicide
Corruption is the most potent weapon of mass destruction and the most powerful enemy to be
conquered. Dictionary defines corruption in many related ways, the common thread being
deviant behaviour of those in positions of power or authority for illegitimate gain. They read as
follows
Dishonest or fraudulent conduct by those in power, typically involving bribery

Dis-honest or illegal behaviour, especially of people in authority
Lack of integrity or honesty (susceptibility to bribery); use of a position of trust for dishonest gain
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Moral perversion; impairment of virtue and moral principles

Inducement (of a public official) by improper means (bribery) to violate duty (by committing a felony)
Dishonesty, fraud, fiddling (informal), graft (informal), bribery, extortion, profiteering, breach of trust,
venality, shady dealings (informal), crookedness (informal), shadiness

Departure from what is legally, ethically, and morally correct
A term that offends against established usage standards
While integrity is the most powerful individual trait to be compromised and won over,
corruption is the most potent weapon to conquer the susceptible. Susceptibility reflects mental
weakness, low moral / ethical standard, institutional and systemic weakness to apprehend and
punish the corrupt, greed; over-smartness leading to tendency for misadventure for gain, and
above all societys values and attitudes.
13. Genesis of Corruption In India
The British used corruption as a weapon to divide and rule India, a country of several princely
states living in harmony and prosperity. Corruption grew into an enemy difficult to be
conquered, even after seven decades of independence, gaining traction, getting deeply
entrenched and spreading its tentacles in all spheres of life. Corruption has dented a social
ecosystem of honesty, trust, commitment, courage, enterprise and achievement orientation, and
fostered one of mistrust, low morals and ethics, suspicion, intrigue, greed, disenchantment,
fear, lack of enterprise, low productivity, ill feelings and hatred.
14. Power of Corruption

Corruption is more powerful than any weapon invented ever to destroy (your enemy), slowly
and unobtrusively, using their own people and resources, with minimum bloodshed and cost. It
is akin to a creeping guerrilla warfare damaging the target slowly but steadily and invisibly. It
is a silent weapon that once triggered goes auto pilot and self-propelling with no exogenous
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fuel to energise it. It generates its own fuel and spreads wherever it can reach, without being
noticed. It is a virus difficult to control and contain. Our enemies use it effectively to slowly
destroy our unity, our economy, society and productivity by directing our energy into
unproductive / destructive terrain. It is even used surreptitiously as a powerful bait on the lower
rungs of the security establishment to gain information, access, plant destructive devices and
walk away with no foot prints left, making it difficult to trace the source.
Corruption, if used ingeniously and patiently as a strategy, enables even a Lilliput to conquer a
Giant. Such is the power of destruction of this unobtrusive weapon. It is used as part of a larger
game plan of intrigue where the fence eats the crop. It has been used in ancient times (Puranas)
to corrupt the mind of enemys men to make them wage war (non-cooperation) against their
own master and in turn achieving the veiled objective of the originator. A classic case of
demonstration of this is the assassination of a Prime Minister by her own security guard. Same
weapon is now destroying our society though without an identifiable hand behind it. Should we
allow this self- destructive force to work towards our own end?
15. Catalysis for Corruption

Corruption neither happens by accident or nor is a by-product of oversight, but is an organised
business of intelligent minds. The partners are many: policy makers, politicians, bureaucracy,
oversight and law enforcement agencies, lower rung officials, mafia, service providers and
motivated section of citizens. Corruption can happen only under a conducive environment. The
job of these partners in crime is to create and nurture that environment, that is self-serving and
at the cost of ordinary citizens and progress of the country. Those who indulge in corruption
and be partners to it are to be treated as national criminals, not petty thiefs. The job of wellmeaning citizens is to break that conducive environment in which corruption and the corrupt
thrive. This conducive environment is an amalgam of several elements discussed later.
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16. Character of Corruption

Corruption is the most debilitating bane of our society. It is a despicable phenomenon deeply
entrenched in our culture. Corruption eats into all progressive initiatives and actions of the
minority of well-meaning individuals and institutions. Corruption is all pervading; not limited
to a few spheres/levels of economic activity, segments of society, geographies or even
hierarchical levels. It surfaces wherever and whenever there is an opportunity exists for
illegitimate benefits (rent seeking) in whatever form it takes and an enabling environment. The
benefits transacted through corruption have many forms: financial, material, tangible,
intangible, immediate, delayed, open, masked, direct, indirect, minor, major, obtrusive and
subtle: indulged in by functionaries (officials) across levels: higher, middle and lower; cutting
across business, services, emergency care; not excluding crematoria, hospitals, police,
judiciary, education, municipal services and any. It is rooted in a despicable mind-set to make
illegitimate short term gains using short cuts by both parties to the transaction.
Corruption needs at least two parties to the transaction like in trading: the buyer and the seller
(giver and taker). In some micro-societies (states / cities in our country) corruption has reached
a state of institutionalisation, where rates for illegitimate (or hassle free) transactions are fixed,
corrupt transactions do not necessarily happen under cover, commitments are honoured,
sharing of booty is organised including its distribution across the hierarchy. Honesty to the core
is the norm in corrupt transactions to the extent that, if the job is not done as committed, the
corrupt transaction booty is returned. Fairness in corruption is the rule, except that there is no
legal remedy for the illegal act. It is an organised parallel institutional mechanism that works
more efficiently and effectively than the official clean and transparent mechanism. Corruption
over time graduates into a mafia with its own rules of the game.
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The key driver of corruption is the need for a favour (service) delivered for a price that is off
records. In fact the value of the corruption (monetary value of the illegal transaction) reflects
the true price (perceived value - willingness to pay) of the service, similar to black market price
reflecting the true value (utility) of the good, in a controlled economy. Corruption reflects the
level of distortion in the economy: the gap between what society needs and what the system
allows it to have. Value of corruption reflects the gap between demand and the supply of
services to the level of satisfaction expected. It is the responsibility of any responsible and
ethical government to eliminate this gap.
Favours extended in exchange for the corrupt gratification are not necessarily illegal or
unofficial or in violation of rules, but are the rent sought and given for perfectly legitimate acts;
that one is entitled to from an official; but without delay and harassment in various forms, to
get the task completed. Corruption or speed money is the unofficial price for avoiding delay,
jumping the queue, not being asked embarrassment questions, not probing beyond the essential
superficial verification, closing eyes and ears to even what is visible and within range of
hearing, pretending to have not heard or seen, connivance and even active collusion and be
partners in the crime. The price varies depending on the tangible benefit accrued or intangible
loss contained (avoided) to the seeker of the service.
Harassment meted out to the one seeking service, by the official expected to deliver the service,
can range from asking for unwanted pre-requisites (records, supporting documents),
misleading the service seeker, misinformation, creating a situation for multiple visits to get the
service completed, under various pretexts such as pleading missing files, using innocuous grey
areas in interpretation of laws and rules against the individual when it can be legitimately and
without any illegality used in his favour, manipulation of records, mis-representation and so on.
It is the price for favourable use of discretionary power, speeding up the work without any
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extra effort, being just helpful whenever possible, sharing information and interpreting rules to
help the task completion legitimately; just doing the job one is paid for but demanding illegal
gratification.
17. Boundary of Corruption

Corruption cuts across levels: high (policy) as well as middle (implementation) and low
(operational). Corruption at policy level (wholesale) are of high value with less no. of
participants (low volume high value deals) and those at operation and implementation levels
are of a retail nature (high volume low value business).
Corrupt practices exist in every social and economic activity in the corrupt society: businesses,
education, access to social, physical and institutional infrastructure, legitimate government
benefits (subsidies, pension, rations), discharge of legitimate government services, basic
approvals for access to municipal services, day to day needs, access to law and order, police
services, judiciary, regulatory, enforcement, vigilance ...
18. Drivers of Corruption

Corruption exists due to several factors attributable to the parties to the transaction as well as
policy makers and relief providers such as the law and order machinery, judiciary...
Speed, efficiency, cost and effectiveness of the relief providers and the justice system; clarity,
transparency, specificity, currency, relevance, objectivity and practicality of the policy, rules,
procedures and the conundrum of institutional mechanism; honesty, fear of the law, integrity of
the officials involved; literacy, awareness, transparency, access to rules and procedures for
those seeking service; enterprise, awareness, assertiveness, belief in the system and integrity of
the service seeker; all influence corruption (incidence, gravity, nature and perpetuator)
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Corruption is driven by the general perception in society on how work can be got done (the
smart / practical way), the low moral standards in society, degraded value systems and lack of
determination to follow the right path to get ones work done, and lack of trust and credibility
in the working of the system sans the speed money. Beneficiaries of corrupt practices also
disseminate motivated messages that the work can be got done only if handled by the
middlemen, instilling fear of harassment of the seeker, if he approaches officials directly and so
on, to woo service seekers into their fold (marketing their services!).
19. Role of Bureaucracy

Corruption is built into the system by providing for discretion to the bureaucracy, to be used
favourably, for a price. Bureaucrats who frame rules build in provisions for rent seeking for
themselves and everyone up and down the hierarchy. Rules are not made in a simple language
comprehensible to the ordinary citizen, but with built-in layers over layers and wheels within
wheels, unwieldly expansion of boundary to obfuscate the true intent and implementation
mechanism creating cacophony, scope for interpretation and denial of service, which is the
main source of graft.
Rules are also framed keeping in mind the need to provide jobs and earning opportunity for
lawyers, judges, consultants, superfluous middle-men and intermediaries through convoluted
definition, wordings that make it impractical for any straight thinking citizen to comprehend
the rules and procedures to be completely law abiding. The job of all intermediaries is to guide
the seeker of their service on how to go around the law without making the violation apparent
and also follow the crowd in officially permitted violation. The question that often comes to
the mind of an innocent honest citizen is, if the government knowingly overlooks violation
when the work is routed through middle-men, why dont they make amendments in the rules so
that the practice being followed and accepted is declared to be the official version, so that there
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is no guilt associated with the compulsive accepted violation? The answer to this is evident in
that, maintaining status quo provides employment and earning opportunity for their interested
constituency. Alas, such a thinking is regressive, results in waste of precious man-hours,
resources, creation of unproductive employment and cacophony eroding growth. This is the
ingenious way to employment generation and practice of socialism. Such regressive practices
make it unavoidable even for honest and educated citizens to seek unnecessary help of middlemen to bend the rules, even to get perfectly legitimate work done. Powerful lobbies of service
providers earning their living by making life difficult for ordinary citizens, and promises of
getting them out of the problem for a price, are major reasons for the corrupt to flourish.
20. Target Segment of Corruption

Maximum corruption is at the highest and the lowest levels.
At the highest levels to tweak government policies to favour oneself and create barriers for the
competition, to secure futuristic advantageous positions. These include eligibility criteria for
government contracts, bidding and allocation for natural resources such as minerals, energy,
communication spectrum, defence production and procurement; services where the stakes are
high but no. of contenting parties are low.
At the lowest levels, corruption is rampant in distribution and access to all forms of benefits
and basic services from government such as ration, employment guarantees, subsidised water,
electricity, housing and employment to the masses, across levels, in government. Even menial
services such as issue of death and birth certificates, caste / income certificates, building plan
approvals, ownership records, and even for paying the dues to the government such as taxes are
not spared from the ambit of corrupt practices. Here the corruption is mass based, each unit of
corruption being of low value.
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Continued practice of corruption over time and having been immersed in a corrupt system have
made citizens immune to (invisible of) its existence, even failing to recognise corruption as an
evil or something to be qualified as wrong-doing. Citizens have to reconcile to accept the
reality that this is the way to be, and find themselves out of place in a clean environ where
corruption does not exist, creating cultural shocks and getting caught for misdemeanours, in an
alien land, that are perfectly normal in the home turf.
21. Well-Oiled Corruption Infrastructure

Corruption is indulged in by self-appointed unofficial intermediaries in the garb of providing
assistance to the needy service seekers. These unofficial intermediaries are generally the
underlings of political parties in power or part of their informal network, without a clear
identity. Corruption at this level is an incentive or reward for supporting the party leaders
before, during and after elections.
Support for the corrupt is by passive approval of the corrupt act by inaction, when complaints
are raised by victims, to higher levels and ombudsmen, unobtrusive and veiled intimidation and
coercion of the complainant to withdraw the complaint, delays and inaction on files / request,
looking the other way on the complaint and even informally advising for cooperation and
amicable settlement. Such implicit support amounts to approval of the corrupt act. Such passive
connivance is due to the under-cover sharing of the spoils with the perpetrator.
These underlings are small time thugs masquerading as Good Samaritans, helping the needy to
get things done. Getting things done carries shades of meaning: providing information, gaining
access to officials, filling up outdated forms, submission, do all the manipulations to make the
individual eligible even if not eligible, paying off officials, flexing muscles whenever needed
and finally getting the individual a small fraction (10%) of what is due to him / her from the
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benefits provided by government, for instance. The remaining 90% is classified as systemic
leakage, a euphemism for corrupt money shared by the various links in the chain. The
individual practically becomes dependent on the Good Samaritan and falls under his control.
In other scenarios the underlings charge the service seeker several times the official fees under
the guise of expenses. The word expenses is a euphemism for un-disclosable corrupt
transaction without records, defined purpose and justification.
22. Conspiracy in Design

The government (politicians, bureaucrats, officials combine) consciously designs schemes and
systems to implement the scheme, to provide for rent seeking opportunity for the several
intermediaries in the chain. In effect, 90% of the resources meant for the targeted
disadvantaged sections end up in the pockets of these middle men, politicians and officials
administering the scheme. Most of this illegitimate transaction traverses non-banking channels
and form a large part of the black money generated (unaccounted in the GDP).
Though the government budgeted expenditure is incurred and accounted for in records, the
funds actually land in the hands of the wrong people and ultimately finds its place not in
purchase of consumption goods by the poor, but splurging on discretionary spending by the
rich, as this money is unaccounted and not earned. To accommodate this large segment of bad
money owners, jewellery and other luxury businesses that are the normal sink for bad money,
protested against governments move to ban high value cash transactions, compulsory quoting
of Income tax PAN, payment through bank instruments such as credit / debit cards for such
transactions; the argument being many establishments in these businesses will lose business,
which is a clear pointer to where the bad money is spent. So businesses expect government to
support illegality to protect their business interests: is this ease of doing business?
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23. Surveys and Monitoring

Government carries out various surveys through external consultants to assess the impact of
pro-poor developmental schemes. All surveys come up with colourful reports on expenditure
data well aligned with objectives and plans, but what is not found in the records is, where the
loot has landed and who are the real beneficiaries. Any study will only come up with distorted
findings on the impact of such programs, quietly ignoring the crucial invisible elements.
The real truth never comes out as even in surveys, the intended beneficiary sharing only what
he/she has been tutored to share by the vested interests, during the survey, out of fear of
harassment by the goons for spilling the beans or fear of losing benefits in future, if truth is
spilled. Also due to low level of literacy, many victims are not even aware of what is their due
vis a vis what they got and how much has leaked out and where. Though surveys are meant to
be carried out in confidence, the vested interests gain access to such confidential information
even at the planning stage. So much for discretion and confidentiality
24. Superficial Efforts at Containing Corruption
Every party that comes to power in government makes unstinting promises of arresting
corruption, with clear understanding that they have no intention of disturbing the business as
usual scenario. Such promises lack conviction and are only meant to be election manifesto, to
be easily overshadowed by more high decibel issues.
Efforts at disintermediation in distribution of benefits to the poor have been stymied by the
army of illegal beneficiaries, including at the highest political and bureaucratic levels. The
Direct Benefit Transfer (DBT) through banking channels with national identity verification,
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recently introduced for distribution of benefits to the poor, has started moving only recently
and has its own detractors, people who tend to lose the loot from disintermediation.
25. Collateral Developments (Damages) from Corruption
The degradation in the practice of stealing from the poor has reached alarming and unspeakable
levels. Due to the huge opportunity for illegal earnings, there is an un-satiated demand for
employment in critical lucrative positions with huge budgetary allocations targeted at the
masses, even at lower levels, from over-qualified individuals. Due to the high demand for these
lucrative positions, another level of corruption has surfaced in recruitment and appointment to
lucrative positions and postings.
There are cases of engineering post graduates applying for posts of office assistants, sub
inspectors, Police constables, RTOs, superintendents and so on, as the real net gain (including
bad money) from these positions, are found to be much more than the legitimate gain from a
respectable professional job. This has led to wasteful expenditure in education of persons who
ultimately are severely under-employed, since such voluntary under-employment is found to be
more lucrative than appropriate employment commensurate with their skill level. This is a
vicious chain, one feeding the other. A large part of the corruption is an organised crime with
the passive support of the government, as it suits everyone in the chain, except the poor, who
are oblivious to the loot under their name.
26. Impact on Society
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Deep rooted and all-encompassing corrupt system has deep-rooted and wide-ranging
ramifications on the socio political economic eco-system. The corrupt system has led to deeply
entrenched and wide ranging negative behavioural changes in people and systemic changes in
the socio economic structure. The inefficient official system to deliver services including
grievance redressal and dispute resolution, have become a great opportunity for informal
institutions such as deal makers settling disputes through means that are less than legal and
civilized, and themselves being corrupt; crime syndicates and mafia indulging in settling
disputes outside the legal framework, law enforcement machinery such as the police indulging
in activities beyond their purview such as settling disputes for a price (using their veiled
power), in favour of the one who has deeper pocket; and social unrest.
Lawlessness prevails due to inefficiency of the official law enforcement and judicial
machinery. People tend to lose faith in the credibility, integrity and efficacy of the regulatory
machinery as well as the appellate body, the judiciary. A sense of helplessness and apathy
prevails. High energy is wasted in going through this cacophony of unreliable and opaque
system that could have been directed towards activities leading to progress and higher GDP.
The sense of helplessness and apathy with the system drives the educated class to seek
opportunities in more matured, dependable, predictable, reliable and organised economies with
systems that work. The country is thus left with people who perpetuate and benefit from the
corrupt system, as it exists and their victims, the poor, who believe their needs are taken care of
by their political masters (middlemen), little realising the powerful undercurrents and how they
are misused.
27. Corruption in Government Employment (The Lucrative And Safe Heaven)
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Even oversight institutions such as the Lok Pal / Lok Ayukta (institutions to check corruption),
auditing agencies, the entire inspector machinery (covering labour laws, commercial and
income tax, food safety, health matters) are part of the same system and demonstrate similar
behaviour. The extent of this deep rooted malaise can be gauged by the fact that postings for
some of these positions are auctioned informally (the price to be paid for a lucrative posting to
political bosses and official supervisors), the highest bidder gets the right to loot during his
tenure of 2-3 years, a well analysed business decision to pay the price, to be in a lucrative
position for a couple of years (project life for recognising revenue streams in a payback
period / NPV / IRR calculation). The official ensures a lucrative return on the capital
investment made (bribe paid for the position).
28. The silent approver

No one needs an upright efficient officer as ones subordinate. Everyone needs a flexible
corrupt pliable individual, who will enrich himself and also the links in the machinery he is
associated with.
No one speaks about it as anything to be discussed, as the public has reconciled to the situation
with appropriate coping mechanism. The ones who try to challenge the system are harassed
using provisions in the law with utmost unfavourable interpretations (using the scope for
interpretation of the rule book that is most often outdated and impractical to abide by).
29. Conflict of Purpose and Means
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The country is faced with a dilemma of having to bridge the huge void between what is needed
and what is politically right and individually convenient. Laws are framed to appease the poor
illiterate ignorant mass voting population, with no intention of implementing them, as
implementing them would amount to jeopardising economic growth objectives. This syndrome
of having laws and not implementing them with integrity, is what provides the huge
opportunity for rent seeking and corruption; all joining the party; a syndrome of blatant
hypocrisy.
Democracy in a plural society proves to be dysfunctional. The ones (rich, powerful, influential)
who get elected by the poor masses are caught in the conflict zone of having to portray an
image of working for the poor, by appearing to be enacting (ineffective) laws for their welfare,
but are actually interested in working for own interests, lobbies, big businesses for a free
market society. This inherent conflict is the root cause for the wide gulf between laws
(ineffective) on paper and practice that hinges on accepted violations using the machinery of
self-styled unofficial intermediaries.
30. Real Role of Intermediaries

Financial advisors / consultants, tax consultants, labour law consultants et al, consultants of any
creed; disguised service providers masquerading as consultants are in simple language fixers /
middle men, who bridge their client and the respective government functionary, for gaining
access to services such as: funding from financial institutions, resolving tax dispute issues,
settling labour law matters and so on. They do not add any intrinsic professional value
compliant with the law, but only do the menial job of broking the bribe settlement amount and
the modus operandi with the official. In turn, they take their own cut, in addition to agreed fees
for the services.
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Many of them play the double game of collecting potentially useful information from their
client, in trust, under the mask of solving their problem, and leaking the same selectively to the
authorities later, who will issue notice, and the desperate client is forced to seek the help of the
fixer consultant again, who will extract his pound of flesh, in addition to feeding the
government official. Consultants end up as source of information to hound the citizen and in
turn settle the issue for a price. This is how consultants create business using blackmail, deceit
and so on. This happens due to lack of code of conduct and effective law on professional
liability, data privacy and confidentiality.
31. Disconnect With External World

Indians who are used to working in an eco-system of wheels within wheels, cacophony,
opacity, bribery and corruption to get their work done, sometimes find themselves out of place
in an alien culture where what is stated is what is meant, there are no hidden rules, consultants
are not just middle men but who add real professional value.
So is the reverse where overseas investors find themselves lost in the labyrinthine of rules,
procedures and compliances, when they start their business ventures in India.
The gap between rules and practice, commitments and action, promises and performance,
reality and rhetoric is huge for any normal person to comprehend and draw comfort from.
These gaps are huge opportunities for feeding corrupt practices. One can easily swing from
extremes of compliance and non-compliance simply based on how one handles the problem;
the way to handle the problem is not necessarily the way it is pronounced to be. A criminal
becomes an innocent overnight and vice versa depending on his ability to strike the right chord
with the right people at the right time. It is more important to know the unwritten system than
the written law of the land.
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32. Corruption and Human Values

Corruption is linked to ones psyche. For someone with a high level of personal integrity,
conviction, valuing ones self esteem, determination to go to any length to do things right and
fight your way, one may still be able to survive in the system. But it is a tall order. The
premium for honesty is very high, not the other way. Honesty is penalised for the uninitiated
and innocent. One needs to know the way around. Going around is the norm as the straight path
is most times blocked or one will hit a wall after going some distance.
This scenario is the prime driver for unease of doing business in India. This syndrome is
neither uniform throughout the country nor applicable equally in all sectors where there is a
citizen government interface. The root cause for this is general reluctance of all stakeholders
who benefit from this cacophony to rock the boat, as status quo suits those who are benefited
and those who are not, develop coping mechanisms and learn to live in the system or quit, but
not change it.
One has to just erase concepts of ethical conduct, honesty, integrity, law abiding, fear of
breaking the law and so on. This doesnt mean one doesnt get caught. Such unfortunate
development may happen more by chance or one trying to be over ambitious or sparring with
someone who is in the know of ones ways. You can buy peace if you choose to be peaceful
and contented. Obviously, the enterprising ones are not willing to accept such compromises,
which is the reason for India being branded as difficult to do business in, particularly for the
novice and innocent, who are not trained to read the unwritten word or between lines.
33. Game Plan to Extract Rent

In order to enhance cacophony which feeds corruption, a complex loop of exemptions,
eligibility, prerequisites, qualifications and so on are built in or interpreted at the operating
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level, when they are loosely defined or undefined and left to the articulation / interpretation of
the lower level functionaries. These grey areas are feeding grounds for corruption. Poor
drafting of rules lacking transparency, extremely poor convergence of many related laws, that
give scope for interpretation, manoeuvring and rent seeking, catalyse corruption. This is
because of the huge dis-connect between stated objectives (due to political compulsion) and
what is needed and intended to ensure economic growth and progress. This is due to diversity
of our demography and the ensuing diverse needs and aspirations of citizens. The political class
and the bureaucracy thrive on this disconnect and would rather preserve the status quo in their
own interest.
34. Tackling Corruption

Corruption can be contained only if citizens are educated, organised and empowered to
challenge the corrupt officials and practices. Empowerment happens through a mix of
initiatives: transparency, access to information and an efficient, speedy, low cost redressal
mechanism working in unison. We must also have an environment where booty from
corruption is not celebrated; corrupt should be forced to surrender all their corrupt gains and
more, and penalised with long incarceration.
Any money that is gained beyond legitimate disclosed earnings is to be treated as corrupt
money. There is no need for any lengthy convoluted delayed procedure (that causes delays in
bringing the corrupt to justice which tantamount to allowing him/her escaping the law) to
establish the source of the booty that is splurged. The expected value of graft should be
negative and high, considering probability of conviction and the value of penalty. Swiftness,
severity and certainty of justice are the key drivers of a crime free society.
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Education on awareness on corruption: its ill effects, how to resist it, how to name and shame
those who indulge in corruption (including parents), where and how to report instances of
corrupt practices and officials, should start at the school level. Children should be trained to
question their parents on the source of their money, that is splurged on luxury goods and high
living beyond recognisable means.
35. Consequences of Corruption in Various Spheres

Below are typical cases of corruption and its cost to society. One can find innumerable such
cases with a little bit of field work
a) Municipal services
Tendering: favourable prequalification requirements orchestrated to suit interested bidders
leading to reduced competition and non-participation from more competent bidders. The work
gets awarded to incompetent, unethical bidders at lower value for money, though bid per se is
of lower value (to satisfy the lowest bidder condition for award of contract), despite availability
of more value for money bidders. The lower value for money derives from poor quality work
of lesser life, frequent rework, poor service, accidents caused, disruption of life, lower citizen
productivity from disruptions and frequent service calls that are rarely attended expeditiously,
higher overall economic cost, suffering and low morale of citizens. The net social and
economic costs are high.
The beneficiary from manipulated tendering is the municipal official awarding the contract and
his coterie instrumental in the manipulation of the tendering process and the bidder who shares
the spoils, which in turn affect progress and quality of work. Such a scenario dissuades
competent and ethical bidders who shift their activities to more favourable environments. The
city or the county loses in the bargain, despite availability of competent and quality contractors.
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Execution of works - manipulating tender conditions after award of contract: This form of
corruption dilutes enforcement of contractual performance obligations after award of contract
or the contract terms surreptitiously in favour of the contractor for a price. This will again have
the same effect as above.
Corruption in tendering for works adversely affects citizens, community, businesses and the
overall economy, disproportionate to value of the private gain made by the corrupt partners to
the deal.
Municipal services demonstrates one of the most implementation level corrupt practices at a
huge cost to society in terms of delay, indirect consequential costs and obstruction to normal
life. Though the value of each corrupt instance may be small, the collective value is huge and
so is the price paid by society due to the high volume, variety and frequency of such works and
inability to measure volume and quality due to the dissipated and unbounded nature of such
small works. Cost of societal externalities are disproportionately high to the quantum of private
gain made by the corrupt
b) Education
In government provided educational services, manipulation of various forms for a price, leads
to provision of educational services to less deserving candidates and denial to more competent
and deserving ones, at huge cost of subsidy to the government. This leads to student drop outs
mid-way through the program due to inability to cope up by those (incompetent ones) who
made an easy entry, and the more competent ones denied the opportunity choosing alternate
educational avenues. This results in mismatch between competence and opportunity for both
groups and collectively poorer outcome for society.
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Some competent ones choose to leave for greener pastures and they are lost for good to other
countries, where conditions for quality education and opportunities for growth are better. This
is the prime driver of brain drain either before education or after, when the competent ones are
also denied the opportunity at higher levels of education or even in employment. Brain drain is
a major loss to the country due to loos of brain power as well as inability to derive value from
investments made in education.
One can set up schools, colleges, universities and run them violating all norms and still
claiming to be compliant, misleading all, by deftly managing the licensing, inspecting and
oversight authorities. It is more critical to know the individual official and the informal system
than the formal rules and procedures, to be in business. Job of most consultants is to get you
the compliance certificates from respective authorities; not necessary to be compliant. The
certificate is more important than being compliant.
c) Traffic police
Expected to enforce traffic rules on the roads, on the move and lacking effective concurrent
oversight, by lower rung officials in the police establishment; traffic management is a potent
source of corruption. Instead of charging the offender and collecting the official penalty for the
violation, traffic police resort to collecting a fraction of the official penalty from the offender
without records, and share the difference between official penalty and the actual cash collected,
with the offender.
Due to absence of records on offences committed (by collecting penalty in cash with no records
of the offence), there is no way to track, apprehend and control repeat offences and even preempt fatal offences or crimes later, adversely affecting safety on roads including from criminal
offences. The price paid by the society is high incidence of road accident fatalities, low
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confidence level for honest law abiding citizens to use roads without fear. This affects the level
of economic activity due to reluctance to use roads freely and other collateral fallouts.
d) Law and order police
Police are empowered to collect evidence on crimes reported or those they come across. They
use this power to manipulate the evidence and filing charges against the offender on
appropriate sections of the law. One can get charged for a very diluted version of the offence or
a minor offence for a price paid unofficially. Such a conduct leads to citizens losing trust and
confidence in the objectivity of the law enforcement machinery, not reporting offences,
resorting to private compromises and using third party agents to resolve issues. Such a
tendency is very dangerous and can lead to complete breakdown of the law and order, followed
by loss of confidence and consequential outcomes.
e) Judiciary
Posting of cases for hearing, flouting rules and the queue, appeasing pliable judges for
favourable judgment, delaying hearing and judgments, presenting evidences, issuing judgment
copies, orchestrating deliberate in actions that are considered unfavourable
f) Land and revenue
Tampering with records, issue of various certificates on ownerships, transfer for various
reasons, transaction deed copies, encumbrance certificates and any other area of citizen needs
g) Housing and construction
Approval for construction, turning a blind eye towards deviations from sanctioned plans,
encroachment, violations of building code, fixation of property tax, acting against blatant
violations, acting on public complaints of various kinds, reporting and acting on raising
demand and collection of tax arrears by manipulating / concealing records, regularisation and
condoning unauthorised occupation / construction, framing laws to suit interested builders /
developers / architects / contractors any area of interest to and concern for citizens
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h) Transport permits
Issue of permits and acting on unauthorised plying without permits, acting on violations such
as pollution control, vehicle maintenance and road worthiness, accidents, violation of MV Act,
issue / renewal of licenses, confiscation of vehicle for violations, over speeding, overloading,
use for purpose not permitted. Other critical areas for graft are
Environment and pollution control

Defence and security
Food and Drug safety
Health Care, Pharma
Issue of driving license (an under aged and incapacitated person can get license without
even visiting the RTO or taking a driving test)
Management programs should have a course on corruption as a social cost, ethical business and
corporate social responsibility
36. Social and Economic Cost of corruption

Prevalence of corrupt practices in a society diverts valuable intellectual man-hours /man-years
on countering the negative fall outs of corrupt practices. Corrupt environment entices one tuned
to misadventure, given an opportunity, to explore opportunities for quick gains. Intellectual
capital gets diverted from productive activity to ways and means of quick gains, risky
misdemeanours, manipulative tendencies, obfuscation of facts, indulging in misinformation
and their cover ups, crimes. Fall out of the negative acts are preoccupation in building backups, cover-ups, defensive strategies, mental stress, non-cooperation or passive cooperation
among members of society from suspicion and so on. The same intellectual resources could
have been productively deployed in meaningful acts for a progressive society contributing to
GDP.
Openness has the positive bye product of being physically and mentally healthy, improved
collaboration, positivism from being able to see results and a general sense of wellbeing.
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Positive experience will drive more positive acts and is contagious as much as negative
feelings are. The value of this could be roughly estimated from the below narration
It is understood that in IT capital of India, Bangalore, alone, about eight lac (1 million equals
10 Lacs) IT employees generate $23 per man hour of export revenue in a year
(http://qz.com/280082/the-true-cost-of-bangalores-traffic-gridlock-to-indias-it-industry-isstaggering/). Bangalore contributes about 33% of all exports of IT services. Annual costs
(productivity lost) only due to 2 hr lost per day on traffic alone is US$6.5 billion. Corrupt
environment leads to at least 50% loss in productivity due to preoccupations in steering ones
way through the several corrupt officials and systems, corrupt thoughts, loss of productivity
from poor infrastructure: physical, social, institutional; morbidity as well as loss of leisure and
peace of mind. Extrapolating this to a larger population and the whole country, the cost of
corruption is mind boggling. The real cost of corruption is several times the monetary costs
(unofficial payments and resource leakages of all kinds at all levels). It would make sense to
even simply pay off even twice the financial leakages from corruption and clean up the system.
Still at a macro level we would be better off as a society.
A non-corrupt society will be better able to integrate productively with other global economies
and societies. It will also enhance image in the global landscape and reduce cost of friction,
learning, unlearning and relearning
37. Irreversible Damage to Our Psyche Emotional Costs

Negativity, diffidence, lack of trust, submissiveness, non-obtrusive and non-committal,
experiencing constrained freedom and lack of enterprise, mark the typical behavioural traits of
Indians. This is due to the repeated hammering of children and youngsters by parents, school
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teachers, well-wishers and the elders on the need to be cautious, keeping a low profile, not to
trust anyone particularly strangers, always have a backup, never expose oneself, not to be
aggressive and take risks, and in essence not trusting the intelligence, competence, ability of
youngsters to manage themselves.
This experience is particularly true of children of parents who are born before independence as
they have been repeated witness to several negatives around them. This is also the reason why
despite having all the capabilities and technical qualifications, Indians are found to be not able
to exploit their full potential so long as they are within the country. When they leave the shores
to work / study in foreign land, they are unable to trust their own abilities in a more organised
and trusting environment. This is the fundamental reason why many educated persons leave the
shores to find their fortunes elsewhere, where conditions congenial for enterprise and realising
their true potential are believed to prevail.
Corruption has a very deep rooted negative influence retarding progress of the society. Post the
internet era, greater exposure to the free world has opened the minds of Indians and given them
renewed confidence on their own capabilities, and the belief that the external world is not as
much of a barrier as they were conditioned to believe, due to their own immediate
circumstances. This is driving more youngsters to venture out, explore, return and daring to
express themselves even against the established medieval norms of negativity and regress. The
cost of this damage to the psyche is unfathomable. It would need several generations to come
out of the slavish psyche and undo the feudal practices characteristic of pre-independent times.
38. Institutions for Tackling Corruption

Institutions such as the Central Bureau of Investigation (CBI), Enforcement Directorate,
Vigilance Commission, Loka Ayukta, Lok Pal, the RTI act, The Whistle blowers act, Witness
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protection act and so on, are more decorative creations for catalysing a feel good environment
and to comply with demands of International funding agencies and financial institutions, Credit
rating agencies, FIIs and so on, for a favourable reception in the international community,
creating semblance of a favourable investment destination, improve ease of doing business
rating, reduce cost of fund raising, manage forex and invite investments from FIIs and FDIs.
The actual functioning (outcome orientation) of these institutions are far from the stated
objectives, pronouncements, commitments and meeting the real purpose of setting up these. A
huge gap prevails between pronouncements, mandates, stated objectives and effective
functioning on the ground.
The role of these institutions and the legal backing through the Acts are more illusory than of
any real practical value, due to a plethora of institutions addressing intertwined issues, that are
poorly delineated, and notorious for their overlap of jurisdictions, conflicting provisions, poor
integration, poor definition with several overriding provisions, exemptions, caveats, lacking
clarity of boundary leading to many criminal actions falling between stools, and ultimately the
criminal going scot free and the plaintiff not getting definitive justice in a time bound manner.
The system provides for easy escape of the villain with imaginative legal assistance and pliable
judges. Instead of aiding the victim and confronting the mis-adventurous, the system provides
for escape of the culprit. It is easier to get away after a misadventure. Payoffs from crimes are
not negative enough to dissuade such attempts. Well-meaning honest citizens find the system a
disincentive and a drag on progress. Such an environment has become feeding ground for more
corruption and the corrupt to thrive, making honest ones a laughing stock of not being smart!
39. Incapacitating the Institutions
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Most of these institutions for good governance are practically incapacitated from discharging
their duties dispassionately. Collective responsibility that effectively is a joint irresponsibility,
leading to non-accountability as against the need for unity of command that enables fix direct
responsibility. Joint responsibility is a potent tool for dissipated energy and noise, but with no
desired outcome. Collective responsibility provides for loopholes, escape routes, dilution of
charges, delays leading to selective amnesia that itself means justice not delivered, conundrum
of passing the buck and ultimately the criminal escaping scot free. Such a complex web creates
enough scope for further corruption, low traceability, more escape routes and cacophony. It is
simply noise for media distraction / news / entertainment with no time-bound purposive action.
Institutions are incapacitated by poor staffing, shortage of competent officials, poor
infrastructure, low use of technology for driving efficiency and transparency, and holding
officials accountable.
Even acts such as RTI, Whistleblowers act, Witness protection are more known for their
ineffectiveness, distraction and keeping some people employed at the states expense than of
any real tangible value to society. RTI acts are more misused for extortion by gangs than to
bring about any real difference in governance and accountability, its espoused objective.
Honest RTI activists get eliminated when the RTI Acts provisions are used to expose and fix
wrong doing by powerful individuals or institutions, and catalysing transparency and good
governance.
Similar is the case with Whistle Blower Protection Acts which if used against the powerful, can
land one in the grave. Real protection for those demanding professionalism, transparency and
rule of law is rare to come by. Tendency is to ignore whistle blower protection requests for
protection by the police or simply provide perfunctory protection that serves no purpose.
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Police themselves play the double game of informing the person against whom the complaint is
made; aiding him to threaten, blackmail or even plan for elimination of the whistle blower.
It is considered prudent and safe not to use these legal provisions even though they exist on the
statute books. The infrastructure for implementation of these Acts exists, but rarely serve the
purpose for which these Acts were enacted. This is common knowledge and wise citizens
discount promise of assistance and relief from the system. It is considered wiser to be
intelligent enough to take care of oneself than try to set right the wrong institutions depending
on support from the system.
40. Manifestations of corrupt practices

Corrupt practices manifest in several ways depending on the situation as below
Closing ones eyes / ears to wrong happenings within their bounds of knowledge for a
price
Diluting charges by booking under lighter provisions of the Acts for lighter
punishments and getting away, for a price

Delay tactics to frustrate the opponent and deny justice to the aggrieved
Harassing the complainant than the wrong doer (the victim vs the villain)
Obfuscation and diversionary tactics to deflect the guilt on an innocent through
misinformation campaigns, evidence orchestration or dilute the charges

Intimidation of the complaint, filing false charges against the complaint to dissuade
him/her to back-out and withdraw the complaint

Inciting the mob to handle the problem by inaction, delayed or improper action
Leakage of information to interested party for a price to weaken the case or provide a
bargaining / stronger position to the opponent

Blackmailing the complainant by digging for wrong doing by him, for use as a
bargaining chip
Double standards practised by government institutions and officials (two sides of the
same coin) where officials believe powers associated with the position are their
personal privileges to be used indiscriminately for gain. If it yields benefits it goes to
the pocket of the official, when it gets challenged and court decrees impose penalty, it
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goes to institutions account and penalties are paid from tax payers money. It should, in
fact be charged to the officials personal account to make them do their homework
while initiating actions and conduct themselves more responsibly

It is common practice, whenever, government institutions have to take actions for
misdemeanours such as non-payment of dues, loan repayments etc. government
becomes defensive extending all possible loopholes for the defendant to escape
prosecution. Resourceful violators use the legal machinery against the govt. institution
such as banks, to stall action and prolong litigation. In the end, the whole episode dies a
natural death due to insolvency and provisions of some other laws, making
governments action infructuous. Eg. Case of loan repayment by a business magnate
disputing on tagging him as a wilful defaulter for taking action. The fundamental issue
gets deflected from violation of contractual obligation to one of definition of a wilful
defaulter and ordinary defaulter, before his name is announced. How does it matter if it
is wilful or otherwise, when it is a default. What is the need for complicating the matter
on definitions and give the resourceful criminal a safe passage? This diverts attention
and precious manpower from solving issues, to frivolous matters aiding the criminal.
Such tendencies are galore and lawyers feed on such windfall opportunities
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Doing business in India

Doing Business in India

Culture, Conundrum, Corruption, Creativity

Cacophony / Conundrum by Design............................................................................. 5

Unease of Doing Business Shaking Confidence Level..................................................14

Creativity in Problem Solving...................................................................................15

Medieval Culture, Mobocracy............................................................................... 17

Corruption: Weapon of Mass Destruction and Recipe for Societal Suicide.........................17

Genesis of Corruption In India...............................................................................18

Catalysis for Corruption....................................................................................... 19

Target Segment of Corruption................................................................................24

Well-Oiled Corruption Infrastructure.......................................................................25

Surveys and Monitoring....................................................................................... 27

Superficial Efforts at Containing Corruption..............................................................27

Collateral Developments (Damages) from Corruption..................................................28

Corruption in Government Employment (The Lucrative And Safe Heaven).......................30

The silent approver............................................................................................. 30

Conflict of Purpose and Means.............................................................................. 31

Real Role of Intermediaries.................................................................................. 31

Disconnect With External World............................................................................ 32

Corruption and Human Values...............................................................................33

Game Plan to Extract Rent.................................................................................... 34

Consequences of Corruption in Various Spheres.........................................................35

Social and Economic Cost of corruption...................................................................39

Irreversible Damage to Our Psyche Emotional Costs.................................................41

Institutions for Tackling Corruption........................................................................42

Incapacitating the Institutions................................................................................ 43

Manifestations of corrupt practices.........................................................................44

2. Cacophony / Conundrum by Design

India is a concoction of proclaimed democracy, portrayed socialism and practised confusion,

8. Unease of Doing Business Shaking Confidence Level

9. Creativity in Problem Solving

10. Medieval Culture, Mobocracy

11. Power of Diversity

Dishonest or fraudulent conduct by those in power, typically involving bribery

Moral perversion; impairment of virtue and moral principles

venality, shady dealings (informal), crookedness (informal), shadiness

13. Genesis of Corruption In India

14. Power of Corruption

15. Catalysis for Corruption

16. Character of Corruption

17. Boundary of Corruption

18. Drivers of Corruption

19. Role of Bureaucracy

20. Target Segment of Corruption

21. Well-Oiled Corruption Infrastructure

22. Conspiracy in Design

23. Surveys and Monitoring

24. Superficial Efforts at Containing Corruption

25. Collateral Developments (Damages) from Corruption

26. Impact on Society

27. Corruption in Government Employment (The Lucrative And Safe Heaven)

28. The silent approver

29. Conflict of Purpose and Means

30. Real Role of Intermediaries

31. Disconnect With External World

32. Corruption and Human Values

33. Game Plan to Extract Rent

34. Tackling Corruption

35. Consequences of Corruption in Various Spheres

Environment and pollution control

36. Social and Economic Cost of corruption

37. Irreversible Damage to Our Psyche Emotional Costs