Culture of Corruption in India

2012
CULTURE OF CORRUPTION
IN INDIA
PUBLIC WORLD PRESS
सतीशचन्द्र यादव
©2012SatishchanderYadav
satishmjk@gmail.com
CULTURE OF CORRUPTION IN INDIA 1
2012
SATISHCHANDER SSM
BA.DED.BED.MBA (HR)
ALL READERS
Dear,
I’m writing in response to my book. I have over life experience as a writer, and although I do not
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SATISHCHANDER YADAV
SATISHCHANDER
About the Author
Satishchander lives in Mohindergarh Town, Haryana. He currently teaches English at the

Govt. School, and spends much of his time writing and listening to music. His passions
include education, literature, development, creativity and spirituality. He is very grateful and
blessed that you have read the book improve your English, and wishes you amazing levels
of English, joy, power, knowledge and connection in your life.
SATISHCHANDER B.A DED.BED MBA (HR)

satishmjk@gmail.com
SATISHCHANDER
“Corruption and hypocrisy ought not to be inevitable products of democracy, as they

undoubtedly are today”
-Mahatma Gandhi
"Ethical and responsible behaviour needs to become the cornerstone of corporate

behaviour"
-ManMohan Singh
SATISHCHANDER
CULTURE OF CORRUPTION
IN INDIA
SATISHCHANDER
भारत में भ्रष्टाचार की संस्कृतत
SATISHCHANDER
CONTENTS
INTRODUCTION
PAGE
1) Corruption 5
2) Who is Responsible? 18
3) Is Corruption a Global Typology? 19
4) The Donors’ Interest in Tackling Corruption 20
5) Prevention an Important Tool in Fighting Corruption? 21
6) Underlying Principles Of This New Governance Strategy 23
7) Prevention And Integrity Tools And Activities 33
8) More quests Than Answers 45
9) Challenges Ahead 51
10) Conclusion 53
11) Hypotheses of Corruption 55
CULTURE OF CORRUPTION IN INDIA
12) Corruption in India 58

13) Corruption and Democracy 89
14) Effects on Politics, Administration, And Institutions 92
CAUSES
15) Hawala 95
16) Money Laundering 100
17) Slush Fund 104
18) Mauritius Route 104
19) Rent-Seeking 105
20) Licence Raj 108
EFFECTS
21) Black Money 111

22) Scandals 112
23) Slow Progress 117
24) Poverty 120
CRIMES
25) Mafia Raj 129

26) Child Labour 133
27) Rape 135
28) Honor Killing 144
SATISHCHANDER
29) Bankruptcy 148

30) Chit Fund Misused 151
31) Human Trafficking 152
PREVENTION &REDUCTION TOOLS (ACT’S)
32) Transparency International 156

33) UNOAC 159
34) RTI Acts 160
35) Ombudsmen 167
36) Whistleblowers 170
37) Alertness 174
38) Jan Lokpal Bill 175
39) Civil Society 178
40) Prevention of Corruption Act 1988 179
41) Money-Laundering Act, 2002 182
42) Vohra Report 183
43) 2011 Indian Anti-Corruption Movement 194
44) Present Anti-Corruption System & Watch dog agencies 198
45) E-Governance 214
SATISHCHANDER
A. INTRODUCTION
1. CORRUPTION
The word of corruption means the destruction, ruining or the spoiling of a society or a
nation. A corrupt society stops valuing integrity, virtue or moral principles. It changes for the
worse. Such a society begins to decay and sets itself on the road to self-destruction.
Corruption is an old age phenomena. Selfishness and greed are two main cause of
corruption. Political corruption is the abuse of their power by the state official for their
unlawful private gain.
Over 1500 year ago the mighty Roman Empire disintegrated when its rulers became corrupt
and selfish. Nations having tyrannical powerful ruling elite that refuses to punish the corrupt
within it, face menace of corruption. A corrupt society is characterized by immorality and
lack of fear and respect for law. Corruption cannot be divorced from the economics.
Inequality of wealth, low wages and salaries are some of the economics cause of corruption.
Employees often strike corrupt deals to supplement their meagre income. A license-permit
regime or scarcity of basic commodities promotes corruption. In societies where traditional,
religious, ethical teaching and standards of morality are weak, corruption often thrives.
These values should revive among their congregation and subjects and in this effort
religious leaders and chiefs have an important role to play. Of late, the media has carried
out of large number of stories of prophets who misuse offerings and traditional healers who
abuse penitents.
The judiciary, the law enforcement agencies and the education sector have an important
role to play the corruption by changing prevailing laws, punishments and the education
system. Corruption has prevailed in all form of government. Various forms of corruption
include extortion, graft, bribery, cronyism, nepotism, embezzlement and patronage.
Corruption allows criminal activities such as money laundering, extortion drug trafficking to
thrive. At times, bribes are given to avoid punishment .For some people, being corrupt are a
way to get what they desire. In societies which ignore corruption, it becomes a way of life.
People getting very low wages feel they have to demand bribes in order to lead decent lives.
But they do not realize that corruption cause suffering to other.
1
The consequences of corruption for social and economic development are bad. Corruptions
hinder economic growth and deter investment. The impact of development assistance of
reduced and natural resources are overexploited causing further harm to a country’s
environment assets. Resources are diverted from the sectors such as education and heath
to less important sectors or personal enrichment. The rule of eroded and the people no
longer respect or trust the state. A few people manage to get rich at the expense of society
as a whole, while the poor suffer terribly .In the long run unchecked corruption pushes more
and more people into poverty which often destabilizes a society. Societies can fight
corruption by letting the state know that they have had enough of it. The authorities move
very quickly when the press or the television highlights instances of corruption. Education
spreads political add social awareness and are some factor that help curb the menace of
corruption.
Definition of corruption
Corruption is defined by the World Bank & transparency international (TI) as “the misuse
of public office for private gain.”
This definition considers the cause of corruption in public authority and its abuse, and links
corruption to the state, its activities, state intervention on the market and the existence of
the public sector. In other words, the use of this definition excludes the possibility of
corruption in the private sector, and it focuses exclusively on corruption in the public sector.
This definition is consistent with the behalf of Noble Prize laureate Gary Becker that “If we
abolish the state, we abolish corruption”.
What is corruption? There are several answers to this question. Analytically speaking, the
most promising answer is the one made by Vito Tanzi: “Corruption is the intentional non-
compliance with the arm’s-length principle aimed at deriving some advantage for oneself or
for related individuals from this behaviour.” There are three basic elements of this
definition. The first element deals with the arm’s-length principle as it requires that personal
or other relationships should play no part in the economic decisions that involve more than
one party. Equal treatment of all economic agents is essential for a well-working market
economy. Bias towards particular economic agents definitely violates the arm’s-length
principle and fulfils a necessary condition for corruption. If there is no bias, there is no
corruption.
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There are two additional necessary conditions for corruption, or rather conditions that must
be fulfilled for observed bias (“non-compliance with the arm’s-length principle”) to be
specified as corruption. The first condition is that the bias must be intentional – accidental
violation of the arm’s-length principle because of, for example, imperfect information, does
not represent corruption. Second, there must be some advantage for the individual who
commits a violation of the arm’s-length principle; otherwise, there is no corruption.
Violating impartiality may sometimes represent racism, but it is not corruption. Deriving
some advantage, or seizing some benefit for the corrupted economic agent, can have
different forms. It is a rather widespread notion that corruption is receiving money (this
form of corruption is most often called bribery), but similar gain can imply expensive gifts or
various favours returned. Giving expensive jewellery to the wife of the person who violated
the arm’s length principle and providing a well-paid job (with little work) for his son is
definitely corruption. Seizing some benefit or deriving some advantage can be carried out
simultaneously with a violation of the arm’s-length principle, but those two actions can be
taken at different times.
Namely, biased behaviour of the one who is corrupted makes an informal, but sometimes
binding obligation of the corruptor to return or repay the favour, and that obligation does
not grow obsolete, so that seizing the benefits from the one who is corrupted moves into
the future. If the returned favour is a well-paid job for the son, and the son has just started
college, it is obvious that there is a time gap between the two actions. Furthermore, in
formulating the corruption contract, the returned favour is sometimes not even specified,
but the obligation is assumed. There is an alternative definition of corruption frequently
used by the World Bank that specifies corruption as “the abuse of public office for private
gain.” This definition considers the cause of corruption in public authority and its abuse, and
links corruption to the state, its activities, state intervention on the market and the
existence of the public sector. In other words, the use of this definition excludes the
possibility of Corruption in the private sector and it focuses exclusively on corruption in the
public sector.
This definition is consistent with the beliefs of Nobel Prize laureate Gary Becker that “if we
abolish the state, we abolish corruption. “The problem with the alternative definition is that
not all abuses of public office are corruption. Some of them are straightforward theft, fraud,
embezzlement, or similar activities, but definitely not corruption. If a senior governmental
official simply illegally appropriates a sum of money from the budget without providing any
SATISHCHANDER
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service orator to anyone, that is not corruption – it is a crime, but of another kind. It is
socially unacceptable, but it is still not corruption, i.e. corruption is not the only thing that is
socially unacceptable and illegal. In addition, extortion is something that provides
intentional non-compliance with the arm’s length principle, but since there is no advantage
for the victim of extortion (a judge or a prosecutor, for example) a violation of this kind is
not corruption. It is important to distinguish between corruption and other illegal activities
because factors of corruption and policies to fight corruption usually are or can be quite
distinctive from factors and policies against other types of illegal activities.
From the enforcement point of view, corruption is a contract. It is an informal contract

because it is illegal – no court in the world will uphold it if there is a problem with its
enforcement. On the contrary, a properly operating court would process corruption as a
criminal offense. This very specific feature of corruption as an illegal contract generates its
substantial transaction costs, the most important of which are: finding the counterpart,
formulating the contract (particularly taking into account all foreseeable and unforeseeable
contingencies), monitoring the contract, and enforcing the contract. This is not to say that
standard legal contracts are free of transaction costs. This is to say that due to the illegal
nature of the corruption contract, its transactions costs are multiplied. The transaction cost
feature of corruption is of great relevance and must be taken into account when the
consequences of corruption are analysed. From the point of view of its source, corruption is
in most cases, the consequence of rent appropriation. Rent is a factor’s income that is above
the competitive returns of the factor. Competitive returns are those achieved on the
competitive market; hence in the world of perfectly competitive markets, there will be no
rents. Corruption is just a form of rent appropriation and its dissipation, i.e. a situation in
which economic agents are willing to pay a bribe to be included in the rent appropriation
scheme – they are paying to earn some rent. This origin of corruption should always be
taken into account when discussing the factors of corruption. The factors that create rent
are the ones that create fertile ground for corruption.
Corruption is a complex social, political and economic phenomenon that affects all
countries. Corruption undermines democratic institutions, slows economic development
and contributes to governmental instability. Corruption attacks the foundation of
democratic institutions by distorting electoral processes, perverting the rule of law and
creating bureaucratic quagmires whose only reason for existing is the soliciting of bribes.
Economic development is stunted because foreign direct investment is discouraged and
small businesses within the country often find it impossible to overcome the "start-up costs"
required because of corruption.
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A few words on the ethical aspects in defining corruption should be added. For an
overwhelming majority of people corruption is something morally unacceptable; it is the evil
that should be fought because its very existence is against basic moral principles. The
analysis of corruption which follows is morally neutral. The issue of morality is irrelevant to
the considerations in this document. In that sense Tanzi’s definition of corruption is morally
neutral.
Basic Types of Corruption
The types of corruption are strictly linked to the theoretical view on corruption. Economic
theory has developed two basic views of corruption.
One view is set within the framework of the principle-agent theory. This approach is based
on the assumption that there is an asymmetry of information between principles (politician
or decision maker) and agent (civil servants or bureaucracy). Accordingly, benevolent
politicians are not informed about the misdemeanours of their subordinates. This approach
is analytically very clear; it is very well developed, and the models of theoretical models of
corruption based on this approach are analytically rich, as they can explain a wide range of
behaviours of civil servants, including administrative corruption. However, this approach
cannot explain political corruption. According to the main assumption, the state is
benevolent, so there is no possibility for political corruption. Only administrative corruption
(corruption of civil servants) can be explained and predicted.
Since the list of corrupted politician and associated political scandals is lengthy in virtually all
counties of the world, it seems that not only are the assumptions of the model unrealistic,
but also its predictions regarding political corruption are wrong. Political corruption simply
cannot be explained within this methodological framework. The crucial feature of this
approach is that corruption is exogenous to the political process; hence principal-agent
relations (and the scale and scope of asymmetry of information) are not as influenced by
the political process and political constellations as by the outcomes of the process. In other
words, corruption is not institutionalized. Nonetheless, if corruption is considered
endogenous to the political process, corruption is institutionalized and its level and pattern
depend on the political constellation, i.e. the political regime in the country. Corruption is
nothing but a consequence of the political process. The methodological breakthrough of the
kind has been recently achieved by Charap are Harms. The methodological approach based
on recent contributions to literature on the economics of conflict and appropriation, the
economics of organized crime and the political economy of dictatorship. Within such a
framework, corruption is considered as a form rent appropriation by the ruler.
SATISHCHANDER
5
Corruption is the answer to the problem of internal cohesion of predatory teams. Corrupt
civil servants are created to satisfy ruler desire to foster loyalty through patronage. Corrupt
civil service is nothing but the extension of efficient rent appropriation by the ruler. The rent
is extracted through sales of a limited number of permits and licenses for economic activity.
Furthermore, endowing only a few civil servants with the power to grant license enables the
diversion of the licensing proceeds from the budget toward private gain. Finally, civil
servants are cooperative because they have their share in the spoils. Corruption serves as a
hostage mechanism to minimize the probability of defection or insurrection by lower level
insiders of corrupted civil servants; they are effectively constrained, due to their own
participation, from turning to the public to denounce the system. Dictators can, when and is
necessary, find a reason why an uncooperative civil servant is found guilty of corruption.
Hence, there is both the carrot and the stick to strengthen loyalty. This approach is tempting
because it provides grounds for understanding and explaining the relationship between
corruption and the political process. Nonetheless, this methodological approach does not
provide a clear analytical framework for consideration, given the level the structure of
corruption. The main problem is that the structure of incentives to the political decision
makers and change of the structure are not explained, hence we have information on the
driving force of the change, although the model provides information on the structure of
incentives for rent appropriation.
In general, within one or other theoretical views, there basic types of corruption are
identified. The first one is corruption for achieving or speeding-up materialization of some
specific right that the citizen or legal entity is entitled to-corruption without theft, as
suggested by Shleifer and Vishney. If a person bribes civil servants in charge of issuing a
passport that a briber/corruptor is entitled to, i.e. there is no legal barrier for his passport to
be issued, that is exactly the first types of corruption. Its specific and more aggressive
version is bribing officials for jumping the queue for providing the service that is thoroughly
legal. In other words, civil servants are corrupted to do their job or to do it more quickly
then they usually do, instead of not doing it. The frequency of this type of corruption is a
good indicator of the capacity and effectiveness of a country’s administration, i.e. its poor
administrative capacities or a poor supply of administrative service. One should bear in mind
that the shortage of supply of administrative services can be deliberately produced, aimed
at creating the rent and its redistribution via corruption.
The second type of corruption is a corruption that violates the legal rules, or a very biased
enforcement of the rules. This is administrative corruption and is the most modelled type of
corruption – the vast majority of theoretical contributions in the field are about
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administrative corruption. This is due to very clear motives and incentives for each
economic agent and very clear relation between them. This type of corruption corresponds
to the principle-agent model of corruption, as the total supply of corruption (demand for
the bribe for violating the rules) is provided by the civil servants. The most significant direct
consequence of this type of corruption is that legislation and public policies are not justly
enforced. A cynical approach to the issue within counties with widespread corruption is that
some pubic polices are so bad, it is actually better for the society that they are not enforced.
Accordingly, corruption is considered to be the second best solution. It would be better if
these policies were not enforced at all. Nonetheless, since the political process resulted in
bad policies (and no alternatives to political process are feasible in the foreseeable future),
corruption is seen as a solution for bad public polices, whatever the source of these bad
public polices, Nonetheless, one should take into account the costs of corruption as a
method for circumventing bad public policies.
Finally, there is “state capture’’- corruption that is aimed at changing the rules and
regulations into rules and regulations that favour the interests of the corruptor. The concept
of state capture was developed by the World Bank primarily for explaining the reality of
political life in transitional economies. The underlying assumption is that legislation and
public policies are influenced by the bribing of legislators by a few oligarchs-very powerful
business people. In other words, public policies are inevitably formulated to favour the
oligarchs, not the public. Although there is no doubt that such a process exists, and that this
type of corruption can explain some elements of public policy in many counties (not only
transitional ones), the concept of ‘’state capture’’ lacks analytical clarity. The main problem
is that interest group influence legislators’ decision making in all counties. Strong lobbying is
an entirely legal and legitimate activity in mature democracies. The crucial analytical
problem of the “state capture” concept is specifying a cut-offline between legitimate
political lobbying and “state capture” created by corruption. The state can be captured both
by aggressive lobbying and by effective corruption. Subsequently, the crucial question is to
what extent are the outcomes regarding public policies from legitimate lobbying and illegal
corruption different, and more specifically are the public policies designed by lobbying
superior to ones designed through corruption? Additionally, the question is whether the
social costs (in terms of the opportunity costs of resources uses) of lobbying are greater or
less compared with the social costs of corruption. In brief, although the type of corruption
that influences public policy is very important to consider, the analytical framework of
“state capture’’ should be substantially improved in order to better explain its mechanisms
and for an enhanced understanding of the process.
The other important distinction in the case of corruption is its industrial organization, as
Shleifer and Vishney thoroughly analysed the phenomenon, emphasizing centralized
SATISHCHANDER
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(monopolized) vs. decentralized pattern of corruption. The crucial prerequisite for

centralized corruption is the ability to enforce joint profit in bribe collection. It is closely
related to problem of the problem enforcing collusion in oligopoly. It has been pointed out
that when governments have an effective policing machine to monitor the action of civil
servants, such as the KGB in the former Soviet Union, corruption in the country is
centralized. Within the methodological framework of a benevolent state, the analysis of
industrial organization cannot answer why some (benevolent) governments are equipped
with agencies like the KGB while others are not. Apart from the prerequisites for distinctive
industrial organization of corruption, the crucial distinction is the one of transaction costs. In
decentralized corruption, a single corruptor is dealing with multiple, rather than single,
corruption contracts (transactions) hence the transaction costs are multiplied. In other
words, a monopolized corruption pattern is superior to a decentralized one regarding the
scale of transaction costs.
Basic Causes of Corruption
All economic agents are maximizing their individual utility, i.e. personal welfare
(wealth).Accordingly; selfish interests of economic agents are the basic motive for economic
transaction between them. Resources are allocated to the activities the greatest return on
investment (an allocation decision). In short, people in all conceivable conditions behave
economically rationally.
As described earlier, rent is a factor of income above the competitive returns (opportunity
costs) of the factor. Because of that, i.e. because rent appropriations will maximize
individual utility (welfare), economic agents are engaged in the rent-seeking process, the
process of creation and distribution (appropriation) of rent. Theoretically speaking, rent can
be created in a few distinctive ways, but in realty the most significant rent generator is
government intervention, i.e. violation of free market operations. A frequently used
synonym for this type of government intervention is regulation. In other words, instead of
enabling the free market to regulate relations and transactions among economic agent on
the market, the government, whatever the motive may be, steps in and regulations in a
hands-on manner.
The majority of government intervention on the market is prohibitive, i.e. economic agents’
are precluded from doing something, unless the government explicitly empowers some of
SATISHCHANDER
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them to do so. A typical regulation of kind is import licensing. Only the firms the obtain
import certain goods and only the quantity specified in the license. That will inevitably
create a shortage in the market; supply will not be formulated according to the marginal
costs of the producer/importer, but by the administratively specified quantity. At that
specified quantity, the commanded by demand (i.e. the amount of money consumers are
prepared to pay for an additional unit of the good) will be substantially higher than the
costs of its production/import.
That difference is economic rent which will be distributed, i.e. appropriated, at the end of
the day. By paying a bribe to get an import license, a portion of the Rent is appropriated by
the corruptor and the remaining Portion is appropriated (in the form of bribe) by the
Corrupted. Needless to say, without introducing import License regulation there would be
no rent and there would be no corruption. There are some cases of corruption not Linked to
rent, but the most significant, most common, and consequentially dangerous forms of
corruption are linked to Rent-seeking behaviour.
Accordingly, more government regulation ceteris paribus (all other things being equal),
results in fewer free-market operations, and therefore more corruption. Nonetheless, apart
from the content of legislation that introduces government regulation, it is very important
how these rule and the process of the enforcement are specified. As to the specification of
the rules, for efficient enforcement the rules should is simple, clear, and easily
understandable by anyone. The more complicated, unclear, and ambiguous the rules, the
more opportunity there is for corruption. A typical example of this occurs with a large
variety of customs tariff rates in general and for rather similar products in particular. If the
customs tariff rate for one product is 3% and for another similar product is 30%, there are
strong incentives for corruption aimed at misclassification of the goods and illegally
reducing the levy by applying the lower rate.
Furthermore, procedural legislation, which are rules regarding enforcement of rules and
regulations, is very important for corruption. The complicated and non-transparent
legislation specifying slow procedure (procedures with unspecified time limits or no binding
deadlines), at the discretion of civil servants in the enforcement process, creates
tremendous opportunity for corruption. Not only does such legislation create incentives for
corruption, but it also decreases the probability of detection, making threats to the
corruptors and corrupted less credible.
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The analysis of corruption factors is a prerequisite for an effective strategy for fighting
corruption, as the strategy should take into account and address the main sources of
corruption. Taking into account that rent is the most important source of corruption and the
government intervention that creates rent is the most important factor of corruption, the
crucial element for any effective strategy for fighting corruption is deregulation.
Deregulation means abolishing government intervention that is prohibitive, thus allowing
market forces to function effectively. Market forces on the free market will drive all the
factors’ returns to their competitive level and there will be no rent due to government
intervention, hence there will be no source of corruption of that kind. There will be no
shortage on the market, no queues for goods whose supply is limited, no black market and
no rent generated and appropriated from long queues and the black-market.
From another perspective, deregulation will decrease and in some cases eliminate
corruption due to the lack of discretionary power of civil servants. Then there will be no
incentive for private parties to bribe civil servants, because civil servants will not be in a
position to offer any favour to the corruptor. For example, there will be no import licenses
because anyone can import whatever she likes in the quantity that she considers profitable
or good for the business. There will be no barriers to entry that must be circumvented by a
certificate issued by a civil servant, etc. Civil servants will lose their power to decisively
influence the fortune of businesspeople and citizens.
Deregulation and decreasing the role of the government has its limits. The basic reason for
the government to exist is to provide the rule of law. For economic agents the most
important aspect of the rule of law is protection of private property rights through efficient
contract enforcement. In the case of rule of law, government power should not be
diminished, on the contrary it should be enhanced – there is no room for the government to
withdraw from this area as a key element of anticorruption strategy. On the contrary, strict
rule of law is one of the elements of an effective strategy for fighting corruption.
Accordingly, all measures that improve the rule of law will definitely contribute to the fight
against corruption. One of the crucial elements of strengthening the rule of law is the
creation of simple, clear, and transparent rules that are understood by all concerned parties.
Such Rules of the game – and the name of the game is market competition – will minimize
disputes regarding their enforcement which will minimize the uncertainty of economic
agents and substantially decrease any room for corruption.
Streamlining procedural legislation and making it simple and transparent is also very
important because it minimizes the uncertainty of economic agents, reduces the
discretionary power of civil servants, and increases the visibility of corruption cases, i.e.
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situations in which procedural legislation is violated. Such a framework increases the

probability of detecting corruption misdeed sand apprehending corrupted civil servants. The
increased probability of apprehension and punishment creates a deterrent for civil servants
to accept bribes, therefore decreasing incentives for corruption. Increasing wages of civil
servants is another important segment of the strategy for fighting corruption.
Nonetheless, this element of the strategy should be considered within the framework of the
deterrent, i.e. punishment. Part of the punishment for corruption should be expulsion of the
civil servant from the job that provides higher wages than those on the labour market, i.e.
wages in the private sector. In this sense, high wages of civil servants (higher than in the
private sector) can provide incentive to not accept bribes only if there is a substantial risk of
apprehension and punishment that includes a decrease in their future (expected) incomes.
Accordingly, the wage scheme as a segment of an anticorruption strategy should always be

considered along with the probability of apprehension. Furthermore, excessively high wages
in the public sector can have an adverse effect on the allocation of the labour force as talent
is moved away from the private, value-adding sector.
Nonetheless, the most important prerequisite for effective anticorruption strategies is

strong and unconstrained political will. Such a will can be generated by identifying the most
significant consequences of corruption. If such a will exists, government must send an
unequivocal and credible signal to all concerned parties that it is committed to fighting
Corruption. Strong words are necessary, but not sufficient, for credibility. These words must
be followed by actions and accomplishments in the area of policy and institutional reform
along the suggested lines as well as action in the area of the criminal prosecution of
corruption.
Consequences of Corruption
As to the consequences of corruption, it should be recognized that the bribe itself is nothing
but a redistribution of income. In other words, the bribe itself is not a welfare loss – the
scale of social welfare does not change, only its distribution. Although strictly speaking this
is true, emphasizing only distributional aspects of corruption is one of the major fallacies of
corruption research.
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The first reason is the existence of huge transaction costs from corruption. As it has been
pointed out, corruption is an illegal contract, and therefore its transaction costs are Massive.
And transaction costs are real costs: the opportunity costs of resources engaged in
transaction activities. According to some estimates (Tanzi), senior managers in countries
with widespread corruption spend about 20% of their working time negotiating corruption
and enforcing corruption contracts; this is the amount of transaction costs in terms of the
opportunity costs of highly skilled labour.
There is a rather widespread notion that the corruption income of corrupted civil servants
provides compensation for their lower wages. Hence there is no need for a wage increase
and no need for increasing the tax burden. In other words, the corruption burden is its own
kind of a “tax burden” that, according to this approach, enables the proper tax burden to be
decreased. However, proper taxation (together with efficient tax administration) decreases
Uncertainty and transaction costs. Hence, corruption “taxation” is inferior in terms of
economic efficiency.
Furthermore, it was demonstrated that rent-seeking activities are closely related to

corruption. The origin of rent-seeking is public policies that boost government intervention
and disable free market operation. These public policies can be deliberately pursued
specifically because they create rent, i.e. these policies can be influenced (irrespective of
whether it is done by legitimate lobbying or illegitimate “state capture “corruption) by
interest groups with a vested interest in creating and appropriating rents. Although these
public policies are in favour of these interest groups, they are completely wrong regarding
maximization of economic efficiency and social welfare, i.e. they are not in favour of the
public interest.
Corruption violates the rule of law, and the rule of law is prerequisite for the market
economy. If there is no rule of law, there is no protection of private property rights and
noncontract enforcement. There is poor exchange between agents because there are no
incentives for exchange due to poor protection of property rights and inadequate support of
contract enforcement. Because of the poor exchange between firms, all firms produce the
majority of inputs internally, instead of the purchasing these inputs on the market. In other
words, there is no social division of labour and no prerequisite for specialization. Since there
is no specialization, a significant source of increasing economic efficiency is absent. This is
the indirect way in which corruption diminishes economic efficiency and consequently Social
welfare.
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Corruption increases basic business uncertainty, particularly regarding protection of

property rights. This kind of uncertainty decreases the expected profit rate for potential
investors. Investors, making their decisions based on expected profit rate (returns), are less
likely to invest when lower returns are expected. This is particularly true for the foreign
direct investors who compare expected returns, i.e. expected cash flow for investments in
various countries and decide to invest their capital in the country with the highest expected
returns. Since corruption decreases expected returns, corrupt countries receive less foreign
direct investment and consequently record lower growth rates.
There is another reason that countries with widespread corruption cannot expect high
growth rates that is directly related to entrepreneurship and innovations. As suggested by
Baumol, entrepreneurship is a resource that can be alternatively allocated to productive
activities or to unproductive and destructive activities. It will go to the activity that enables
the entrepreneur the highest possible returns on his activity. Corruption is definitely an
unproductive, and sometimes evens a destructive, activity. If corruption is widespread, i.e. if
the highest possible returns are in the area of corruption, entrepreneurs, instead of focusing
on productive, wealth creating activities will focus on corruption, redistributing activities
and allocating their talents to it. As a consequence, other resources will be also be allocated
to redistributive activities. Innovations that are a result of entrepreneurship will be allocated
to redistribution and corruption. New methods of corruption will be introduced instead of
new products and new methods of production.
This is a crucial dilemma for every nation: will the available resources be engaged in creating
wealth or merely in its redistribution? Widespread corruption is a symptom of a severely ill
society with a majority of resources and innovation allocated to the area of redistribution.
Corruption is not about an amount of money changing hands or about “grease in the wheels
of business.” It is about the future of the nation. And it is the nation that must make some
difficult decisions regarding it.
2. WHO IS RESPONSIBLE?
Ultimately, all parts of society must share the responsibility for containing corruption
because all are willing or unwilling participants. Each corrupt transaction requires a “buyer”
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and a “seller.” The government is responsible for dealing with civil servants who engage in
extortion and bribery but it is businesses and individuals who offer bribes to civil servants to
obtain certain advantages.
In most countries, the demand for reform is being led by organizations of civil society and
the International donor community. An active, involved and empowered citizenry is indeed
essential to any anti-corruption campaign. Reformers can only achieve real gains when a
Society changes its expectations and understanding of its entitlement to a government that
is not corrupt. For their part, government leaders’ politicians and bureaucrats’ must provide
the political will to address all forms of corruption. Governments need to introduce
appropriate legislation to reduce corruption and provide whatever means is necessary to
ensure that appropriate steps are taken to build systems of integrity and rule of law.
While all those who are part of the problem must be part of the solution, it would be
Unrealistic and cost-prohibitive to attempt to eliminate corruption completely. Such a
strategy would be likely to create new inefficiencies in government. Draconian anti-
corruption Programs, moreover, can have a negative effect on personal freedoms and
fundamental human rights if regulations translate into excuses for public officials to become
in caressingly abusive toward the citizenry. Additionally, bureaucratic discretion is necessary
for effective administration. The aim, therefore, is not to achieve complete rectitude but
rather a Fundamental increase in the honesty, efficiency, and fairness of government. The
responsibility of containing corruption must not ignore the participation of international
Firms, foreign governments and others engaged in corrupt practices either actively or
passively. A number of instruments are available to curb cross-border corruption.
The new “No bribery pledge” initiated by OECD is one. Among stronger measures is the
criminalization of bribery, including the prosecution of companies and governments in the
North and tax deductibility of bribes paid by Northern companies in the South.
3. IS CORRUPTION GLOBLE TYPOLOGY?
Corruption does have some common characteristics. For instance, it occurs in all countries
regardless of the level of social and economic development. For corruption-extortion or
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bribery-to take place, there must be a public official with discretionary power followed by a
misuse of that power. In the case of bribery, there is also collusion between the dishonest
official and one or more public or private officials, and a benefit, in money or in kind, to all
parties involved. Corruption most likely will occur in the interaction between the public and
private sectors. And it is generally practiced by public officials who have direct responsibility
to deliver services to the public, apply or enforce specific regulations, or levy fees or taxes.
Despite these common characteristics, corruption takes on very different features from one
place to another. Corruption flourishes in different places in different forms including: land
Re-joining, customs duties, income tax collection, and non-merit based appointments,
promotions, and many more. The actors amenable to leading or supporting reform also vary
significantly from country to country. Still, it is unlikely that a detailed attempt to achieve a
global or even regional typology would serve a useful purpose because of the number of
variables involved.
Corruption has a freer rein in some countries than in others. For example, in some
countries, the failure to pay a living wage lies, at least in part, at the root of the problem. In
other Countries, public servants still engage in corrupt behaviour despite adequate pay.
Some Developing countries enjoy the rule of law and benefit from an independent judiciary
that conscientiously reviews the legality of official actions; elsewhere the judiciary is
suborned, acquiescent, or neutralized. Some governments have incentives that encourage
law enforcement officers to be willing partners in anti-corruption activities. Others have
politicians who create legislation that seems designed to render corrupters free from
prosecution, even if they are caught. In some countries, the private sector and other
elements of civil society are well-organized and poised to assume an assertive role; in
others, they are weak and unaccustomed to having a ‘voice’ or speak authoritatively to their
government. All of these factors dictate the importance of carefully choosing the strategy
and entry points for anti-corruption measures.
4. The Donors’ Interest in Tackling Corruption
The topic of anti-corruption has recently generated substantial academic interest as well as
support from the highest levels of the World Bank, IMF and the international community in
general. The new approach presented in this book is founded upon the premise that
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corruption is a major hindrance to economic development. More and more development

experts have come to the conclusion that it is impossible to alleviate poverty without first
curbing corruption. Most donors are concerned “not with the exercise of state powers in
the broad sense but specifically with the appropriate management of the public sector and
the creation of an enabling environment for the private sector. Some multilateral donors’
mandate dictates that they can only become legitimately involved when corruption is
treated as an economic phenomenon and its actions or reactions to corruption must have
economic development at their core.
More specifically, corruption can be addressed by World Bank and IMF staff as an economic
Concern within the framework approved by the Board for governance issues. This
framework allows for activities in which the Bank and IMF can advise countries on economic
policy reform and strengthening institutional capacity. However, the Bretton Wood
organizations’ mandate do not extend to the political aspects of controlling corruption, and
though civil society is crucial to sustaining reform, there are limits on the extent to which
the Bank, as a lender to governments, can directly support civil society’s efforts.
As an example of a framework for addressing corruption “at home” the World Bank works
at four levels:
-Preventing fraud and corruption within Bank-financed projects.
-Helping countries that request support in their efforts to reduce corruption.
-Greater consideration of corruption in country-assistance strategies, country-lending

Considerations, policy dialogue, analytical work, and in the choice and design of Projects.
-Adding its voice and support to international efforts to reduce corruption.
The ultimate goal of most donors’ strategies on corruption is to help countries move from
systemic corruption to an environment in which a well-performing government minimizes
corruption’s negative effects on development. The strategy is based on action coming from
three directions: (a) economic policy reform, (b) institutional strengthening and (c)
international action. The model assumes that corruption is a function of weak institutions
and of policies that create economic rents. The majority of donors believe that tackling
corruption is less a matter of new instruments than of reducing corruption through existing
ones.
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5. Prevention an important tool for fighting corruption
The approach presented in this paper is essentially holistic. Corruption is viewed as a

systemic issue requiring the donors to work on several fronts and to collaborate with all
branches of government and many parts of society. The approach to promote good
governance through among other things, prevention, is to help client countries curb
corruption and build integrity, and therefore, improve their public services and create an
enabling environment for the private sector. The Governance and Anti-Corruption program
comprises three principal activity areas: (a) improving public sector service delivery by
focusing on public sector accountability and legal reform in order to re-introduce rule of
law;(b) building integrity by promoting governmental accountability and transparency; and
(c)building an prevention and anti-corruption capacity of the public sector-including
parliament, watchdog and enforcement agencies, and the judiciary -and of civil society,
particularly by strengthening non-governmental organizations (NGOs) and the media.
The program dovetails with other reforms such as: Public Sector Management program,
which focuses on prevention through civil-service reform and public-expenditure planning
and management, as well as, on supporting governance activities, research and
dissemination of findings. Legislative reforms to strengthen parliament role in overseeing
the executive but also the passing of new anticorruption legislation Legal reforms; that
strengthen the rule of law Building “integrity”, which means “using public powers for the
public good,” is the flip side of fighting corruption. Experience gained from work with client
countries demonstrates that it is preferable to focus on prevention through the building of
integrity, which suggests a positive, pro-active preventive approach. It is often easier to get
various stakeholder groups to support preventive measures through the creation of a
system of national integrity rather than specific measures designed to fight corruption.
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SUSTAINABLE DELELOPMENT
IMPACT OUTCOME OUTPUT COST
INTEGRITY CAPACITY RESULTS ORIENTION
MACRO ECONOMIC FRAMEWORK
Figure 1: Key Focus Areas for Institutional Reform
The new approach links integrity to other key variables for sustainable development. As
Shown in Figure 1, against the background of an appropriate macroeconomic framework,
Three areas of focus combine to promote better delivery of public services.
A first element is to build systemic integrity within the society as a whole and establish the
rule of law. A second and related element is to strengthen the institutional capacity of select
public-sector and civil society organizations so that systemic integrity and better public-
sector performance become possible. A third is to reorient government in order to improve
performance or results. It is often necessary to explain to partners that what is sought is not
merely the curbing of corruption or the improvement of integrity. The real impact these
programs seeks is improved delivery of public services, established rule of law and creation
of an enabling environment for the private sector.
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6. Underlying principles of this new governance

strategy
A. New Paradigms
In the old paradigm, donor agencies preferred to work almost entirely with government
agencies. Governments and donors alike gave little recognition to the private sector, the
general public or civil society organizations as important agents for change. Most capacity
building focused on “tools and skills” for the executive branch of government with little
emphasis on the capacities of the legislative and judicial branches of government or of civil
society and the private sector. More attention was given to budgets and activities than to
the economic outcomes and impacts that would be achieved by these activities. Results
were seldom the focus.
And government accountability and transparency were not seen as particularly important.
Underlying this new approach is the belief that elected politicians and public sector
employees should focus on generating sustainable development results by meeting the
needs of the general public and other clients. Politicians and employees should be held
accountable individually and collectively for fulfilling government’s responsibilities and
commitments.
This new strategy can be expressed in the new paradigms shown are…
• Accountability through transparency (access to information)
• Focus on prevention rather than enforcement
• Raise awareness and expectations of civil society
• Focus on results-oriented service to the public
• Develop the capacity of “Pillars of Integrity” to fight corruption
New Paradigms of a Governance Strategy
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B. Prevention through Increased Accountability
Lack of accountability by national and international politicians and civil servants is probably
one of the most important reasons why sustainable development has not occurred in most
of the world’s poorest countries. How can transparency and accountability be generated?
The approach presented in this paper is to help clients change the mind set of public-sector
employees. Through its work with client countries, tools have been developed that can help
client ministries and municipalities increase government accountability and performance. In
recent years, it has helped clients organize integrity workshops and administer informal
surveys involving public sector officials to raise their awareness of the causes and
consequences of corruption. To institute accountability and transparency in government,
both internal and external pressure is needed. Accountability must be generated by a
combination of political will from the top and public pressure from the base. Even if leaders
are successful in changing attitudes within the government bureaucracy, more will need to
be done because less than two per cent of the population in most developing countries
works for the government. The new governance approach is based on the assumption that
increased public sector accountability can only be achieved through the education,
involvement and empowerment of the remaining98 per cent of the population, including
the private sector, media and civil society.
C. Raising Public Awareness
Educating and involving the public in building integrity is the key to preventing corruption
and thereby the key challenge and the keystone of this holistic integrated strategy and can
take different forms:
• Public education and awareness campaigns (radio, newspapers, TV).
• Conduct annual broad based national/municipal integrity workshops were all
Stakeholders are invited to discuss problems and suggest changes.
• Inform citizens about their rights (Citizens’ Charter); and empower the citizens to Monitor
the government through periodic service delivery surveys.
• Production and dissemination of a national integrity strategy and an annual corruption

survey at national, municipal and sub-county level.
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• Production of integrity surveys at the municipal or sub-national level.
• Investigative journalism and information by the media.
• Dissemination.
D. Broad Based Capacity Building to strengthen all Pillars of

Integrity
Capacity building has traditionally focused on expanding government facilities and skills.
Typically, such projects financed infrastructure, equipment and technical skills training.
These activities are important, but without a leadership confident in introducing
Accountability, transparency and a focus on objectives and results, the sustainable effect of
these initiatives are questionable. The new approach to capacity building encouraged and
Pioneered by the Economic Development Institute (EDI) of the World Bank in close
Collaboration with TI, involves two major shifts from traditional approaches. The new
approach emphasizes the importance of leadership and an integrity mind set among Public
servants. “Mind set” refers to the outlook and state of mind that policy-makers and Civil
servants bring to their jobs. Donors work as facilitators with clients to establish Standards
and ground rules for leaders in the public service through the introduction of Leadership
codes, codes of conduct, and declarations and monitoring of assets. Integrity is critical when
appointments of key executive or civil service positions are made and is equally important
among politicians.
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INPUT TRADITIONAL CAPACITY BUILDING NEW APPROACH OUTPUT
WHAT WHO
ENFORCEMENT AGENCIES,WATCHDOG
TOOLS,SKILLS,MIND-SET.
AGENCIES.PRIVATE SECTOR.
LEADERSHIP,INTEGRITY. PARLIAMENT,EXECUTIVE,JUDICIARY.
INFORMATION,INCENTIVES. CIVIL SOCIATY,MEDIA.
Capacity Building - A New Definition
The second change is that the audience for the capacity building be broadened to include all
Parts of society interested in creating and maintaining national integrity. Traditionally, the
focus of donor attention has been on the Executive branch of government, particularly the
relating to government ministries. However, capacity building focused most entirely on
strengthening the capacity of ministries to deliver public services is insufficient. A more
systemic approach to building integrity and sustainable development requires institutional
strengthening of other “pillars” that is, domestic stakeholders both inside and outside
government. Donors have in some of the more advanced countries been invited into help
initiate awareness raising and skill building efforts with parliaments, law enforcement
agencies, judiciaries, public account committees, NGOs and private-sector organizations.
Pillars of Integrity
To ensure that there is an enabling environment that is supportive of private- and public-
sector Contributions to sustainable development, a National Integrity System needs to be
built with mutually supportive pillars. The “pillars of integrity” in a society include actors
outside the executive and outside government itself. The collection of stakeholder groups is
referred to as “pillars of integrity” because it is incumbent on them to support and uphold
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practices that promote public integrity. A National Integrity System is based on eight pillars
of integrity:-
(1) Executive
(2) Parliament
(3) Judiciary
(4) Watchdog agencies
(5) Media
(6) Private sector (Chambers of Commerce, etc.)
(7) Civil society
(8) Law enforcement agencies
The pillars are interdependent, a weakening of one pillar results in an increased load being
shifted on the others. Where several pillars weaken, the system can no longer support
sustainable development and effectively collapses illustrates the inter action of the different
stakeholders in combating corruption. Examining a National Integrity System requires
identifying gaps and opportunities for corruption within each of the pillars and then co-
coordinating the work of the government, civil society, and donors into a coherent
framework of institutional strengthening. The reasons for building an integrity system may
differ from country to country. Three broad, almost generic, objectives are identified: rule of
law, sustainable development, and quality of life. In the fifteen countries that have
embraced the reform effort, inadequate rule of law could turn out to be the critical
bottleneck for progress. This is particularly the Case in much of Latin America and Africa
where it is estimated that many countries need ten To fifteen years of intensive work before
effective rule of law can be established.
E. The Role of the National Integrity Unit in Integrating Reforms

Develop a systemic approach to building integrity by ensuring the inclusion of Integrity
issues in the economic reform agenda;
1. Provide a direct link between government and institutions of civil society for research,
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2. Information and public awareness-raising
3. Requesting, providing, and using Information in partnership with the media, NGOs, and
citizens;
4. Facilitate integrity-building activities as part of the implementation of the government’s

economic and public-sector reform programs;
5. Conduct SDSs, public-education and awareness-raising activities, integrity-building

Workshops and other events.
The National Integrity Strategy should result in a wide range of reforms that are interrelated
and integrated in order to create systemic change. The focus of the strategy is on achieving
Specific out comes in the expectation that these will, in turn, contribute significantly to such
impacts as improved public-service delivery and an enabling environment for private-
sector development through the establishment of the rule of law.
Elements of a National Integrity System
INTEGRATED STRATEGY FOR CURBING CORRUPTION

IN INDIA
INDEPENDENCE OF BRANCHES AND CHECKS AND BALANCES
LEGISLATIVE REFORMS JUDICIAL REFORMS EXECUTIVE REFORMS

BUILDING CAPACITY: BUILDING INTEGRITY ECONOMIC REFORM:
-SKILLS & TOOLS TO -TAX REFORM
-MINDSET FIGHT CORRUPTION -DEREULATION
-INTEGRITY TO -OPEN THE ECONOMY
-INCENTIVES IMPROVE -CUSTOMS REFORM
-LEADERSHIP SERVICE DELIVERY
EMPOWERING CIVIL SOCIETY AND THE MEDIA TO MONITOR THE STATE
CITIZENS/YOUTH RESPONISIBLE CIVIL RIGHTS POLITICAL

REFORM
EMPOWERMENT MEDIA
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Each of the outcomes listed in represents a series of integrated activities and outputs.
Following are two examples of a series of outputs that may be needed to achieve outcomes
in terms of public administration and civil-service reform as an element of institutional
reform, and in terms of deregulation as an element of economic/regulatory reform.
F. The Champions of Reform in India
A ninth “pillar” can be added to the eight organizational or institutional pillars. This pillar
would be composed of those essential individuals or groups of people who provide the
Political leadership necessary to give vision to the reforms and the political will to see them
Implemented. Depending on the country, this group could be derived from municipalities or
youth. Such groups increasingly have the power and influence needed to protect the
Institutions undergoing reform from the enemies of reform. Ideally, a country’s Executive
Would is the chief champion of reform and this is the case in most of the countries where
Donors facilitate governance work. However, in other situations, the nation’s chief
executive May be the formal client for governance work while the real champion is another
senior Government official India...
Customs
1) Review customs precede legislation to strength incompliance.
2) Have regular meetings with various stakeholders
3) Establish Complaints Bureau (report to outsider)
4) Code of Ethics for all officers
5) Raise public awareness
6) Increased transparency about where you get what service in customs
7) Implement the declaration and monitoring of assets for customs officers.
Private Sector
1) Strengthen Code of Ethics for managers of private-sector companies
2) Increase transparency of political party financing
3) Implement declaration and monitoring of assets for private-sector managers
4) Increase public accountability for private-sector managers
5) Increase protection of shareholders’ interests
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6) Increase control of monopolies and quasi-monopolies

7) Improve monitoring of financial services, banking, and insurance
Watchdog Agencies and Ombudsman

1) Review the role of the ombudsman
2) Reappraise institutions assigned to combat corruption
3) Strengthen anti-corruption legislation and institutions
Executive Branch
1) National Transport Authority: “Clean up” vehicle fitness test through privatization and
improved Enforcement
2) Introduce and enforce Code of Ethics in the public service
3) Create a Human Resource Division and job appraisal review
4) Implement declaration and monitoring of assets for top civil servants
5) Introduce more realistic ceiling on funding of political parties
6) Demand registration with Electoral Supervisory Commission
Parliament
1) Shorten parliamentary holidays for MPs
2) Increase number of weekly sessions
3) Demand annual report of Ministries to Parliament
4) Introduce live broadcast of parliamentary proceedings
5) Introduce more regular meetings of Public Accounts Committee (PAC)
6) Improve staffing and resources of PAC
7) Have the PAC’s report debated in assembly, open to the media and the public
8) Sanction parasternal bodies for late submission of annual report to Parliament
9) Introduce more parliamentary committees to discuss corruption reforms
10) Introduce regulation of political funding before the next general election
11) Introduce written answers to PQs communicated in advance
12) Introduce annual returns of assets for MPs published in the media
13) Amend legislation to deal with corruption
Strategy for building integrity
A. Local Ownership
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First among key elements in promoting new governance strategy is local ownership. Local
“Ownership” must be rapidly achieved when a pilot governance program is launched. Local
actors must drive the process for the very reason that they will be bringing about reform. It
is naive for outsiders to believe they can solve another country’s corruption problems.
Corruption takes a myriad of forms, and the internal dynamic vary subtly but distinctively
from country to country. The local community is best positioned to know and understand its
particular problems, the network of participants, and the best possible solutions.
The Role of Civil Society
Civil society’s involvement is a central part of a strategy to build integrity. Government

efforts have failed when the confidence and support of civil society were absent, so it is
essential to develop broad coalitions supporting reform. An apathetic, cynical public could
undermine even a government’s best intentions, thus the stipulation that credible donors
be invited into a country by government and an organization in civil society. The potential
partner in civil society must be one the government feels comfortable with to enhance
creativity. This protects the donor’s objectivity on political issues and ensures that work is
directed towards the entire system rather than individuals. There are practical benefits to
including an international NGO such as TI in the partnership. There are various stakeholders
in the integrity system and success depends on involving as many as possible. Having an
international NGO as a partner opens avenues into civil society through its contacts with
leading individuals and opinion-makers in the country. Such a partnership also helps
minimize risks and exposure for the donor in this admittedly sensitive area of activity.
The Role of Donors as External Facilitators
Most donors would probably today openly accept that they have more questions than
answers and must work with partners in a learning process. There are no standard solutions
that any donor can impose upon or recommend to a country. The donors’ competitive
advantage lies in:
(a) The knowledge it acquires through its global experience and perspective;
(b) Its ability to help identify the questions that should be asked; and
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(c) Its capability of contributing relevant experiences from other countries and contexts into
the answer-seeking processes.
With a shared understanding of objectives among all the partners and with the process
being locally owned and driven, the donors should work as facilitators, focusing on the
process, Rather than presenting themselves as policy experts. These facilitators should help
governments determine how to manage a change process that results in increased
transparency, accountability and improved service delivery. The strategy is to demonstrate
an approach that can be incorporated into projects and to act as a resource for NGOs and
local institutions. Ultimately, the objective is to help client countries mainstream integrity so
anticorruption practices become institutionalized and systemic. One of the strategies is to
initiate a process that will lead all the stakeholders to identify their roles and recognize that
“they are either part of the problem or part of the solution.”
B. Action Research
Action research refers to learning by doing. Various instruments and tools are used, ranging
from formal surveys, which provide baseline data and measure, change over time, to do
establishment of integrity units within government. There are many questions to be
answered, which might include:
1. What is the role and impact of bribes paid by companies from the North to civil servants
in the South?
2. What is the role and impact of donors on corruption in a country?
3. Who is paying and who is receiving the bribes?
4. Where is the money going?
5. Is there a link between paying a small bribe and improved service delivery?
CICP and UNICRI both emphasize the piloting of new approaches to public-sector
Management issues and the dissemination of lessons learned from such pilots and
experiences elsewhere. The Governance Program works on a regional basis because a
country is likely tube most interested in the experiences of other countries in the same
region and therefore more receptive to their examples. While these efforts need to be
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tailored carefully to each client’s situation, some approaches based upon the Team’s prior
experiences have married well with the circumstances of other countries.
The strategy for building integrity systems must remain flexible at all times, adapting to case
law and best practice experience in order to improve the strategy’s effectiveness. The
Sequencing of reforms is an action-research issue of particular interest to CICP’s and its
Clients. While it is too soon to provide clear guidelines, this element is being studied in each
country case. Facilitating the building of national integrity to curb corruption in sixteen
countries or more allows for sharing and learning among them. In order to make this
learning process as rich as possible, countries across all five regions have been chosen. The
objective of the action-research process is to monitor the performance of different tools
and processes within these countries, learn from the results as they become available, and
adapt each national strategy accordingly.
C. Action-Oriented Data Collection
Critical to the success and sustainability of the integrated approach to governance is the
innovative use of information. Data from different surveys and other economic and financial
data are made available to all integrity pillars, opening up government to the public. The
information disseminated about the government’s responsibilities and what it is actually
doing empowers the public and increases the accountability of public servants.
7. Prevention and integrity tools and activities

The process of strengthening a National Integrity System begins with a national dialogue
followed by national action. To promote national reform, the following prevention and
integrity tools have been developed.
1. Surveys focusing on service delivery
2. Integrity or corruption Surveys
3. Municipal and Sub-national Integrity Workshops
4. External oversight in tender process
5. Enforce code of conduct including declaration and monitoring of assets
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6. National and Integrity Workshops (NIWs) (broad based action planning)
7. The Integrity Pledge
8. Islands of Integrity
9. National Integrity Steering Committee (NISC)
10. National Integrity Unit (NIU)
A. Service Delivery Surveys (SDSs)
In many countries, programs to increase the integrity, effectiveness, and efficiency of public
management have had limited success. One reason for this is that programs are frequently
designed with limited information about the quality of service delivery before reforms to
improve delivery are implemented. The Service Delivery Survey (SDS) is an important tool
used by governments to provide information about service quality, including factors
constraining the delivery of public services. The SDS covers many aspects of service delivery
and identifies the multiple reasons for inefficient and ineffective service delivery. Equally, If
not more important, the SDS cycle employs processes which build local capacity for data
collection and analysis. The NGO, CIET international, developed the SDS methodology and
continues to administer the surveys for the government.
The SDS provides essential baseline data and periodic evaluation information to help design
civil service, decentralization, privatization, and other reforms; monitor results; and
ultimately make services more responsive to citizens’ demands. By obtaining more accurate
information about service delivery, including information about the cost, timeliness,
coverage, and quality of each service, government clients are better equipped to decide
which services should be delivered by the State, private sector, and NGOs. If the information
leads a government to privatize some services or to ask NGOs to deliver them, the surveys
will also give the agencies responsible for the out-sourcing excellent information to manage
the contracts.
The SDS process involves a number of steps. First, representatives of the public-service
Institutions that will be the focus of the survey and representatives from the private sector
help analyses any existing data and prepare the process. Second, the appropriate number of
Local supervisors and interviewers are trained to organize the surveys and analyses the
results. Several survey cycles are required to build local capacity sufficiently so that future
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surveys may be conducted independently. Next, the survey is conducted; households and
service providers are asked about their perceptions of the quality of public services, existing
problems, and ways to overcome the problems. After the data is collected, the results are
shared and interpreted by focus groups comprised of both the households and the service
providers. Finally, workshops bringing all key stakeholders together are conducted to build
consensus and find acceptable solutions to service delivery problems.
An SDS supplements existing institutional data with community-based data. The basic
building block of the community-based data is the household survey. Since households have
a wide range of contacts with public institutions (e.g., taxation, health, roads and police
protection), the methodology is inherently inter-sectorial. A group of communities is chosen
in given region or country, which permits comparison between communities over time in
order to measure the effect of reforms. The SDS uses a large enough sample to permit
statistical analysis of the survey results data. The quantitative data is supplemented with
qualitative data collected through focus groups, key informant interviews, and institutional
reviews. The survey results provide valuable information, which enables national and sub-
national public managers and policy makers to do their jobs more effectively.
All SDSs observe the same guiding principles and methods, and in all cases, capacity building
is a central theme. A large number of nationals are trained to sustain the process. The SDS
process provides data for sub-national levels (such as regions and districts) as a basis for
rational planning at these levels. It builds skills among planners and decision makers at local
levels in the process of designing surveys, collecting data, interpreting findings and planning
on the basis of timely, relevant information. By emphasizing analysis and communication
capacities, SDSs can contribute substantively to national capacities for evidence-based
planning. Thus, SDSs do not require highly developed capacities to be in place; instead, it
develops from and along with national capacities.
Survey results are used in different ways by different stakeholders. The central government
and a municipal government may use the data as a performance monitoring tool in part of a
broader results-oriented management scheme. The public is empowered when the same
data when it is disseminated by the media and other means to civil society and the private
sector.
These additional “pressure points” outside the civil service should increase the
accountability of the public sector and may lead to improved efficiency, effectiveness, and
responsiveness. In each country, the objectives, instruments, and outcomes are different
and reflect the particular country’s context, capacities, and needs. The SDS was part of an
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effort financed by donors to reform public administration. A pilot cycle was run in
ministries (urban transportation, environment, and customs services) that opted into the
reform program. Survey questions dealt with specific problems that public-sector manager
shad identified. By contrast, in Mali, SDSs were used further up-stream in program
development. Regionally, a representative sample of households were asked open-ended
questions about their contact with government services, which services were most
important to them, which ones had problems, and their suggestions for improvements. The
information gathered was used to raise the awareness of designers of an institutional
development Program to improve service delivery. With the growing realization that an
assessment of public-service delivery should consider the private sector, the SDS compares
public and private services and highlights the areas where the public and private sectors
interact. The surveys help identify areas of institutional weakness that prevent the optimal
use of resources and allow individuals to use public power for private gain.
B. Integrity Surveys
Since 1997, client countries have found it useful to complement the extensive Service
Delivery Surveys, which examine many aspects of service delivery and identify multiple
reasons for inefficient and ineffective delivery, with smaller surveys focused specifically on
corruption. The “integrity surveys” or “corruption surveys” are used to identify those areas
in the public service where corruption is a problem and to raise awareness of the extent of
corruption. They can also be used as part of an anti-corruption enforcement strategy. For
most reformers and governments committed to change, enforcement remains one of their
biggest challenges. New laws, rules and regulations serve little purpose without an
adequately funded and staffed enforcement strategy. NGOs such as TI, with donor support,
can play an important role in helping reformers to monitor the effectiveness of enforcement
measures. One way of doing this is to conduct an annual bribery survey similar to the TI
Index. In addition to the formal integrity surveys, informal participant surveys are
sometimes Included as part of an integrity workshop or symposium to draw attention to a
particular corruption issue.
C. National Integrity Workshops (NIWs)
The completion of an SDS or an Integrity Survey generally involves a workshop where

different stakeholders discuss the causes of inefficiency and corruption and seek to form a
consensus about possible solutions. The objective of an NIW is to promote better public
service. Delivery is by facilitating actions and promoting reforms that increase accountability
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and transparency in institutions and among stakeholder groups. The NIW assembles
representatives of all the major stakeholders or integrity pillars in society: the executive
branch of government, parliament, the judiciary, media, civil society, watchdog agencies,
and others.
The workshop can start with a presentation of the SDS and Integrity Survey data, papers
written by representatives of each of the “integrity pillars” describing how corruption is
present in various stakeholder groups, and international experiences and best practices in
controlling corruption. External actors can facilitate the process, but the dialogue and its
results must be developed and therefore owned by the local stakeholders. In small
discussion groups, the participants identify and form a consensus about where and how
corruption affects their society. With a contextual understanding of the problem, these
small groups are then encouraged to apply lessons learned and prepare an action plan.
When this was done in Tanzania, 60 per cent of the proposed actions in the plan were
accomplished within a year. Follow-up activities may aim to help prevent corruption,
strengthen enforcement, raise public awareness, and build (or strengthen) institutions.
Examples of these activities include:-
-the declaration and monitoring of assets as occurred in Tanzania.
-the establishment of Citizens’ Charters;
- Payment of adequate wages.
-The re-enforcement of anti-corruption laws (on election financing, gifts for civil Servants,
etc.).
-The strength inning of the court system and the police.
Awareness-raising activities include:
-dissemination of survey and workshop results to the media (Tanzania, Uganda, and
Ukraine);
-a media campaign and public-education program about corruption (Tanzania, Uganda, and
Ukraine); and
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-concrete expression of political will
A series of two or more NIWs is useful in building a National Integrity System. The main
purpose of the initial NIW is to build a consensus for a National Integrity Action Plan
involving representatives from each of the integrity pillars, including the political opposition.
Another key objective of the workshop is to raise awareness about the negative effect of
corruption in the country and the progress that has been made in curbing it. The workshop
develops a general outline of a National Integrity System within the guidelines of the
country. This is done by drawing on experience and identifying the relevant actors in the
society and the roles they would assume in establishing a program where civil society can
complement the efforts of government. During the initial workshop, the issues of integrity
and ethics and their relation to corruption control are addressed. As part of this dialogue,
the facilitators describe their experience in working with societies addressing comparable
problems and actions taken internationally, especially within the OECD, to constrain
transnational corruption and its impact on countries in the South.
Specifically, participants are invited to:
-discuss the needs of their country in the context of building a workable National Integrity
System and in the light of evidence of corruption.
-prepare an outline drawing on best practice that can serve as a basis for informed public
discussion and political debate.
-determine how the society as a whole might participate in continuing the debate on the
issue of integrity and how to work with like-minded political players in a creative and
constructive fashion.
-establish ownership and commitment of the participants to the conclusions and an action
plan.
The integrity workshop model marshals the ideas and resources of key stakeholders by
inviting them to contribute to the proceedings as equal partners. It also emphasizes the
production of tangible outputs:-
A. An Integrity Pledge that expresses the consensus of the workshop on the issue of
corruption.
B. A National Integrity Action Plan by the end of the workshop; or
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C. A review of progress made on an earlier Action Plan.
D. Municipal and Sub-national Integrity Workshops
Conscientious mayors and municipal managers are generally concerned about the quality of
Municipal services and how to improve municipal efficiency, effectiveness, transparency,
Accountability and value for money. They want to know residents ‘opinions of the services
provided, find out where corruption may be siphoning resources, install a Local Integrity
System to improve service delivery, and enhance the image of the municipality. Municipal
and other sub-national workshops are part of a four-phase program to introduce a
Municipal (or subnational) Integrity System. Phase I is intended to help build a coalition in
support of reform by focusing on discussions with local stakeholders and deciding on the
modalities for a program. This is done through a Municipal Integrity Workshop. The specific
objectives of this first workshop are to:
Determine the views of the workshop participants regarding the provision of municipal
services by conducting an informal opinion poll.
Seek agreement on the importance of an improved service delivery system to increase the
efficiency and effectiveness of delivery.
Introduce the idea of a Local Integrity System to enhance accountability and transparency.
Phase II focuses on carrying out an SDS directed at specific areas of concern.
Phase III, the results of the SDS are presented at a second Municipal Integrity Workshop and
an Action Plan is drafted.
Phase IV involves implementing the action plan according to the agreed timetable,
monitoring and evaluation.
Drawing on the SDS findings, the content of the second workshop includes the following
Topics:-
 Define the nature and magnitude of corruption in the municipality

 Define the detrimental effects of corruption
 Define a Local Integrity System to fight corruption
 Raise public awareness and emphasize the role of the civil society
 Emphasize public participation and the democratic process
 Discuss anti-corruption strategies
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 Discuss watchdog agencies

 Discuss the judicial process
 Discuss role of the media
 Discuss role of the private sector

Like the National Integrity Workshops, the municipal or other sub-national workshop should
Produce tangible outputs, including: (a) an Integrity Pledge, which expresses the consensus
of The workshop about corruption, and (b) a Local Integrity Action Plan which established a
time Frame for specific actions to address priority areas and identifies a group (probably an
NGO) That will be responsible for monitoring the achievement of the plan’s goals and tasks.
Being Held accountable for decisions made at the workshop makes participants role models
for accountability throughout the country.
The results of the Local Integrity Action Plan can be measured in terms of progress made in
building a Local Integrity System. Of particular importance is the extent to which the plan
has been implemented. Each stakeholder should be encouraged to self-assess the outputs
and outcomes achieved by the organization. Regularly repeated SDS will provide outside
confirmation of changes in public-sector performance and of the factors that are
responsible for these changes. Integrity surveys can provide additional information on the
extent to which the public perceives that corruption has been curbed. Other indicators of
progress can be established at the Municipal Integrity Workshop (e.g. media coverage of
corruption, changes in revenue collection, changes in foreign direct investment, or evidence
of successful prosecutions for corrupt practices).Measuring results may show progress in
terms of “outputs” (e.g., introducing a Code of Conduct and periodic appraisals of the
performance of municipal employees) and the desired “outcomes” of these changes such as
a decline in requests for bribes. The sustainable “impacts” of these changes in terms of less
corruption and improvements in public services overall will be influenced, however, by
factors (such as wage scales and offers of bribes from the private sector) beyond the control
of a particular municipality.
E. Special Integrity Workshops for Each Integrity Pillar
Special workshops have been held for peer groups, which focus on corruption as seen from
their perspective and what it means for them in carrying out their public roles and
responsibilities. For example, a workshop for parliamentarians includes discussion on how
to prevent or curb corrupt practices among the parliamentarians themselves and seeks to
strengthen Parliament as a watchdog agency. Workshops for ministers have similar
objectives. Occurrences of ministerial indiscretions being vaguely defined and being
defended as being “in the public interest” are all too common. To give one example, this
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kind of reasoning has been used by an Attorney General to justify the action taken by a
Minister of Finance who exempted his own car from import duties.
The overall objective of these workshops is to create a pool of trainers in the region
equipped with skills to assist local authorities in developing and setting up a Local Integrity
System to fight corruption. More specifically, these workshops aim at:
1. making participants appreciate the detrimental effects of corruption.
2. Fostering discussion of what will be needed to set up a Local Integrity System with all
Integrity pillars.
3. Assisting/facilitating local authorities in setting up Local Integrity Systems.
4. Defining the roles of relevant actors (donors, NGOs, and other integrity pillars).
F. Action Plans
Translating dialogue into action is a critical step in the process of building a National
Integrity System. The same principles apply to all action plans, whether they are a National
Integrity Action Plans, municipal or other sub-national action plans.
First, to be successful, the effort must be wholly owned and driven by the subject country.
In particular, the country’s political leader and his/her deputy play a central role in setting
the Tone and asserting moral authority. The action plan should be endorsed or issued by an
executive commission.
Second, a major effort must be made to draw civil society into the process in imaginative
and Constructive ways. Public opinion surveys, which proved successful in the INDIA reform
efforts, can be used.
As a third principle, any action plan should call for major initiatives in four separate areas:
awareness-raising, both top-down and bottom-up; institution building; prevention of
corruption by minimizing opportunities and increasing risks of detection; and enforcement
Expectations must be managed carefully to ensure that promises are realistic, that some
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changes are made quickly and that they are communicated to the public to maintain their
confidence in the process.
Fourth, a high level of co-ordination within the government will be needed as actors and
Stakeholder execute the program. Implementing the national action plan, for example, will
typically involve the auditor-general’s office the ombudsman’s office, prosecution agencies,
the civil service, public procurement agencies, government departments, and professional
Associations among other groups. Donors will also need to co-ordinate their actions as the
undertaking will be too all-embracing to allow for the luxury of ad hoc assistance. The
process of devising a National or Local Integrity Action Plan is event-driven. A time table
with benchmarks, staggered events, and monitoring schedules is necessary but there should
be some room for flexibility. Stakeholders should be held accountable for achieving results.
Donors can help organizations achieve reform by providing resources, space and protection.
Most action plans developed so far have had concrete action items for each of the pillars
Workshop emphasized the importance of:
Agree on a focused and realistic action plan (no more than 5 items)
- Select actions where the participants have authority to change things
- Pick areas that are visible and important to the public
- Pick action items that you can afford to implement
- Agree on who is responsible for the implementation and a time frame
G. The Integrity Pledge
Another tool used is an “integrity pledge” that participants sign at the end of integrity
workshops. These pledges are not legally binding, but participants commit themselves with
their signatures to take certain actions against corruption. Pledges have included the
Following; launching a local chapter of Transparency International; committing to act
honestly and openly in all aspects of their lives; putting the well-being of the people ahead
of their personal and party interests; uniting to fight corruption by using all opportunities
both in their place of work and in their private lives; and sensitizing the public to the effects
of corruption on the development of their countries. These pledges are given wide publicity
at the end of the workshops by both print and broadcast media, and the names and
signatures of participants are printed in newspapers in most cases. Such public commitment
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by participants, who include parliamentarians, journalists, educators, civil servants, ordinary

citizens, non-governmental organizations, etc., puts added pressure on the participants to
take the fight against corruption seriously.
H. Islands of Integrity
The “Island of Integrity” or “enclave” approach was developed by Transparency

International as one way of guaranteeing a transparent process in procurement. The
approach fences off an area of government activity to address corruption in a manner
isolated from other influences.
For example, in the area of procurement, the approach is based on pledges by bidders not
to pay bribes to win government contracts. Sizeable bonds are subject to forfeiture in the
event of non-compliance. Other consequences could include, disqualification from further
Involvement in the project or other publicly-funded projects (blacklisting) for all private
sector parties who violate the pledge and immediate dismissal of those in the public sector.
Who are found guilty of violation? This approach has been tried in countries like Ecuador,
Argentina, and Panama, sends a definitive message that private industry is no longer a party
to defraud the government and the public. Key donors have been including this approach as
one of the integrity tools in the fight against corruption. Although it is too early to pass
judgment on its successes, the challenge of this approach is to introduce integrity into the
process before any irregularity takes place and to obtain a credible commitment by all
stakeholders involved, to ensure the rules are not broken.
I. The National Integrity Steering Committee
A first practical step in strengthen a National Integrity System is to establish a National

Integrity Steering Committee (NISC) which brings together all stakeholders. Within
government this would include representatives of the nation’s executive, judiciary, cabinet,
electoral governing body, and civil servants in key departments such as customs,
procurement, revenue collection, and local government. Representatives from outside
government would include leaders from religious groups, business, the media and special
interest groups.
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The committee’s task is to analyses the framework, identify and priorities areas for reform,
and develop a plan that includes short-term, medium-term, and long-term goals along with
a public awareness-raising program. It should assign subcommittees to follow up action and
receive reports on the progress toward stated goals. The working group should publish the
names of its members, its overall plan, and regular status reports. Input from the general
public should be solicited from the beginning and regularly throughout the national integrity
working group’s existence. The endorsement of the working group and its plan by political
leaders and the public is essential and must be solicited for the duration of the committee’s
existence. The group should pay particular attention to achieving several “quick wins” to
build public confidence early in the process. In doing their work, the NISC members should
be guided by certain key principles.
Key Principles
-Local Ownership
-Increase accountability through increased transparency
-Enforce access to information to all
-Balancing of powers across executive, legislative and judiciary
-Broad-based capacity building
-Public empowered to monitor the state
-Administration based on rules
-Rule of law
-Focus on corruption initiated both from the “North and South”
-Overall objective is improved service delivery and high quality growth
8. MORE QUESTS THAN ANWERS
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Despite the work done over the past few years, its intensity and the involvement of both
academics and activists, reformers and development agencies, there are still more questions
than answers.
We have found very clearly that what outsiders have to offer is process: substance has to be
provided by the internal actors. Outsiders can facilitate and provide information, but they
cannot diagnose and they cannot prescribe. Only the local people are in a position to do
either. However, together, the facilitators and the facilitated, there can be potentially
powerful impact emerging from informed discussion, particularly through the creation of
action plans. We have found, too, that the concept of the single “national integrity system”
is an extraordinarily useful one and one which helps put the various components into a
coherent perspective. It also can throw short-comings into sharp relief, especially where
discourse takes place in the setting of a national integrity workshop.
A classic example is provided by experience in Uganda. There a stakeholder innocently

asked of the Inspector General of Government how it was that although many cases of
corruption were unearthed by him, few if any people appeared in court. The IGG said that
his was not the job to prosecute, simply investigate, and so the files were sent to the
Director of Public Prosecutions for action. The DPP said that his office did not receive the
files. Why not, asked the questioner, have the IGG prosecute, as this would eliminate the
gap through which the files appeared to be leaking and make it plain where accountability
lay? The DPP agreed to a recommendation that the constitution be amended to provide for
this, and the amendment was made several weeks later. One of the morals of the story is
that the DPP and the IGG might well never meet in a work environment, and so the
workshop provided a unique opportunity for pillars of the integrity system to discuss their
difficulties in ways that otherwise would not have eventuated. It has also appeared very
clearly that an effective anti-corruption strategy must be integrated and holistic. Ad hoc,
standalone reforms are unlikely to achieve much progress, at least in the short term. It
matters little, for example, to tidy up a judicial system is the prosecution and Investigation
“pillars” are left to crumble.
There can be longer term advantages—the reforms in Kenya which have strengthened the
office of the Auditor-General have resulted in much more transparency and greater
awareness of the extent of corruption in that country, but because of an enfeebled
parliament and a dominant executive, despite the media discharging its role and getting the
messages out, the levels of corruption do not appear to have abated.
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A clear lesson—and a widely accepted approach—is that prevention is better than

prosecution. The move to clean up a system through prosecution depends on having a
working judiciary and good prosecution service in place and numbers of people being
charged who can be accommodated within the system, and the available resources, both
human and material, to conduct the necessary investigations. It thus lends itself more for
tidying up a strong integrity system which has hit a bumpy patch, rather than resolving
problems of systemic corruption. Enforcement is certainly essential if the corruption
equation of “Corruption = High Profit, Low Risk’ is to be converted into a deterrent which
says “Corruption = High Risk, Low Profit”. But it can seldom be the major tool. Enforcement
is retrospective, and what matters most is to stop the leakages at once, not chase after the
Leakages after they have taken place. This in turn points to the need to address “the
system” rather than the individual. There is little point in indulging in indiscriminate witch-
hunts (though some scalps may well assist raise public confidence in the credibility of the
reform process).
Corruption is generally being a secret undertaking, with benefit flowing to both giver and
receiver; we are left with having to battle against perceptions of where corruption is taking
place. The need for hard facts is obvious, but obtaining them may be another matter. One
way is to install telephone call-in lines, guaranteeing anonymity, and inviting the public to
ring in with their complaints. Another is to establish a commission of inquiry, such as the
Warioba Commission in Tanzania (although this unearthed so much corruption that popular
perception seemed to be that matters were getting worse, not better, pointing to other
lessons, particularly to information management being essential).
More recently, in some countries we have seen municipalities start to realize that there is
space for them to reform local practices, enabling local mayors and councils to clean up
local government without having to rely on central government (which may itself be
paralyzed by corruption or otherwise be unwilling to take the issue on). Mayors are starting
to develop strategies, drawing civil society watch-dogs into the frame to inform and to
authenticate the processes, and there will be many interesting insights gained at the local
level in the coming months.
We have also seen very starkly that what will work in one country, and work well, may be
wholly ineffectual in another. The most outstanding example of this would be the
Independent commission Against Corruption, which was introduced so successfully in Hong
Kong, and copied with a high degree of success in Singapore. What was it about the Asian
model that helped it succeed there, whilst failing dismally in e.g. Africa? The Hong Kong
environment was an ideal one for the Commission approach. There was a head of
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government (a Colonial Governor) from outside the colony, with no family or business links
into the local scene. He was well paid and could look forward to a comfortable, respectable
and respected future as a member of the U.K. House of Lords. There was also determined to
see the experiment succeed and so honoured the independence of the Commission, even
though this was nominally accountable to himself. Added to this there was a working
judiciary and a pool of well-paid, highly professional Investigators and prosecutors to
conduct enforcement work, and a robust economy (particularly over the later years) capable
of delivering significant budgets to the Commission for its public awareness and prevention
work. The country was undemocratic, and thus could sustain the shocks of a police strike
and an enforced partial amnesty being granted for past sins which shocked the populace
and might well have brought down a popularly-elected government.
Singapore took the model, and again it worked. The same ingredients were there, with the
exception of an outsider as head of government. Instead there was a Prime Minister who
was well-paid and ruthlessly determined to rid the country of corruption, which he had
identified as the major barrier to the country succeeding. Thus, although the Commission
(actually an Agency) was accountable to the Prime Minister (and formed part of his office), it
knew that it had the whole-hearted support of the Prime Minister and so could and did
investigate even cabinet ministers where these were suspected as having transgressed. The
fact that the country was a de facto one party state also meant that the room for
politicization of anti-corruption work was kept to a minimum. Yet when the same models
were established in Africa they undoubtedly failed. The Prevention of Corruption Bureau in
Tanzania was been blunt about political interference in its work.
Reporting to the Office of the President, once the unquestionably “clean” Julius Nyrere
stepped down as president, its reports simply disappeared into a black hole, and although
they were largely free to investigate the system determined that none could touch the
untouchables who developed around the office of former President Mwinyi. Zambia is
another country that had a similar problem. It tried to resolve these at times by bringing in
expatriates to head the office, but these departed in situations surrounded by controversy.
In both countries the resources available for the agencies were grotesquely insufficient, the
rule of law was far from entrenched, courts were unpredictable to say the least, and many
of those working in the public sector were poorly paid, inadequately motivated and
professionally lacking. The fatal flaw was unquestionably taking the Hong Kong and
Singapore models and applying them into different situations where they simply would
never be able to function.
By contrast, Botswana—an African country well-run, well-resourced and where the rule of
law was functioning—adopted the Hong Kong model after scandals involving ministers had
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been uncovered. The fact that these discoveries were triggered by police at a car accident
scene finding a considerable sum of money in US treasury bills say much for the prevailing
ethical environment (in many countries, north, east or south, the money would have
vanished and the story would have ended then and there). Quickly, a Commission was
established under the Hong Kong model and a former Deputy from the Hong Kong ICAC
brought in to run it. Just as quickly a rash of prosecutions began against low level civil
servants and are form introduced to snare big fish was scooping up minnows. The
development in Botswana are too recent for us to be able to judge the success of the
reforms, but without doubt the presence of ethical leadership at the highest levels of
government have played a significant role in the achievements to date.
This, then, highlights the problem of transition. As the Vice President of Uganda remarked to
donor mission, a government that has corruption at the highest levels lacks moral authority
to act against those, who are corrupt at the lower levels. “How do I explain to a family why it
is their brother or their sister who has been singled out for treatment?” she fairly asked.
So if prosecution for all past transgressions is not a viable option—too many people, hugely
disruptive and the state lacking moral authority to act—how does one achieve an amnesty,
both to set minds at rest and to ensure that there is not a huge spate of prosecutions such
as appears to have been the case in Botswana? The public (as was the case in Hong Kong)
deeply resent corrupt police being given an amnesty for their illegal actions against the
public. Rationally one can explain why this might be necessary, but it is easy for a political
opponent to blow the case out of the water with a blast of populist oratory—“Soft on crime,
soft on the causers (sic) of crime”, etc.
An alternative approach—or a supplemental one—can be the introductions of systems

whereby senior decision makers declare their assets, whether publicly or privately. This is
now widely seen as the key to unlocking the anti-corruption chest. Indeed, it might be. But
for the monitoring of assets to work there must be several thresholds met—the declarations
must be true and correct (and so able to serve as a benchmark against which future assets
can be measured), the procedure must be such as to deter people from making false
declarations (e.g. They must be subject to random audit if they are made in confidence; or
they must be Accessible to the press and the public to enable civil society to do its own
monitoring), the assets covered must include all the areas that lend themselves to be used
to store looted public funds (an excellent example of how to ensure that legislation is wholly
ineffectual is provided by the law in Tanzania, which requires that all assets be declared but
then goes on to exempt just about everything imaginable), and the immediate family of the
of the official must also be covered in appropriate ways (the debates in legislatures are
wonderfully instructive, with legislators notorious for their male chauvinism suddenly
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becoming advocates of the rights of wives to earn and hold wealth separate and apart from,
and unknown by, their spouse).
It has to be said that the authors are not aware of a serious recent attempt to get on top of
the problem through this route. There are many legislatures who have been going through
motions of one sort or another, but the jury is still out as to whether ways will be found to
cut through a classic conflict of interest: the legislators/executive are being asked to provide
firm rules to keep themselves honest.
There are very real problems. If a person has survived for some time in a systematically
corrupt environment and risen to a position of prominence, the chances are that he will
have (perhaps have been forced by economic circumstances to have) augmented his income
in irregular ways, whether through unnecessary foreign travel, “ghost” up-country trips or
simply servicing his private car in the public service garage. One way or another he or she
will have acquired assets and a style of life that is out of line with their official income—
particularly where this has not constituted a “living wage”. This means that anyone filling
out a declaration of assets will in effect be declaring that they possess illicit wealth. And if
they do not complete the forms correctly, the whole exercise is valueless. The same
questions overhang another simple reform. Hong Kong introduced the offence of a civil
servant “living beyond known means”. It was not necessary to show a corrupt act. It was
enough for a person in a position to prosper illicitly as being in possession with wealth or
leading a life style wholly out of line with official income, unless and until he or she can
Produce an affirmative defence and show that the wealth came from licit sources. This has
proved powerful in Hong Kong, Singapore and Malaysia to name three. But again, in Africa
the provision has been enacted but there have been no prosecutions. Why not? Again, an
EDI/TI team was told that the provision was “a bit harsh “and that “we do not like it very
much”.
Part of the answer lies in the participation of civil society and the active involvement of the
professions and the private sector in cleaning out their own houses as well as helping the
government with prevention strategies. A large part of the answer lies in non-legal
approaches: In dismissing public servants “in the public interest” and not risking an endless
succession of hazardous and time-consuming trials through an incompetent and perhaps
corrupt legal system. In building accountability between officials and the public they are
meant to be serving, both by the use of surveys and, even more potently, by organizing
Meetings in which officials explain to people at the grass roots just where the money has an
excellent model for this latter approach is provided by activities in India.
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The Indian village of Surajpura is a long way from Washington D.C., yet access to
information—which forced President Nixon from office in the USA after the Watergate
Tapes become public—proved no less potent there. The Government of Rajasthan recently
recognized the people’s right to access to official documents at the local level, landmark
legislation itself the culmination of a 53-day hunger strike. Now an NGO, the Mazdoor Kisan
Shakti Sangathan (MKSS) is taking that information to the people. A public hearing, attended
by village leaders, on 19 January 1998 in Surajpura village began with a puppet show dealing
with the abuse of development funds by politicians and government functionaries. A crowd
soon gathered and most stayed for the next six hours. Some had been involved in
development works as labourers or masons and followed with interest as the accounts for
23 development projects were publicly examined. Schools, drainage and sewage schemes
and other projects were looked at and as confidence among the crowd grew, more and
more started to ask questions and to identify a wide range of frauds. The accounts listed
some as being paid who had not been. Some showed inflated bills. Others suggested that
payments had been made for materials that were never used. The crowd roared with mirth
when the name of a person long dead was listed as a paid labourer.
Throughout, the meeting was surprisingly constructive and orderly, made possible through
skilful facilitation by MKSS and its success in persuading officials that they really had no
alternative but to take part. At its end, about 20 per cent of the funds were found to have
been misappropriated and leaders involved had agreed to co-operate with a follow-up
process to recover the funds, some even agreeing on the spot to return money where
personal liability had been established. Unpaid workers and suppliers were promised
payment.
These may seem small victories, but across rural India small development projects have
been undertaken in the name of the poor only to have the funds looted for private gain by
contractors and officials. The looted money then helps pay for the buying of votes and so
distorts democracy as well as development. Aside from being a creative exercise in
government for the people by the people, these meetings are small but significant steps
towards a transition from representative to participatory democracy. This points to access
to information being a powerful tool if creatively used by civil society and suggests that
more work needs to be done in this are, if necessary at the expense of some of the work
that has been going on in more traditional governance research areas.
Overall, there is a Gordian knot that needs to be cut if it cannot be untangled. We know
where we are. We know where we want to be. Just how do we get there? The answers are
coming, but not just yet.
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9. CHALLENGES AHEAD
If there are many unanswered questions, there are also as many challenges. First, the
question is the sequencing of reforms. This will differ from country to country, but actually
working out precisely where to start in the process is an important one as it will dictate
much of the path ahead. It is in this context that the “national integrity system workshop”
can be most effective, providing as it does an opportunity for all stakeholders to participate
in a process that otherwise tends to be dominated, for no good or compelling reason, by
lawyers.
A particular challenge for the outsider is to identify the appropriate (and clean) partners in a
given country. There may be many who offer themselves, but the outsider must be able to
determine what hidden agendas there may be and what individual motivations are as well
as gain a reading on where the people concerned stand in their community. This dictates a
Special role for civil society in a country from the very outset so as to ensure that the reform
process is fostered with the right “champions”. The road blocks, too, need to be identified
from the outset, and the base line of acceptable (or perhaps better described as
tolerable)conduct which the people are prepared to live with, defined.
The credibility of enforcement and watchdog agencies is crucial to the building of public
trust and confidence. Credible agencies will attract public co-operation, both as
complainants and as witnesses. An institution lacking in trust will not. And at the heart of
credible institutions lies their manifest and popularly-accepted integrity. Their leaders must
role model conduct of the highest kind.
The donor community also has a significant role to play in developing countries, both as part
of the problem and as part of the solution. They are part of the problem because in many
quarters they are viewed as having turned a blind eye to corruption in the projects they
have been funding, and to tolerate the misappropriation of public funds to suit their own
ends.
However, unfair some may think this to be, it is a perception that is very real. And in many
instances there is substance to the complaint. So donor organizations must re-examine their
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own practices, something which many have been doing. And as part of the solution there
are activities which donors can, should and do fund, but it is essential that these be locally
owned and driven. The traditional form of expert aid—a foreigner flying in for a short
period, doing a job and going—has been conspicuous by its failure to achieve sustainable
development. Whatever may have been the position in the past, most countries now have
the human resources to tackle their own problems, but they may need access to
information, the tools they need to undertake the job and, at times, a word of
encouragement. Thus the donor’s role is to be low key, supportive and facilitative. The more
conspicuous is the role of the donor, (dominating small group discussions etc.) the less likely
the efforts are to bear fruit. The donor community can; in particular, back up the data
collection processes needed to empower civil society to hold the civil service accountable—
to turn public servants into servants for the public.
And they can help stress a focus on the bribe giver, and not just the bribe receiver. This is
particularly the case in so-called “grand corruption”, where for a generation or more
exporters from the industrialized countries have been accustomed to bribing officials in
developing countries to win business or to create what in many cases became “white
elephant” projects. Frank acknowledgement of the role of the rich countries in contributing
to the present decline, and with it an equally frank admission that no country can claim any
sort of moral supremacy when it comes to corrupt practices goes a long way towards
cementing a meaningful partnership. The “hand that gives” must also be addressed at the
national level, but concerted action against the “grand corrupters” from abroad (and the
OECD treaty signed in December 1998 offers a way forward for the industrialized world)
creates a climate of change and the moral ground necessary to address forms of corruption
at lower levels.
There are many lessons to learn, and the final one is information sharing. The task countries
Confront is daunting and everyone needs access to as much experience and information as
possible. This is not an area in which “experts” should develop stand-alone and discreet
information bases. This is why TI are joining with the Vienna-based UN Crime Prevention
Programme and the Commonwealth Secretariat in London to build a web site which will
contain as much best practice as possible. This will be added to, and pruned from, as
experience grows. And we would conclude with an invitation to others to join in this project
as being one from which all can benefit through sharing.
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10. CONCLUSION
The process of building national integrity systems is as important as the content. The
following are six final thoughts about the process.
1) Successful reform requires a country to integrate and harmonies all reforms in to a

National Reform Program, including: sector reforms, financial reforms, economic
reforms, constitutional reforms, civil-service reform, decentralization, army
demobilization, privatization, and legal reforms.
2) Reform is a long-term process where attitudes and conduct must be examined and re-
evaluated for effectiveness at all levels.
3) Successful reformers will have to manage both expectations and change while
introducing realistic incentive structures and sanctions.
4) Initially, reform should only tackle areas: (a) that can show credible impact on issues
Important to key stakeholders; (b) where the return on investment is greatest; (c) that
are discrete and where reformers can control implementation, (d) that are within the
budget; and(e) that can have some short-term positive impact.
5) Reform is a process of instituting building blocks that must be put in place over a
number of years.
The process of and commitment to reform must be visibly supported from the top Essential
to curbing corruption is undertaking and maintaining the public’s confidence in the State as
an institution. It is dependent upon the people’s loyalty to its philosophy and policies
regarding the development of the society’s social, economic, and political welfare. At the
heart of successful reform is the State’s.
These ten country examples are important since they act as regional examples, which are
Often more relevant and easier to sell to other countries in the same region. All CICP
country based activities should be compatible with the other donors’ general strategy and
an overall larger framework of country reform (CDF) Collaboration between all active
donors to put -corruption into an effective overall strategy can only facilitate these efforts.
Some the anti-models based upon the governance group’s prior experiences have been
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effective, but the strategy must remain adaptable. The model should change as “case law”
or best practice experience increases with the final objective being improved effectiveness.
Surveys help establish baseline on which to judge progress. The growing realization that the
private and public sectors should be examined supports efforts to develop effective, action-
oriented information-gathering procedures. They play an important role in measuring the
places where the private sector interacts with the public, such as the case of the TI survey. It
is significant to note that surveys used for pure awareness raising and problem identification
are going to be less involved and smaller than surveys used for problem description or in the
development of a broader reform program. The so-called Service Delivery Surveys (SDSs),
done in partnership with CIET International, are in the latter category and are consequently
expensive. However, to ensure effectiveness, much of the governance work should be done
at the sub-national level. As decentralization becomes a growing priority, more analyses are
needed to assess the relative advantages of decentralization and the process for the
efficient delivery of public services.
11. Hypotheses of corruption
Additional Literature and the Hypotheses
1. Higher Levels of Income and Education
In most all studies of the determinants of corruption – whether at the national or

subnational level – studies have found that most affluent and better educated countries or
regions are associated with lower levels of corruption. Essentially, the theoretical
Foundations for this hypothesis come from Lip set’s theory of modernization (Lip set 1960)
combined with the standard principle-agent model oftentimes employed in the corruption
literature (Rose-Ackerman 1975). Lip set posits that as citizens (the agents) become
wealthier and better educated they will be more capable of monitoring their public
representatives (the principle). Due to the greater likelihood of being caught, incentives are
reduced for politicians and bureaucrats to engage in rent-seeking behaviour. The higher
levels of wealth also give more citizens the resources to mobilize and take action against
corrupt public officials. This sentiment is essentially echoed by Huntington (1968), in that he
claims that in earlier stages of development there are greater opportunities for corruption
due to the changes in the socio-economic system of the state. Numerous studies have
shown strong empirical support for the impact of income and education on corruption
(Treisman 2000; Alt and Lasson 2003; La Porta et al 1999; Montinola and Jackman 2002). We
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would thus hypothesize that regions in India with greater levels of education and affluence,
would, on average, be less corrupt.
2. The Heterogeneity/ Fractionalization Hypothesis
India, a country of 1.16 billion inhabitants, is a country with high levels of ethnic, linguistic
and religious diversity3. It has two major ethnic groups (Indo-Aryan and Dravidian), 15
official languages and at least 5 major religious (Hindu, Islam, Christianity, Buddhism and
Sikh) 4. Thus a discussion about the effects of heterogeneity on corruption applies quite well
in the case of India. As Mauro (1995) argues, regions or countries with higher levels of
ethno-linguistic fractionalization might reduce the Like LaHood that citizens will oppose or
penalize corrupt public officials. Citizens are more apt to back a politician that is of their
religion or ethnicity and in return, leaders of various groups might be more inclined to
allocate resources in a systematically unfair way to benefit their own ethnic, religious or
linguistic group. Several studies have found evidence suggesting that on average, greater
diversity is associated with higher levels of corruption (Alesina et al 2003; La Porta et al
1999; Charron 2009). We would thus expect that, ceteris paribus, regions that have greater
levels of heterogeneity will be more susceptible to clientalism and politics of division that
lead to greater corruption in the public sector.
3. Income Inequality Hypothesis
Although admittedly it is next to impossible to distinguish a distinct causal direction

between these two variables, inequality and corruption are expected to be related. Several
recent studies have demonstrated a significant relationship between these two variable,
with some finding that corruption has a positive effect on income inequality (Gupta et al
2002; Gyimah-Brempong 2002) and others showing support that inequality increases
corruption, in particular in democratic states (You and Khagram 2004). The argument as to
why these two forces are related is rather straight-forward. In areas that are more unequal,
more of the citizens will of course be poorer, which should compel them to pressure the
state for greater redistribution, which would come from taxing the wealthier class (Meltzer
and Richard 1983). In response to redistributive pressures, the wealthy have greater
incentives to engage in political corruption to avoid paying higher tax along with
bureaucratic corruption to avoid tax payments. In this scenario, the poorer Citizens have
fewer resources to keep the wealthy in check or monitor their behaviour and are likely to
receive poor services such as health and education from the state. They are thus themselves
more likely to be dependent on petty corruption to receive services because bureaucrats
are in a better position to extort them in exchange for basic public services (You and
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Khagram 2004). Additionally, you and Khagram (2004) show that in democracies, inequality
is likely to have a greater impact on corruption than in dictatorships because the wealthier
classes are forced to rely on corruption over repression of the masses. Further, the greater
number the poor, the more opportunities for vote buying during a political campaign. Based
on this, we would anticipate that on average, higher levels of income inequality in Indian
states are associated with higher levels of corruption.
4. The Effect of Decentralization on Corruption
The impact of decentralization – whether political, financial or administrative - on

corruption is a hotly contested topic. India is a long-time federal system with state-level
elected official and parliaments which are represented by both national and regional
parties. Today it contains a total of 28 states and 7 unit territories, most of which under the
States Reorganization Act in 1956 were draw around linguistic lines5. Each state is primarily
responsible for issues such as law enforcement, education, public works and services, and
hospital care within their borders. On the one hand, Tanzi (2001) and others argue that
fiscal decentralization might lead to greater levels of corruption, especially in developing
countries, because local leaders are expected to be less competent than those at the
national level and might be more prone to clientalism because of closer and more frequent
contact with citizens. Moreover, the lines of responsibility are more blurred than in a strict
unitary, centralized system, thus voters do become more confused regarding to whom they
should assign blame for corrupt politics. Gerring and Thacker (2004) find empirical evidence
in a cross-sectional study supporting this argument with respect to political decentralization.
On the other hand, the greater the political or fiscal decentralization, the closer the voters
come to their politicians, who should increase accountability, encourage responsible
governance and reduce corruption. Provincially elected governments that are more
responsible for collecting their own revenues via citizens in their state should be less
inclined to rent-seeking than a regional government that is mainly subsidized by the central
government – meaning that public officials are less accountable for their funds and policies.
Fisman and Gatti (2002) and Gurgur and Shah (2005) find empirical evidence for greater
levels of decentralization being associated with lower corruption levels. However, most of
the tests of this hypothesis have been conducted using national level data on corruption and
aggregated levels of decentralization. India provides an excellent test case in that there are
substantial variations in the level of decentralization – especially fiscal decentralization –
among the states. Thus it will be fruitful and interesting to test whether greater levels of in-
state fiscal responsibility are correlated with higher or lower corruption across the sample.
5. The Media
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Several studies have argued and found empirical evidence to support the idea that countries
with greater media access and an independent free press have lower corruption at the
national level, ceteris paribus (Brunetti and Weder 2003; Lindstedt and Naurin 2005; Ahrend
2002). At the provincial level, Ferraz and Finan (2008) and Francken et al (2005)
demonstrate the media’s pivotal role in helping curb corruption in certain regions due to
higher volume of radio listeners in Brazil and Madagascar respectively. Since this analysis is
examining a sample of state within one country, variations in press freedom are expected to
be low to non-existent across regions. However, one might expect that states with higher
levels of media consumption might have a more informed public on political matters, thus
building a population that is better suited to monitor and penalize corrupt behaviour in the
public sector.
B. CULTURE OF CORRUPTION IN INDIA
12. Corruption in India
Corruption is widespread in India. Corruption has taken the role of a pervasive aspect of
Indian politics and bureaucracy. Political and bureaucratic corruption in India is major
concerns. A 2005 study conducted by Transparency International in India found that more
than 45% of Indians had first-hand experience of paying bribes or influence peddling to get
jobs done in public offices successfully. In India, corruption takes the form of bribes, evasion
of tax and exchange controls, embezzlement, etc.
Transparency International estimates that truckers pay US$5 billion in bribes annually. In
2010 India was ranked 87th out of 178 countries in Transparency International's Corruption
Perceptions Index (3.3).
Overview
Although former Prime Minister and Congress party leader Indira Gandhi is quoted as saying
that corruption is a misuse of power, she also publicly stated "nonchalantly" that
"corruption was a global phenomenon" and her government was no different. Successive
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central governments and members of India's famous Nehru-Gandhi political dynasty have
often been accused most of corruption and amassing illegal wealth among India's political
class. The year 2011 has proved to be a watershed in the public tolerance of political
corruption in India, with widespread public protests and movements led by social activists
against corruption and for the return of illegal wealth stashed by politicians and
businessmen in foreign banks over the six decades since independence.
Since 1991, economic liberalization in India has reduced red tape and bureaucracy,
supported the transition towards a market economy and transformed the economy, with
record growth rates of 9.2% in 2007and 9.6% in 2006. However, though the Indian economy
has become the 6th largest in the world, its growth has been uneven across social and
economic groups, with sections of society experiencing some of the highest levels of poverty
in the world. Endemic corruption contributes to this uneven distribution of wealth. The cost
of corruption, perceptible in public sector inefficiencies and inadequate infrastructure, is
undermining efforts to reduce poverty and promote sustainable growth.
Criminalization is also a serious problem in contemporary Indian politics. In July 2008 The
Washington Post reported that nearly a fourth of the 540 Indian Parliament members faced
criminal charges, "including human trafficking, immigration rackets, embezzlement, rape
and even murder".
India tops the list for black money in the entire world with almost US$1456 billion in Swiss
banks (approximately USD 1.4 trillion) in the form of black money. According to the data
provided by the Swiss Banking Association Report (2006), India has more black money than
the rest of the world combined. To put things in perspective, Indian-owned Swiss bank
account assets are worth 13 times the country’s national debt.
“The recent scams involving unimaginably big amounts of money, such as the 2G spectrum
scam, are well known. It is estimated that more than trillion dollars are stashed away in
foreign havens, while 80% of Indians earn less than 2$ per day and every second child is
malnourished. It seems as if only the honest people are poor in India and want to get rid of
their poverty by education, emigration to cities, and immigration, whereas all the corrupt
ones, like Hassan Ali Khan are getting rich through scams and crime. It seems as if India is a
rich country filled with poor people", the organizers of Dandi March II in the United States
said.
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The Comptroller and Auditor General of India said, “As on March 31, 2010, unutilized
committed external assistance was of the order of Rs.1, 05,339 crore.”
In a most recent example of corruption, even as the Enforcement Directorate (ED) probes
US$8 billion worth transactions allegedly involving suspected money launderer Hassan Ali
Khan, evidence available with a news source in India shows that he had transactions of over
Rs 112,000 crore (US$24.86 billion) between years 2005 and 2006. This amount is enough to
fund the national drinking water project in all the six lakh (600,000) villages in India for the
next 10 years.
History
The economy of India was under socialist-inspired policies for an entire generation from the
1950s until the late 1980s. The economy was subject to extensive regulation, protectionism,
and public ownership, leading to pervasive corruption and slow growth. License Raj was
often at the core of corruption.
The Vohra Report, submitted by the former Indian Union Home Secretary, N.N. Vohra, in
October 1993, studied the problem of the criminalization of politics and of the nexus among
criminals, politicians and bureaucrats in India.
The report contained several observations made by official agencies on the criminal network
which was virtually running a parallel government. It also discussed criminal gangs who
enjoyed the patronage of politicians — of all political parties — and the protection of
government functionaries. It revealed that political leaders had become the leaders of
gangs. They were connected to the military. Over the years criminals had been elected to
local bodies, State Assemblies, and even the Parliament. The unpublished annexures to the
Vohra Report are believed to contain highly explosive material.
According to Jitendra Singh, "in the bad old days, particularly pre-1991, when the License
Raj held sway, and by design, all kinds of free market mechanisms were hobbled or stymied,
and corruption emerged almost as an illegitimate price mechanism, a shadowy quasi-
market, such that scarce resources could still be allocated within the economy, and
decisions could get made. These were largely distortions created by the politico-economic
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regime. While a sea change has occurred in the years following 1991, some of the distorted
cultural norms that took hold during the earlier period are slowly being repaired by the
sheer forces of competition. The process will be long and slow, however. It will not change
overnight." One of the major problems and obstacles to development that many developing
countries face is corruption by greedy, power-hungry politicians, which is endemic in certain
parts of the world.
Forms of Corruption
Most reports and studies emphasize that the country continues to face major governance
challenges. There is a lack of transparency in governance rules, procedures are complicated
and the bureaucracy enjoys broad discretionary power. Nepotism is embedded in the civil
service, journalists are harassed for reporting on corruption and recent years have seen an
increase in off-the-books campaign finance arrangements. The country is further
characterized by rigid bureaucratic structures, an exclusivist process of decision-making,
overly centralized government, poorly-paid civil servants and the absence of effective
internal control mechanisms. Political corruption and corruption scandals involving high
ranking officials and ministers periodically hit the headlines, undermining the legitimacy of
democratic processes and citizens’ trust in public institutions.
Political corruption
Political corruption is the use of legislated powers by government officials for illegitimate
private gain. Misuse of government power for other purposes, such as repression of political
opponents and general police brutality, is not considered political corruption. Neither are
illegal acts by private persons or corporations not directly involved with the government. An
illegal act by an officeholder constitutes political corruption only if the act is directly related
to their official duties.
Forms of corruption vary, but include bribery, extortion, cronyism, nepotism, patronage,
graft, and embezzlement. While corruption may facilitate criminal enterprise such as drug
trafficking, money laundering, and human trafficking, it is not restricted to these activities.
The activities that constitute illegal corruption differ depending on the country or
jurisdiction. For instance, certain political funding practices that are legal in one place may
be illegal in another. In some cases, government officials have broad or poorly defined
powers, which make it difficult to distinguish between legal and illegal actions. Worldwide,
bribery alone is estimated to involve over 1 trillion US dollars annually. A state of
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unrestrained political corruption is known as a kleptocracy, literally meaning "rule by

thieves".
Types
Bribery
A bribe is a payment given personally to a government official in exchange of his use of
official powers. Bribery requires two participants: one to give the bribe, and one to take it.
Either may initiate the corrupt offering; for example, a customs official may demand bribes
to let through allowed (or disallowed) goods, or a smuggler might offer bribes to gain
passage. In some countries the culture of corruption extends to every aspect of public life,
making it extremely difficult for individuals to stay in business without resorting to bribes.
Bribes may be demanded in order for an official to do something he is already paid to do.
They may also be demanded in order to bypass laws and regulations. In addition to using
bribery for private financial gain, they are also used to intentionally and maliciously cause
harm to another (i.e. no financial incentive). In some developing nations, up to half of the
population has paid bribes during the past 12 months.
Bribery, a form of corruption, is an act implying money or gift given that alters the behavior
of the recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the
offering, giving, receiving, or soliciting of any item of value to influence the actions of an
official or other person in charge of a public or legal duty. The bribe is the gift bestowed to
influence the recipient's conduct. It may be any money, good, right in action, property,
preferment, privilege, emolument, object of value, advantage, or merely a promise or
undertaking to induce or influence the action, vote, or influence of a person in an official or
public capacity.
Forms of bribery
Many types of bribes exist: tip, gift, perk, skim, favor, discount, waived fee/ticket, free food,
free ad, free trip, free tickets, sweetheart deal, kickback/payback, funding, inflated sale of
an object or property, lucrative contract, grease money, donation, campaign contribution,
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fund raiser, sponsorship/backing, higher paying job, stock options, secret commission, or
promotion (rise of position/rank).
One must be careful of differing social and cultural norms when examining bribery.
Expectations of when a monetary transaction is appropriate can differ from place to place.
Political campaign contributions in the form of cash, for example, are considered criminal
acts of bribery in some countries, while in the United States they are legal. Tipping, for
example, is considered bribery in some societies, while in others the two concepts may not
be interchangeable.
In some Spanish-speaking countries, bribes are referred to as "mordida" (literally, "bite"); in

Arab countries they are Baksheesh or Bakshish. However, Bakshish is more akin to tipping.
French-speaking countries often use the expressions "dessous-de-table" ("under-the-table"
commissions), "pot-de-vin" (literally, "wine-pot"), or "commission occultes" ("secret
commission" or "kickback"). While the last two expressions contain inherently a negative
connotation, the expression "dessous-de-table" can be often understood as a commonly
accepted business practice (for instance, on the occasion of a real estate transaction before
the notary, a partial payment made between the buyer and seller; needless to say, this is a
good way to launder money).
In German the common term is Schmiergeld ("greasing money"), but according to the
Transparency International corruption perception index, corruption would be rare in that
part of the world.
The offence may be divided into two great classes: the one, where a person invested with
power is induced by payment to use it unjustly; the other, where power is obtained by
purchasing the suffrages of those who can impart it. Likewise, the briber might hold a
powerful role and control the transaction; or in other cases, a bribe may be effectively
extracted from the person paying it, although this is better known as extortion.
The forms that bribery takes are numerous. For example, a motorist might bribe a police
officer not to issue a ticket for speeding, a citizen seeking paperwork or utility line
connections might bribe a functionary for faster service. In Eugene, Oregon, bribery is an
important aspect of the local SLUG Queen pageant that sets it apart from other pageants.
The Slug Queens set the rare example of creating an environment where bribery is both
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accepted and encouraged. The moment a new queen is crowned, the old queens, who are
the judges of the pageant, are open to bribery.
Bribery may also take the form of a secret commission, a profit made by an agent, in the
course of his employment, without the knowledge of his principal. Euphemisms abound for
this (commission, sweetener, kick-back etc.) Bribers and recipients of bribery are likewise
numerous although bribers have one common denominator and that is the financial ability
to bribe.
Bribery around the world is estimated at about $1 trillion (£494bn).
Trading in influence
Trading in influence, or influence peddling in certain countries, refers to the situation where
a person is selling his/her influence over the decision process involving a third party (person
or institution). The difference with bribery is that this is a tri-lateral relation. From a legal
point of view, the role of the third party (who is the target of the influence) does not really
matter although he/she can be an accessory in some instances. It can be difficult to make a
distinction between this form of corruption and certain forms of extreme and poorly
regulated lobbying where for instance law- or decision-makers can freely "sell" their vote,
decision power or influence to those lobbyists who offer the highest retribution, including
where for instance the latter act on behalf of powerful clients such as industrial groups who
want to avoid the passing of certain environmental, social, or other regulations perceived as
too stringent, etc. Where lobbying is (sufficiently) regulated, it becomes possible to provide
for distinctive criteria and to consider that trading in influence involves the use of "improper
influence", as in article 12 of the Criminal Law Convention on Corruption (ETS 173) of the
Council of Europe.
Patronage
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Patronage is the support, encouragement, privilege, or financial aid that an organization or

individual bestows to another. In the history of art, arts patronage refers to the support that
kings or popes have provided to musicians, painters, and sculptors. It can also refer to the
right of bestowing offices or church benefices, the business given to a store by a regular
customer, and the guardianship of saints. The term derives from the Latin patrons, the
formal relationship between a Patronus and his Cliens.
In some countries the term is used to describe political patronage, which is the use of state
resources to reward individuals for their electoral support. Some patronage systems are
legal, as in the Canadian tradition of allowing the Prime Minister to appoint the heads of a
number of commissions and agencies; in many cases, these appointments go to people who
have supported the political party of the Prime Minister. As well, the term may refer to a
type of corruption or favoritism in which a party in power rewards groups, families,
ethnicities for their electoral support using illegal gifts or fraudulently-awarded
appointments or government contracts.
Patronage refers to favoring supporters, for example with government employment. This
may be legitimate, as when a newly elected government changes the top officials in the
administration in order to effectively implement its policy. It can be seen as corruption if
this means that incompetent persons, as a payment for supporting the regime, are selected
before more able ones. In no democracies many government officials are often selected for
loyalty rather than ability. They may be almost exclusively selected from a particular group
(for example, Sunni Arabs in Saddam Hussein's Iraq, the nomenklatura in the Soviet Union,
or the Junkers in Imperial Germany) that support the regime in return for such favors. A
similar problem can also be seen in Eastern Europe, for example in Romania, where the
government is often accused of patronage (when a new government comes to power it
rapidly changes most of the officials in the public sector).
Nepotism and cronyism
Favoring relatives (nepotism) or personal friends (cronyism) of an official is a form of

illegitimate private gain. This may be combined with bribery, for example demanding that a
business should employ a relative of official controlling regulations affecting the business.
The most extreme example is when the entire state is inherited, as in North Korea or Syria.
A milder form of cronyism is an "old boy network", in which appointees to official positions
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are selected only from a closed and exclusive social network – such as the alumni of
particular universities – instead of appointing the most competent candidate.
Seeking to harm enemies becomes corruption when official powers are illegitimately used
as means to this end. For example, trumped-up charges are often brought up against
journalists or writers who bring up politically sensitive issues, such as a politician's
acceptance of bribes.
In the Indian political system, leadership of national and regional parties are passed from
generation to generation creating a system in which a family holds the center of power,
some examples are most of the Dravidian parties of south India and also the largest party in
India – Congress.
Electoral fraud
Electoral fraud is illegal interference with the process of an election. Acts of fraud affect
vote counts to bring about an election result, whether by increasing the vote share of the
favored candidate, depressing the vote share of the rival candidates, or both. Also called
voter fraud, the mechanisms involved include illegal voter registration, intimidation at polls,
and improper vote counting.
Embezzlement
Embezzlement is outright theft of entrusted funds. It is a misappropriation of property.

Another common type of embezzlement is that of entrusted government resources; for
example, when a director of a public enterprise employs company workers to build or
renovate his own house.
Kickbacks
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A kickback is an official's share of misappropriated funds allocated from his or her

organization to an organization involved in corrupt bidding. For example, suppose that a
politician is in charge of choosing how to spend some public funds. He can give a contract to
a company that is not the best bidder, or allocate more than they deserve. In this case, the
company benefits, and in exchange for betraying the public, the official receives a kickback
payment, which is a portion of the sum the company received. This sum itself may be all or a
portion of the difference between the actual (inflated) payment to the company and the
(lower) market-based price that would have been paid had the bidding been competitive.
Kickbacks are not limited to government officials; any situations in which people are
entrusted to spend funds that do not belong to them are susceptible to this kind of
corruption. Kickbacks are also common in the pharmaceutical industry, as many doctors and
physicians receive pay in return for added promotion and prescription of the drug these
pharmaceutical companies are marketing.
Unholy alliance
An unholy alliance is a coalition among seemingly antagonistic groups, especially if one is

religious, for ad hoc or hidden gain. Like patronage, unholy alliances are not necessarily
illegal, but unlike patronage, by its deceptive nature and often great financial resources, an
unholy alliance can be much more dangerous to the public interest. An early, well-known
use of the term was by Theodore Roosevelt (TR):
"To destroy this invisible Government, to dissolve the unholy alliance between corrupt
business and corrupt politics is the first task of the statesmanship of the day." – 1912
Progressive Party Platform, attributed to TR and quoted again in his autobiography where
he connects trusts and monopolies (sugar interests, Standard Oil, etc.) to Woodrow Wilson,
Howard Taft, and consequently both major political parties.
Involvement in organized crime
An illustrative example of official involvement in organized crime can be found from 1920s
and 1930s Shanghai, where Huang Jinrong was a police chief in the French concession, while
simultaneously being a gang boss and co-operating with Du Yuesheng, the local gang
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ringleader. The relationship kept the flow of profits from the gang's gambling dens,
prostitution, and protection rackets undisturbed.
The United States accused Manuel Noriega's government in Panama of being a

"narcokleptocracy", a corrupt government profiting on illegal drug trade. Later the U.S.
invaded Panama and captured Noriega.
Conditions favorable for corruption
It is argued that the following conditions are favorable for corruption:-
 Information deficits
o Lacking freedom of information legislation. The Indian Right to Information Act 2005 has
"already engendered mass movements in the country that is bringing the lethargic,
often corrupt bureaucracy to its knees and changing power equations completely."
o Lack of investigative reporting in the local media.
o Contempt for or negligence of exercising freedom of speech and freedom of the press.
o Weak accounting practices, including lack of timely financial management.
o Lack of measurement of corruption. For example, using regular surveys of households
and businesses in order to quantify the degree of perception of corruption in different
parts of a nation or in different government institutions may increase awareness of
corruption and create pressure to combat it. This will also enable an evaluation of the
officials who are fighting corruption and the methods used.
o Tax havens which tax their own citizens and companies but not those from other nations
and refuse to disclose information necessary for foreign taxation. This enables large
scale political corruption in the foreign nations.
 Lacking control of the government.
o Lacking civic society and non-governmental organizations which monitor the

government.
o An individual voter may have a rational ignorance regarding politics, especially in
nationwide elections, since each vote has little weight.
o Weak civil service and slow pace of reform.
o Weak rule of law.
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o Weak legal profession.

o Weak judicial independence.
o Lacking protection of whistle-blowers.
o Lack of benchmarking that is continual detailed evaluation of procedures and
comparison to others who do similar things, in the same government or others, in
particular comparison to those who do the best work. The Peruvian organization
Ciudadanos al Dia has started to measure and compare transparency, costs, and
efficiency in different government departments in Peru. It annually awards the best
practices which has received widespread media attention. This has created competition
among government agencies in order to improve.
 Opportunities and incentives
o Individual officials routinely handle cash, instead of handling payments by giro or on a

separate cash desk—illegitimate withdrawals from supervised bank accounts are much
more difficult to conceal.
o Public funds are centralized rather than distributed. For example, if Rs 1,000 is
embezzled from a local agency that has Rs 2,000 funds, it is easier to notice than from a
national agency with Rs 2,000,000 funds.
o Large, unsupervised public investments.
o Sale of state-owned property and privatization.
o Poorly-paid government officials.
o Government licenses needed to conduct business, e.g., import licenses, and encourage
bribing and kickbacks.
o Long-time work in the same position may create relationships inside and outside the
government which encourage and help conceal corruption and favoritism. Rotating
government officials to different positions and geographic areas may help prevent this;
for instance certain high rank officials in French government services (e.g. treasurer-
paymasters general) must rotate every few years.
o Costly political campaigns, with expenses exceeding normal sources of political funding,
especially when funded with taxpayer money.
o Less interaction with officials reduces the opportunities for corruption. For example,
using the Internet for sending in required information, like applications and tax forms,
and then processing this with automated computer systems. This may also speed up the
processing and reduce unintentional human errors. See e-Government.
o A windfall from exporting abundant natural resources may encourage corruption.
o War and other forms of conflict correlate with a breakdown of public security.
 Social conditions
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o Self-interested closed cliques and "old boy networks’’.

o Family-, and clan-centered social structure, with a tradition of nepotism/favouritism
being acceptable.
o A gift economy, such as the Soviet blat system, emerges in a Communist centrally
planned economy.
o Lacking literacy and education among the population.
o Frequent discrimination and bullying among the population.
o Tribal solidarity, giving benefits to certain ethnic groups
Politics
The public trust in democratic processes in India is seriously undermined by opaque

financing of electoral processes, widespread bribery and other forms of corrupt practices.
Political corruption is the use of legislated powers by government officials for illegitimate
private gain. Misuse of government power for other purposes, such as repression of political
opponents and general police brutality, is not considered political corruption. Neither are
illegal acts by private persons or corporations not directly involved with the government. An
illegal act by an officeholder constitutes political corruption only if the act is directly related
to their official duties.
Forms of corruption vary, but include bribery, extortion, cronyism, nepotism, patronage,
graft, and embezzlement. While corruption may facilitate criminal enterprise such as drug
trafficking, money laundering, and human trafficking, it is not restricted to these activities.
The activities that constitute illegal corruption differ depending on the country or
jurisdiction. For instance, certain political funding practices that are legal in one place may
be illegal in another. In some cases, government officials have broad or poorly defined
powers, which make it difficult to distinguish between legal and illegal actions. Worldwide,
bribery alone is estimated to involve over 1 trillion US dollars annually. A state of
unrestrained political corruption is known as a kleptocracy, literally meaning "rule by
thieves".
The entry of criminals into politics - despite laws requiring public disclosure of candidates’
assets, criminal records and educational backgrounds – is another alarming facet of political
corruption in India.
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According to The Economist, more than a fifth of federal parliament members in 2008 faced
criminal charges. Of the 522 members of India’s current parliament, 120 are facing criminal
charges; around 40 of these are accused of serious crimes, including murder and rape. Many
of the biggest scandals since 2010 have involved very high levels of government, including
Cabinet Ministers and Chief Ministers, such as in the 2G spectrum scam and the Adarsh
Housing Society Scam.
Bureaucracy
The purpose of a bureaucracy is to successfully implement the actions of an organization of

any size (but often associated with large entities such as government, corporations, and
non-governmental organizations), in achieving its purpose and mission, and the bureaucracy
is tasked to determine how it can achieve its purpose and mission with the greatest possible
efficiency and at the least cost of any resources.
Development
Modern bureaucracies arose as the government of states grew larger during the modern
period, and especially following the Industrial Revolution. As the authors David Osborne and
Ted Gaebler pointed out in 1993:
It is hard to imagine today, but a hundred years ago bureaucracy meant something positive.
It connoted a rational, efficient method of organization – something to take the place of the
arbitrary exercise of power by authoritarian regimes. Bureaucracy brought the same logic to
government work that the assembly line brought to the factory. With the hierarchical
authority and functional a specialization, they made possible the efficient undertaking of
large complex tasks.
Weberian Bureaucracy
Bureaucratic administration means fundamentally domination through knowledge.
– Max Weber
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Weber described many ideal types of public administration and government in his magnum
opus Economy and Society (1922). His critical study of the bureaucratization of society
became one of the most enduring parts of his work. It was Weber who began the studies of
bureaucracy and whose works led to the popularization of this term. Many aspects of
modern public administration go back to him, and a classic, hierarchically organized civil
service of the Continental type is called "Weberian civil service". As the most efficient and
rational way of organizing, bureaucratization for Weber was the key part of the rational-
legal authority, and furthermore, he saw it as the key process in the on-going rationalization
of the Western society.
Weber listed several preconditions for the emergence of the bureaucracy. The growth in
space and population being administered and the growth in complexity of the
administrative tasks being carried out and the existence of a monetary economy resulted in
a need for a more efficient administrative system. Development of communication and
transportation technologies made more efficient administration possible but also in popular
demand, and democratization and rationalization of culture resulted in demands that the
new system treats everybody equally.
Weber's ideal bureaucracy is characterized by hierarchical organization, delineated lines of

authority in a fixed area of activity, action taken on the basis of and recorded in written
rules, bureaucratic officials need expert training, rules are implemented by neutral officials,
and career advancement depends on technical qualifications judged by organization, not
individuals.
The decisive reason for the advance of bureaucratic organization has always been its purely
technical superiority over any other form of organization.
– Max Weber
While recognizing bureaucracy as the most efficient form of organization, and even
indispensable for the modern state, Weber also saw it as a threat to individual freedoms,
and the on-going bureaucratization as leading to a "polar night of icy darkness", in which
increasing rationalization of human life traps individuals in the aforementioned "iron cage"
of bureaucratic, rule-based, rational control. In order to counteract bureaucrats, the system
needs entrepreneurs and politicians.
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Corruption in Bureaucracy in India
These findings confirm the prevalence of the bureaucratic and administrative forms of
corruption that take place at the implementation end of politics, where the public meets
public officials. Bureaucratic corruption pervades the Indian administrative system with
widespread practices of bribery, nepotism, and misuse of official positions and resources.
A 2005 study done by Transparency International (TI) in India found that more than 50% of
the people had first-hand experience of paying bribe or peddling influence to get a job done
in a public office. Taxes and bribes are common between state borders; Transparency
International estimates that truckers pay annually US$5 billion in bribes. A 2009 survey of
the leading economies of Asia, revealed Indian bureaucracy to be not just least efficient out
of Singapore, Hong Kong, Thailand, South Korea, Japan, Malaysia, Taiwan, Vietnam, China,
Philippines and Indonesia; further it was also found that working with India's civil servants
was a "slow and painful" process.
Police corruption
Police corruption is a specific form of police misconduct designed to obtain financial
benefits, other personal gain, and/or career advancement for a police officer or officers in
exchange for not pursuing, or selectively pursuing, an investigation or arrest. One common
form of police corruption is soliciting and/or accepting bribes in exchange for not reporting
organized drug or prostitution rings or other illegal activities. Another example is police
officers flouting the police code of conduct in order to secure convictions of suspects — for
example, through the use of falsified evidence. More rarely, police officers may deliberately
and systematically participate in organized crime themselves.
Police sector
The percentage of people affected by corruption in Police sector is about 2% of the entire
population of India. 53% have said that political intervention has been the key corruption
that they have faced. 14% have pointed out that money has been demanded for making an
FIR. 50% of the people admit having paid money. However this is lower in the West (36%)
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and the metros (39%). The duty police officer (54%) is seen as the chief beneficiary. Other
beneficiaries are the investigation officer, officer in charge, clerk in the police station.
Corrupt acts by police officers
Police officers have various opportunities to gain personally from their status and authority
as law enforcement officers. The Knapp Commission, which investigated corruption in the
New York City Police Department in the early 1970s, divided corrupt officers into two types:
meat-eaters, who "aggressively misuse their police powers for personal gain," and grass-
eaters, who "simply accept the payoffs that the happenstances of police work throw their
way."
The sort of corrupt acts that have been committed by police officers have been classified as
follows:
1) Corruption of authority: police officers receiving free drinks, meals, and other
gratuities.
2) Kickbacks: receiving payment from referring people to other businesses. This can
include, for instance, contractors and tow truck operators.
3) Opportunistic theft: from arrestees and crime victims or their corpses.
4) Shakedowns: accepting bribes for not pursuing a criminal violation.
5) Protection of illegal activity: being "on the take", accepting payment from the operators
of illegal establishments such as brothels, casinos, or drug dealers to protect them from
law enforcement and keep them in operation.
6) "Fixing": undermining criminal prosecutions by withholding evidence or failing to appear
at judicial hearings, for bribery or as a personal favour.
7) Direct criminal activities: of law enforcement officers themselves.
8) Internal payoffs: prerogatives and perquisites of law enforcement organizations, such as
shifts and holidays, being bought and sold.
9) The "frame-up": the planting or adding to evidence, especially in drug cases.
Prevalence of police corruptions
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Accurate information about the prevalence of police corruption is hard to come by, since
the corrupt activities tend to happen in secret and police organizations have little incentive
to publish information about corruption. Police officials and researchers alike have argued
that in some countries, large-scale corruption involving the police not only exist but can
even become institutionalized. One study of corruption in the Los Angeles Police
Department (focusing particularly on the Rampart scandal) proposed that certain forms of
police corruption may be the norm, rather than the exception, in American policing.
Where corruption exists, the widespread existence of a Blue Code of Silence among the
police can prevent the corruption from coming to light. Officers in these situations
commonly fail to report corrupt behavior or provide false testimony to outside investigators
to cover up criminal activity by their fellow officers. The well-known is case of Frank Serpico,
a police officer who spoke out about pervasive corruption in the NYPD despite the open
hostility of other members, illustrates how powerful the code of silence can be. In Australia
in 1994, by 46 votes to 45, independent politician John Hatton forced the New South Wales
state government to override the Independent Commission against Corruption and the
advice of senior police to establish a ground-breaking Royal Commission into Police
Corruption.
Police and Prosecution
1) Set up of an independent police complaints board with its own investigators

2) Have complaints go to media, DPP, or ombudsman
3) Introduce an independent group within the police force to investigate corruption within
the police
4) Implement a declaration and monitoring of assets for police officers
5) Implement and monitor Code of Ethics for police
Suggestions for improvement
1) Suspension / suitable punishment for corrupt officials

2) Bribery to be penalized
3) Authorities to be more vigilant for prevention of corrupt activities
Land and property
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Officials often steal state property. In cities and villages throughout India, Mafia Raj
consisting of municipal and other government officials, elected politicians, judicial officers,
real estate developers and law enforcement officials, acquire, develop and sell land in illegal
ways.
Land Administration
The percentage of people affected by corruption in Land administration sector is about 3%

of the entire population of India.
1) There are two main forms of corruption faced in this sector. The first one is waiting a
long time for getting documents and the second one is an offshoot of the money
involved in various activities such as mutation, services and tax.
2) On an average, 36% of those interacted talk of money being demanded. This incidence is
the strongest in the North (58%). In 59% of the cases money is directly demanded.
3) The key beneficiaries of corruption in this sector are perceived to be Surveyors (45%),
Revenue officers (30%) and Tehsildars (23%).
Tendering processes and awarding contracts
Government officials having discretionary powers in awarding contracts engage in

preferential treatment for selected bidders and display negligence in quality control
processes. Many state-funded construction activities in India, such as road building, are
dominated by construction mafias, which are groupings of corrupt public works officials,
materials suppliers, politicians and construction contractors. Shoddy construction and
material substitution (e.g. mixing sand in cement while submitting expenses for cement)
result in roads and highways being dangerous, and sometimes simply washed away when
India's heavy monsoon season arrives.
Medicine
In Government Hospitals, corruption is associated with non-availability of medicines (or
duplicate/fake medicines), getting admission, consultations with doctors and availing
diagnostic services. There have been cases of diversion of medical supplies from
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government hospitals and clinic as well as supply and distribution of medicines of inferior
quality.
Income tax
There have been several cases of collusion of officials of the income tax department of India
for a favourable tax treatment in return for bribes.
Preferential award of public resources

As detailed earlier, land in areas with short supply is relatively common with government
entities awarding public land to private concerns at negligible rates. Other examples include
the award of mining leases to private companies without a levy of taxes that is
proportionate to the market value of the ore.
Judiciary
The Indian court system consists of a supreme court, high courts at state level and
subordinate courts at district and local level. Court procedures are very slow and
complicated; and the court system is severely backlogged and understaffed. This results in
delays in the processing of cases, and a loss of confidence in the law and in the justice
system. There is also a high level of discretion in the processing of paperwork during trials
and multiple points where court officials can misuse their power with impunity. In such
contexts, people are tempted to resort to bribes, favours, hospitality or gifts not only to
obtain a favourable decision but to move the case through the system and speed up the
court proceedings.
According to Transparency International, judicial corruption in India is attributable to factors

such as "delays in the disposal of cases, shortage of judges and complex procedures, all of
which are exacerbated by a preponderance of new laws".
1) Introduce Code of Conduct for all sectors within Judiciary

2) Conduct speedy investigations into allegation of misconduct made against judicial staff
according to Existing regulations
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3) Entrust responsibility of recruitment and discipline to the judicial and legal service
4) Commission for administrative staff as well
5) Introduce Code of Conduct for administrative staff in the judiciary
Suggestion for improvement in judiciary

1) Punishment / suspension of the wrong doer
2) Judgment to be correctly made / and fast
This is the crux of all suggestions made for curbing corruption in this sector.
Also to add to this point “Justice delayed is justice denied”.
Public Distribution System

Public Distribution System (PDS) is a national food security system, established by the
Government of India under Ministry of Consumer Affairs, Food and Public Distribution and
managed jointly with state governments in India. It distributes subsidized food and non-food
items to India's poor. Major commodities distributed to consumers include staple food
grains such as wheat, rice, sugar, and kerosene through a network of Fair Price Shops (FPS)
established in several states across the country. Food Corporation of India, a PSU,
distributes food grains to FPS throughout the country, which are managed by state
governments. As of date there are about 4.99 lakh Fair Price Shops (FPS) across India.
In terms of both coverage and public expenditure, it is considered to be the most important
food security network. However the food grains supplied by the ration shops are not
enough to meet the consumption needs of the poor or are of inferior quality. The average
level of consumption of PDS grains in India is only 1 kg per person / month. The PDS has
been criticized for its urban bias and its failure to serve the poorer sections of the
population effectively. The targeted PDS is costly and gives rise to a lot of corruption in the
process of extricating the poor from those who are not poor.
Fallouts of P.D.S System
1. Generally, the consumers get inferior food grains in ration shops.
2. Deceitful dealers replace good supplies received from the F.C.I (Food Corporation of
India) with inferior stock.
3. Many retail shopkeepers have large number of bogus cards to sell food grains in the open
market.
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4. Many FPS dealers resort to malpractice since they acquire little profit.
5. Despite the PDS, India accounts for over 400 million poor and hungry people. Numerous
malpractices make safe and nutritious food inaccessible and unaffordable to many poor.
Several schemes have augmented the number of people aided by PDS, but the number is
still extremely low. Poor supervision of FPS and lack of accountability have spurred a
number of middlemen who eat up (literally) a good proportion of the stock meant for the
poor. There is also no clarity as to which families should be included in the BPL list and
which excluded. This results in the genuinely poor being excluded whilst the ineligible get
several cards. Also, the stock assigned to a single family cannot be bought in instalments.
This is one of the biggest bottlenecks in the efficient functioning of PDS in India. Many BPL
families are not able to acquire ration cards either because they are seasonal migrant
workers or because they live in unauthorized colonies. A lot of families also mortgage their
ration cards for money.
To improve the current system of the PDS, the following suggestions are furnished for:
1. Vigilance squad should be strengthened to detect corruption, which is an added

expenditure for taxpayers.
2. Personnel in charge of the Department should be chosen locally.
3. Margin of profit should be increased for honest business, in which case the market
system is more apt anyway.
4. F.C.I. and other prominent agencies should provide quality food grains for distribution,
which is a tall order for an agency that has no real incentive to do so.
5. Frequent checks & raids should be conducted to eliminate bogus and duplicate cards,
which is again is an added expenditure and not fool proof.
6. The Civil supplies Corporation should open more Fair Price shops in rural areas.
7. The Fair Price dealers seldom display rate chart and quantity available in the block-boards
in front of the shop. This should be enforced.
In aggregate, only about 42% of subsidized grains issued by the Central Pool reach the target
group, according to a Planning Commission study released in March 2008, which would
cause reasonable belief that the PDS system is only fuelling starvation in India.
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Suggestion for improvement in PDS
1) Proper and timely inspection of Ration shops

2) Ration shop owner to stop black marketing
3) Product should be given on time
4) Weights should be proper
Corruption mars India’s healthcare system

"Doctors who concerned themselves with mass disease and the health of the population
had to be committed to political activity if they wishes to may progress"
But in India today, the same India that has developed nuclear weapons, and is even talking
of putting people on the Moon, there is still polio, somewhere a child dies every minute of
every day from diarrhoea and every 6 minutes a woman dies from pregnancy related
causes. Infant female foeticide is raging - ironically in wealthier districts, and even in districts
where female literacy is the highest e.g. in Orissa). Road traffic accidents in Delhi alone are
of epidemic proportions.
Tackling these problems does not require more research or the application of more
expensive technologies. Each of these deaths is preventable with low tech technology
already well known for decades. We do not need a better polio vaccine or better oral re-
hydration salts. So what is ‘causing’ these problems, and a myriad more that leave countless
millions every year disabled, dysfunctional and often dead?
The biggest killer in India today is not the mosquito, not the salmonella, staphylococcus or
streptococcus bacteria, not tobacco, and certainly not the polio bacterium despite the
disproportionate effort spent on eradicating it, it is corruption. To make it sound more
technical and acceptable to the medical profession perhaps we need to label it. Corruption
may be.
Logically, I should take a step back and focus on what causes or enables corruption to thrive,
but trying to change human nature, or cultural values enshrined in centuries or millennia of
cultural attitudes and beliefs, is too big a step at this stage. So let us focus on this one cause,
and consider its role in the morbidity and mortality of hundreds of millions of people across
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the globe today, and what might be done about it. Such a study may seem outside the
responsibility of the health professional, but I would argue that we are largely wasting our
time with massive health projects and programmes, training courses, investments in
buildings, mass distribution of drugs and vaccines, because of the undermining effects of
corruption in all areas of the health system.
Doctors and other health professionals have an ethical responsibility to highlight the
contribution of corruption to the health status of their patients, and to become politically
active to control such a significant cause of death. But we also need to address it because it
is alive and well amongst health professionals themselves.
Let us look at some of its manifestations first, then at what might be done about it:
• Phone doesn’t work because of lack of bribe to telephone lines-man, a woman with an
obstructed labour can’t call an ambulance, and she dies.
• Education of SCs and STs and slum dwellers neglected because teachers concentrate on
children whose parents pay them, so another generation grows up ignorant of basic health
measures.
• Drivers can bribe policemen on side of road so speeding and ignoring red lights is
common-place.
• Spurious and adulterated drugs proliferate because high level politicians protect the killers
who sell them.
• Students bribe college staff resulting in under-experienced/ qualified staff taking up posts.
• Buildings fall down in earthquakes because of building violations.
• Issuing of licences to service providers and manufacturers inappropriately.
• Subversion of licensing, accreditation and legal systems intended to promote quality and
root out negligence.
• Doctors don’t attend place of work despite drawing a wage from the Government.
• Failure of drugs and other consumables to reach the intended point of use.
• Misappropriation of vehicles (and much more) by officials and doctors.
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• Staff not paid or reimbursed for outreach work because of embezzlement of their wages
or babus demanding favours to move their files.
• Inattention to ensuring clean water and hygienic environments resulting in filthy hospitals
- because officials know there is no accountability.
• Lack of electrical energy because politicians will not tackle theft of electricity, and power
breakdowns compromise the safety of hospitals.
• Official government and externally funded programmes are neglected as senior District
health officials are more interested in recouping the cost of buying their post.
• Unnecessary duplication and irrational drug prescribing by doctors, due to lack of

accountability and incentives from unscrupulous pharmaceutical companies.
• Under the desk payments demanded from patients by everyone for the watchman to the
doctor.
• Lack of accountability of staff and contractors due to corrupt supervisors/ masters
• Buildings constructed at inappropriate sites to please politicians and others, discouraging

proper use.
• Theft and sabotage of instruments by staff wanting to make their private practices look
more efficient than the public sector.
• The wrong staff is sent on training courses (even abroad) because of patronage, similarly
incompetent consultants and advisers are appointed to ‘assist’ projects.
• Politicians and public servants badger development agencies or private sector banks for
loans which have little or no technical justification.
It is easy to blame the masses for voting short-sightedly for the wrong sorts of politicians.
To blame are the politicians for veniality or civil servants (especially the IAS) for their unholy
alliances with the political classes. It is easy to blame the effects of globalisation, or to blame
development agencies.
And certainly for far too long development agencies have ignored or connived in such
corruption. Development agencies are under pressure to spend money and to show short
term results, so they do not properly challenge the non-appropriateness of buildings, sites
or non-maintenance.
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But if anything is to happen to improve governance India’s health sector doctors and other
health professionals need to start putting their own house in order. They also need to take
seriously the challenge of ‘political medicine’, to become active combatants in a crusade to
eradicate this mass killer.
Let us look back again into medical history. At about the time Virchow was active in Silesia a
doctor in Vienna was growing more and more perturbed by puerperal fever and the
unacceptable high maternal mortality it caused. Semmelweiss became convinced that he
and his colleagues were transmitting the disease (caused by a variety of infectious agents)
and experimented with using limewater to wash hands between examinations and
deliveries. Despite his successful demonstration of the efficacy of this simple remedy, he
was hounded out of Vienna and finally died in a mental asylum, so we must not necessarily
anticipate universal admiration of our efforts to tackle Coruptionomia. However, his
pioneering work led to better aseptic practices in hospitals and clinics around the world, and
also led indirectly to more hygienic conditions in non-health settings, thereby promoting
healthier living (unless one accepts the hypothesis that such over-attention to hygiene
causes low tolerance to infection and a tendency to asthma, etc.).
If the health professionals of India and other developing countries (led by the profession
primus inter pares, medicine) were to start with a zero tolerance campaign within the sector
itself, who knows how far the ripples would spread out?
What are some of the practical steps that India’s health care workers could start taking
themselves? The sorts of moves I have in mind would be:
• Hippocratic type oath to be promulgated by IMA which would make it a matter of

professional self-discipline to:
O Refuse to give, receive or countenance bribery in their sphere of influence;
O To anonymously report for collective action to highlight where and when outside
interference occurs (there is safety in numbers);
O To commit themselves to rational drug use, referral and evidence based interventions.
O To shun errant colleagues
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• For professional are associations to support the Medical Council of India in making
violations of the above a ’striking-off’ the register offence, and to set up their own self-
disciplinary machinery if the official machinery won’t do it.
• Participate actively in designing and pressurising for governance systems that are
transparent and fool proof.
• Refusing pharmaceutical companies’ and others’ incentives.
• Refusing to buy posts or co-operate with those who buy post.
• Refusing to tolerate bribery among junior staff.
It is only when India’s health professionals decide that enough is enough and recognise that
their calling includes stamping out this major cause of death and disease that the health
status of India’s people will begin to improve significantly again.
Health Sector
The percentage of people affected by corruption in Health sector is about 8% of the entire
population of India.
1) Payment of money through hospital staff is the dominant irregular process

encountered for admission, followed by direct payments being made. Payments
made for admission to hospitals are higher in the South.
2) The dominant corruption after getting admission is non-proper care by doctors and
nurses and also in terms of non-proper medicine, food etc.
3) 25% of those who has interacted with the health sector talk of money being
demanded and it is especially high in the South (38%)
4) The key actors leading to corruption in this sector across zones are allegedly Doctors
(77%) followed closely followed by Hospital staff (67%).
Improvement in Health Sectors
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1) Government to keep close vigil on the working of the hospitals.

2) Better medicines arrangement: Availability of Medicines to patients should be
improved
3) Doctors should come on time. This could also mean that more doctors should be
employed in the hospitals depending upon the demand of doctors in a particular
department.
4) Doctors should demand less money.
Education
The percentage of people affected by corruption in Education sector is about 5.3% of the
entire population of India.
A. The key process that seeds corruption in this sector is the Admission process. The
Study shows that 18% of those who interacted with this sector, got admission
through an irregular process. This trend was strongest in South (39%) and lowest in
East (6%).
B. The two main dominant modes of corruption in the Admissions process are (a)
Donations (57%) and (b) Use of an influential relative (19%). Receiving donations is a
custom strongly rooted in the South zone (70%).
Education Sectors
A. Management to see – teacher teaches responsibly. If the management of all Schools

and other educational institutions are able to ensure good quality education, then
people will not have to unnecessarily flock to only ‘some’ reputed institutions, and
give in to their unreasonable demands.
B. Inspection of teachers / schools Proper and timely inspection of all educational

institutions and teachers would also ensure the above stated point.
C. Private tuition should be stopped It was suggested that private tuition in all its forms
should be prohibited. Even otherwise, if the quality of education imparted is
improved, the students will not have to seek private tuitions.
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D. Proper punishment for offenders

This would be necessary if norms are broken and would further ensure accountability in the
system by rule of the stick.
Power Sector
The percentage of people affected by corruption in Power sector is about 5.9% of the entire
population of India.
A. ‘Improper supply of electricity’ and ‘Payment of excess bill’ – were the key
corruptions faced.
B. About 50% respondents who had interacted with the Power sector in the past one
year had to pay the office staff. Of these 50%, in most cases (67%) money is directly
demanded.
C. About every second person having interacted with the power sector had to make
repeated visits to the office just to get their complaint registered or addressed. The
incidence of this experience was much higher in West Zone (72%).
D. The key actors in corruption in this sector are Linesmen (37%), Officers (24%), Meter
readers (23%) and Billing clerks (22%).
Solutions
A. Punishment for wrong doers

B. Time to time checking against corruption
C. Stealing of electricity to be stopped: This is more or less a subset of the above
suggestion.
Telecom
A. Punishment for wrong doers’ Proper punishment in the form of Suspension of corrupt
officials was suggested
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B. Quick rectification of faults this would prevent people from falling prey into the
unreasonable demands made by linesmen and the like.
C. Privatization of telecom sector
D. Close watch on the linesmen by officers
The above suggestions are more or less inter-related and are mainly in line with a strong
desire to bring accountability to this sector.
Taxation
The percentage of people affected by corruption in Taxation sector is about .66% of the
entire population of India.
A. Surprisingly this sector has garnered a lower ‘Corruption score’ as compared to other
sectors.
B. In the North zone, and metros, more than 50% people who had interacted claimed
to be paying Income tax. On the other hand, Municipal tax (»80%) features are very
strongly in the West and South.
C. The key corruption faced is “paying for getting reduced or correct assessment”.
However, only about 11% talk about paying money.
D. The tax officer (44%) and the clerk in tax department (35%) are the key actors in the
corruption in this sector.
Armed forces
The Indian Armed Forces have frequently witnessed corruption involving senior armed
forces officers from the Indian Army, Indian Navy and Indian Air Force. Many officers have
been caught for allegedly selling defence stores in the black market in the border districts of
Indian states and territories. Recent sukhna land scandal involving four Indian Lieutenant
Generals has shaken public faith in the country's growing military at a time when large sums
are being spent on modernizing the armed forces. A string of eye-popping fraud cases has
damaged the institution in recent years. The latest Adarsh land scam is another example of
the nexus between the armed forces, bureaucracy and the politicians in the embezzlement
of government property.
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Media
The role of media in systemic corruption cannot be undermined at it shows it involvement

through paid news and sometimes unethical support to corrupt.
Media bias in India
Media bias in India refers to the bias of journalists and news producers within the mass
media in the selection of which events and stories are reported and how they are covered.
Many privately operated television channels have been formed since the privatization of
Indian television in 1991.
Political bias
There have been events when the media has been accused of political bias. However, in
April 2011 the incumbent information and broadcasting minister, Ambika Soni claimed that
it was "probably the freest in the world". At the same gathering, a representative from
Tanzania commented that he had not seen evidence of political bias in Indian newspapers,
although the chairman for the Centre for Media Studies believed that the content,
particularly on television, "smack (sic) of elitism".
Media
1) Leg-is-late liberalization of broadcasting
2) Leg-is-late more access to information in ministries
3) Demand more balanced reporting
4) Implement Code of Conduct for journalists
5) Introduce more specialized training (e.g. investigative journalism)
6) Demand more balanced coverage between private-sector and public-sector on
corruption issues
7) Have media engage in public awareness campaign on corruption issues
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Religious institutions
In India, the corruption has also crept into religious institutions. Some of the Church of
North India is making money by selling Baptism certificates. A group of church leaders and
activists has launched a campaign to combat the corruption within churches. The chief
economic consequences of corruption are the loss to the economy an unhealthy climate for
investment and an increase in the cost of government-subsidized services. The TI India study
estimates the monetary value of petty corruption in 11 basic services provided by the
government, like education, healthcare, judiciary, police, etc., to be around 21,068 crore
(US$4.7 billion). India still ranks in the bottom quartile of developing nations in terms of the
ease of doing business, and compared to China and other lower developed Asian nations,
the average time taken to secure the clearances for a start-up or to invoke bankruptcy is
much greater.
13. Corruption and Democracy
What We Know
Both theory and case evidence provide compelling support for a democratization breeds
corruption hypothesis, at least up to a point. At the theoretical level, Mohtadi and Roe
(2003) model corruption as the monopolistically competitive behaviour of private sector
agents who can either invest in productive activity Orin rent-seeking (corruption). In their
model, young democracies suffering from insufficient checks and balances and lack of
transparency, provide rent-seekers with greater access to public officials and hence greater
opportunities for collecting public sector rents, at least up to a point, without making the
corrupt acts of rent-seekers and officials open to public scrutiny. Because of free entry into
rent-seeking, competition among rent-seekers ultimately reduces returns to individual rent
seekers even as it drives aggregate rents up. But as the institutions of transparency and
accountability in new democracies rise as they mature, aggregate rents and corrupt activity
fall because rents per rent seeker fall and because the cost of rent-seeking (including the
probability of getting caught and punished) to rent-seekers and the government officials,
who accept bribes, rises. Taken together, this combination implies an inverted U pattern
between corruption and the durability or maturity of new democracies.
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The case evidence, at least from Indonesia and Thailand, is broadly consistent with this
picture. In both polities, corrupt networks were more or less tightly controlled by political
elites in government, the bureaucracy and the army (Rock 2003, Rock 2000, Rock and
Bonnett, 2004). As Rock (1994, 2000) and Rockand Bonnett (2004) argue with respect to
Thailand’s bureaucratic polity, democratization led to the break-up of a centralized
corruption network between political elites, senior bureaucrats and senior army officials on
the one hand and the Sino-Thai entrepreneurs who drove the growth process following the
growth coalition assembled by General Sarit in 1960. In this centralized network,
government officials, including army officers, provided protectionist rents to a surprisingly
small number of Sino-Thai entrepreneurs in exchange for kickbacks. As in Indonesia, the
government protected private property and extracted rents at a low enough ‘tax’ rate to
entice entrepreneurs to invest, which they did.
A combination of rapid growth and democratization ultimately led to at least a semi-

democratic polity by the early 1980s (Chai-Anan 1990). For a while, during the time Prem
was the prime minister (1980-88), Thailand’s bureaucratic polity evolved toward both a
broker polity (Ramsay 1985) and a Northeast Asian style developmental state (Anek 1988)
as core economic agencies, peak business associations, and key business leaders regularly
met in a high level Joint Public Private Sector Consultative Committee to work our problems
associated with Thailand’s policy shift which favoured the export of manufactures.
But this transformation did not last as unscrupulous up-country provincial politicians
subsequently captured both the legislature and the prime minister’s office (Girling 1997;
Callahan and McCargo 1996; King 1996). They used their control of both to carry out a
frontal and corrupt assault on the state to reward their supporters and build their coffers for
the next election (King 1996: 136-137).6 They did so, by among other things, politicizing the
core institutions of macroeconomic policy—the Ministry of Finance, the Central Bank, and
the national planning agency, the National Economic and Social Development Board (Rock
2000: 197-198; Murray 1996). This led at least one long time analyst to ask whether new
democracies could manage their macro-economies (Ammar 1997). The rise of shadowy
provincial businessmen in politics and their corrupt frontal assault on the state ultimately
led bureaucratic and political elites in Bangkok to try and slow the spread of corruption by
enacting a new constitution in the late 1990s designed to reign in the corruption associated
with money politics and rural vote buying (Callahan 2005).7 Although it is difficult to know
whether the new constitution reduced corruption in Thailand, the new constitution re-
centralized politics by significantly reducing the number of political parties (Hicken 2006).
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One outcome of this process was the rise of another provisional businessman Thaksin
Shinawata, who became prime minister in a government that for the first time in Thai
history captured a majority in parliament for his Thak Rai Thai Party (McCargo and Ukrist
2005).
Poor Democracy
Poor democracies do not lack the structural mechanisms that help constrain corruption: re-
election pressures, competitive party systems, intra-government checks and balances, free
media and free speech that make open and transparent government possible. The
Westminster parliamentary democracy, of which India is one, is also supposed to be the
least corrupt structurally among the variety of parliamentary and presidential democracies.
Its plurality voting system tends to produce national parties and reduces extortions by
individuals, factions and small parties with narrow interests and constituencies.
Poor Democracy with Corruption in India
In a poor democracy, the combination of elite accessibility and meagre economic

opportunity can contribute to a fragmented patronage system leading to extreme
corruption. The clientalism literature establishes a causal relation between democracy and
corruption by suggesting that clients or voters desire patronage politics because it supplies
extra-bureaucratic material benefits. In such a political setting, political elites are not only
accessible but they seek power amid weak institutions, intense political competition, and
scarce economic opportunities. They therefore depend on building personal patronage
systems to seek and maintain power. Yet because material rewards are scare and political
opportunities more plentiful, patronage politics is fragmented. Elites build personal
followings, rather than broad-based parties, and find them hard to control due to a chronic
shortage of material rewards yet availability of political alternatives for followers. Such
patronage politics may also involve more sinister groups that resort to intimidation and
violence.
These characteristics have indeed afflicted India’s political system. Efforts by politicians to
create broad organizational support have often failed because “the ordinary voter has an
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extremely narrow view of public responsibility and is not willing to give time and effort
without the promise of immediate material reward.”
The strength of the state is a strong determinant of corruption because the relative
autonomy of political elites is critical for shaping the corruption scenario in a political
setting. Corruption takes many forms, and the dominant patterns in modern political and
economic systems take the form of illicit exchange between state power and societal
interests. If democracy or the lack thereof is characterized by different relationships
between the state and society (aside from institutional differences), then these different
relationships should have an important impact on the types of corruption resulted.
In short, a weak state (elite accessibility), combined with political opportunities and
economic scarcities, produce in India decentralized structures in the corruption process,
encouraging independent monopoly or fragmented rent seeking and a greater dissipation of
rents. A stronger state (elite autonomy); along with economic opportunities and political
scarcities, are produces in other country more centralized corruption with a lesser degree of
rent seeking.
Conclusion
Democracy in a poor, developing country has not been more successful at tackling
corruption than an authoritarian developmental state. The reasons are a combination of the
sources of corruption that characteristically affect democracies on one hand and those that
typically afflict developing countries on the other. Though the socialist legacy and economic
liberalization are compounding factors in the Indian scenario.
14. Effects On politics, administration, and

institutions
Corruption poses a serious development challenge. In the political realm, it undermines

democracy and good governance by flouting or even subverting formal processes.
Corruption in elections and in legislative bodies reduces accountability and distorts
representation in policymaking; corruption in the judiciary compromises the rule of law; and
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corruption in public administration results in the inefficient provision of services. It violates

a basic principle of republicanism regarding the centrality of civic virtue. More generally,
corruption erodes the institutional capacity of government as procedures are disregarded,
resources are siphoned off, and public offices are bought and sold. At the same time,
corruption undermines the legitimacy of government and such democratic values as trust
and tolerance.
Economic effects
Corruption undermines economic development by generating considerable distortions and

inefficiency. In the private sector, corruption increases the cost of business through the
price of illicit payments themselves, the management cost of negotiating with officials, and
the risk of breached agreements or detection. Although some claim corruption reduces
costs by cutting bureaucracy, the availability of bribes can also induce officials to contrive
new rules and delays. Openly removing costly and lengthy regulations are better than
covertly allowing them to be bypassed by using bribes. Where corruption inflates the cost of
business, it also distorts the playing field, shielding firms with connections from competition
and thereby sustaining inefficient firms.
Corruption also generates economic distortions in the public sector by diverting public
investment into capital projects where bribes and kickbacks are more plentiful. Officials may
increase the technical complexity of public sector projects to conceal or pave the way for
such dealings, thus further distorting investment. Corruption also lowers compliance with
construction, environmental, or other regulations, reduces the quality of government
services and infrastructure, and increases budgetary pressures on government.
Economists argue that one of the factors behind the differing economic development in
Africa and Asia is that in the former, corruption has primarily taken the form of rent
extraction with the resulting financial capital moved overseas rather than invested at home
(hence the stereotypical, but often accurate, image of African dictators having Swiss bank
accounts). In Nigeria, for example, more than $400 billion was stolen from the treasury by
Nigeria's leaders between 1960 and 1999. University of Massachusetts researchers
estimated that from 1970 to 1996, capital flight from 30 sub-Saharan countries totaled
$187bn, exceeding those nations' external debts. (The results, expressed in retarded or
suppressed development, have been modeled in theory by economist Mancur Olson.) In the
case of Africa, one of the factors for this behavior was political instability, and the fact that
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new governments often confiscated previous government's corruptly-obtained assets. This

encouraged officials to stash their wealth abroad, out of reach of any future expropriation.
In contrast, Asian administrations such as Suharto's New Order often took a cut on business
transactions or provided conditions for development, through infrastructure investment,
law and order, etc.
Environmental and social effects
Corruption facilitates environmental destruction. Corrupt countries may formally have

legislation to protect the environment; it cannot be enforced if officials can easily be bribed.
The same applies to social rights worker protection, unionization prevention, and child
labor. Violation of these laws rights enables corrupt countries to gain illegitimate economic
advantage in the international market.
The Nobel Prize-winning economist Amartya Sen has observed that "there is no such thing
as an apolitical food problem." While drought and other naturally occurring events may
trigger famine conditions, it is government action or inaction that determines its severity,
and often even whether or not a famine will occur. Governments with strong tendencies
towards kleptocracy can undermine food security even when harvests are good. Officials
often steal state property. In Bihar, India, more than 80% of the subsidized food aid to poor
is stolen by corrupt officials. Similarly, food aid is often robbed at gunpoint by governments,
criminals, and warlords alike, and sold for a profit. The 20th century is full of many examples
of governments undermining the food security of their own nations – sometimes
intentionally.
Other areas: health, public safety, education, trade unions, etc.
Corruption is not specific to poor, developing, or transition countries. In western countries,

there have been cases of bribery and other forms of corruption in all possible fields: under-
the-table payments made to reputed surgeons by patients willing to be on top of the list of
forthcoming surgeries, bribes paid by suppliers to the automotive industry in order to sell
poor quality connectors used for instance in safety equipment such as airbags, bribes paid
by suppliers to manufacturers of defibrillators (to sell poor quality capacitors), contributions
paid by wealthy parents to the "social and culture fund" of a prestigious university in
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exchange for it to accept their children, bribes paid to obtain diplomas, financial and other
advantages granted to unionists by members of the executive board of a car manufacturer
in exchange for employer-friendly positions and votes, etc. Examples are endless. These
various manifestations of corruption can ultimately present a danger for the public health;
they can discredit certain essential institutions or social relationships.
Corruption can also affect the various components of sports activities (referees, players,
medical and laboratory staff involved in anti-doping controls, members of national sport
federation and international committees deciding about the allocation of contracts and
competition places).
There have also been cases against (members of) various types of non-profit and non-
government organisations, as well as religious organisations.
Ultimately, the distinction between public and private sector corruption sometimes appears
rather artificial and national anti-corruption initiatives may need to avoid legal and other
loopholes in the coverage of the instruments.
D. CAUSES
15. HAWALA
Hawala (also known as hundi) is an informal value transfer system based on the
performance and honour of a huge network of money brokers, which are primarily located
in the Middle East, North Africa, the Horn of Africa, and South Asia.
Origins
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Hawala has its origins in classical Islamic law and is mentioned in texts of Islamic
jurisprudence as early as the 8th century. Hawala itself later influenced the development of
the agency in common law and in civil laws such as the aval in French law and the avallo in
Italian law. The words aval and avallo were themselves derived from Hawala. The transfer
of debt, which was "not permissible under Roman law but became widely practiced in
medieval Europe, especially in commercial transactions", was due to the large extent of the
"trade conducted by the Italian cities with the Muslim world in the Middle Ages." The
agency was also "an institution unknown to Roman law" as no "individual could conclude a
binding contract on behalf of another as his agent." In Roman law, the "contractor himself
was considered the party to the contract and it took a second contract between the person
who acted on behalf of a principal and the latter in order to transfer the rights and the
obligations deriving from the contract to him." On the other hand, Islamic law and the later
common law "had no difficulty in accepting agency as one of its institutions in the field of
contracts and of obligations in general."
Hawala is believed to have arisen in the financing of long-distance trade around the
emerging capital trade centres in the early medieval period. In South Asia, it appears to have
developed into a fully-fledged money market instrument, which was only gradually replaced
by the instruments of the formal banking system in the first half of the 20th century. Today,
Hawala is probably used mostly for migrant workers' remittances to their countries of origin.
How Hawala works
In the most basic variant of the Hawala system, money is transferred via a network of
Hawala brokers, or Hawaladars. A customer approaches a Hawala broker in one city and
gives a sum of money to be transferred to a recipient in another, usually foreign, city. The
Hawala broker calls another Hawala broker in the recipient's city, gives disposition
instructions of the funds (usually minus a small commission), and promises to settle the
debt at a later date.
The unique feature of the system is that no promissory instruments are exchanged between
the Hawala brokers; the transaction takes place entirely on the honor system. As the system
does not depend on the legal enforceability of claims, it can operate even in the absence of
a legal and juridical environment. Informal records are produced of individual transactions,
and a running tally of the amount owed by one broker to another is kept. Settlements of
debts between Hawala brokers can take a variety of forms, and need not take the form of
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direct cash transactions. In addition to commissions, Hawala brokers often earn their profits
through bypassing official exchange rates. Generally, the funds enter the system in the
source country's currency and leave the system in the recipient country's currency. As
settlements often take place without any foreign exchange transactions, they can be made
at other than official exchange rates.
Hawala is attractive to customers because it provides a fast and convenient transfer of

funds, usually with a far lower commission than that charged by banks. Its advantages are
most pronounced when the receiving country applies distortive exchange rate regulations
(as has been the case for many typical receiving countries such as Pakistan or Egypt) or
when the banking system in the receiving country is less complex (e.g. due to differences in
legal environment in places such as Afghanistan, Yemen, Somalia). Moreover, in some parts
of the world it is the only option for legitimate funds transfers, and has even been used by
aid organizations in areas where it is the best-functioning institution.
Furthermore, the transfers are usually informal and not effectively regulated by
governments, which are a major advantage to customers with tax, currency control,
immigration, or other concerns. In some countries however, Hawala are actually regulated
by local governments and Hawaladars are licensed to perform their money brokering
services.
Hundis
On a similar note, Hundis referred to legal financial instruments evolved on the Indian sub-
continent. These were used in trade and credit transactions; they were used as remittance
instruments for the purpose of transfer of funds from one place to another. In the era of
bygone kings and the British Raj these Hundis served as Travellers Cheques. They were also
used as credit instruments for borrowing and as bills of exchange for trade transactions.
Technically, a Hundi is an unconditional order in writing made by a person directing another
to pay a certain sum of money to a person named in the order. Being a part of an informal
system, Hundis now have no legal status and were not covered under the Negotiable
Instruments Act, 1881. They were mostly used as Cheques by indigenous bankers.
Angadia
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The word Angadia means courier (in Hindi) but it is also used for people who act as
Hawaladars within the country (India). These people mostly act as a parallel banking system
for businessmen. They charge a commission of around 0.2-0.5% per transaction from
transferring money from one city to another.
Hawala after September 11, 2001
Hawala has been made illegal in some U.S. states and other countries as it is seen to be a
form of money laundering and can be used to move wealth anonymously. It continues,
however, to be a legal and effective system in many countries across the globe.
After the September 11 terrorist attacks, the American government suspected that some
Hawala brokers may have helped terrorist organizations to transfer money to fund their
activities. The 9/11 Commission Report has since confirmed that the bulk of the funds used
to finance the assault were not sent through the Hawala system, but rather by inter-bank
wire transfer to a SunTrust Bank in Florida, where two of the conspirators had opened a
personal account. However as a result of intense pressure from the U.S. authorities,
widespread efforts are currently being made to introduce systematic anti-money laundering
initiatives on a global scale, to better curb the activities of the financiers of terrorism and
those engaged in laundering the profits of drug smuggling.
Whether these initiatives will have the desired effect of curbing such activities has yet to be
seen; although a number of Hawala networks have been closed down and a number of
Hawaladars have been successfully prosecuted for money laundering, there is little sign that
these actions have brought the authorities any closer to identifying and arresting a
significant number of terrorists or drug smugglers. Experts emphasize, though, that the
overwhelming majority of those who use these informal networks are doing so for
legitimate purposes.
In November 2001, the Bush administration froze the assets of AL-Barakat a Somali
remittance Hawala company used primarily by the large Somali diaspora. Many of its agents
in several countries were initially arrested, though later freed after no concrete evidence
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against them was found. In August 2006 the last Al-Barakat representatives were taken off
the U.S. terror list, though some assets remain frozen. In October 2009, the Swedish branch
of Al-Barakat was removed from the United Nations' list of terrorist organizations; the
company had been on the list for the past eight years, and had had its bank account funds
frozen. According to the Swedish Public Radio broadcaster SR, the UN did not explain why it
had elected to remove Al-Barakat from its terror list. However, it has been suggested that
the recent change in the European Union's position regarding the many organizations "that
have been too easily included in the UN terror list" might have influenced the UN's position.
Al-Barakat is now able again to access its bank account funds.
Media has been speculating that Somali pirates use the Hawala system to move funds
internationally, for example into neighbouring Kenya, where corruption is high and these
transactions are neither taxed nor recorded.
The 2010 court case United States v. Banki dealt with the question of whether Hawala
transactions violated the current U.S. sanctions against trade with Iran. In January 2010, the
Kabul office of New Ansari Exchange, Afghanistan's largest Hawala money transfer business,
was shuttered following a raid by the Sensitive Investigative Unit, the country's national
anti-graft task force vetted and trained by the US Drug Enforcement Administration (DEA),
allegedly because this company could be involved in laundering profits from the illicit opium
trade and moving the cash earned by Taliban through extortion and drug trafficking.
Thousands of records were seized to dig into the movement of billions of dollars in and out
of Afghanistan. There were links between the money transfers by this company and political
and business figures in the country, including relatives of President Hamid Karzai. In August
2010, Karzai took control of the taskforce that staged the raid, and another US-advised anti-
corruption group, the Major Crimes Task Force. He ordered a commission to review scores
of past and current anti-corruption inquests. Senior US military and civilian officials viewed
Karzai's move as an effort to protect those close to him and, in the process, to quash the
investigation into New Ansari.
The Hawala system is in Afghanistan also instrumental in providing financial services for the
delivery of emergency relief and humanitarian and developmental aid for the majority of
international and domestic NGOs, donor organizations, and development aid agencies. On
September 1, 2010, the Financial Crimes Enforcement Network issued an advisory on
"Informal Value Transfer Systems".
Hawala scandal in India
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The Hawala scandal or Hawala scam was an Indian political scandal involving payments
allegedly received by politicians through Hawala brokers, the Jain brothers. It was a US$18
million bribery scandal that implicated some of the country's leading politicians. Many were
acquitted in 1997 and 1998, partly because the Hawala records (including diaries) were
judged in court to be inadequate as the main evidence.
16. Money Laundering
Money laundering is the practice of disguising the origins of illegally-obtained money.

Ultimately, it is the process by which the proceeds of crime are made to appear legitimate.
The money involved can be generated by any number of criminal acts, including drug
dealing, corruption, accounting and other types of fraud, and tax evasion. The methods by
which money may be laundered are varied and can range in sophistication from simple to
complex. Many regulatory and governmental authorities quote estimates each year for the
amount of money laundered, either worldwide or within their national economy. In 1996
the International Monetary Fund estimated that two to five per cent of the worldwide
global economy involved laundered money. However, the FATF, an intergovernmental body
set up to combat money laundering, admitted that "overall it is absolutely impossible to
produce a reliable estimate of the amount of money laundered and therefore the FATF does
not publish any figures in this regard." Academic commentators have likewise been unable
to estimate the volume of money with any degree of assurance.
Regardless of the difficulty in measurement, the amount of money laundered each year is in
the billions and poses a significant policy concern for governments. As a result, governments
and international bodies have undertaken efforts to deter prevent and apprehend money
launderers. Financial institutions have likewise undertaken efforts to prevent and detect
transactions involving dirty money, both as a result of government requirements and to
avoid the reputational risk involved.
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Often linked in legislation and regulation, terrorist financing and money laundering are
conceptual opposites. Money laundering is the process where cash raised from criminal
activities is made to look legitimate for re-integration into the financial system, whereas
terrorist financing cares little about the source of the funds, but it is what the funds are to
be used for that defines its scope.
An in-depth study of the symbiotic relationship between organized crime and terrorist
organizations detected within the United States of America and other areas of the world
referred to as crime-terror nexus points has been published in the forensic literature. The
Perri, Lichtenwald and Mackenzie article emphasizes the importance of multi-agency
working groups and the tools that can be used to identify, infiltrate, and dismantle
organizations operating along the crime-terror nexus points.
Terrorists use low value but high volume fraud activity to fund their operations. Paramilitary
groups in Northern Ireland are using legitimate businesses such as hotels, pubs and taxi
operators to launder money and fund political activities. Even beyond Ireland, terrorists are
buying out/controlling front-end businesses especially cash-intensive businesses including in
some cases money services businesses to move monies. Bulk cash smuggling and
placement through cash-intensive businesses is one typology. They are now also moving
monies through the new online payment systems. They also use trade linked schemes to
launder monies. Nonetheless, the older systems have not given way. Terrorists also
continue to move monies through MSBs/Hawala, and through international ATM
transactions. Charities also continue to be used in countries where controls are not so
stringent.
Suspicious activity
Operation Green Quest was the US multi-agency task force set up in October 2001 to
combat terrorist financing and had developed a checklist of suspicious activities. The
following patterns of activity indicate collection and movement of funds that could be
associated with terrorist financing:
A. Account transactions that are inconsistent with past deposits or withdrawals such as
cash, Cheques, wire transfers, etc.
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B. Transactions involving a high volume of incoming or outgoing wire transfers, with no

logical or apparent purpose that come from, go to, or transit through locations of
concern that is sanctioned countries, non-cooperative nations and sympathizer nations.
C. Unexplainable clearing or negotiation of third party Cheques and their deposits in foreign
bank accounts.
D. Structuring at multiple branches or the same branch with multiple activities.
Corporate layering, transfers between bank accounts of related entities or charities for no
apparent reasons.
1) Wire transfers by charitable organisations to companies located in countries known to

be bank or tax havens.
2) Lack of apparent fund raising activity, for example a lack of small Cheques or typical
donations associated with charitable bank deposits.
3) Using multiple accounts to collect funds that are then transferred to the same foreign
beneficiaries
4) Transactions with no logical economic purpose, that is, no link between the activity of
the organization and other parties involved in the transaction.
5) Overlapping corporate officers, bank signatories, or other identifiable similarities
associated with addresses, references and financial activities.
6) Cash debiting schemes in which deposits in the US correlate directly with ATM
withdrawals in countries of concern. Reverse transactions of this nature are also
suspicious.
7) Issuing Cheques, money orders or other financial instruments, often numbered
sequentially, to the same person or business, or to a person or business whose name is
spelled similarly.
It would be difficult to determine by the activity alone whether the particular act was
related to terrorism or to organized crime. For this reason, these activities must be
examined in context with other factors in order to determine a terrorist financing
connection. Simple transactions can be found to be suspect and money laundering derived
from terrorism will typically involve instances in which simple operations had been
performed (retail foreign exchange operations, international transfer of funds) revealing
links with other countries including FATF blacklisted countries. Some of the customers may
have police records, particularly for trafficking in narcotics and weapons and may be linked
with foreign terrorist groups. The funds may have moved through a state sponsor of
terrorism or a country where there is a terrorism problem. A link with a Politically Exposed
Person (PEP) may ultimately link up to a terrorist financing transaction. A charity may be a
link in the transaction. Accounts (especially student) that only receive periodic deposits
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withdrawn via ATM over two months and are dormant at other periods could indicate that
they are becoming active to prepare for an attack.
The Operation Green Quest raids led to the convictions of two people, including
Abdurrahman Alamoudi, who worked for the SAAR Foundation. Alamoudi admitted that he
plotted with Libya to assassinate the Saudi ruler and was sentenced to 23 years in jail.
Bank processes
In addition to normal AML controls, banks must focus on the CFT angle with renewed vigor
and knowledge derived from the extensive databank of case studies now available. Banks
must focus on not just name matching with sanctions databases but also with other know
your customer (KYC) high-risk databases of good third party vendors. They must use
technologies like link analysis to establish second and third level links that identify
transactions as potentially suspicious from a CFT perspective. Focus on preventing identity
theft is an integral part of any CFT program. Detection rules designed to capture the
suspicious activity list given above, should be evaluated. Controls out of the transaction
monitoring process, for example, account openings by groups of individuals, are also
important to watch for. Any bank that is used for terrorist financing will suffer tremendous
reputational damage and also a real business impact in terms of share price and expensive
fines. To safeguard against this, financial institutions purchase anti-money laundering
software from companies such as Lexis Nexis and C6 along with databases of high risk
individuals and organizations developed by companies such as World Compliance and C6.
India
The Prevention of Money-Laundering Act, 2002 came into effect on 1 July 2005.
Section 12 (1) prescribes the obligations on banks, financial institutions and intermediaries
(a) to maintain records detailing the nature and value of transactions which may be
prescribed, whether such transactions comprise of a single transaction or a series of
transactions integrally connected to each other, and where such series of transactions take
place within a month; (b) to furnish information of transactions referred to in clause (a) to
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the Director within such time as may be prescribed and t records of the identity of all its
clients. Section 12 (2) prescribes that the records referred to in sub-section (1) as mentioned
above, must be maintained for ten years after the transactions finished.
The provisions of the Act are frequently reviewed and various amendments have been
passed from time to time.
The recent activity in money laundering in India is through political parties’ corporate
companies and share market.
The Prevention of Money-Laundering Act, 2002 came into effect on 1 July 2005. Section 12
(1) prescribes the obligations on banks, financial institutions and intermediaries (a) to
maintain records detailing the nature and value of transactions which may be prescribed,
whether such transactions comprise of a single transaction or a series of transactions
integrally connected to each other, and where such series of transactions take place within
a month; (b) to furnish information of transactions referred to in clause (a) to the Director
within such time as may be prescribed and t records of the identity of all its clients. Section
12 (2) prescribes that the records referred to in sub-section (1) as mentioned above, must
be maintained for ten years after the transactions finished. The provisions of the Act are
frequently reviewed and various amendments have been passed from time to time. The
recent activity in money laundering in India is through political parties’ corporate companies
and share market.
17. Slush fund
A slush fund, colloquially, is an auxiliary monetary account or a reserve fund. However, in

the context of corrupt (including but not limited to) political dealings by governments, large
corporations or other bodies and individuals, a slush fund can have particular connotations
of illegality, illegitimacy, or secrecy in regard to the use of this money and the means by
which the funds were acquired.
Political dealings with slush funds tend to create suspicions of quid pro quo (buying political
favors), and can be viewed on the surface as corrupt and subversive of the democratic
process. For example, Richard Nixon's "Checkers speech" of 1952 was a successful effort to
dispel a scandal concerning a rumored slush fund of campaign contributions.
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The term slush fund is used in accounting to describe a general ledger account in which all
manner of transactions can be posted to commingled funds and "loose" monies by debits'
and credits' cancelling each other out.
18. Mauritius route
Mauritius route is a channel to evade paying taxes in India amounting to thousands of crore
of rupees with the help of loopholes in a bilateral agreement on double taxation.
Double Taxation Avoidance Convention
The key to the apparent paradox lies in the provisions of a two-decade-old bilateral
agreement, the Double Taxation Avoidance Convention (DTAC). Foreign entities have set up
paper companies in Mauritius, claiming to be Mauritian residents. These companies,
masquerading as Mauritian companies, have invested in India and taking advantage of the
DTAC they save paying taxes in India.
19. Rent-seeking
In economics, rent-seeking is an attempt to derive economic rent by manipulating the social

or political environment in which economic activities occur, rather than by adding value. An
example of rent-seeking is the limitation of access to skilled occupations imposed by
medieval guilds.
Many current studies of rent-seeking focus on efforts to capture various monopoly

privileges stemming from government regulation of free enterprise competition. The term
itself derives, however, from the far older practice of appropriating a portion of production
by gaining ownership or control of land.
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Description of concept
Rent-seeking generally implies the extraction of uncompensated value from others without
making any contribution to productivity, such as by gaining control of land and other pre-
existing natural resources, or by imposing burdensome regulations or other government
decisions that may affect consumers or businesses. Rent-seeking agents will spend money in
socially unproductive ways, such as political lobbying, in order to attain, maintain or
increase monopoly power.
In modern industrialized countries, economic benefits derived by most people involve some
form of rent-seeking, but in the aggregate such behaviors may result in substantial social
losses.
Studies of rent-seeking are focus on efforts to capture special monopoly privileges such as
government regulation of free enterprise competition.
The term "monopoly privilege rent-seeking" is an often-used label for the former type of
rent-seeking. Often-cited examples include a farm lobby that seeks tariff protection or an
entertainment lobby that seeks expansion of the scope of copyright. Other rent-seeking is
held to be associated with efforts to cause a redistribution of wealth --- by shifting the
government tax burden or government spending allocation, for instance.
Development of theory
The phenomenon of rent-seeking in connection with monopolies was first formally

identified in 1967 by Gordon Tullock. The expression rent-seeking was coined in 1974 by
Anne Krueger. The word "rent" does not refer here to payment on a lease but stems instead
from Adam Smith's division of incomes into profit, wage, and rent. Rent-seeking behavior is
distinguished in theory from profit-seeking behavior, in which entities seek to extract value
by engaging in mutually beneficial transactions.
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Critics of the concept point out that in practice, there may be difficulties distinguishing
between beneficial profit-seeking and detrimental rent-seeking. Often a further distinction
is drawn between rents obtained legally through political power and the proceeds of private
common-law crimes such as fraud, embezzlement and theft. This viewpoint sees "profit" as
obtained consensually, through a mutually agreeable transaction between two entities
(buyer and seller), and the proceeds of common-law crime non-consensually, by force or
fraud inflicted on one party by another.
Rent, by contrast with these two, is obtained when a third party deprives one party of
access to otherwise accessible transaction opportunities, making nominally "consensual"
transactions a rent-collection opportunity for the third party.
The abnormal profits of the illegal drug trade are considered rents by this definition, as they
are neither legal profits nor the proceeds of common-law crimes. Taxi medallions are
another commonly referenced example of rent-seeking. To the extent that the issuing of
medallions constrains overall supply of taxi services (rather than ensuring competence or
quality), forbidding competition by non-medallion taxis makes the otherwise consensual
transaction of taxi service a forced transfer of wealth from the passenger to the medallion
holder.
Rent-seeking is held to occur often in the form of lobbying for economic regulations such as
tariffs. Regulatory capture is a related concept which refers to collusion between firms and
the government agencies assigned to regulate them, which is seen as enabling extensive
rent-seeking behavior, especially when the government agency must rely on the firms for
knowledge about the market.
The concept of rent-seeking has been applied to corruption by bureaucrats who solicit and
extract ‘bribe’ or ‘rent’ for applying their legal but discretionary authority for awarding
legitimate or illegitimate benefits to clients. For example, tax officials may take bribes for
lessening the tax burden of the tax payers. Faizul Latif Chowdhury suggested that ‘bribery’ is
a kind of rent-seeking by the government officials.
Possible consequences
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From a theoretical standpoint, the moral hazard of rent-seeking can be considerable. If

"buying" a favorable regulatory environment is cheaper than building more efficient
production, a firm may choose the former option, reaping incomes entirely unrelated to any
contribution to total wealth or well-being. This results in a sub-optimal allocation of
resources — money spent on lobbyists and counter-lobbyists rather than on research and
development, improved business practices, employee training, or additional capital goods
— which retards economic growth. Claims that a firm is rent-seeking therefore often
accompany allegations of government corruption, or the undue influence of special
interests.
Rent-seeking may be initiated by government agents, such agents soliciting bribes or other
favors from the individuals or firms that stand to gain from having special economic
privileges, which opens up the possibility of exploitation of the consumer. It has been shown
that rent-seeking by bureaucracy can push up the cost of production of public goods. It has
also been shown that rent-seeking by tax officials may cause loss in revenue to the public
exchequer.
Rent-seeking behavior, in terms of land rent, figures in Georgist economic theory, where the
value of land is largely attributed to provision of government services and infrastructure
(e.g., road building, provision of public schools, maintenance of peace and order, etc.) and
the community in general, rather than resulting from any action or contribution by the
landowner.
20. License Raj
License Raj, the Permit Raj, refers to the elaborate licenses, regulations and accompanying
red tape that were required to set up and run businesses in India between 1947 and
1990.The License Raj was a result of India's decision to have a planned economy where all
aspects of the economy are controlled by the state and licenses are given to a select few. Up
to 80 government agencies had to be satisfied before private companies could produce
something and, if granted, the government would regulate production.
Reforms since the mid-1980s have significantly reduced regulation, but Indian labour laws
still prevent manufacturers from reducing their workforce without prohibitive burdens.
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Term
The term plays off "British Raj", the period of British rule in India. It was coined by Indian
statesman Chakravarthi Rajagopalachari, who firmly opposed it for its potential for political
corruption and economic stagnation and founded the Swatantra Party to oppose these
practices.
"I want the corruptions of the Permit/License Raj to go. [...] I want the officials appointed to
administer laws and policies to be free from pressures of the bosses of the ruling party, and
gradually restored back to the standards of fearless honesty which they once maintained.
[...] I want real equal opportunities for all and no private monopolies created by the
Permit/License Raj."
Swarajya Newspaper, C. Rajagopalachari

History
The architect of the system of License Raj was Jawaharlal Nehru, India's first Prime Minister.
Inspired by the economy in the Soviet Union, he implemented a mixed economy in India. A
mixed economy is one in which capitalism is combined with government intervention.
Private players could manufacture goods only with official licenses. The quantity of goods
they were allowed to produce was determined by the license regime, not by free-market
demand. The key characteristic of the License Raj is a Planning Commission that centrally
administers the economy of the country. Like a command economy, India has five-year
plans on the lines of the Five Year Plans in the former Soviet Union.
Before the process of reform began in 1991, the government attempted to close the Indian
economy to the outside world. The Indian currency, the rupee, was inconvertible and high
tariffs and import licensing prevented foreign goods reaching the market. India also
operated a system of central planning for the economy, in which firms required licenses to
invest and develop. The labyrinthine bureaucracy often led to absurd restrictions — up to 80
agencies had to be satisfied before a firm could be granted a license to produce and the
state would decide what was produced, how much, at what price and what sources of
capital were used. The government also prevented firms from lying off workers or closing
factories. The central pillar of the policy was import substitution, the belief that India
needed to rely on internal markets for development, not international trade — a belief
generated by a mixture of socialism and the experience of colonial exploitation. Planning
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and the state, rather than markets, would determine how much investment was needed in
which sectors.
Consequences
India had started out in the 1950s with good era.
 High growth rates

 Openness to trade and investment
 A promotional state
 Social expenditure awareness
 Macro stability
However, by the 1980s, the country was left with bad age.
 Low growth rates

 Closure to trade and investment
 A license-obsessed, restrictive state
 Inability to sustain social expenditures
 Macro instability, indeed crisis
Current status
The License Raj-system was in place for four decades. The government of India initiated a
liberalization policy under the Prime Minister ship of Rajiv Gandhi, though much of the
actual progress was made under P.V.Narasimha Rao. Liberalization resulted in substantial
growth in the Indian economy, which continues today The License Raj is considered to have
been significantly reduced in 1991 when India had only two weeks of dollars left: "In return
for an IMF bailout, Gold bullion was transferred to London as collateral, the Rupee devalued
and economic reforms were forced upon India." The federal government, with DrMan
Mohan Singh as finance minister, reduced licensing regulations; lowered tariffs, duties and
taxes; and opened up to international trade and investment.
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However, manufacturing organizations still encounter a permit process (though not as

extensive as earlier) in procurement of land, importing equipment, etc.
Recently, this liberalization may be altered under a draft bill seeking to regulate
broadcasting media.
E. EFFECTS
21. BLACK MONEY
Black money refers to funds earned on the black market, on which income and other taxes
have not been paid. The total amount of black money deposited in foreign banks by Indians
is unknown, but one estimate by R Vaidyanathan, a Professor of Finance, estimated the total
at over Rs 7,280,000 Crore (USD $1.4 trillion).
In January 2011 the Supreme Court of India asked why the names of those who have
stashed money in the Liechtenstein Bank have not been disclosed. The court argued that the
government should be more forthcoming in releasing all available information on what it
called a "mind-boggling" amount of money that is believed to be held in illegally in foreign
banks.
Black money in Swiss banks
While official numbers are not available, Swiss banking officials have said that the largest
depositors of illegal foreign money in Switzerland are Indian.
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India tops the list for black money in the entire world with almost US$1456 billion in Swiss
banks (approximately USD 1.4 trillion) in the form of black money. According to the data
provided by the Swiss Banking Association Report (2006), India has more black money than
the rest of the world combined. To put things in perspective, Indian-owned Swiss bank
account assets are worth 13 times the country’s national debt.
In August 2010, the government revised the Double Taxation Avoidance Agreement to
provide means for investigations of black money in Swiss banks. This revision, expected to
become active by January 2012, will allow the government to make inquiries of Swiss banks
in cases where they have specific information about possible black money being stored in
Switzerland.
Tax Information Exchange Agreement
To curb black money, India has signed TIEA with 10 countries - Bahamas, Bermuda, the
British Virgin Islands, the Isle of Man, the Cayman Island, and the British island of jersey,
Monaco, St Kitts and Nevis, Argentina and the Marshal Islands - where money is believed to
have been stashed away
Prominent cases
In April 2011, Hassan Ali Khan was arrested on charges of stashing over 36,000 crore in
foreign banks.
22. SCANDALS
Major scandals involving high level public officials have shaken the Indian public service in
recent years, with politicians and public servants regularly caught accepting bribes or
mismanaging public resources. This suggests corruption has become a pervasive aspect of
Indian politics and bureaucracy.
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The following is a list of alleged scams and scandals in India since independence. These
include political, financial, corporate and others.
2011
Hassan Ali Khan scandal
Devas-Antrix deal scandal
Cash-for-votes scandal
Indian Black Money in Swiss Banks
2010
2G spectrum scam and Radia Tapes Controversy
Adarsh Housing Society scam
Commonwealth Games Scam
2010 housing loan scam in India
Belekeri port scam
Lavasa Scandal
Uttar Pradesh Food Grain Scam
Andhra Pradesh Industrial Infrastructure Corporation Controversy
ISRO-Devas S band Scam
Indian Premier League Cricket Scandals
2009
Madhu Koda mining scam
2008
Cash for Votes Scandal
Pune billionaire Hassan Ali Khan tax
The Satyam scam
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2006
Stamp Paper Scam
Kerala Ice Cream Parlor Sex Scandal
Scorpion Deal Scam
Navy War Room spy scandal (related to Scorpion Deal Scam)
2005
Oil-for-food programme scam
2004
Gegong Apang PDS Scam
2003
Taj corridor scandal
2002
Kargil Coffin Scam
2001
Ketan Parekh securities scam
Barak Missile Scandal
Calcutta Stock Exchange Scam
1997
Sukh Ram telecom scam
SNC Lavalin scandal
Hawala Scandal
1996
Bihar fodder scam
Sukh Ram Telecom Equipment Scandal
C R Bhansali Scam
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1995
SNC Lavalin scandal
Purulia arms drop case
Telgi scam
1992
Harshad Mehta securities scam
Palmolein Oil Import Scam
1989
Bofors Scandal
1982
Cement Scam
1971
Nagarwala Scandal
1957
Haridas Mundhra scandal
1948
Jeep Scandal
The Top Scams in India
1) 2G Spectrum Scam
We have had a number of scams in India; but none bigger than the scam involving the
process of allocating unified access service licenses. At the heart of this Rs.1.76-lakh crore
worth of scam is the former Telecom minister A Raja – who according to the CAG, has
evaded norms at every level as he carried out the dubious 2G license awards in 2008 at a
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throw-away price which were pegged at 2001 prices. The 2G spectrum scam in India
involved the issue of 122 licenses by the ruling Congress-led UPA alliance of the 2G
spectrum to 85 companies including many new telecom companies with little or no
experience in the telecom sector.
The scam involved allegations regarding...
1) The under-pricing of the 2G spectrum by the Department of Telecommunications which

resulted in a heavy loss to the exchequer.
2) The illegal manipulation of the spectrum allocation process to favour select companies.
The scam came to public notice when the Supreme Court of India took Subramaniam
Swamy's complaints on record.
2) Commonwealth Games Scam

Another feather in the cap of Indian scandal list is Commonwealth Games loot. Yes, literally
a loot! Even before the long awaited sporting bonanza could see the day of light, the grand
event was soaked in the allegations of corruption. It is estimated that out of Rs. 70000 crore
spent on the Games, only half the said amount was spent on Indian sportspersons. The
Central Vigilance Commission, involved in probing the alleged corruption in various
Commonwealth Games-related projects, has found discrepancies in tenders – like payment
to non-existent parties, will-full delays in execution of contracts, over-inflated price and
bungling in purchase of equipment through tendering – and misappropriation of funds.
3) Telgi Scam
As they say, every scam must have something unique in it to make money out of it in an
unscrupulous manner- and Telgi scam had all the suspense and drama that the scandal
needed to thrive and be busted. Abdul Karim Telgi had mastered the art of forgery in
printing duplicate stamp papers and sold them to banks and other institutions. The tentacles
of the fake stamp and stamp paper case had penetrated 12 states and was estimated at a
whooping Rs. 20000 crore plus. The Telgi clearly had a lot of support from government
departments that were responsible for the production and sale of high security stamps.
4) Satyam Scam
The scam at Satyam Computer Services is something that will shatter the peace and
tranquillity of Indian investors and shareholder community beyond repair. Satyam is the
biggest fraud in the corporate history to the tune of Rs. 14000 crore. The company’s
disgraced former chairman Ramalinga Raju kept everyone in the dark for a decade by
fudging the books of accounts for several years and inflating revenues and profit figures of
Satyam. Finally, the company was taken over by the Tech Mahindra which has done
wonderfully well to revive the brand Satyam.
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5) Bofors Scam
The Bofors scandal is known as the hallmark of Indian corruption. The Bofors scam was a
major corruption scandal in India in the 1980s; when the then PM Rajiv Gandhi and several
others including a powerful NRI family named the Hindujas, were accused of receiving
kickbacks from Bofors AB for winning a bid to supply India’s 155 mm field howitzer. Most of
all, the Bofors scam had a strong emotional appeal because it was a scam related to the
defence services and India’s security interests.
6) The Fodder Scam

If you haven’t heard of Bihar’s fodder scam of 1996, you might still be able to recognize it by
the name of “Chara Ghotala,” as it is popularly known in the vernacular language. In this
corruption scandal worth Rs.900 crore, an unholy nexus was traced involved in fabrication
of “vast herds of fictitious livestock” for which fodder, medicine and animal husbandry
equipment was supposedly procured.
7) The Hawala Scandal

The Hawala case to the tune of $18 million bribery scandal, which came in the open in 1996,
involved payments allegedly received by country’s leading politicians through Hawala
brokers. From the list of those accused also included was then the Leader of Opposition.
Thus, for the first time in Indian politics, it gave a feeling of open loot all around the public,
involving all the major political players being accused of having accepted bribes and also
alleged connections about payments being channelled to Hizbul Mujahedeen militants in
Kashmir.
8) IPL Scam
Well, I am running out of time and space over here. The list of scandals in India is just not
ending and becoming grave by every decade. Most of us are aware about the recent scam in
IPL and embezzlement with respect to bidding for various franchisees. The scandal already
claimed the portfolios of two big-wigs in the form of Shashi Tharoor and former IPL chief
Lalit Modi.
9, 10) Harshad Mehta & Ketan Parekh Stock Market Scam

Although not corruption scams, these have affected many people. There is no way that the
investor community could forget the unfortunate Rs. 4000 crore Harshad Mehta scam and
over Rs. 1000 crore Ketan Parekh scam which eroded the shareholders wealth in form of big
market jolt.
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23. Slow Progress
According to a report by KPMG, "high-level corruption and scams are now threatening to
derail the country's credibility and [its] economic boom".
Will Growth Slow Corruption In India?
Now that India is playing an ever larger role in the world economy, the issue of corruption,
in both the private and public sectors, is coming into sharper focus. Two scenarios are
possible:
As India's multinational corporations develop both economic and political muscle; they may
act as a broom, sweeping corruption from the economic sphere.
On the other hand, entrenched practices may prove the stronger force, and corruption
could end up being a significant brake on India's economic rise.
Widespread corruption in India costs billions of dollars and threatens to derail the country’s
growth, a survey says. The report by consultancy firm KMPG said that the problem had
become so endemic that foreign investors were being deterred from the country, BBC News
informs.
Over (2010) the last six months India has been hit by a series of corruption scandals
including a Multi-billion dollar telecoms scandal, alleged financial malpractices in connection
with the Commonwealth Games and allegations that houses for war widows were diverted
to civil Servants.
The License Raj and the Spoils System
One strand in the knot of corruption is the legacy of the License Raj, which ended in the
early 1990s. The system created bureaucracies that were all but self-perpetuating. In a
context where government workers were routinely underpaid, graft became an industry all
its own. Civil servants were, and remain, anything but disinterested administrators.
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Wharton management professor Jitendra Singh and Ravi Ramamurti, professor of

international business at North-eastern University, have been studying the emergence of
multinational corporations in emerging economies such as India. In late June, they organized
a conference on this topic in Boston; the conference's papers will form the core of an edited
volume which is planned for publication in 2008.
"In the bad old days," Singh said in an interview, "particularly pre-1991, when the License
Raj held sway, and by design, all kinds of free market mechanisms were hobbled or stymied,
and corruption emerged almost as an illegitimate price mechanism, a shadowy quasi-
market, such that scarce resources could still be allocated within the economy, and
decisions could get made.
"Of course, this does not in any way condone the occurrence of such corruption. The
shameful part of all this was that while value was captured by some people at the expense
of others, it did not go to those who created the value, as it should in a fair and equitable
system."
The real failing, he said, "was a distortion of incentives within the economy, such that
people began expending efforts toward fundamentally unproductive behaviours because
they saw that such behaviours could lead to short-term gains. Thus, cultivating those in
positions of power who could bestow favours became more important than coming up with
an innovative product design. The latter was not as important, anyway, because most
markets were closed to foreign competition--automobiles, for example--and if you had a
product, no matter how uncompetitive compared to global peers', it would sell.
"These were largely distortions created by the politico-economic regime. While a sea change
has occurred in the years following 1991, some of the distorted cultural norms that took
hold during the earlier period are slowly being repaired by the sheer forces of competition.
The process will be long and slow, however. It will not change overnight."
India's advancement producing valuable goods is of limited utility if they cannot be

transported in a timely fashion, for example. Transparency International estimates that
Indian truckers pay something in the neighbourhood of $5 billion annually in bribes to keep
freight flowing. "Corruption is a large tax on Indian growth," Ramamurti said in an interview
after the conference. "It delays execution, raises costs and destroys the moral fibre."
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Corruption also cripples the effort to ameliorate poverty in India and to improve the
country's stock of "human capital." The rate at which this happens varies tremendously
from region to region. Edward Luce, for example, author of In Spite of the Gods: The Strange
Rise of Modern India notes that "Rates of theft vary widely from state to state in India, with
the better states, such as Kerala and Tamil Nadu, getting more than 80% of subsidized
government food to their poor. Meanwhile, in the northern state of Bihar, India's second
poorest with a population of 75 million, more than 80% of the food is stolen."
Indian MNC's as Change Agents
"A few Indian companies," Ramamurti said, "such as the Tata group or Wipro, have taken
the high road, but most firms find it impossible to get anything done without greasing
palms." Wipro, headed by Azim Premji, is India's third-biggest global tech services provider
(behind Tata Consultancy Services (other-etc.: TACSF - new - people) and Infosys).
In Bangalore Tiger: How Indian Tech Upstart Wipro Is Rewriting the Rules of Global
Competition, business journalist Steve Hamm writes that "Wipro is not just a company, it's a
quest." That quest, according to some observers, is as much about moral rectitude as it is
about business success. For example, according to Hamm, the company pays no bribes and
has a zero tolerance policy for corruption.
"The paradox," Ramamurti said, "is that even though India's faster growth in recent years is
the result of fewer government controls, most Indian managers would tell you that
corruption has increased, not decreased, in tandem.
"How could this be? The explanation is that faster growth has created new choke points at
which politicians and bureaucrats can extract payments, such as land regulation, spectrum
allocation or college admissions--all of which have become much more valuable in this
century. Faster growth has also raised the economic cost to firms of delays in public
approvals, giving officials that much more 'hold-up' leverage over private investors."
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24. Poverty
Poverty is widespread in India, with the nation estimated to have a third of the world's poor.
According to a 2005 World Bank estimate, 41.6% of the total Indian population falls below
the international poverty line of US$ 1.25 a day (PPP, in nominal terms Rs 21.6 a day in
urban areas and Rs 14.3 in rural areas).
Poverty estimates
There has been no uniform measure of poverty in India. The Planning Commission of India has
accepted the Tendulkar Committee report which says that 37% of people in India live below the
poverty line.
The Arjun Sengupta Report (from National Commission for Enterprises in the Unorganized
Sector) states that 77% of Indians live on less than Rs 20 a day (about $0.50 per day).The
N.C. Saxena Committee report states that 50% of Indians live below the poverty line.
Estimates by NCAER (National Council of Applied Economic Research) show that 48% of the
Indian households earn more than Rs 90,000 (US$1,998) annually (or more than US$ 3 PPP
per person). According to NCAER, in 2009, of the 222 million households in India, the
absolutely poor households (annual incomes below Rs 45,000) accounted for only 15.6% of
them or about 35 million (about 200 million Indians). Another 80 million households are in
income levels of Rs 45,000– 90,000 per year. These numbers also are more or less in line
with the latest World Bank estimates of the “below-the-poverty-line” households that may
total about 100 million (or about 456 million individuals).
The World Bank estimates that 80% of India's population lives on less than $2 a day which
means a higher proportion of its population lives on less than $2 per day as compared with
sub-Saharan Africa.
The World Bank estimates that 80% of India's population lives on less than $2 a day which
means a higher proportion of its population lives on less than $2 per day as compared with
sub-Saharan Africa.
Impact of poverty
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Since the 1950s, the Indian government and non-governmental organizations have initiated
several programs to alleviate poverty, including subsidizing food and other necessities,
increased access to loans, improving agricultural techniques and price supports, and
promoting education and family planning. These measures have helped eliminate famines,
cut absolute poverty levels by more than half, and reduced illiteracy and malnutrition.
Presence of a massive parallel economy in the form of black (hidden) money stashed in
overseas tax havens and underutilization of foreign aid have also contributed to the slow
pace of poverty alleviation in India.
Although the Indian economy has grown steadily over the last two decades, its growth has
been uneven when comparing different social groups, economic groups, geographic regions,
and rural and urban areas. Between 1999 and 2008, the annualized growth rates for Gujarat
(8.8%), Haryana (8.7%), or Delhi (7.4%) were much higher than for Bihar (5.1%), Uttar
Pradesh (4.4%), or Madhya Pradesh (3.5%). Poverty rates in rural Orissa (43%) and rural
Bihar (41%) are among the world's most extreme.
Despite significant economic progress, one quarter of the nation's population earns less
than the government-specified poverty threshold of 12 rupees per day (approximately US$
0.25).
According to a recently released World Bank report, India is on track to meet its poverty
reduction goals. However by 2015, an estimated 53 million people will still live in extreme
poverty and 23.6% of the population will still live under US$1.25 per day. This number is
expected to reduce to 20.3% or 268 million people by 2020.However, at the same time, the
effects of the worldwide recession in 2009 have plunged 100 million more Indians into
poverty than there were in 2004, increasing the effective poverty rate from 27.5% to 37.2%.
As per the 2001 census, 35.5% of Indian households availed of banking services, 35.1%
owned a radio or transistor, 31.6% a television, 9.1% a phone, 43.7% a bicycle, 11.7% a
scooter, motorcycle or a moped, and 2.5% a car, jeep or van; 34.5% of the households had
none of these assets. According to Department of Telecommunications of India the phone
density has reached 33.23% by December 2008 and has an annual growth of 40%.
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These tallies with the fact, that a family of four with an annual income of 1.37 lakh rupees
could afford some of these luxury items.
Causes of poverty in India
Caste system
According to S. M. Michael, Dalit’s constitute the bulk of poor and unemployed. Another
cause is corruption.
According to William A. Havilland, casteism is widespread in rural areas, and continues to

segregate Dalit. Others, however, have noted the steady rise and empowerment of the Dalit
through social reforms and the implementation of reservations in employment and benefits.
Caste explanations of poverty fail to account for the urban/rural divide. Using the Definition
of poverty, 65% of rural forward castes are below the poverty line.
In 1947, the average annual income in India was US$439, compared with US$619 for China,
US$770 for South Korea, and US$936 for Taiwan. By 1999, the numbers were US$1,818;
US$3,259; US$13,317; and US$15,720, respectively. (Numbers are in 1990 international
Maddison dollars) In other words, the average income in India was not much different from
South Korea in 1947, but South Korea became a developed country by 2000s. At the same
time, India was left as one of the world's poorer countries.
License Raj refers to the elaborate licenses, regulations and the accompanying red tape that
were required to set up and run business in India between 1947 and 1990. The License Raj
was a result of India's decision to have a planned economy, where all aspects of the
economy are controlled by the state and licenses were given to a select few. Corruption
flourished under this system.
The labyrinthine bureaucracy often led to absurd restrictions - up to 80 agencies had to be

satisfied before a firm could be granted a license to produce and the state would decide
what was produced, how much, at what price and what sources of capital were used.
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—BBC
India had started out in the 1950s with; high growth rates, openness to trade and
investment, a promotional state, social expenditure awareness and macro stability but
ended the 1980s with: low growth rates, closure to trade and investment, a license-
obsessed, restrictive state (License Raj), inability to sustain social expenditures and macro
instability, indeed crisis.
Poverty has decreased significantly since reforms were started in the 1980s.
Also:
Vote bank and use their votes to resist reallocation of land for higher-income industrial
projects. While services and industry have grown at double digit figures, agriculture growth
rate has dropped from 4.8% to 2% Over-reliance on agriculture. There is a surplus of labour
in agriculture. Farmers are a large about 60% of the population depends on agriculture
whereas the contribution of agriculture to the GDP is about 18%.High population growth
rate, although demographers generally agree that this is a symptom rather than cause of
poverty.
Liberalization policies and their effects
Other points of view hold that the economic reforms initiated in the early 1990s are
responsible for the collapse of rural economies and the agrarian crisis currently underway.
As journalist and the Rural Affairs editor for The Hindu, P Sainath describes in his reports on
the rural economy in India, the level of inequality has risen to extraordinary levels, when at
the same time; hunger in India has reached its highest level in decades. He also points out
that rural economies across India have collapsed, or on the verge of collapse due to the neo-
liberal policies of the government of India since the 1990s. The human cost of the
"liberalization" has been very high. The huge wave of farm suicides in Indian rural
population from 1997 to 2007 totalled close to 200,000, according to official statistics. That
number remains disputed; with some saying the true number is much higher.
Commentators have faulted the policies pursued by the government which, according to
Sainath, resulted in a very high portion of rural households getting into the debt cycle,
resulting in a very high number of farm suicides. As professor Utsa Patnaik, India’s top
economist on agriculture, has pointed out, the average poor family in 2007 has about 100 kg
less food per year than it did in 1997.
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Government policies encouraging farmers to switch to cash crops, in place of traditional

food crops, has resulted in an extraordinary increase in farm input costs, while market
forces determined the price of the cash crop. Sainath points out that a disproportionately
large number of affected farm suicides have occurred with cash crops, because with food
crops such as rice, even if the price falls, there is food left to survive on. He also points out
that inequality has reached one of the highest rates India has ever seen. In a report by
Chetan Ahya, Executive Director at Morgan Stanley, it is pointed out that there has been a
wealth increase of close to US$1 Trillion in the time frame of 2003-2007 in the Indian stock
market, while only 4-7% of the Indian populations hold any equity. During the time when
Public investment in agriculture shrank to 2% of the GDP, the nation suffered the worst
agrarian crisis in decades, the same time as India became the nation of second highest
number of dollar billionaires. Sainath argues that Farm incomes have collapsed. Hunger has
grown very fast. Public investment in agriculture shrank to nothing a long time ago.
Employment has collapsed. Non-farm employment has stagnated. (Only the National Rural
Employment Guarantee Act has brought some limited relief in recent times.) Millions move
towards towns and cities where, too, there are few jobs to be found.
In one estimate, over 85 per cent of rural households are landless, sub-marginal, marginal or
small farmers. Nothing has happened in 15 years that has changed that situation for the
better. Much has happened to make it a lot worse.
Those who have taken their lives were deep in debt – peasant households in debt doubled
in the first decade of the neoliberal “economic reforms,” from 26 per cent of farm
households to 48.6 per cent. Meanwhile, all along, India kept reducing investment in
agriculture (standard neoliberal procedure). Life was being made more and more impossible
for small farmers.
As of 2006, the government spends less than 0.2% of GDP on agriculture and less than 3% of
GDP on education. However, some government schemes such as the mid-day meal scheme
and the NREGA have been partially successful in providing a lifeline for the rural economy
and curbing the further rise of poverty. But now there is no.1 country.
Rich Indians not generous
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There are 115,000 individuals in India with high net-worth. Since 2000, this elite group has
grown an average of 11 per cent annually. Between 2006 and 2007, the number of wealthy
individuals in India surged by 23 per cent, which is the highest growth rate in the world.
However, the wealthiest have the lowest level of giving at 1.6% of their household income
for charitable purposes.
"While the 'high class', which is ranked one level below the 'upper class' on the income and
education scale, donates 2.1% to charity, the middle class gives 1.9% of household income
to philanthropy," says Arpan Seth, partner, Bain & Company.
The percentage of India's GDP that is spent for charitable purposes is only 0.6 where the
percentage is 2.2 in the United States.
Reduction in Poverty
Despite all the causes, India currently adds 40 million people to its middle class every year.
Analysts such as the founder of "Forecasting International", Marvin J. Cetron writes that an
estimated 300 million Indians now belong to the middle class; one-third of them have
emerged from poverty in the last ten years. At the current rate of growth, a majority of
Indians will be middle-class by 2025.
Despite government initiatives, corporate social responsibility (CSR) remains low on the
agenda of corporate sector. Only 10 percent of funding comes from individuals and
corporates, and "a large part of CSR initiatives are artfully masqueraded and make it back to
the balance sheet". The widening income gap between the rich and the poor over the years
has raised fears of a social backlash.
Efforts to alleviate poverty
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Since the early 1950s, govt. has initiated, sustained, and refined various planning schemes
to help the poor attain self-sufficiency in food production. Probably the most important
initiative has been the supply of basic commodities, particularly food at controlled prices,
available throughout the country as poor spend about 80 per cent of their income on food.
The schemes have however not been very successful because the rate of poverty reduction
lags behind the rapid population growth rate.
Outlook for poverty alleviations
Eradication of poverty in India is generally only considered to be a long-term goal. Poverty

alleviation is expected to make better progress in the next 50 years than in the past, as a
trickle-down effect of the growing middle class. Increasing stress on education, reservation
of seats in government jobs and the increasing empowerment of women and the
economically weaker sections of society, are also expected to contribute to the alleviation
of poverty. It is incorrect to say that all poverty reduction programs have failed. The growth
of the middle class (which was virtually non-existent when India became a free nation in
August 1947) indicates that economic prosperity has indeed been very impressive in India,
but the distribution of wealth is not at all even.
After the liberalization process and moving away from the socialist model, India is adding 60
to 70 million people to its middle class every year. Analysts such as the founder of
"Forecasting International", Marvin J. Cetron writes that an estimated 390 million Indians
now belong to the middle class; one-third of them have emerged from poverty in the last
ten years. At the current rate of growth, a majority of Indians will be middle-class by 2025.
Literacy rates have risen from 52 per cent to 65 per cent during the initial decade of
liberalization (1991–2001).
Controversy over extent of poverty reduction
The definition of poverty in India has been called into question by the UN World Food
Programme. In its report on global hunger index, it questioned the government of India's
definition of poverty saying:
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The fact that calorie deprivation is increasing during a period when the proportion of rural
population below the poverty line is said to be declining rapidly, highlights the increasing
disconnect between official poverty estimates and calorie deprivation.
While total overall poverty in India has declined, the extent of poverty reduction is often
debated. While there is a consensus that there has not been increase in poverty between
1993–94 and 2004–05, the picture is not so clear if one considers other non-pecuniary
dimensions (such as health, education, crime and access to infrastructure). With the rapid
economic growth that India is experiencing, it is likely that a significant fraction of the rural
population will continue to migrate toward cities, making the issue of urban poverty more
significant in the long run.
Some, like journalist P Sainath, hold the view that while absolute poverty may not have
increased India remains at an abysmal rank in the UN Human Development Index. India is
positioned at 132ond place in the 2007-08 UN HDI index. It is the lowest rank for the country
in over 10 years. In 1992, India was at 122ond place in the same index. It can even be argued
that the situation has become worse on critical indicators of overall well-being such as the
number of people who are undernourished (India has the highest number of malnourished
people, at 230 million, and is 94th of 119 in the world hunger index), and the number of
malnourished children (43% of India's children under 5 are underweight (BMI<18.5), the
highest in the world) as of 2008.
Economist Pravin Visaria has defended the validity of many of the statistics that
demonstrated the reduction in overall poverty in India, as well as the declaration made by
India's former Finance Minister Yashwant Sinha that poverty in India has reduced
significantly. He insisted that the 1999-2000 survey was well designed and supervised and
felt that just because they did not appear to fit preconceived notions about poverty in India,
they should not be dismissed outright. Nicholas Stern, vice president of the World Bank, has
published defences of the poverty reduction statistics. He argues that increasing
globalization and investment opportunities have contributed significantly to the reduction
of poverty in the country. India, together with China, has shown the clearest trends of
globalization with the accelerated rise in per-capita income.
A 2007 report by the state-run National Commission for Enterprises in the Unorganized
Sector (NCEUS) found that 77% of Indians, or 836 million people, lived on less than 20
rupees per day (USD 0.50 nominal, USD 2.0 in PPP), with most working in "informal labour
sector with no job or social security, living in abject poverty." However, a new report from
the UN disputes this, finding that the number of people living on US$1.25 a day is expected
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to go down from 435 million or 51.3 per cent in 1990 to 295 million or 23.6 per cent by 2015
and 268 million or 20.3 per cent by 2020.
A study by the McKinsey Global Institute found that in 1985, 93% of the Indian population
lived on a household income of less than 90,000 rupees a year, or about a dollar per person
per day; by 2005 that proportion had been cut nearly in half, to 54%. More than 103 million
people have moved out of desperate poverty in the course of one generation in urban and
rural areas as well. They project that if India can achieve 7.3% annual growth over the next
20 years, 465 million more people will be lifted out of poverty. Contrary to popular
perceptions, rural India has benefited from this growth: extreme rural poverty has declined
from 94% in 1985 to 61% in 2005, and they project that it will drop to 26% by 2025. Report
concludes that India's economic reforms and the increased growth that has resulted have
been the most successful anti-poverty programs in the country.
Persistence of malnutrition among children
According to the New York Times, is estimated that about 42.5% of the children in India
suffer from malnutrition. The World Bank, citing estimates made by the World Health
Organization, states that "About 49 per cent of the world's underweight children, 34 per
cent of the world's stunted children and 46 per cent of the world's wasted children, live in
India." The World Bank also noted that "while poverty is often the underlying cause of
malnutrition in children, the superior economic growth experienced by South Asian
countries compared to those in Sub-Saharan Africa, has not translated into superior
nutritional status for the South Asian child."
A special commission to the Indian Supreme court has noted that the child malnutrition rate
in India is twice as great as sub-Saharan Africa.
F. CRIMES
25. Mafia Raj
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Mafia Raj refers to an economic and political situation where public goods, property and
funds are controlled and systematically embezzled by a criminalized nexus (or "mafia") of
government officials, elected politicians, business interests and other entities (such as law-
enforcement authorities, non-governmental organizations, trade unions or criminal
organizations).The phenomenon of Mafia Raj is highly prevalent in Pakistan and Bangladesh
as well, countries which share a similar culture to that of India.
The term is used primarily in India, and can refer to cities, states, government departments,
public sector businesses or entire sectors of the economy that are subject to these
conditions. Due to the ability of these mafias to operate their illegal activities in a sustained
fashion, sometimes openly and with the use of violent intimidation, terms like Goonda Raj
(rule of the Dons’), Jungle Raj (law of the jungle) and Anarchy are used to refer to the same
phenomenon.
In the Indian and Pakistani media, the mafias are usually mentioned by the name of the
economic sector in which they are involved. Terms such as coal mafia, timber mafia
(sometimes, forest mafia), contractor mafia (sometimes, road construction mafia or road
contract mafia) and land mafia are commonly used.
Coal Mafia
An Indian coal mine, The Dhanbad mine complex is allegedly dominated by a coal mafia.
The state-owned coal mines of Jharkhand were among the first areas in India to see the
emergence of a sophisticated mafia, beginning with the mining town of Dhanbad. It is
alleged that the coal industry's trade union leadership forms the upper echelon of this
particular arrangement, and employs caste allegiances to maintain its power. Pilferage and
sale of coal on the black market, inflated or fictitious supply expenses, falsified worker
contracts and the expropriation and leasing-out of government land have allegedly become
routine. A parallel economy has also developed with a significant fraction of the local
population employed by the mafia in manually transporting the stolen coal for long
distances over unpaved roads to illegal mafia warehouses and points of sale.
The coal mafia has had a negative effect on Indian industry, with coal supplies and quality
varying erratically. Higher quality coal is sometimes selectively diverted, and missing coal
replaced with stones and boulders in railway cargo wagons. Once, even a human corpse has
been discovered in a sealed coal wagon.
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Illegal mining in India

Illegal mining in India is widespread in various ore-rich states of India, and has generated
controversy, which spans encroachment of forest areas, underpayment of government
royalties, and conflict with tribal regarding land-rights. The spill-over of the effects of illegal
mining into problems such as Naxalism and the distortion of Indian democracy by mixed
political and mining interests, has gained international attention.
Timber Mafias
India's Himalayan and other forests are vulnerable to timber mafias. Protected forest areas
in several parts of India, such as Jammu and Kashmir, Himachal Pradesh, Karnataka and
Jharkhand, are vulnerable to illegal logging by timber mafias that have coped or intimidated
forestry officials, local politicians, businesses and citizenry. Terrorist groups have also joined
the nexus in militancy-affected areas such as Kashmir. Clear-cutting is sometimes covered-
up by conniving officials who report fictitious forest fires.
Many studies indicate large losses of forest cover to indiscriminate logging by timber mafias,
with over a million hectares in the environs of Chhotanagpur alone being illegally
transferred by the forest department directly to industrial, mining and logging companies.
Besides the environmental degradation, public financial losses can be substantial, and one
1994 estimate of stolen timber in the state of Karnataka amounted to Rs 1,000 crore (about
US$ 230 million). Veerappan was a notorious bandit who, until his shooting death by state
police in 2004, specialized in illegally logging sandalwood in Karnataka and Tamil Nadu.
As with coal, there have also been incidents of substitution, of low-grade wood, for high-
quality timber, when the procurement of wood is, in fact, authorized for government use. In
an incident in 2005, officials determined that high-quality deodar wood meant for military
and railway use had been substituted with lower-quality chir wood in Jammu and Kashmir
State, and the higher quality wood was intercepted in the process of being smuggled across
the state border into Punjab.
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Contractor Mafias
Public works, such as road construction, are sometimes dominated by contractor mafias.
Many state-funded construction activities in India, such as road building, are dominated by
construction mafias, which are groupings of corrupt public works officials, materials
suppliers, politicians and construction contractors. Shoddy construction and material
substitution (e.g. mixing sand in cement while submitting expenses for cement) result in
roads and highways being dangerous, and sometimes simply washed away when India's
heavy monsoon season arrives.
In a widely covered case, Satyendra Dubey, a project director with the National Highways
Authority of India, was murdered in 2003, allegedly because he had written a letter exposing
deep-seated contractor mafia involvement in the construction of a section of the prestigious
Golden Quadrilateral project to the Prime Minister's office. Although a CBI investigative
report after the assassination stated that there was no contractor mafia involvement in
Dubey's murder, his family and supporters maintained that an attempt at a cover-up was
being made.
Attempts have been made to reduce mafia influence by making construction tendering
processes more transparent, sometimes by attempting to move them online, so that a
complete audit trail of bids and activity is maintained. Construction mafias are alleged to
have used their political influence decisively to frustrate many such attempts, for example in
the public works for which the Municipal Corporation of Delhi is responsible.
Land Mafias
A local land mafia reportedly attempted to seize land planned to be used by the Central Zoo
Authority as the site for India's first night safari. In cities and villages throughout India and
Pakistan, mafias consisting of municipal and other government officials, elected politicians,
judicial officers, real estate developers and law enforcement officials, acquire, develop and
sell land in illegal ways for profit. Sometimes, government land or land ostensibly acquired
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for some legitimate government purpose is then handed over to real estate developers who
build commercial and residential properties and sell them in the open market, with the
connivance of administrative and police officials.
In one set of allegations in Karnataka, a lake was filled in and government buildings torn
down after illegal transfers to a developer by mafia-connected officials.s Eminent domain
laws, intended to procure private land at relatively low prices for public benefit or
redistribution to poorer people under social justice programs, are abused to pressure
existing landholders to sell land to a government entity, which transfers the land to
developers at those low prices, and who in turn sell it back on the market at much higher
prices.
Computerization of records relating to the classification of tracts and land ownership is a

key tool in countering the illegal activities of land mafias, since it creates transparency on all
information relating to a given parcel of land. This approach has been effective in Bangalore,
but efforts to extend it elsewhere have sometimes met with strong resistance by land
mafias, manifesting itself as bureaucratic inaction.
Focused vigilance in specific areas by government agencies has also acted as a deterrent to
land mafia activities. For example, the land mafia in the Noida area, on the outskirts of
Delhi, was reported to have illegally begun carving out plots for commercial sale on land
identified by the Central Zoo Authority of India as the site for India's first night Safari park.
Subsequent to coverage in the press, vigorous legal action by the Greater Noida Authority
reportedly led to this mafia alliance backing away from this theft, although it may have
shifted its attention to illegally encroaching on land along the planned Taj Expressway,
connecting Delhi and Agra, which is expected to become quite valuable once the highway is
inaugurated.
26. Child labour
Of 12.6 million children in hazardous occupations, India has the highest number of labourers
in the world less than 14 years of age. Although the Constitution of India guarantees free
and compulsory education to children between the age of 6 to 14 and prohibits
employment of children younger than 14 in any hazardous environment, child labour is
present in almost all sectors of the Indian economy. Companies including Gap, Primark, and
Monsanto etc. have been criticised for using child labour in either their operations in India
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or by their suppliers in India. In 1998, Madhura Swaminathan from the Indira Gandhi
Institute of Development Research argued that economic growth in Western India was
associated with an increase in the number of child workers over the last 15 years and that
children work at simple repetitive manual tasks that do not require long years of training or
experience in low-paying hazardous works that involves drudgery and forecloses the option
of school education for most children. Human Rights Watch estimates that at least 350,000
bonded children are employed by the silk industry in India. As per Human Rights Watch,
children as young as five years old are employed and work for up to 12 hours a day and six
to seven days a week. Children are forced to dip their hands in scalding water to palpate the
cocoons and are often paid less than Rs 10 per day.
Official estimates for child labour working as domestic labour and in restaurants is more
than 2,500,000 while NGOs estimate the figure to be around 20 million. The Government of
India expanded the coverage of The Child Labour Prohibition and Regulation Act and banned
the employment of children as domestic workers and as workers in restaurants, dhabas,
hotels, spas and resorts effective from October 10, 2006.
The misuse of adult labour can be found in the construction industry too. Adults are found
in construction of both home and office buildings. In 2011, for the construction of the Asian
Games care house, the contractors had employed adults, for they had to be paid more,
making it a small issue. Each year, thousands of children are rescued from brick kilns,
working in awful conditions. Some of the children are actually sold to the brick kiln owners,
and are not paid.
Initiatives against child labour
In 1979, the Indian government formed the Gurupadswamy Committee to find about child
labour and means to tackle it. The Child Labour Prohibition and Regulation Act were enacted
based on the recommendations of the committee in 1986. A National Policy on Child Labour
was formulated in 1987 to focus on rehabilitating children working in hazardous
occupations. The ministry of Labour and Employment had implemented around 100
industry-specific National Child Labour Projects to rehabilitate the child workers since 1988.
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Legislation
The Child Labour Prohibition and Regulation Act (1986) bans employment of children in
occupations related to
 Transport of passengers
 Manufacture and selling of crackers and fireworks
 Abattoirs
 Carpet weaving
 Manufacture of Beedi, cement, matches, explosives, soap, slate pencils, agate products,
agarbatti etc.
 Building and construction industry
 Hazardous processes under the factory act
 Brick kilns etc.
The violation of the act can result in punishments ranging from imprisonment for one
month to two years.
Non-Governmental Organizations
Many NGOs like CARE India, Child Relief and You, Global march against child labor etc. have
been working to eradicate child labour in India. In 2005, Pratham, an Indian NGO was
involved in one of the biggest rescue operations when around 500 child laborers were
rescued from zari sweatshops in North East Delhi.
27. Rape
Rape is a type of sexual assault usually involving sexual intercourse, which is initiated by one
or more persons against another person without that person's consent. The act may be
carried out by physical force, coercion, abuse of authority or with a person who is incapable
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of valid consent. The term is most often defined in criminal law. A person who commits an
act of rape is known as a rapist.
Internationally, the incidence of rapes recorded by the police during 2008 varied between
0.1 in Egypt per 100,000 people and 91.6 per 100,000 people in Lesotho with 5.0 per
100,000 people in Russia as the mean. According to the American Medical Association
(1995), sexual violence, and rape in particular, is considered the most under-reported
violent crime. The rate of reporting, prosecution and convictions for rape varies
considerably in different jurisdictions. The U.S. Bureau of Justice Statistics (1999) estimated
that 91% of U.S. rape victims are female and 9% are male, with 99% of the offenders being
male. Rape by strangers is usually less common than rape by persons the victim knows, and
several studies argue that male-male and female-female prison rape are quite common and
may be the least reported forms of rape.
When part of a widespread and systematic practice, rape and sexual slavery are recognized
as crimes against humanity and war crimes. Rape is also recognized as an element of the
crime of genocide when committed with the intent to destroy, in whole or in part, a
targeted ethnic group.
Definitions
The definition of rape varies both in different parts of the world and at different times in
history. It is defined in many jurisdictions as sexual intercourse, or other forms of sexual
penetration, of one person by another person without the consent of the victim. The United
Nations defines it as "sexual intercourse without valid consent," and the World Health
Organization defined it in 2002 as "physically forced or otherwise coerced penetration –
even if slight – of the vulva or anus, using a penis, other body parts or an object. “Some
countries such as Germany are now, however, using more inclusive definitions which do not
require penetration and the 1998 International Criminal Tribunal for Rwanda defines it as "a
physical invasion of a sexual nature committed on a person under circumstances which are
coercive". In some jurisdictions, the term "rape" has been phased out of legal use in favor of
terms such as "sexual assault" or "criminal sexual conduct".
Some jurisdictions continue to define rape to cover only acts involving penile penetration of
the vagina, treating all other types of non-consensual sexual activity as sexual assault. In
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Brazil, for example, the legal code defines rape as non-consensual vaginal sex. Thus male
rape, anal rape, and oral rape are not included. The FBI uses the following definition of rape
in compiling their annual Uniform Crime Reports: "The carnal knowledge of a female forcibly
and against her will." This has been interpreted to mean only forced penile-vaginal
penetration.
Consent
In any allegation of rape, the absence of consent to sexual intercourse on the part of the
victim is critical. Consent need not be expressed, and may be implied from the context and
from the relationship of the parties, but the absence of objection does not of itself
constitute consent. Lack of consent may result from either forcible compulsion by the
perpetrator or incapacity to consent on the part of the victim (such as persons who are
asleep, intoxicated or otherwise mentally helpless). The law can also invalidate consent in
the case of sexual intercourse with a person below the age at which they can legally consent
to such relations with older persons. Such cases are sometimes called statutory rape or
"unlawful sexual intercourse", regardless of whether it was consensual or not, as people
who are under a certain age in relation to the perpetrator are deemed legally incapable of
consenting to sex. Consent can always be withdrawn at any time, so that any further sexual
activity after the withdrawal of consent constitutes rape.
Duress, in which the victim may be subject to or threatened by overwhelming force or

violence, and which may result in absence of objection to intercourse, leads to the
presumption of lack of consent. Duress may be act or threatened force or violence against
the victim or somebody else close to the victim. Even blackmail may constitute duress.
Abuse of power may constitute duress. For instance, in Philippines, a man commits rape if
he engages in sexual intercourse with a woman "By means of fraudulent machination or
grave abuse of authority”. The International Criminal Tribunal for Rwanda in its landmark
1998 judgment used a definition of rape which did not use the word 'consent': "a physical
invasion of a sexual nature committed on a person under circumstances which are coercive."
Marital rape, also known as spousal rape, is non-consensual sex in which the perpetrator is
the victim's spouse. As such, it is a form of partner rape, of domestic violence, and of sexual
abuse. Historically, and still in some countries, consent was assumed within the marriage
contract, thus making spousal rape an impossibility; however, spousal rape is now
repudiated by international conventions and increasingly criminalized. In 2006, it was
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estimated that marital rape could be prosecuted in at least 104 countries (in four of these
countries, marital rape could be prosecuted only when the spouses were judicially
separated), and since 2006 several other countries have outlawed spousal rape. In the US,
spousal rape is illegal in all 50 states; the first state to outlaw it was South Dakota in 1975
and the last North Carolina in 1993. Other developing countries outlawed it in the 2000s. In
many countries, it is not clear if marital rape may or may not be prosecuted under ordinary
rape laws. However, in the absence of a spousal rape law it may be possible to bring
prosecutions for what is effectively rape by characterizing it as an assault
Types
There are several types of rape, generally categorized by reference to the situation in which
it occurs, the sex or characteristics of the victim, and/or the sex or characteristics of the
perpetrator. Different types of rape include but are not limited to: date rape, gang rape,
marital rape or spousal rape, ancestral rape, child sexual abuse, prison rape, acquaintance
rape, war rape and statutory rape.
Causes and motivation
There is no single theory that conclusively explains the motivation for rape; the motives of
rapists can be multi-factorial and are subject to debate. Several factors have been proposed:
anger, a desire for power, sadism, sexual gratification, and evolutionary pressures.
Effects
Victims of rape can be severely traumatized by the assault and may have difficulty
functioning as well as they had been used to prior to the assault, with disruption of
concentration, sleeping patterns and eating habits, for example. They may feel jumpy or be
on edge. After being raped, it is common for the victim to experience acute stress disorder,
including symptoms similar to those of posttraumatic stress disorder, such as intense,
sometimes unpredictable emotions, and they may find it hard to deal with their memories
of the event. In the months immediately following the assault, these problems may be
severe and upsetting and may prevent the victim from revealing their ordeal to friends or
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family, or seeking police or medical assistance. Additional symptoms of Acute Stress

Disorder include:-
1) Depersonalization or dissociation (feeling numb and detached, like being in a daze or a

dream, or feeling that the world is strange and unreal)
2) Difficulty remembering important parts of the assault
3) Reliving the assault through repeated thoughts, memories, or nightmares
4) Avoidance of things, places, thoughts, and/or feelings that remind the victim of the
assault
5) Anxiety or increased alertness (difficulty sleeping, concentrating, etc.)
6) Avoidance of social life or place of rape
For one-third to one-half of the victims, these symptoms continue beyond the first few
months and meet the conditions for the diagnosis of posttraumatic stress disorder. In
general, rape and sexual assault are among the most common causes of PTSD in women.
Victim blaming
"Victim blaming" is holding the victim of a crime to be in whole or in part responsible for the
crime. In the context of rape, this concept refers to the Just World Theory and popular
attitudes that certain victim behaviours (such as flirting, or wearing sexually-provocative
clothing) may encourage rape. In extreme cases, victims are said to have "asked for it",
simply by not behaving demurely. In most Western countries, the defense of provocation is
not accepted as mitigation for rape. A global survey of attitudes toward sexual violence by
the Global Forum for Health Research shows that victim-blaming concepts are at least
partially accepted in many countries. In some countries, victim-blaming is more common,
and women who have been raped are sometimes deemed to have behaved improperly.
Often, these are countries where there is a significant social divide between the freedoms
and status afforded to men and women. Amy M. Buddie and Arthur G. Miller, in a review of
studies of rape myths, state:
Rape victims are blamed more when they resist the attack later in the rape encounter rather
than earlier (Kopper, 1996), which seems to suggest the stereotype that these women are
engaging in token resistance (Malamuth & Brown, 1994; Muehlenhard & Rogers, 1998) or
leading the man on because they have gone along with the sexual experience thus far.
Finally, rape victims are blamed more when they are raped by an acquaintance or a date
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rather than by a stranger (e.g., Bell, Kuriloff, & Lottes, 1994; Bridges, 1991; Bridges &
McGrail,1989; Check & Malamuth, 1983; Kanekar, Shaherwalla, Franco, Kunju, & Pinto,
1991; L'Armand & Pepitone, 1982; Tetreault & Barnett, 1987), which seems to evoke the
stereotype that victims really want to have sex because they know their attacker and
perhaps even went out on a date with him. The underlying message of this research seems
to be that when certain stereotypical elements of rape are in place, rape victims are prone
to being blamed.
However, they also state that "individuals may endorse rape myths and at the same time
recognize the negative effects of rape."
A number of gender role stereotypes can play a role in rationalization of rape. In the case of
male-on-female rape, these include the idea that power is reserved to men whereas women
are meant for sex and objectified, that women want forced sex and to be pushed around,
and that male sexual impulses and behaviors are uncontrollable and must be satisfied. In
the case of female-on-male rape, the victim may either be perceived as weak or, in cultures
where men acquire status by sexual conquest, as fortunate.
Prosecution
Reporting
Sexual violence and rape in particular, is considered the most under- reported violent crime
(American Medical Association, 1995). Thus, the number of reported rapes is lower than
both incidence and prevalence rates (Wallaby and Allen, 2004).
The legal requirements for reporting rape vary by jurisdiction — each U.S. state may have
different requirements while other countries may have less stringent limits.
Investigation
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Since the vast majority of rapes are committed by persons known to the victim, the
initiation and process of a rape investigation depends much on the victim's willingness and
ability to report and describe a rape.
Biological evidence such as semen, blood, vaginal secretions, saliva, vaginal epithelial cells
(typically collected by a rape kit) may be identified and genetically typed by a crime lab. The
information derived from the analysis can often help determine whether sexual contact
occurred, provide information regarding the circumstances of the incident, and be
compared to reference samples collected from patients and suspects.
Conviction
In the United Kingdom, figures on reported rape cases show an ongoing decline in the
conviction rate, putting it at an all-time low of 5.6% in 2002. The government has been
expressed its concern at the year-on-year increase in attrition of reported rape cases, and
pledged to address this "justice gap" (Home Office, 2002a).
Prevention and treatment
As sexual violence affects all parts of society, the response to sexual violence is
comprehensive. The responses can be categorized as: individual approaches, health care
responses, community-based efforts and actions to prevent other forms of sexual violence.
"Recovery from sexual assault is a complicated and controversial concept."
Support groups, usually accessed by "umbrella" organizations (see List of anti-sexual assault
organizations in the United States) are prevalent, including some on-line.
War rape
In 1998, Judge Navanethem Pillay of the International Criminal Tribunal for Rwanda said:
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From time immemorial, rape has been regarded as spoils of war. Now it will be considered a
war crime. We want to send out a strong message that rape is no longer a trophy of war.
Rape, in the course of war, dates back to antiquity, ancient enough to have been mentioned
in the Bible. The Israelite, Persian, Greek and Roman armies reportedly engaged in war rape.
The Mongols, who established the Mongol Empire across much of Eurasia, caused much
destruction during their invasions. Documents written during or after Genghis Khan's reign
say that after a conquest, the Mongol soldiers looted pillaged and raped. Rogueries’, a monk
who survived the Mongol invasion of Hungary, pointed out not only the genocidal element
of the occupation, but also that the Mongols especially "found pleasure" in humiliating
women.
The systematic rape of as many as 80,000 women by the Japanese soldiers during the six
weeks of the Nanking Massacre is an example of such atrocities. During World War II an
estimated 200,000 Korean and Chinese women were forced into prostitution in Japanese
military brothels, as so-called "Comfort women". French Moroccan troops known as
Goumiers committed rapes and other war crimes after the Battle of Monte Casino. Rape by
soldiers was common in many areas occupied by the Red Army.
It has been alleged that an estimated 200,000 women were raped during the Bangladesh
Liberation War by the Pakistani army (though this has been disputed by many including the
Indian academic Sarmila Bose), and that at least 20,000 Bosnian Muslim women were raped
by Serb forces during the Bosnian War. Wartime propaganda often alleges, and exaggerates,
mistreatment of the civilian population by enemy forces and allegations of rape figure
prominently in this. As a result, it is often very difficult, both practically and politically, to
assemble an accurate view of what really happened.
Commenting on rape of women and children in recent African conflict zones UNICEF said
that rape was no longer just perpetrated by combatants but also by civilians. According to
UNICEF rape is common in countries affected by wars and natural disasters, drawing a link
between the occurrence of sexual violence with the significant uprooting of a society and
the crumbling of social norms. UNICEF states that in Kenya reported cases of sexual violence
doubled within days of post-election conflicts. According to UNICEF rape was prevalent in
conflict zones in Sudan, Chad and the Democratic Republic of Congo. It is estimated that
more than 200,000 females living in the Democratic Republic of the Congo today have been
raped in recent conflicts. Some estimate that around 60% of combatants in Congo are HIV-
infected.
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In 1998, the International Criminal Tribunal for Rwanda found that systematic rape was
used in the Rwandan genocide. The Tribunal held that "sexual assault [in Rwanda] formed
an integral part of the process of destroying the Tutsi ethnic group and that the rape was
systematic and had been perpetrated against Tutsi women only, manifesting the specific
intent required for those acts to constitute genocide." An estimated 500,000 women were
raped during the 1994 Rwandan Genocide. The Rome Statute, which defines the jurisdiction
of the International Criminal Court, recognizes rape, sexual slavery, enforced prostitution,
forced pregnancy, enforced sterilization, "or any other form of sexual violence of
comparable gravity" as crime against humanity if the action is part of a widespread or
systematic practice.
Rape was first recognized as crime against humanity when the International Criminal
Tribunal for the former Yugoslavia issued arrest warrants based on the Geneva Conventions
and Violations of the Laws or Customs of War. Specifically, it was recognised that Muslim
women in Foča (southeastern Bosnia and Herzegovina) were subjected to systematic and
widespread gang rape, torture and enslavement by Bosnian Serb soldiers, policemen and
members of paramilitary groups after the takeover of the city in April 1992.
The indictment was of major legal significance and was the first time that sexual assaults
were investigated for the purpose of prosecution under the rubric of torture and
enslavement as a crime against humanity. The indictment was confirmed by a 2001 verdict
of the International Criminal Tribunal for the former Yugoslavia that rape and sexual
enslavement are crimes against humanity. Amnesty International stated that the ruling
challenged the widespread acceptance of the torture of women as an intrinsic part of war.
Rape culture
Rape culture is a term which originated in women's studies and feminist theory, describing a
culture in which rape and sexual violence against women are common and in which
prevalent attitudes, norms, practices, and media condone, normalize, excuse, or tolerate
sexual violence against women. Examples of behaviors commonly associated with rape
culture include victim blaming and sexual objectification. Now India is making a rape
culture.
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28. Honor killing
An honor killing or honour killing is the killing of a member of a family or social group by
other members, due to the belief of the perpetrators (and potentially the wider community)
that the victim has brought dishonor upon the family or community. Honour killings are
directed mostly against women and girls.
The perceived dishonor is normally the result of one of the following behaviors, or the
suspicion of such behaviors: (a) dressing in a manner unacceptable to the family or
community, (b) wanting to terminate or prevent an arranged marriage or desiring to marry
by own choice, (c) engaging in heterosexual sexual acts outside marriage, or even due to a
non-sexual relationship perceived as inappropriate, and (d) engaging in homosexual acts.
Women and girls are killed at a much higher rate than men.
The United Nations Population Fund (UNFPA) estimates that perhaps as many as 5,000
women and girls a year are killed by members of their own families. Many women's groups
in the Middle East and Southwest Asia suspect the victims are at least four times more.
Definitions
In the modern age, the term was first used by a Dutch scholar of Turkish society, Ane Nauta
in 1978. Nauta sought a term that could be used in distinguish honour killings from blood
feuds.
Human Rights Watch defines "honor killings" as follows:-
Honor killings are acts of vengeance, usually death, committed by male family members
against female family members, who are held to have brought dishonor upon the family. A
woman can be targeted by (individuals within) her family for a variety of reasons, including:
refusing to enter into an arranged marriage, being the victim of a sexual assault, seeking a
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divorce—even from an abusive husband—or (allegedly) committing adultery. The mere

perception that a woman has behaved in a way that "dishonors" her family is sufficient to
trigger an attack on her life.
The loose term "honor killing" applies to killing of both males and females in cultures that
practice it. For example, during the year 2002 in Pakistan, it is estimated that 245 women
and 137 men were killed in the name of Karo-karis in Sindh. These killings target women and
men who choose to have relationships outside of their family's tribal or religious
community.
Some women who bridge social divides, publicly engage other communities, or adopt some
of the customs or the religion of an outside group may be attacked. In countries that receive
immigration, some otherwise low-status immigrant men and boys have asserted their
dominant patriarchal status by inflicting honor killings on women family members who have
participated in public life, for example in feminist and integration politics. Women in the
family tend to support the honor killing of one of their own. Alternatively, matriarchs may
be motivated not by personal belief in the misogynistic ideology of women as property, but
by pragmatic calculations. Sometimes a mother may support an honor killing of an
"offending" female family member in order to preserve the honor of other female family
members, since many men in these societies will refuse to marry the sister of a "shamed"
female whom the family has not chosen to punish, thereby failing to "purify" the family
name.
There is some evidence that homosexuality can also be perceived as grounds for honor
killing by relatives. In one case, a gay Jordanian man was shot and wounded by his brother.
In another case, a homosexual Turkish student, Ahmet Yildiz, was shot outside a cafe and
later died in hospital. Sociologists have called this Turkey's first publicized gay honor killing.
Men can also be the victims of honour killings by members of the family of a woman with
whom they are perceived to have an inappropriate relationship.
As a cultural practice
Sharif Kanaana, professor of anthropology at Birzeit University, says that honor killing is:-
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A complicated issued that cuts deep into the history of Arab society. What the men of the
family, clan, or tribe seek control of in a patrilineal society is reproductive power. Women
for the tribe were considered a factory for making men. The honour killing is not a means to
control sexual power or behavior. What's behind it is the issue of fertility, or reproductive
power.
An Amnesty International statement adds:-
The regime of honor is unforgiving: women on whom suspicion has fallen are not given an
opportunity to defend themselves, and family members have no socially acceptable
alternative but to remove the stain on their honor by attacking the woman.
The lawyer and human rights activist Henna Jilani says, "The right to life of women in
Pakistan is conditional on their obeying social norms and traditions.
Nighat Taufeeq of the women's resource center Shirkatgah (Lahore, Pakistan) says: "It is an
unholy alliance that works against women: the killers take pride in what they have done, the
tribal leaders condone the act and protect the killers and the police connived to the cover-
up."
A July 2008 Turkish study by a team from Deckle University on honor killings in the
Southeastern Anatolia Region, the predominantly Kurdish area of Turkey, has so far shown
that little if any social stigma is attached to honor killing. It also comments that the practice
is not related to a feudal societal structure, "There are also perpetrators who are well-
educated university graduates. Of all those surveyed, 60 percent are either high school or
university graduates or at the very least, literate."
India
Honor killings have been reported in northern regions of India, mainly in the Indian states of
Punjab, Rajasthan, Haryana, Uttar Pradesh and Bihar, as a result of people marrying without
their family's acceptance, and sometimes for marrying outside their caste or religion. In
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contrast, honour killings are rare to non-existent in South India and the western Indian
states of Maharashtra and Gujarat. In some other parts of India, notably West Bengal, honor
killings ceased about a century ago, largely due to the activism and influence of reformists
such as Vivekananda, Ramakrishna, Vidyasagar and Raja Ram Mohan Roy.
Among Rajput’s, marriages with members of other castes can provoke the killing of the
married couple and immediate family members. This form of honour killing is attributed to
Rajput culture and traditional views on the perceived "purity" of a lineage.
The Indian state of Punjab is notorious for honour killings. According to data compiled by
the Punjab Police, 34 honour killings were reported in the state between 2008 and 2010: 10
in 2008, 20 in 2009, and four in 2010.
Haryana also is known for incidents of honour killing. Bhagalpur in the northern Indian state
of Bihar has also been notorious for honour killings. Recent cases include a 16-year-old girl,
Imrana, from Bhojpur who was set on fire inside her house in a case of what the police
called ‘moral vigilantism’. The victim had screamed for help for about 20 minutes before
neighbours arrived, only to find her still smoldering. She was admitted to a local hospital,
where she later died from her injuries. In May 2008, Jayvirsingh Bhadodiya shot his daughter
Vandana Bhadodiya and struck her on the head with an axe. In June 2010 some incidents
were reported even from Delhi.
In a landmark judgment in March 2010, Karnal district court ordered the execution of the
five perpetrators of an honour killing, and imprisoning for life the khap (local caste-based
council) head who ordered the killings of Manoj Banwala (23) and Babli (19), a man and
woman of the same clan who eloped and married in June 2007. Despite having been given
police protection on court orders, they were kidnapped; their mutilated bodies were found
a week later in an irrigation canal.
In 1990 the National Commission for Women set up a statutory body in order to address the
issues of honor killings among some ethnic groups in North India. This body reviewed
constitutional, legal and other provisions as well as challenges women face. The NCW's
activism has contributed significantly towards the reduction of honor killings in rural areas
of North India. According to Pakistani activists Henna Jilani and Emans M. Ahmed, Indian
women are considerably better protected against honor killings by Indian law and
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government than Pakistani women, and they have suggested that governments of countries
affected by honor killings use Indian law as a model in order to prevent honor killings in
their respective societies.
In June 2010, scrutinizing the increasing number of honour killings, the Supreme Court of
India issued notices to the Central Government and six states including Uttar Pradesh,
Punjab, Haryana and Rajasthan to take preventive measures against honor killings.
Alarmed by the rise of honour killings, the Government planned to bring a bill in the
Monsoon Session of Parliament July 2010 to provide for deterrent punishment for 'honour'
killings.
29. Bankruptcy
Bankruptcy or insolvency is a legal status of a person or organisations that cannot repay the
debts it owes to its creditors. Creditors may file a bankruptcy petition against a business or
corporate debtor ("involuntary bankruptcy") in an effort to recoup a portion of what they
are owed or initiate a restructuring. In the majority of cases, however, bankruptcy is
initiated by the debtor (a "voluntary bankruptcy" that is filed by the insolvent individual or
organisations). An involuntary bankruptcy petition may not be filed against an individual
consumer debtor who is not engaged in business.
The word bankruptcy is formed from the ancient Latin bancus (a bench or table), and ruptus
(broken). A "bank" originally referred to a bench, which the first bankers had in the public
places, in markets, fairs, etc. on which they tolled their money, wrote their bills of exchange,
etc. Hence, when a banker failed, he broke his bank, to advertise to the public that the
person to whom the bank belonged was no longer in a condition to continue his business.
Fraud
Bankruptcy fraud is a white-collar crime. While difficult to generalise across jurisdictions,

common criminal acts under bankruptcy statutes typically involve concealment of assets,
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concealment or destruction of documents, conflicts of interest, fraudulent claims, false

statements or declarations, and fee fixing or redistribution arrangements. Falsifications on
bankruptcy forms often constitute perjury. Multiple filings are not in and of themselves
criminal, but they may violate provisions of bankruptcy law.
Bankruptcy fraud should be distinguished from strategic bankruptcy, which is not a criminal
act, but may work against the filer.
All assets must be disclosed in bankruptcy schedules whether or not the debtor believes the
asset has a net value. This is because once a bankruptcy petition is filed; it is for the
creditors, not the debtor to decide whether a particular asset has value. The future
ramifications of omitting assets from schedules can be quite serious for the offending
debtor. A closed bankruptcy may be reopened by motion of a creditor or the U.S. trustee if a
debtor attempts to later assert ownership of such an "unscheduled asset" after being
discharged of all debt in the bankruptcy. The trustee may then seize the asset and liquidate
it for the benefit of the (formerly discharged) creditors.
India
India does not have a clear law on corporate bankruptcy even though individual bankruptcy
laws have been in existence since 1874. The current law in force was enacted in 1920 called
Provincial Insolvency Act.
Legal meaning of the terms bankruptcy, insolvency, liquidation and dissolution are
contested in the Indian legal system. There is no regulation or statute legislated upon
bankruptcy which denotes a condition of inability to meet a demand of a creditor as is
common in many other jurisdictions.
Winding up of companies is in the jurisdiction of the Courts which can take a decade even
after the Company has actually been declared insolvent. On the other hand, supervisory
restructuring at the behest of The Board of Industrial and Financial Reconstruction is
generally undertaken using receivership by a Public Finance Institution.
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BANKING SECRECY
Bank secrecy (or bank privacy) is a legal principle in some jurisdictions under which banks
are not allowed to provide to authorities personal and account information about their
customers unless certain conditions apply (for example, a criminal complaint has been filed).
In some cases, additional privacy is provided to beneficial owners through the use of
numbered bank accounts or otherwise. Bank secrecy is prevalent in certain countries, such
as Switzerland, Singapore, Lebanon and Luxembourg, as well as offshore banks and other
tax havens under voluntary or statutory privacy provisions. Each State Party shall ensure
that, in the case of domestic criminal Investigations of offences established in accordance
with this Convention, there are appropriate mechanisms available within its domestic legal
system to overcome Obstacles that may arise out of the application of bank secrecy laws.
BANKING SECRECY IN INDIA
Finance minister of India Pranab Mukherjee on 13 June 2011 called for stepping up
multilateral cooperation to end the era of banking secrecy and deal with the “abusive”
transfer pricing mechanism that is robbing developing nations of their scarce natural
resources. Mukherjee, while addressing a seminar on international taxation jointly
organized by his ministry and the Organisation for the Economic Cooperation and
Development (OECD), regretted that the banking system is still opaque in various non-tax
and low tax jurisdictions. Despite efforts made at the global level and statements issued by
G-20 leaders at their London summit in April 2009,”We cannot say with certainly that the
bank secrecy is over in all cases,” the minister said.
“While countries have accepted to end bank secrecy in the general, come countries have
agree to do so only from a prospective date and are not willing to exchange past banking
information,’’ he said. Such issue put a question mark on the efficacy of exchange of banking
information, he said.
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30. Chit fund misused
Chit Funds are also misused by its promoters and there are many instances of the
founders running what is basically a Ponzi scheme and absconding with their money.
Chit funds are the Indian equivalent of the Rotating Savings and Credit Associations (ROSCA)
that are famous throughout the world. ROSCAs are a means to „save and borrow‟
simultaneously. It is considered one of the best instruments to cater to the needs of the
poor. It enables poor people to convert their small savings into lump sums. The concept of
chit funds originated more than 1000 years ago. Initially it was in the form of an informal
association of traders and households within communities, wherein the members
contributed some money in return for an accumulated sum at the end of the tenure.
Participation in Chit funds was mainly for the purpose of purchasing some property or, in
other words, for „consumption‟ purposes. However, in recent times, there have been
tremendous alterations in the constitution and functioning of Chit funds.
Whiles in most places ROSCAs are user-owned and organized informally, in India, chit funds
have been formally institutionalized as well. Legally recognized firms provide a variety of
chit schemes. Under the Chit Fund Act, this industry has been highly regulated and is
governed by stringent rules. This institutionalization of the chit funds (a) makes it easier for
poor or illiterate people to know exactly what different chit schemes the chit companies
offer, (b) provides an option to people to participate in schemes where members need not
know each other; hence there is a larger diversification of the idiosyncratic risks. This makes
it easier to provide chit schemes in urban settings where social linkage among members
might be weak, (c) to some extent ensures transparency in the operations, (d) given that the
law determines the size of the bidding and the commission the company can charge, it
encourages competition among chit fund firms to improve services to clients, and (e) legal
recognition also helps the chit fund operators to scale their operations. It allows the chit
fund operator to use the legal means to handle defaults and more importantly it infuses
faith in the clients that there are sufficient checks and balances which will prevent
opportunistic behaviour. In return the chit fund companies take a fee from the clients to
cover their expenses, in the form of a commission. The chit fund company provides a variety
of mechanisms by which the savings of the members can be transformed into lump sums.
The main mechanisms are; savings deposit which allow a lump sum to be enjoyed in future
in exchange for a series of savings made at present, loans which allow a lump sum to be
enjoyed at present in exchange for a series of savings to be made in the future and,
insurance which allows a lump sum to be enjoyed at some unspecified future time (for
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example, daughter’s marriage) in exchange for a series of savings made both at present and
in the future.
A Chit fund is a kind of savings scheme practiced in India. A Chit fund company means a
company managing, conducting or supervising, as foremen, agent or in any other capacity,
chits as defined in Section 2 of the Chit Funds Act, 1982. According to Section 2(b) of the
Chit Fund Act, 1982, "Chit means a transaction whether called chit, chit fund, chitty, kuri or
by any other name by or under which a person enters into an agreement with a specified
number of persons that every one of them shall subscribe a certain sum of money (or a
certain quantity of grain instead) by way of periodical installments over a definite period
and that each such subscriber shall, in his turn, as determined by lot or by auction or by
tender or in such other manner as may be specified in the chit agreement, be entitled to the
prize amount".
Such chit fund schemes may be conducted by organized financial institutions or may be
unorganized schemes conducted between friends or relatives. There are also variations of
chits where the savings are done for a specific purpose. Chit funds also played an important
role in the financial development of people of south Indian state of Kerala, by providing
easier access to credit. In Kerala chitty (chit fund) is a common phenomenon practiced by all
sections of the society. In Kerala, there exists a company under the State Government,
called Kerala State Financial Enterprise, the main business activity of it being the chitty
business.
31. Human trafficking in India
India is a source, destination, and transit country for men, women, and children trafficked
for the purposes of forced labor and commercial sexual exploitation. Internal forced labor
may constitute India’s largest trafficking problem; men, women, and children are held in
debt bondage and face forced labor working in brick kilns, rice mills, agriculture, and
embroidery factories. While no comprehensive study of forced and bonded labor has been
completed, NGOs estimate this problem affects 20 to 65 million Indians. Women and girls
are trafficked within the country for the purposes of commercial sexual exploitation and
forced marriage especially in those areas where the sex ratio is highly skewed in favor of
men. Children are subjected to forced labor as factory workers, domestic servants, beggars,
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and agriculture workers, and have been used as armed combatants by some terrorist and
insurgent groups.
India is also a destination for women and girls from Nepal and Bangladesh trafficked for the
purpose of commercial sexual exploitation. Nepali children are also trafficked to India for
forced labor in circus shows. Indian women are trafficked to the Middle East for commercial
sexual exploitation. There are also victims of labor trafficking among the thousands of
Indians who migrate willingly every year to the Middle East, Europe, and the United States
for work as domestic servants and low-skilled laborers. In some cases, such workers are the
victims of fraudulent recruitment practices that lead them directly into situations of forced
labor, including debt bondage; in other cases, high debts incurred to pay recruitment fees
leave them vulnerable to exploitation by unscrupulous employers in the destination
countries, where some are subjected to conditions of involuntary servitude, including non-
payment of wages, restrictions on movement, unlawful withholding of passports, and
physical or sexual abuse.
Prosecutions
The Government of India prohibits some forms of trafficking for commercial sexual
exploitation through the Immoral Trafficking Prevention Act (ITPA). Prescribed penalties
under the ITPA — ranging from seven years’ to life imprisonment — are sufficiently
stringent and commensurate with those for other grave crimes. India also prohibits bonded
and forced labor through the Bonded Labor Abolition Act, the Child Labor Act, and the
Juvenile Justice Act.
These laws are ineffectually enforced, however, and their prescribed penalties — a
maximum of three years in prison —are not sufficiently stringent. Indian authorities also use
Sections 366(A) and 372 of the Indian Penal Code, prohibiting kidnapping and selling minors
into prostitution respectively, to arrest traffickers. Penalties under these provisions are a
maximum of ten years’ imprisonment and a fine.
In addition to this, bonded labor and movement of sex trafficking victims, is facilitated by
corrupt officials and people having a stake in this lucrative business. They protect brothels
that exploit victims, and protect traffickers and brothel keepers from arrest and other
threats of enforcement.
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Usually, there are no efforts made to tackle the problem of government officials’ complicity
in trafficking workers for overseas employment. Bulk of bonded labor heads for Middle East
to emerging economies and there are several media reports which testify the plight of
Indian workers.
State governments regularly conduct campaigns through their welfare departments along
with police raids. However, sustained efforts in combating trafficking for commercial sexual
exploitation usually come to a naught because of ineffectual laws as well as delays in
prosecution.
India’s Central Bureau of Investigation incorporated anti-trafficking training into its standard
curriculum. In November, the State of Maharashtra developed an action plan to combat
trafficking; it did not, however, allocate appropriate funding to accomplish the objectives of
this plan.
The government does not break down these statistics by sections of the law, meaning that
law enforcement data regarding trafficking offenses may be conflated with data regarding
arrests of women in prostitution pursuant to Section 8 of the ITPA.
Protection
India’s effort to protect victims of trafficking varies from state to state, but remains
inadequate in many places. Victims of bonded labor are entitled to 10,000 rupees ($225)
from the central government for rehabilitation, but this program is unevenly executed
across the country. Government authorities do not proactively identify and rescue bonded
laborers, so few victims receive this assistance. Although children trafficked for forced labor
may be housed in government shelters and are entitled to 20,000 rupees ($450), the quality
of many of these homes remains poor and the disbursement of rehabilitation funds is
sporadic.
Some states provide services to victims of bonded labor, but Non-Governmental

Organisations provide the majority of protection services to these victims. The central
government does not provide protection services to Indian victims trafficked abroad for
forced labor or commercial sexual exploitation. Indian diplomatic missions in destination
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countries may offer temporary shelter to nationals who have been trafficked; once
repatriated, however, neither the central government nor most state governments offer any
medical, psychological, legal, or reintegration assistance for these victims.
Section 8 of the ITPA permits the arrest of women in prostitution. Although statistics on
arrests under Section 8 are not kept, the government and some NGOs report that, through
sensitization and training, police officers no longer use this provision of the law; it is unclear
whether arrests of women in prostitution under Section 8 have actually decreased. Because
most law enforcement authorities lack formal procedures to identify trafficking victims
among women arrested for prostitution; some victims may be arrested and punished for
acts committed as a result of being trafficked.
Some foreign victims trafficked to India are not subject to removal. Those who are subject
to removal are not offered legal alternatives to removal to countries in which they may face
hardship or retribution. NGOs report that some Bangladeshi victims of commercial sexual
exploitation are pushed back across the border without protection services. The
government also does not repatriate Nepali victims; NGOs primarily perform this function.
Many victims decline to testify against their traffickers due to the length of proceedings and
fear of retribution by traffickers.
NGOs that receive funding indirectly from either the central or state government do not
want to be brought within the scrutiny of anybody.
Prevention
Ministry of Labor and Employment displays full-page advertisements against child labor in
national newspapers at periodic intervals. The government has also instituted pre-departure
information sessions for domestic workers migrating abroad on the risks of exploitation.
Most of the Indian workers’ pay huge sums of money to agents who facilitate their
emigration outside the official channels and willingly emigrate despite being aware of the
conditions prevailing in those destinations. This is because of the fact that most of the
destinations abroad pay better sums of money. Therefore, a dream of better future ahead
often lures the people abroad and hence trafficking cannot entirely be prevented. India has
not ratified the 2000 UN TIP Protocol.
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G. PREVENTION &REDUCTION TOOLS (ACT’S)
32. Transparency International
Transparency International (TI) is a non-governmental organization that monitors and

publicizes corporate and political corruption in international development. It publishes an
annual Corruption Perceptions Index, a comparative listing of corruption worldwide. The
headquarters is located in Berlin, Germany but operates through more than 70 national
chapters.
History
TI was founded in May 1993 through the initiative of Peter Eigen, a former regional director
for the World Bank. Founding board members included Eigen, Hansjörg Elshorst, Joe
Githongo, Fritz Heimann, Michael Hershman, Kamal Husain, Dolores L. Español, George
Moody Stuart, Jerry Parfitt, Jeremy Pope and Frank Vogl. Eigen acted as Chairman and Pope
was Managing Director.
In 1995, TI developed the Corruption Perceptions Index (CPI). The CPI ranked nations on the
prevalence of corruption within each country, based upon surveys of business people. The
CPI was subsequently published annually. It was criticized for poor methodology and unfair
treatment of developing nations, while also being praised for highlighting corruption and
embarrassing governments.
In 1999, TI began publishing the Bribe Payers Index (BPI) which ranked nations according to
the prevalence that a country's multinational corporations would offer bribes.
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Organization and role
TI is organized as a group of some 100 national chapters, with an international secretariat in

Berlin, Germany. Originally founded in Germany in May 1993 as a not-for-profit
organization, TI is now an international non-governmental organization, and claims to be
moving towards a completely democratic organizational structure. TI says of itself:
"Transparency International is the global civil society organization leading the fight against
corruption. It brings people together in a powerful worldwide coalition to end the
devastating impact of corruption on men, women and children around the world. TI's
mission is to create change towards a world free of corruption."
Since 1995, TI has issued an annual Corruption Perceptions Index (CPI); it also publishes an
annual Global Corruption Report, a Global Corruption Barometer and a Bribe Payers Index.
TI does not undertake investigations on single cases of corruption or expose individual

cases. It develops tools for fighting corruption and works with other civil society
organizations, companies and governments to implement them. The goal of TI is to be non-
partisan and to build coalitions against corruption.
TI's biggest success has been to put the topic of corruption on the world's agenda.
International Institutions such as the World Bank and the International Monetary Fund now
view corruption as one of the main obstacles for development, whereas prior to the 1990s
this topic was not broadly discussed. TI furthermore played a vital role in the introduction of
the United Nations Convention against Corruption and the OECD Anti-Bribery Convention.
Corruption Perceptions Index
The CPI—besides the World Bank corruption index—is the most commonly used measure
for corruption in countries worldwide. To form this index, TI compiles surveys that ask
businessmen and analysts, both in and outside the countries they are analysing, their
perceptions of how corrupt a country is. Relying on the number of actual corruption cases
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would not work since laws and enforcement of laws differ significantly from country to
country.
The CPI has received criticisms over the years. The main one stems from the difficulty in
measuring corruption, which by definition happens behind the scenes. The CPI therefore
needs to rely on third-party surveys which have been criticized as potentially unreliable.
Data can vary widely depending on the public perception of a country, the completeness of
the surveys and the methodology used. The second issue is that data cannot be compared
from year to year because TI uses different methodologies and samples every year. This
makes it difficult to evaluate the result of new policies. The CPI authors replied to these
criticisms by reminding that the CPI is meant to measure perception and not "reality". They
argue that "perceptions matter in their own right, since... firms and individuals take actions
based on perceptions".
Competitiveness and corruption
A review of the linkages between countries' competitiveness and the incidence of

corruption was initiated at a TI workshop in Prague, November 1998 and picked-up in the
International Anti-Corruption Conference three years later.
Mara Faccio (Purdue University, USA) has issued a number of papers on this subject,
including a study entitled “Differences between Politically Connected and Non-Connected
Firms: A Cross Country Comparison”.
With governments committing huge sums to tackle the world's most pressing problems,
from the instability of financial markets to climate change and poverty, corruption remains
an obstacle to achieving much needed progress. The 2010 Corruption Perceptions Index
shows that nearly three quarters of the 178 countries in the index score below five, on a
scale from 10 (highly clean) to 0 (highly corrupt). These results indicate a serious corruption
problem.
To address these challenges, governments need to integrate anti-corruption measures in all

spheres, from their responses to the financial crisis and climate change to commitments by
the international community to eradicate poverty. Transparency International advocates
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stricter implementation of the UN Convention against Corruption, the only global initiative
that provides a framework for putting an end to corruption. Denmark, New Zealand and
Singapore are tied at the top of the list with a score of 9.3, followed closely by Finland and
Sweden at 9.2. Bringing up the rear is Somalia with a score of 1.1, slightly trailing Myanmar
and Afghanistan at 1.4 and Iraq at 1.5.
Notable among decliners over the past year are some of the countries most affected by a
financial crisis precipitated by transparency and integrity deficits. Among those improving in
the past year, the general absence of OECD states underlines the fact that all nations need
to bolster their good governance mechanisms. The message is clear: across the globe,
transparency and accountability are critical to restoring trust and turning back the tide of
corruption. Without them, global policy solutions too many global crises are at risk.
33. United Nations Convention against Corruption
The United Nations Convention against Corruption (UNCAC) is the only legally binding
universal anti-corruption instrument. The Convention's far-reaching approach and the
mandatory character of many of its provisions make it a unique tool for developing a
comprehensive response to a global problem. The UNCAC covers five main areas:
prevention, criminalization and law enforcement measures, international cooperation, asset
recovery, and technical assistance and information exchange. The UNCAC covers many
different forms of corruption, such as trading in influence, abuse of power, and various acts
of corruption in the private sector. A further significant development was the inclusion of a
specific chapter of the Convention dealing with the recovery of assets, a major concern for
countries that pursue the assets of former leaders and other officials accused or found to
have engaged in corruption. The rapidly growing number of States that have become parties
to the Convention is further proof of its universal nature and reach.
34. RTI Acts

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AS a Corruptions Reduction Tools in India
The fight against corruption has been declared a high priority by Prime Minister Man Mohan
Singh. However, corruption remains widespread in the country and there have been many
instances of political and bureaucratic corruption, public funds embezzlement, fraudulent
Procurement practices and judicial corruption. High ranking officials have also been involved
in major corruption scandals. The sectors most affected by corruption include public
procurement, tax and customs administration, infrastructure, public utilities, and the police.
The latter has been identified as one of the most corrupt institutions by various surveys. The
Government has put in place a well-developed legal and institutional framework, with
institutions including the Central Bureau of Investigation, the Office of the Comptroller and
the Auditor General, and the Central Vigilance Commission. The Supreme Court, in
particular, has taken a firm stance against corruption in recent years and made several
important rulings. Another achievement in the fight against corruption has been the
enactment of the Right to Information (RTI) Act in 2005, which grants citizens access to
government information and a mechanism to control public spending. In spite of progress,
however, law enforcement remains weak and reforms have a long way to go.
Right to information act
The Right to Information Act (2005) and equivalent acts in the states that require
government officials to furnish information requested by citizens or face punitive action,
computerization of services and various central and state government acts that established
vigilance commissions have considerably reduced corruption or at least have opened up
avenues to redress grievances. The 2006 report by Transparency International puts India at
the 70th place and states that significant improvements were made by India in reducing
corruption.
Salient Features of Right to Information Act, 2005
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Right to information (RTI) is inherent in democratic functioning and a precondition to good

governance and realization of all other human rights, including education and health care
that have intense and pervasive impact on all the human activities.
Specifically, the main objectives of the law on RTI are: to operationalize the fundamental
right to information; to set up systems and mechanisms that facilitate people’s easy access
to information; to promote transparency and accountability in governance; to minimize
corruption and inefficiency in public offices and to ensure people’s participation in
governance and decision making.
RTI is based on the key concepts: i) The right of the public to access the information and the
corresponding duty of the Government to meet the request, unless specifically defined
exemptions apply; (ii) The duty of the Government to proactively provide certain key
information even in absence of a request.
The Act promises to make the right to information more progressive, participatory and
meaningful, as it encourages the common citizen to enthusiastically participate in the whole
process of governance.
The citizens are not only free to ask for information from the Government, but also have the
right to get it. The scope of the Act extends to all authorities and bodies under the
Constitution or any other law, and inter alia includes all authorities under the Central
Government, State Government sand Local Bodies. The non-governmental organizations
(NGOs) substantially funded, directly or indirectly, by the public funds also fall within the
ambit of this Act.
A duty has been cast, in section 4 of the Act, on every public authority to suo motu provide
to the public with the information as prescribed therein, so that the public has to take
minimum recourse to the use of this legislation for obtaining information.
The procedure of securing information as provided in section 6 of the Act, prescribes a

procedure, which is very simple. A citizen has to merely make a request to the concerned
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Public Information Officer (PIO) specifying the information sought by him. The fee payable is
reasonable and information is to be provided free of cost to citizens living below the poverty
line.
To assure that the information sought is provided quickly, section 7 of the Act, makes it
mandatory for the PIO to provide the information within 30days. If the information
requested concerns the life or liberty of a person, it has been made mandatory to provide it
within 48 hours of the receipt of the request. The Act provides for penalties in case of failure
to provide information in time, or for refusing to accept application for information, or
forgiving incorrect, incomplete or misleading information, or destroying information and so
on. In addition, the Information Commission has also been empowered to recommend
disciplinary action against the government servants.
The Act establishes a two-tier mechanism for appeal. The first appeal lies to an officer within
the organization who is senior in rank to PIO. The second appeal lies in the Information
Commission. The jurisdiction of the lower court is barred under section 20 of the Act. The
categories of information exempted from disclosure in this Act are kept to a bare minimum.
Even the exemptions are not absolute if disclosure of the information outweighs the harm
to the public authorities.
Even in the case of security and intelligence agencies and organizations, which are
exempted from the provisions of this Act, if there were cases of allegation of corruption and
human rights violation, such exemption would not be available. In cases of allegations of
violation of human rights, information would be made available after the approval of the
Information Commission. This Act, thus, paves the way for an empowered citizen, as well as
an alert, efficient, responsive, transparent and accountable government.
The Central/State Information Commission has a major role in enforcing the

implementation of the provisions of the Act as well as for educating the parties, mainly
information seekers and providers. The Commission is vested with the power of a Court.
Under Section 20, the Commission may impose penalty on the concerned officials for denial
of information and recommend disciplinary action against the errant officials, who do not
comply with the requirements of the Act. Moreover, under Section 25(5) of the Act, the
Commission may also advise the appropriate Government in the matters of maintenance
and preservation of records and the norms for disclosure of information with a view to
enabling the people to observe and scrutinize the decision making process. The powers
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vested with the Information Commissioner, who are appointed by the President of
India/Governor of a state, ensure effective implementation of the Act.
Impact of RTI on the Elements of Good Governance
The RTI Act was implemented in October 2005. Though a period of less than three years is
too a short period to assess the success of RTI, it may be worthwhile to analyse some
evidences, for developing an understanding on how it works and what it does or does not
do. We, therefore, propose to find an answer to the question: whether the objectives of the
Act are being realized?
It must be admitted that the assessment of the RTI on good governance and development is
indeed a daunting task, since data are lacking to permit methodological rigour of analysis.
However, reliance is made on (i) the responses of the RTI requesters and the activists,
particularly during the course of hearings conducted by the Author in the cases listed before
the Commission to resolve the disputes between information seekers and providers; (ii)
media reports on the issues pertaining to RTI matters; and (iii) preliminary research studies
and publications of results, mainly those relating to corruption and accountability of public
bodies. The assessment of impact is proposed to be made in terms of the stated objectives
of the RTI Act, which are outlined in its preamble, as under:
An Act to provide for setting out the practical regime of righto information for citizens to
secure access to information under the control of public authorities, in order to promote
transparency and accountability in the working of every public authority.
It is stated furthermore that:-
Democracy requires an informed citizenry and transparency of information which are vital
to its functioning and also to contain corruption and to hold Governments and their
instrumentalities accountable to the governed;
In addition to the above, the Prime Minister of India, while piloting the Bill for its passage by
the National Parliament, stated, as under, on May 11, 2005:
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I believe that the passage of this Bill will see the dawn of a new era in our processes of
governance, an era of performance and efficiency, an era which will ensure that benefits of
growth flow to all sections of our people, an era which will eliminate the scourge of
corruption, an era which will bring the common man’s concern to the heart of all processes
of governance, an era which will truly fulfil the hopes of the founding fathers of our
Republic.
Evidently, the major objectives of the Act are:-
1) Greater Transparency in functioning of public authorities.

2) Improvement in accountability and performance of the Government.
3) Promotion of partnership between citizens and the Government in decision making
process;
4) Reduction in corruption in the Government departments.
All these parameters are critical elements of good governance. An attempt is therefore
made below to examine the extent to which the RTI has been successful in influencing the
above factors in desirable direction.
Transparency
With a view to ensuring maximum disclosure of information regarding government rules,

regulations and decisions, every public authority is mandated to `maintain all its records
duly catalogued and indexed in a manner and the form which facilitates the right to
information under the Act’. The public authorities are therefore required to make pro-active
disclosures through publication of relevant documents. Besides, the public authorities are
also required to ‘provide as much information suo motu to the public at regular intervals
through various means of communication, including internet, so that the public have
minimum resort to the use of this Act to obtain information’.
In compliance of the above provisions of the Act, all the levels of the Government – the
Centre, States and Local Bodies, including Village level Panchayats – have put the records in
public domain, through publications as well as internet in the regional languages. And, to
facilitate the access to information, a citizen has the right to:
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(i) Inspection of work, documents, records;
(ii) Taking notes extracts or certified copies of the documents or records;
(iii) Taking certified sample of material;
(IV) Obtaining, information in electronic form, if available.
Thus, all the public authorities have duly placed the information in public domain and that a
citizen has the right to observe as to what is going on inside an organization. In the cases
where the information sought for are not provided within the stipulated period of 30 days
or the information furnished are incomplete, misleading or incorrect, a requester is free to
file a complaint or appeal before the Information Commission (IC), for necessary directions
to the parties as per the provisions of the Act.
In effect, thus, there is greater transparency than before in the working of the public bodies.
In a large number of cases, the Commission has ordered for providing the details of the
decision-making processes, which include ‘file noting’s, cabinet papers, records of
recruitment, selection and promotion of staff, documents pertaining to tender processes
and procurement procedure, the lists of beneficiaries of the Government’s subsidized
schemes, such as, food grains supplied through ration shops, water and electricity, domestic
gas, educational and health facilities, shelter for poor, muster rolls underemployment
guarantee schemes, etc. The disclosure of vital information, such as above, has thus resulted
in checking corrupt practices in delivery of services and ensuring the reach of entitlements
to the poor. The disclosure of information relating to use of funds allocated to rural
employment guarantee scheme, MLA/MP local area funds, etc. have contributed to
advocacy in favour or against the policies and/or political leaderships.
Accountability
The RTI provides people with the mechanism to access information, which they can use to
hold the government to account or to seek explanation as to why decisions have been
taken, by whom and with what consequences or outcomes. In addition, every public
authority is required ‘to provide reasons for its administrative or quasi-judicial decisions to
the affected persons’ u/s4 (1) (d) of the Act.
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Until the implementation of the RTI Act, it was not possible for an ordinary persons to seek
the details of a decision making process, which was found most often, as ineffective in terms
of its outcome. It was, therefore, not possible to hold a free and frank discussion on issues
of common concern of people or to fix the responsibility for any action. Such an era of
darkness in policy planning is over.
The information regime has, in effect, created conducive conditions for every One to have a
better understanding of how the government works or how a Particular decision was
reached. Such a chance given to people empowers them to make appropriate choice of
leadership and the policies that affects them. This has begun to happen with salutary effects
on delivery of socioeconomic services, particularly for the poor.
For instance, being full aware that the records pertaining to the decision-making process,
including file noting’s, are required to be put in public domain, the concerned officials at all
levels objectively record the reasons for the observations made by them. Attempts are also
made to effectively implement the programs as the relevant details are proactively
disclosed. In effect, thus, the quality of decision making and delivery of services have duly
improved.
Reduction in Corruption
Lack of transparency and accountability encourage the government officials to indulge in

corrupt practices, which result in lower investments due to misuser diversion of funds for
private purposes. As a result, the government’s social spending yields no worthwhile
benefits, because, for instance, the teachers do not teach, doctors and nurses do not attend
health centres, ration card holders do not receive subsidized food grains and the promised
jobs are not provided to the people. In the process, it perpetuates poverty and harms the
poor. It creates an environment of distrust between the people and the government, which
impinge upon the development and jeopardize democratic governance.
RTI has enabled people to participate in the process of development, which has resulted in
reduction of corruption. It has just begun to happen for the first time for establishing an
open and participatory governance system that protects and promotes the socio-economic
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interests of every citizen, particularly the poor, who are receiving the benefits of
development as per their entitlements.
As the functioning of public authorities becomes more transparent and ensure proactive
disclosure of the policies, programmes and their outcomes, there would be greater
participation by people in every sphere of development. It is important therefore to
enhance the capacity of public authorities as well as the citizens to develop awareness and
understanding of information, to make its effective use for the benefits of citizens. In effect,
endeavours should be made to increase the effective demand for improvement in delivery
of services.
35. Ombudsmen
An ombudsman (conventional English plural: ombudsmen) is a person who acts as a trusted

intermediary between an organization and some internal or external constituency while
representing not only but mostly the broad scope of constituent interests. An indigenous
Danish, Norwegian, and Swedish term, Ombudsman is etymologically rooted in the Old
Norse word umboðsmaðr, essentially meaning "representative". An ombudsman is an
official, usually appointed by the government or by parliament, who is charged with
representing the interests of the public by investigating and addressing complaints reported
by individual citizens.
Ombudsman in politics
In general, an ombudsman is a state official appointed to provide a check on government

activity in the interests of the citizen, and to oversee the investigation of complaints of
improper government activity against the citizen. If the ombudsman finds a complaint to be
substantiated, the problem may get rectified, or an ombudsman report is published making
recommendations for change. Further redress depends on the laws of the country
concerned, but this normally involves financial compensation. Ombudsmen in most
countries do not have the power to initiate legal proceedings or prosecution on the grounds
of a complaint. This role is sometimes referred to as a "tribunitian" role, and has been
traditionally fulfilled by elected representatives – the term refers to the ancient Roman
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"tribunes of the plebians" (tribuni plebis), whose role was to intercede in the political
process on behalf of common citizens.
The major advantage of an ombudsman is that he or she examines complaints from outside
the offending state institution, thus avoiding the conflicts of interest inherent in self-
policing. However, the ombudsman system relies heavily on the selection of an appropriate
individual for the office, and on the cooperation of at least some effective official from
within the apparatus of the state. Perhaps for this reason, outside Scandinavia, the
introduction of ombudsmen has tended to yield mixed results.
Industry and organizational ombudsman
Many private companies, universities, non-profit organizations and government agencies

also have an ombudsman (or an ombuds office) to serve internal employees, and managers
and/or other constituencies. These ombudsman roles are structured to function
independently, by reporting to the CEO or board of directors, and according to the
International Ombudsman Association (IOA) Standards of Practice do not serve any other
role in the organization. They are beginning to appear around the world within
organizations, sometimes as an alternative to anonymous hot-lines in countries where these
are considered inappropriate or are illegal, and in addition to hot lines because ombuds
offices typically receive many more calls than do hot lines.
INDIA
The Government of India has designated several ombudsmen (sometimes called Chief
Vigilance Officer or CVO) for the redressal of grievances and complaints from individuals in
the banking, insurance and other sectors being serviced by both private and public bodies
and corporations. The CVC (Central Vigilance Commission) was setup on the
recommendations of Santhanams Committee (1962–64).
In India, Ombudsman is called as Lokpal or Lokayukta. An Administrative Reforms

Commission (ARC) was set up on 5 January 1966 under the Chairmanship of Shri Morarji
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Desai. It recommended two-tier machinery: Lokpal at the Centre (Parliamentary

commissioner as in New Zealand) and one Lokayukta each at the State level for redressal of
people's grievances. However, the jurisdiction of the Lokpal is not extended for judiciary like
in New Zealand. The central Government introduced the first Lokpal Bill, Lokpal and
Lokayukta Bill in 1968 and lastly in 2005, which has so far not been enacted.
Lokayukta institution has come into existence in different years, in different States in India.
Orissa is the first state to present a bill on establishment of Lokayukta in 1970; however,
Maharashtra is the first state to have established the institution in 1972. Thereafter, this
institution was established in different States in different years namely: Maharashtra (1972),
Bihar (1974), Uttar Pradesh (1977), Madhya Pradesh (1981), Andhra Pradesh (1983),
Himachal Pradesh (1983), Karnataka (1984), Assam (1986), Gujarat (1988), Delhi (1995),
Punjab (1996), Kerala (1998), Chhattisgarh (2002), Uttaranchal (2002) and West Bengal
(2003) and Haryana (2004). The structure of the Lokayukta is not uniform across all the
states. Some states have UpaLokayukta under Lokayukta and in some states; the Lokayukta
doesn't have suo moto powers of instigating an enquiry.
Kerala State has an Ombudsman for Local Self Government institutions like Panchayats,
Municipalities and Corporations. He or she can enquire/investigate into allegations of
action, inaction, corruption and mal administration. A Retd-Judge of the High Court is
appointed by the Governor for a term of 3 years. The appointment is made under the
provisions of the Kerala Panchayats Raj Act.
In the State of Rajasthan, the Lokayukta institution was established in the year 1973 after
the Rajasthan Lokayukta and Up-Lokayukta Act, 1973 was passed by the State Legislature
and received assent of the President on 26.3.1973.
The Lokayukta is an anti-government corruption organization in the Indian states. These

institutions are based on the Ombudsman in Scandinavian countries. An amendment to the
Constitution has been proposed to implement the Lokayukta uniformly across Indian states
as a three-member body, headed by a retired Supreme Court judge or high court chief
justice, and comprise of the state vigilance commissioner and a jurist or an eminent
administrator as other members.
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At the national level, there is no ombudsman. However, ombudsmen at state level (Lok
Ayutka) have been created in some Indian states such as Karnataka. However, three issues
that have clearly emerged across states where the institution exists need to be highlighted.
In the first place, the success and visibility of the institution has more to do with the person
who occupies the position than the authority and powers vested in the office. Second, in
many states the Lok Ayutka is hampered by the fact that it does not have an independent
investigating agency and is dependent on the government agencies to carry forward its
investigations. Third, the Lokayukta is largely recommendatory and enjoys limited powers to
initiate action.
Social welfare worker Anna Hazare has led a movement to compel the Indian Government
to notify the Committee for the implementation of the Lokayukta against corruption as an
independent body and also giving enough powers to the Lokayukta to also receive
corruption complaints against politicians, bureaucrats and even sitting judges. Anna Hazare
has achieved this big success through his non-violence measures like fasting till death at the
Jantar Mantar place in Delhi Capital City of India. The public also gave nation-wide support
to Anna Hazare in his demand for strong and tough anti-corruption law.
36. Whistleblowers
A whistle-blower is a person who tells the public or someone in authority about alleged
dishonest or illegal activities (misconduct) occurring in a government department, a public
or private organization, or a company. The alleged misconduct may be classified in many
ways; for example, a violation of a law, rule, regulation and/or a direct threat to public
interest, such as fraud, health/safety violations, and corruption. Whistle-blowers may make
their allegations internally (for example, to other people within the accused organization) or
externally (to regulators, law enforcement agencies, to the media or to groups concerned
with the issues).One of the first laws that protected whistle-blowers was the 1863 United
States False Claims Act (revised in 1986), which tried to combat fraud by suppliers of the
United States government during the Civil War. The act encourages whistle-blowers by
promising them a percentage of the money recovered or damages won by the government
and protects them from wrongful dismissal. Whistle-blowers frequently face reprisal,
sometimes at the hands of the organization or group which they have accused, sometimes
from related organizations, and sometimes under law.
Overview
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The term whistleblower comes from the phrase "blow the whistle," which refers to a whistle
being blown by a policeman or a referee to indicate an activity that is illegal or a foul.
Definition
Most whistleblowers are internal whistleblowers, who report misconduct on a fellow

employee or superior within their company. One of the most interesting questions with
respect to internal whistleblowers is why and under what circumstances people will either
act on the spot to stop illegal and otherwise unacceptable behavior or report it. There is
some reason to believe that people are more likely to take action with respect to
unacceptable behavior, within an organization, if there are complaint systems that offer not
just options dictated by the planning and control organization, but a choice of options for
individuals, including an option that offers near absolute confidentiality.
External whistleblowers, however, report misconduct on outside persons or entities. In

these cases, depending on the information's severity and nature, whistleblowers may report
the misconduct to lawyers, the media, law enforcement or watchdog agencies, or other
local, state, or federal agencies. In some cases, external whistleblowing is encouraged by
offering monetary reward.
Common reactions
Ideas about whistleblowing vary widely. Whistleblowers are commonly seen as selfless
martyrs for public interest and organizational accountability; others view them as "tattle
tales" or "snitches," solely pursuing personal glory and fame. Some academics feel that
whistleblowers should at least be entitled to a rebuttable presumption that they are
attempting to apply ethical principles in the face of obstacles and that whistleblowing would
be more respected in governance systems if it had a firmer academic basis in virtue ethics.
It is probable that many people do not even consider blowing the whistle, not only because
of fear of retaliation, but also because of fear of losing their relationships at work and
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outside work. Because the majority of cases are very low-profile and receive little or no
media attention and because whistleblowers who do report significant misconduct are
usually put in some form of danger or persecution, the idea of seeking fame and glory may
be less commonly believed.
Persecution of whistleblowers has become a serious issue in many parts of the world.
Although whistleblowers are often protected under law from employer retaliation, there
have been many cases where punishment for whistleblowing has occurred, such as
termination, suspension, demotion, wage garnishment, and/or harsh mistreatment by other
employees. For example, in the United States, most whistleblower protection laws provide
for limited "make whole" remedies or damages for employment losses if whistleblower
retaliation is proven. However, many whistleblowers report there exists. A widespread
"shoot the messenger" mentality by corporations or government agencies accused of
misconduct and in some cases whistleblowers have been subjected to criminal prosecution
in reprisal for reporting wrongdoing.
Legal protection
Legal protection for whistleblowing varies from country to country and may depend on any
of the country of the original activity, where and how secrets were revealed, and how they
eventually became published or publicized. For purposes of the English Wikipedia, this
section emphasizes the English-speaking world and covers other regimes only insofar as
they represent exceptionally greater or lesser protections. Whistleblower protection refers
to the provisions put in place in order to protect someone who exposes alleged wrongdoing.
The wrongdoing might take the form of fraud, corruption or mismanagement. India does
not have a law to protect whistleblowers but the Public Interest Disclosure and Protection
to Persons Making the Disclosure Bill, 2010 was approved by the government as part of a
drive to eliminate corruption in the country's bureaucracy.
This decision follows the death of various whistleblowers, including Manjunath Shanmugam
and Satyendra Dubey.
India
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As of 2009 Govt. of India has introduced the whistle blower law named as "Right to
Information act”. Still to maintain and increase the stability in law Govt of India is on the
path to introduce an Ombudsman law which was demanded by a civil society against
corruption.Mr.Anna Hazare a civilian with his committee has demanded the ombudsman
law called as "Jan Lokpal bill”. A committee of 10 people has been sectioned from Govt who
will lead this committee.
Whistleblowers Protection Bill soon, Govt tells RS
Over four years after the Centre passed a resolution designating the Central Vigilance
Commission (CVC) as the key agency for receiving complaints of corruption and ensure the
protection of complainants' identity, government on Thursday said that a comprehensive
Whistleblowers Protection Bill would be brought soon as part of its policy of "zero
tolerance" to curb corruption in the bureaucracy.
Minister of state for personnel Prithviraj Chavan said the government had brought the
whistleblowers' resolution in 2004 to ensure transparency. Now, it is planning to bring a
legislation in this regard soon (incorporating all the guidelines in the resolution), he said in
reply to a question in Rajya Sabha.
He, however, did not indicate the timeframe for bringing the Bill. He said the government
was "fully committed" to implement the policy of "zero tolerance" to curb corruption.
The whistleblowers' resolution was passed by way of an office order in 2004 in response to
the Supreme Court directive in the Bihar-based engineer Satyendra Dubey case. Dubey had
complained about irregularities in the execution of contracts awarded by the National
Highway Authority of India in the state and paid with his life since there was no mechanism
in place to protect those who made complaints against corruption in government
departments.
Whistle blowers in India
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As of 2009 Govt. of India has introduced the whistle blower law named as "Right to
Information act”. Still to maintain and increase the stability in law Govt of India is on the
path to introduce an Ombudsman law which was demanded by a civil society against
corruption.Mr.Anna Hazare a civilian with his committee has demanded the ombudsman
law called as "Jan Lokpal bill”. A committee of 10 people has been sectioned from Govt who
will lead this committee.
Whistleblowers play a major role in the fight against corruption. India currently does not
have a law to protect whistleblowers, which was highlighted by the assassination of
Satyendra Dubey. Indian courts are regularly ordering probe in cases of murders or so-called
suicide of several whistle blowers. One of the latest case of such murder is of V Sasindran
Company Secretary of Palakkad based Malabar Cement Limited, a Government company in
Kerala and his two minor children, Kerala High Court ordered CBI probe on 18 February
2011. Initially, CBI showed its unwillingness for probing into such cases citing over-burden as
a reason. Whistle-blower protection refers to the provisions put in place in order to protect
someone who exposes alleged wrongdoing. The wrongdoing might take the form of fraud,
corruption or mismanagement. India does not have a law to protect whistle-blowers but the
Public Interest Disclosure and Protection to Persons Making the Disclosure Bill, 2010 was
approved by the government as part of a drive to eliminate corruption in the country's
bureaucracy. This decision follows the death of various whistle-blowers, including
Manjunath Shanmugam and Satyendra Dubey.
37. Alertness
Alertness is the state of paying close and continuous attention, being watchful and prompt
to meet danger or emergency, or being quick to perceive and act. It is related to psychology
as well as to physiology. A lack of alertness is a symptom of a number of conditions,
including narcolepsy, attention deficit disorder, and chronic fatigue syndrome, and
depression, Addison's disease, or sleep deprivation. The word is formed from "alert", which
comes from the Italian "all'erta”
Physiological aspects
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People who have to be alert during their jobs, such as air traffic controllers or pilots often
face challenges maintaining their alertness. Research shows that for people "...engaged in
attention-intensive and monotonous tasks, retaining a constant level of alertness is rare if
not impossible." If people employed in safety-related or transportation jobs have lapses in
alertness, this "may lead to severe consequences in occupations ranging from air traffic
control to monitoring of nuclear power plants."
38. Jan Lokpal Bill
In India, the Jan Lokpal Bill (also referred to as the citizens' ombudsman bill) is a proposed
anti-corruption law designed to effectively deter corruption, redress grievances and protect
whistleblowers. The law would create an ombudsman called the Jan Lokpal; this would be
an independent body similar to the Election Commission of India with the power to
prosecute politicians and bureaucrats without prior government permission.
The bill was collaboratively drafted by Shanti Bhushan, retired Indian Police Service officer
Kiran Bedi, Justice N. Santosh Hegde, advocate Prashant Bhushan, and former chief election
commissioner J. M. Lyngdoh, in wide public consultation with the leaders of the India
Against Corruption movement and civil society. The original bill was mooted by the National
Campaign for Peoples’ Right to Information (NCPRI) in its delegated committee. The bill
proposes the institution of the office of Lokpal (Ombudsman) at the center and local
Lokayukta at the state level.
For 42 years, the government-drafted bill has failed to pass the Rajya Sabha, the upper
house of the Parliament of India. The first Lokpal Bill was passed in the 4th Lok Sabha in
1969 but stalled in the Rajya Sabha. Subsequent Lokpal bills were introduced in 1971, 1977,
1985, 1989, 1996, 1998, 2001, 2005 and 2008 but all failed to pass. Following the four day
Anna Hazare fasting struggle. Prime Minister Man Mohan Singh stated that the Lokpal Bill
would be introduced in the 2011 monsoon session of parliament.
Background
Renewed calls for a Jan Lokpal Bill arose over resentment of the major differences between
the draft 2010 Lokpal Bill prepared by the government and the Jan Lokpal Bill prepared by
the members of this movement, N. Santosh Hegde, a former justice of the Supreme Court of
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India and Lokayukta of Karnataka, Prashant Bhushan, a senior lawyer in the Supreme Court
along with the members of the India Against Corruption movement. This movement has also
been joined by many people providing their support in Internet social media such as Twitter
and Facebook. In addition to spiritual leaders Sri Ravi Shankar, Swami Ramdev, Swami
Agnivesh and former Indian cricketer Kapil Dev., many celebrities showed their public
support. The bill's backers consider existing laws too weak and insufficiently enforced to
stop corruption.
Key features of proposed bill
1) To establish a central government anti-corruption institution called Lokpal, supported by

Lokayukta at the state level.
2) As in the case of the Supreme Court and Cabinet Secretariat, the Lokpal will be
supervised by the Cabinet Secretary and the Election Commission. As a result, it will be
completely independent of the government and free from ministerial influence in its
investigations.
3) Members will be appointed by judges, Indian Administrative Service officers with a clean
record, private citizens and constitutional authorities through a transparent and
participatory process.
4) A selection committee will invite shortlisted candidates for interviews, video recordings
of which will thereafter be made public.
5) Every month on its website, the Lokayukta will publish a list of cases dealt with, brief
details of each, their outcome and any action taken or proposed. It will also publish lists
of all cases received by the Lokayukta during the previous month, cases dealt with and
those which are pending.
6) Investigations of each case must be completed in one year. Any resulting trials should be
concluded in the following year, giving a total maximum process time of two years.
7) Losses caused to the government by a corrupt individual will be recovered at the time of
conviction.
8) Government office work required by a citizen that is not completed within a prescribed
time period will result in Lokpal imposing financial penalties on those responsible, which
will then be given as compensation to the complainant.
9) Complaints against any officer of Lokpal will be investigated and completed within a
month and, if found to be substantive, will result in the officer being dismissed within
two months.
10) The existing anti-corruption agencies (CVC, departmental vigilance and the anti-
corruption branch of the CBI) will be merged into Lokpal which will have complete
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power and authority to independently investigate and prosecute any officer, judge or
politician.
11) Whistleblowers who alert the agency to potential corruption cases will also be provided
with protection by it.
Drafting Committee
The drafting committee was officially formed on 8 April 2011. It consists of ten members,
including five from the government and five drawn from society.
Chairmen
The Government of India accepted that the committee be co-chaired by a politician and an
activist, non-politician. It is reported that Pranab Mukherjee, from the political arena, and
Shanti Bhushan, from civil society, will fill those roles.
Government representation
Five Cabinet ministers will be a part of the Drafting Committee. They are:
 Pranab Mukherjee, Finance Minister, Co-Chairman;

 P. Chidambaram, Minister of Home Affairs;
 Veerappa Moily, Minister of Law and Justice;
 Kapil Sibal, Minister for Communications and Information Technology; and
 Salman Khursid, Minister of Water Resources.
Civil society representation

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Five leading social activists will be a part of the Drafting Committee. They are:
 Shanti Bhushan, Former Minister of Law and Justice, Co-Chairman;

 Anna Hazare, Social Activist;
 Prashant Bhushan, Lawyer;
 N. Santosh Hegde, Lokayukta (Karnataka);
 Arvind Kejriwal.
39. Civil Society
The Constitution of India guarantees every citizen the fundamental right to form
associations. These non-governmental organizations have intervened, in significant ways, on
behalf of common citizens to ensure the protection of their rights on the one hand and
secure the accountability of those exercising power on the other. Some states are involving
NGO in the decision-making process as well as in defining expenditure priorities.
However, a major bottleneck in the Indian democratic (and legal) framework has been the
severe restrictions on the free flow of information to citizens on various aspects of the
functioning of government, which has been partially remedied by the Right to Information
Act in 2002. A by-product of this new legislation is the need for public agencies to create a
Citizens Charter and enumerate the rights of stakeholders. However, the Right to
Information Act has faced serious problems in Implementation. The bureaucracy entrusted
with the responsibility of making the Act operational has delayed the entire process and
created more obstacles in the processing the name of ensuring fairness and justice for all. In
addition, the media acted as a watchdog by reporting incidents of misuse of power and
corruption. Conduct a national public awareness campaign.
1) Conduct a media campaign against corruption

2) Conduct a public awareness campaign in secondary schools
3) Conduct further research, monitoring and evaluation (e.g. annual integrity surveys)
4) Introduce Code of Conduct for teachers
5) Co-ordinate the corruption campaign with the media and educational and religious
organizations
Criticisms of the Jan Lokpal Bill
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Some people have opined that the Jan Lokpal Bill is 'Naïve' in its approach to combating
corruption. According to Prataps Bhanu Mehta, President, Center for Policy Research, Delhi,
the bill "is premised on an institutional imagination that is at best naïve; at worst subversive
of representative democracy".
The claim that the Lokpal will be an extra-constitutional body has been derided by Hazare’s
closest lieutenant, Arvind Kejriwal. He states the Jan Lokpal Bill drafted by civil society will
only investigate corruption offences and submit a charge sheet which would then tried and
prosecuted, through trial courts and higher courts. Kejriwal further states that the proposed
bill also lists clear provisions in which the Supreme Court can abolish the Lokpal.
40. Prevention of Corruption Act 1988
To deal with corruption amongst public servants India enacted Prevention of Corruption Act
1988, replacing Prevention of Corruption Act 1947. PCA 1988 incorporates provisions of
chapter IX of the Indian Penal Code to deal with Public servants and those who abet them
by way of criminal misconduct and provides to enable attachment of their ill-gotten wealth
obtained through corrupt means. This act also widens the scope of definition of Public
servants. Public servant means any person in the service, pay of the government, or
remunerated by the government by fees or commission for the performance of any public
duty. Public duty means a duty in the discharge of which the state, the public, or the
community at large has an interest. The ‘State’ includes a corporation established by or
under a central, provincial or state act or an authority or a body owned or controlled or
aided by the government or a government company defined in section 617 of the
Company’s Act1956. In India in addition to a large number of health and educational
institutions, the government also aids many other kinds of organizations. Hence, the
employees of such bodies are also covered by this act. Normally corruption is defined as
using public office for private gains. In PCA 1988 Public Servant and Public duty have very
wide definitions covering every person who is in the actual possession of the situation of a
public servant and discharging public duty which the state, public or the community at large
has an interest. It extends to the whole of India except the State of Jammu and Kashmir and
it applies also to all citizens of India outside India.
Persons holding various public offices are public servants, whether appointed by the
government or notes.
Definitions
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In this Act, unless the context otherwise requires,-
a) "Election" means any election, by whatever means held under any law for the purpose
of selecting members of Parliament or of any Legislature, local authority or other public
authority;
b) "Public duty" means a duty in the discharge of which the State, the public or the
community at large has an interest;
c) Explanation.-In this clause "State" includes a corporation established by or under a

Central, Provincial or State Act, or an authority or a body owned or controlled or aided
by the Government or a Government company as defined in section 617 of the
Companies Act, 1956.
"Public servant" means-
1) Any person in the service or pay of the Government or remunerated by the Government
by fees or commission for the performance of any public duty;
2) Any person in the service or pay of a local authority;
3) any person in the service or pay of a corporation established by or under a Central,
Provincial or State Act, or an authority or a body owned or controlled or aided by the
Government or a Government company as defined in section 617 of the Companies Act,
1956;
4) Any Judge, including any person empowered by law to discharge, whether by himself or
as a member of any body of persons, any adjudicatory functions;
5) Any person authorised by a court of justice to perform any duty, in connection with the
administration of justice, including a liquidator, receiver or commissioner appointed by
such court;
6) Any arbitrator or other person to whom any cause or matter has been referred for
decision or report by a court of justice or by a competent public authority;
7) Any person who holds an office by virtue of which he is empowered to prepare, publish,
maintain or revise an electoral roll or to conduct an election or part of an election;
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8) any person who holds an office by virtue of which he is authorised or required to

perform any public duty;
9) any person who is the president, secretary or other office-bearer of a registered co-
operative society engaged in agriculture, industry, trade or banking, receiving or having
received any financial aid from the Central Government or a State Government or from
any corporation established by or under a Central, Provincial or State Act, or any
authority or body owned or controlled or aided by the Government or a Government
company as defined in section 617 of the Companies Act, 1956;
10) any person who is a chairman, member or employee of any Service Commission or
Board, by whatever name called, or a member of any selection committee appointed by
such Commission or Board for the conduct of any examination or making any selection
on behalf of such Commission or Board;
11) any person who is a Vice-Chancellor or member of any governing body, professor,
reader, lecturer or any other teacher or employee, by whatever designation called, of
any University and any person whose services have been availed of by a University or
any other public authority in connection with holding or conducting examinations;
12) Any person who is an office-bearer or an employee of an educational, scientific, social,

cultural or other institution, in whatever manner established, receiving or having
received any financial assistance from the Central Government or any State
Government, or local or other public authority.
Explanation 1.-Persons falling under any of the above sub-clauses are public servants,
whether appointed by the Government or not.
Explanation 2.-Wherever the words "public servant" occur, they shall be understood of
every person who is in actual possession of the situation of a public servant, whatever legal
defect there may be in his right to hold that situation.
41. Money-Laundering Act, 2002
The Prevention of Money-Laundering Act, 2002 came into effect on 1 July 2005.
Section 12 (1) prescribes the obligations on banks, financial institutions and intermediaries
(a) to maintain records detailing the nature and value of transactions which may be
prescribed, whether such transactions comprise of a single transaction or a series of
transactions integrally connected to each other, and where such series of transactions take
place within a month; (b) to furnish information of transactions referred to in clause (a) to
the Director within such time as may be prescribed and t records of the identity of all its
clients. Section 12 (2) prescribes that the records referred to in sub-section (1) as mentioned
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above, must be maintained for ten years after the transactions finished. The provisions of
the Act are frequently reviewed and various amendments have been passed from time to
time. The recent activity in money laundering in India is through political party’s corporate
companies and share market.
42. Vohra Report
The Vohra (Committee) Report was submitted by the former Indian Union Home Secretary,
N.N. Vohra, in October 1993. It studied the problem of the criminalization of politics and of
the nexus among criminals, politicians and bureaucrats in India. The report contained
several observations made by official agencies on the criminal network which was virtually
running a parallel government. It also discussed criminal gangs who enjoyed the patronage
of politicians, of all parties, and the protection of government functionaries. It revealed that
political leaders had become the leaders of gangs. They were connected to the military.
Over the years criminals had been elected to local bodies, State Assemblies and Parliament.
The unpublished annexures to the Vohra Report were believed to contain highly explosive
material. In 1997 the Supreme Court recommended the appointment of a high level
committee to ensure in-depth investigation into the findings of the N.N. Vohra Committee
and to secure prosecution of those involved.
Government had (through its order No. S/7937/SS (ISP)/93 dated 9 th July 93 established
Committee, comprised as below, to take stock of all available information about the
activities of Crime Syndicates/Mafia organisations which had developed links with and were
being protected by Government functionaries and political personalities. Based on the
recommendations of the Committee, Government shall determine the need, if any to
establish a special organisation/agency to regularly collect information and pursue cases
against such elements:
1) Home Secretary Chairman

2) Secretary ® Member
3) DIB Member
4) Director CBI Member
5) JS (PP) MHA Member Secretary
The Committee was authorised to invite senior officers of various concerned Departments to
gather the required information.
Special Secretary (Internal Security & Police), MHA, was subsequently added as member of
the Committee. The Committee was desired to submit its report within 3 months.
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1) In the first meeting of the Committee (held on 15 th July93), I had explained to the
members that the Government had established the Committee after seeing the
report of our intelligence and Investigation agencies on the activities/linkages of the
Dawood Ibrahim gang, consequently to the Bomb blasts in Bombay in March 1993.
From these various reports, it was apparent that the activities of Memon Brothers
and Dawood Ibrahim had progressed over the years, leading to the establishment of
a powerful network. This could not have happened without these elements having
been protected by the functionaries of the concerned Government departments
specially Customs, Income Tax, Police and others. It was, therefore, necessary to
identify the linkage and to also determine how such information could be timely
collected and acted upon in future.
2) In the course of the discussions, I perceived that some of the Members appeared to
have some hesitation in openly expressing their views and also seemed unconvinced
that Government actually intended to pursue such matters. Accordingly, I addressed
separate personal letters to each of the Members of the Committee seeking their
well-considered suggestions and recommendations. The responses are briefly
brought out below.
Secretary (R&AW)
3) The various offices abroad of this Agency have limited strength and are largely
geared to the collection of military, economic, scientific and political intelligence.
R&AW monitor the activities of certain organisations abroad only insofar as they
relate to their involvement with narco-terrorist elements and smuggling arms,
ammunition, explosives, etc. into the country. It does not monitor the activities of
criminal elements abroad which are mainly confined to "normal smuggling without
any links to terrorist elements". The present strength of the Agency’s office abroad
would not permit it to enlarge its field of activities. If, however, there is evidence to
suggest that these organisations have links with intelligence agencies of other
countries, particularly Pakistan, and they are being used or are likely to be used by
such countries for destabilising our economy, it would become R&AWs responsibility
to monitor their activities, as is being done by this Agency to collect vital information
in regard to the investigations in the Bombay bomb blasts case.
4) The creation of a nodal agency to collect information regarding the activities of

Mafia organisations is very essential. All the existing information/data available with
R&AW, IB, and CBI could be made available to this nodal agency. R&AW will
nominate an officer of suitable rank to liaise with nodal agency on a regular basis to
enable expeditious follow-up action.
Director CBI
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1. A report on the nexus between the Bombay City Police and the Bombay under-world
was prepared by CBI in 1986. It would be useful institute a fresh study by CBI, on the
basis of which appropriate administrative/legal measures could be initiated.
2. An organised crime Syndicate/Mafia generally commences its activities by indulging
in petty crimes at the local level, mostly related to illicit
distillation/gambling/organised seta and prostitution in the larger towns, in port
towns, their activities involve smuggling and sale of imported goods and
progressively graduate to narcotics and drug trafficking. In the bigger cities, the main
source of income relates to real estate- forcibly occupying lands/buildings, procuring
such properties at cheap rates by forcing out the existing occupants/tenants etc.
Over time, the money power thus acquired is used for building up contacts with
bureaucrats and politicians and expansion of activities with impunity. The money
power is used to develop a network of muscle-power which is also used by
politicians during elections.
3. CBI has reported that all over India crime Syndicates have become a law unto
themselves. Even in the smaller towns and rural areas, muscle-men have become the
order of the day. Hired assassins have become a part of these organisations. The
nexus between the criminal gangs, police, bureaucracy and politicians has come out
clearly in various parts of the country. The existing criminal justice system, which was
essentially designed to deal with the individual offences/crimes, is unable to deal
with the activities of the mafia; the provisions of law in regards to economic offences
are weak; there are insurmountable legal difficulties in attaching/confiscation of the
property acquired through Mafia activities.
4. It has been suggested that the menace has first to be tackled at the local level where
the agencies of the State and the concerned Central Enforcement Agencies like
Customs and Excise, Income-Tax etc. would be required to take effective action. In
cases where a crime Syndicate has graduated to big business, it would be necessary
to conduct detailed investigations into its assets, both movable and immovable. It
has been stressed that when such action is not timely and effectively taken, the
lower functionaries of the concerned State and Central Departments/organisations
start overlooking the activities of the crime Syndicates. To elucidate this point, the
Director CBI has given example of IQBAL MIRCHI of Bombay who till the late 80s, was
merely a visitor to passenger and carrier ships to obtain liquor and cigarettes for
selling the same at a profit. In the last 3-4 years, Mirchi acquired real estate valuing
crore of rupees; he has many bank accounts and has been paying lakhs of rupees to
his carriers. The growth of MIRCHI is due to the fact that the concerned Enforcement
agencies did not timely taken action against him and, later, this perhaps became
difficult on account of the enormous patronage that he had developed. If MIRCHI is
investigated, the entire patronage enjoyed by him and his linkages will come to light.
Director CBI has observed that there are many such cases, as that of MIRCHI where
the initial failure has led to the emergence of Mafia giants who have become too big
to be tackled.
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5) Director CBI has stated that the main mode of communications/contacts of the
Mafias operating at the international level is through telephonic communications.
Referring to the useful leads emerging from the investigations into the activities of
Dawood Ibrahim, a Mafia leader, the director CBI has stated that the effective
monitoring of the telephonic calls made from India/received from abroad would
yield useful information and, for this being done, Government may grant sanction to
monitor certain telephonic connections.
6) The assistance of Banks in an essential input. The Bank Managers can be placed
under obligations to render reports on all heavy transactions and suspicious
accounts to the Enforcement agencies. Such a practice obtains in U. K.
7) Concluding his analysis, Director CBI has made the following suggestions to bring
under control the activities of the criminal Syndicates:
i. Identification of offences and awards of deterrent punishments including

preventive detention.
ii. Trial procedures should be simplified and hastened.
iii. Surveillance should be carried out through finger printing, photographs and
dossiers.
iv. Monitoring mechanisms should be established at the State and Central levels.
v. Establishment of Special Cells in the States CIDs and CBI.
vi. Suitable amendments should be introduced in the existing laws to more
effectively deal with the activities of Mafia organisations, etc.; this could also
include review of the existing laws.
vii. A detailed case study of10-15 case would provide useful information regarding
the administrative/legal measures which would be required to be taken to
effectively tackle the functioning of Mafia organisations. The CBI can do this
within a short period.
Director IB
1. DIB has reported that due to the progressive decline in the values of public life in the
country "warning signals of sinister linkage between the underworld politicians and the
bureaucracy have been evident with disturbing regularity, as exemplified by the
exposures of the networks of the Bombay Bomb Blast case". He has recommended
immediate attention to: -
i. Identification of the nexus between the criminals/mafias and antinational elements

on the one hand and bureaucrats, politicians and other sensitively located
individuals on the other.
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ii. Identification of the nature and dimensions of these linkages and the modus
operandi of their operations.
iii. Assessment of the impact of these linkages on the various institutions viz., the
electoral, political, economic, law and order and the administrative apparatus.
iv. Nexus, if any, between the domestic linkages with foreign intelligence.
v. Necessary action to show effective action to counteract/neutralise the Mafia
activities.
vi. Political and legal constrains in dealing with the covert/illegal functioning of the
linkages.
1. Like the Director CBI, the DIB has also stated that there has been a rapid spread and
growth of criminal gangs, armed senas, drug mafias, smuggling gangs, drug peddlers and
economic lobbies in the country which have, over the years, developed an extensive
network of contacts with bureaucrats/Governments functionaries at the local levels,
politicians, media persons and strategically located individuals in the non-State sector.
Some of these syndicates also have international linkages, including the foreign
intelligence agencies. In this context, the DIB has given the following examples: -
i. In certain States, like Bihar, Haryana and UP, these gangs enjoy the patronage of
local level politicians, cutting across party lines and the protection of Government
functionaries. Some political leaders become the leaders of these gangs/armed
senas and, over the years, get themselves elected to local bodies, State Assemblies
and the National parliament. Resultantly, such elements have acquired considerable
political clout seriously jeopardising the smooth functioning of the administration
and the safety of life and property of the common man, causing a sense of despair
and alienation among the people.
ii. The big smuggling Syndicates, having international linkages, have spread into and
infected the various economic and financial activities, including Hawala transactions,
circulation of black money and operations of a vicious parallel economy causing
serious damage to the economic fibre of the country. These Syndicates have
acquired substantial financial and muscle power and social respectability and have
successfully corrupted the Government machinery at all levels and yield enough
influence to make the task of investigating and prosecuting agencies extremely
difficult; even the members of the judicial system have not escaped the embrace of
the mafia.
iii. Certain elements of the mafia have shifted to narcotics, drugs and weapon
smuggling and established narco-terrorist networks, especially in the States of J&K,
Punjab, Gujarat and Maharashtra. The cost of contesting elections has thrown the
politicians into the lap of these elements and led to a grave compromise by officials
of the preventive/detective system. The virus has spread to almost all the centres in
the country; the coastal and the Border States have been particularly affected.
iv. The Bombay bomb blast case and the communal riots in Surat and Ahmedabad have
demonstrated how the Indian underworld has been exploited by the Pak ISI and the
latter’s network in UAE to cause sabotage, subversion and communal tension in
various parts of the country. The investigations into the Bombay bomb blast cases
have revealed extensive linkages of the underworld in the various governmental
agencies, political circles, business sector and the film world.
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1. DBI has stated that the network of the Mafia is virtually running a parallel Government,
pushing the State apparatus into irrelevance. It is thus most immediately necessary that
an institution is established to effectively deal with the menace. In this connection, DIB
has stated: -
i. Presently, there is no system/mechanism which is specially designated to collect and

collate intelligence pertaining to the linkages developed by crime Syndicates/Mafia
with the governmental set up. Nonetheless, the various
intelligence/investigation/enforcement agencies collect, in the normal course of
their functioning, information about the nexus between the bureaucracy and
politicians with Mafia gangs, smugglers and the underworld. These agencies use such
available inputs "only within the narrow confines of their work charter and choose
not to take undue cognisance and follow-up action, leave alone sharing with any
other agencies". Thus, all these agencies "function within their own cocoons, with
the result that a plethora of information fails to get specific and purposeful attention
needed for the exposure of the linkages". It is, therefore, necessary to immediately
have an institutionalised system which "while giving total freedom to the various
agencies to pursue their charter of work, would simultaneously cast on them the
onus of sharing such inputs to a nodal outfit whose job will be to process this
information for attention of a single designated authority". This will enable the
Nodal Group to provide useful leads to the various agencies and, over time, a
progressive data will get generated "to facilitate periodic reviews and analysis which
could then be passed to a designated body".
1. As would be seen from the afore-stated brief discussions, especially the views expressed
by Director CBI and DIB, it is evident that the muscle power of the crime Syndicates is
sustained by their enormous financial power which, in turn, is secured by the Mafia
elements by committing economic offences with impunity. In this context, I held
detailed personal discussions with Secretary (Revenue) under whose control operate the
various economic intelligence/investigative/enforcement agencies.
2. The Department of Revenue functions through the following major agencies: -
i. Central Board of Excise & Customs (CBEC)
Interalia, CBEC is responsible for the prevention of smuggling. In this and other
tasks, it is assisted by the Director General of Revenue Intelligence (DGR) and
Directorate General of Anti-Evasion (DGAE). The DGRI deals with the evasion of
customs duties; and the DGAE with Excise duty evasion.
ii. Central Board of Direct Taxes (CBDT)
Income Tax Department administers the Income Tax Act, Wealth Tax Act, etc.
iii. Central Economic Intelligence Bureau (CEIB)
The CEIB is responsible for coordinating and strengthening the intelligence gathering
activities and the investigative and enforcement actions of the various agencies responsible
for investigation into economic offences and the enforcement of economic laws. The CEIB is
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responsible for maintaining liaison with the concerned Departments/Directorates both at

the Centre and at the State levels and is expected to provide overall direction to the
investigative agencies under the Department of Revenue.
The CEIB is expected, Interalia, to attend to the following tasks: -
a. Identification of major sources generating black money; directing and developing

intelligence about such sources; planning and coordinating action and operations
against such sources.
b. Assisting the various enforcement agencies in strengthening the intelligence
gathering infrastructure and building up their capability for storage and retrieval of
intelligence.
c. Conducting investigative and analytical studies in difficult areas of black money
operations and monitoring indicators thereof.
i. Enforcement Directorate
This Directorate is concerned with the enforcement of the investigation and penal
provision of the Foreign Exchange Regulation Act; collection of intelligence relating
to foreign exchange offences; enquiries into suspected violations of the provisions of
FERRA, etc.
ii. Narcotics Control Bureau (NCB)
The NCB is responsible for the administration of the Narcotics Drugs and Psychotropic Act. It
is responsible for coordination with different Central and State Government
Departments/Ministries and the various Central and State law enforcement agencies for the
implementation of NDPS Act.
1. I explained a Secretary (Revenue) the broad considerations on account of which the

government had set up a Committee to look into the linkages developed by the Mafia
elements. He informed me that he had recently held a meeting with senior
representatives of the RBI, the Chairman CBEC, Chairman CBDT and the Economic
Intelligence Council in the Department of Revenue, and readily agreed with my request
to attend a meeting of the Committee along with his concerned officers for a full
discussion on the issues before the Committee. Accordingly, I arranged a meeting of the
Committee (30th Aug 93) to hear the view of Secretary (Revenue), who was accompanied
by Chairman CBDT, DGRI, Member (Customs) and Director (Enforcement). During the
course of the discussions with Secretary (Revenue) and his aforesaid principal officers,
the following significant observations were made: -
i. In the normal course of his work, to detect violations of Customs & Excise laws, DGRI
comes across information of linkages between crime Syndicates and Governmental
functionaries etc. As following up of such information is not within the charter of
duties of DGRI, his officers’ focus primarily on the information relating to the
violation of the laws relating to their charter.
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ii. As in the case of DGRI, Indirect information also becomes available to the CBDT
about linkages. Here again, not being directly relating to their charter of
responsibilities, the CBDT do not follow up such leads.
iii. While the NCB is specifically responsible for booking drug traffickers, with the
increasing importance being given to Narco-terrorism, the NCB have been asked to
gather further information so that the real king-pins in the narcotics trade can be
apprehended.
iv. The Directorate of Enforcement comes across information on linkages and passes it
on to the CBI and IB.
v. Of late, currency amounting crore of rupees in being seized, invariably packed in suit-
cases and gunny bags. The Banks are reluctant to pass on information about account
holders to CBDT and do not allow their officers to hold exploratory enquiries.
vi. While a certain amount of information is shared between the various organisations
under the Department of Revenue, and those under the MHA and Cabinet
Secretariat, the exchanges are sporadic and limited. This is perhaps due to the fact
that each concerned organisation/agency is anxious to protect its sources and is
apprehensive that a full sharing of all information might jeopardise its operations, on
account of premature leakage of information.
vii. While DGRI, Director (Enforcement) and DG NCB authorised to undertake phone
tapping of suspected offenders, the DGRI has not been allowed to enforce
surveillance on the telephonic communications of political personalities.
viii. Senior Police officers, even in the Border States, are not trained or adequately
informed of the work done by the directorate of Enforcement, especially in regard to
money laundering operations.
ix. Information about the activities of drug traffickers is passed on by DG NCB to the
concerned State Governments and their agencies. However, a niggardly response by
the latter and prolonged delays in the disposal of cases before Courts seriously
hampers the effective functioning of the NCB. While the NDPS act prescribes the
award of deterrent punishments of offences, the results are to the contrary. It is
necessary that the directorates of prosecution in the State Governments are urgently
brought under the control of the State Police.
1. Secretary (Revenue) stated that he field officers of his various Departments were faced
with various problems, amongst which are:
i. The utter inadequacy of the criminal system; cases are not heard timely; functioning
of the Government lawyers is grossly inadequate; all this results in a low percentage
of convictions and mild punishments. Under the criminal justice system is geared up,
the work of the enforcement agencies cannot be effective.
ii. The field officers of the various agencies of the Revenue Departments are often
pressurised by senior government functionaries/political leaders apparently at the
behest of crime Syndicates/Mafia elements. Unless the field level officers are offered
effective protection, they cannot be expected to maintain interest in vigorously
pursuing action against the activities of such elements.
1. Chairman CBDT stated that insofar as the functioning of his officers is concerned,
whenever they come into possession of any information regarding the violation of any
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other law, they pass it on to the concerned agency. He suggested that if the information
available with other agencies is passed on to him, his officers could pursue the same.
1. As a result of the discussions held by the Committee with Secretary (Revenue) and his
principal officers, it is evident that:
i. While, in the course of their normal activities, information on the linkages of the
crime Syndicates sometimes become available, such information is not pursued on
the score that it is not directly related to offences falling within the laws
administered by these agencies;
ii. Such information is occasionally passed on by these agencies to the CBI and or IB;
iii. The various agencies under the Department of Revenue do not specifically search on
the linkages of crime Syndicates.
1. Consequent to the Committees discussions with the Secretary (Revenue) and his
principal officers, I held a series of further personal discussions with the Secretary
(Revenue). At my request Secretary (Revenue) gave me a personal note indicating his
views, which are briefly as below:-
i. The information gathered by the various agencies under the Revenue Department,
while gathering intelligence on offences relating to the laws administered by them, is
generally not put to any use unless it is required to the passed on to the passed on to
the other intelligence agencies outside the Department of Revenue.
ii. The linkages developed by crime syndicated get generally confirmed when pressure
is mounted on the concerned agencies not to take action against the offenders or to
go slow in the cases against them. Such pressures are mounted either immediately
after a raid is conducted or at the time when prosecution is about to be initiated.
Pressures are also exerted whenever corrupt and undesirable officers are shifted
from sensitive assignments (Preventive Customs Divisions at the Airports, sensitive
Collect orates in the Central Excise etc.)
iii. In the narcotics arena, which includes cultivation of opium, manufacture of alkaloids,
prevention of narcotics, smuggling etc. the financial stakes are astronomically high,
Consequently, the level of corruption is of a very high order in this area of
functioning and enormous pressures are brought to bear even when subordinate
officials are posted away, especially when the shift of an officer adversely affects the
interests of those who are making easy money.
iv. Narcotics trade has a world-wide network of smugglers who also have close links
with terrorists. Terrorists indulge in narcotics trade to amass huge funds, in various
foreign currencies, from which they source their procurement of weapons etc.
1. While the Department of Revenue has initiated a number of steps to deal with the
activities of smugglers and to plug loopholes in the system, Secretary (Revenue) has
stated that a possible approach to effectively liquidating the linkages developed by the
crime Syndicates would be to mercilessly prosecute the offenders without succumbing
to any pressure whatsoever. He is of the view that once the offenders are deterrent
punished under the law, their influence and strength will start declining, as also of all
those who support them, wherever located. He has emphasised that for this objective
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being achieved it will be extremely necessary that: the entire government machinery
involved in taking action against the crime Syndicate is allowed to perform its duties
with total freedom; officers with impeccable integrity should be posted to head the
various organisations which are responsible for taking action against tax offenders,
smugglers etc.; such officers should be selected with utmost care and provided
sufficiently long tenures, giving them the clear mandate to ruthlessly punish the
offenders; action must be taken to ensure the objective functioning of Courts which deal
with the trial of economic offences; all cases before the Courts should be speedily
concluded without the judicial officers coming under any pressure or succumbing to
temptations; inefficient and corrupt elements in the various organisations must be
weeded out and Government should take stringent action against officers who seek to
exert political pressure for securing postings and appointments of their choice.
1. From the above narrated analysis, the following conclusions can be drawn: -
i. On the basis of the extensive experience gained by our various concerned

intelligence, investigative and enforcement agencies, it is apparent that crime
Syndicate and Mafia organisations have established themselves in various parts of
the country.
ii. The various crime Syndicates/Mafia organisations have developed significant muscle
and money power and established linkages with governmental functionaries,
political leaders and others to be able to operate with impunity (as recently
exemplified by the activities of the Memon Brothers and Dawood Ibrahim).
iii. While the CBI and IB and the various agencies under the Department of Revenue, in
their normal course of functioning, come across information relating to the linkages
of crime Syndicates/Mafia organisations, there is presently no system under which
they are expected to pass on such information to an identical nodal agency. Sharing
of such information is presently of an occasional nature no evidence is available of
the same having been put to any operational use (the only mentionable exception
perhaps related to the recent investigations into the activities of Memon Brothers
and the Dawood gang on which several of our agencies were put to work
collectively.
1. Even where an agency comes across certain information about the linkages of crime
Syndicates, it has no mandate to immediately pass it on to one or more agencies. Any
agency which comes across information regarding linkages is also apprehensive that the
sharing of such information may jeopardize its own functioning through premature
leakage. In slum, the various agencies presently in the field take care to essentially focus
on their respective character of duties, dealing with the infringement of laws relating to
their organisations and consciously putting aside any information on linkages which they
may come across.
1. In the discussions in the Committee, I asked each of the Members as well as the
Secretary (Revenue) and his principal officers about their views regarding the
establishment of a Nodal Agency for the collection, collation and operationalisation of all
information relating to the activities of crime Syndicates. Broadly, the following
approaches have been mooted:
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i. The DIB has stated that while considering the establishment of any nodal
mechanism "It must be appreciated that the problems has enormous impact on
national security and is indeed highly political in nature". In this context, he has
suggested that the nodal set up should be under the IB, which is even otherwise
engaged in monitoring various political activities having a bearing on national
security. He has recommended that "an exclusive Top Secret Cell be established
in the IB to function as Nodal Group for receipt of inputs from various
security/revenue agencies which reveal political-bureaucrat-underworld nexus.
Such sharing will be through personal communication in writing, while operating
difficulties could be sorted out through periodic meetings among the heads of
these organisations to be chaired by the Home Secretary". The Top secret Cell
will share all tactical and operational information with other concerned agencies
on "need to know and act basis".
ii. The other approach recommended is to set up a system under which the Head of
the Various Intelligence and Revenue Agencies shall meet on a regular basis and
exchange vital information, without there being any leakage.
1. In the background of the discussions so far, there does not appear to be need for any
further debate on the vital importance of setting up a nodal point to which all existing
Intelligence and Enforcement agencies (irrespective of the Department under which
they are located) shall promptly pass on any information which they may come across,
which relates to the activities of crime Syndicates.
2. If the proposition in the preceding Para is sustained, a decision will need to be taken
regarding the Department/Ministry under which the nodal set-up should be located.
1. Under the existing arrangements for the transaction of Government business,

the Ministry of Home Affairs is responsible for all matters relating to internal
security. It is for this reason that the Intelligence Bureau is a part and parcel
of this Ministry (It is only by tradition that the DIB reports directly to
authorities outside MHA). R&AW functions under the Cabinet Secretariat and
deals with external intelligence. The various Intelligence, Investigation and
Enforcement agencies dealing with the implementation of economic laws
report to the Revenue Department under the Ministry of Finance. The CBI,
which is the principal criminal investigation agency of the Centre, is under the
department of Personnel.
2. In my view, considerable care would have to be taken to ensure that the
information which becomes available to the Nodal Cell is handled by a very
senior and trust-worthy officer. Any leakage of such information would not
only jeopardize potential action against the powerful criminal Syndicate, but
may also be susceptible to political exploitation. Under all circumstances, it
will have been ensured that the information available with the nodal set-up is
used strictly and entirely for stringent action against the crime Syndicates,
without allowing any scope whatever of its being exploited for political gain.
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3. In the preceding context, it would be logical it the nodal set-up is under the MHA,
directly handed by the Home Secretary who can be assisted by one or more selected
officers of the Ministry for the collation and compilation of all information received from
IB, CBI, R&AW and the various agencies under the Department of Revenue. The manner
in which such information is operationalised would need to be confidentially discussed
with the concerned Head of Organisations and, as necessary, with Secretary (Revenue).
It will also need to be ensured that the nodal set-up functions with extreme secrecy.
Needless to say, and leakage whatever about the linkages of crime Syndicate with senior
Government functionaries or political leaders in the States or at the Centre could have a
destabilising effect on the functioning of Government. As such, it would not appear
prudent to entrust the functioning of the Nodal Cell to any level below that of the Home
Secretary. Further, the Government would also have to carefully consider and prescribe
the authorities to whom the Home Secretary will report in regard to the sensitive
information received by the nodal set-up as well as regarding the operations to be
launched by one or more of the concerned agencies to apprehend, investigate and
prosecute the offenders.
1. In the normal course, this Report would have been drafted by the Member
Secretary and finalised by the Committee. Considering the nature of the
issues involved, I did not consider it desirable to burden the Members of the
Committee with any further involvement beyond the views expressed by
them. Accordingly, I decided to personally dictate this Report.
2. I have prepared only three copies of this report. One copy each is being
submitted to MOS (IS) and HM, the third copy being retained by me. After
HM has pursued this Report, I request him to consider discussing further
action with finance Minister, MOS (IS) and myself. The emerging approach
could therefore be got approved from Prime Minister before being
implemented. At that stage other concerned senior officer would be taken
into confidence.
3. After an initial discussion at the level of MOS (IS) and HM I could send a copy
of this Report to FM, before the issues are discussed with him.
43. 2011 Indian anti-corruption movement
The 2011 Indian anti-corruption movement refers to a series of protests against the
Government of India intended to seek strong legislation against graft, otherwise known as
corruption. The protests have centred on a proposed bill, called the Jan Lokpal Bill, which
the protestors believe could address the issue if it was suitably worded and enforced. The
movement has gained momentum in particular since 5 April 2011, when Anna Hazare, a
prominent activist, first went on a hunger strike which he called a "fast unto death".
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The protesters are of the opinion that the government desires to dilute proposals contained
in the original draft of the Jan Lokpal bill. They believe that the changes would make the
body intended to oversee the issue, the Lokayukta, no more than a powerless advisory body
in the Indian bureaucracy. Hazare, who is a Gandhi an, went on his initial hunger strike when
talks designed to consider the issues broke down. He had demanded the creation of a joint
drafting committee for the bill, comprised of both members from "civil society" and
government representatives.
Following Hazare's initial, much publicized protest action, a second major protest saw
controversial events take place at the Ram Lila Maidan, New Delhi on 4 June 2011. The
figurehead for these protests was Swami Ramdev and their aim was to highlight the need
for strong legislation to bring back to the country what has been called "black money"
deposited abroad. Ramdev demanded that untaxed money invested abroad should be
declared to be the wealth of the nation. Further, that the act of caching money, which is
alleged to have been obtained illegally, in foreign banks should be declared a crime against
the state. He also demanded that the nation's wealth held in foreign banks should be
brought back and that India should sign the United Nations Convention against Corruption.
He held a hunger strike on 4 June when his demands were not met. According to Ramdev,
10 million Indians would participate in the Satyagraha on 4 June 2011 throughout India. It is
estimated that around US$ 350 billion to US$ 1400 billion worth of illegal money is in
foreign banks.
The protests led to the creation of a movement that saw protests being organized in various
cities and towns of India. Protests included fasts, candlelight vigils and rallies. The protests
are unusual in India as they have no political affiliation and the protesters have been very
hostile to any political party trying to grab the initiative to meet its own political goals from
the activists. The protests to some extent have similarities in methodologies to Jayaprakash
Narayan's Bihar Movement (commonly called the JP Movement) of 1974
“Mahatma Gandhi fought for our freedom but we are yet to achieve real independence. The
second struggle of independence has started. We are ready to sacrifice our lives but will not
buckle under pressure”
-Anna Hazare
Background
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Issues regarding corruption in India have become more prominent in recent years. The
country was subject to socialist-inspired economic policies between the 1950s and the late
1980s. Extensive regulation, protectionism, and public ownership led to slow growth. Forbes
commented in 2007 that the system of bureaucratic controls called License Raj was often at
the core of corruption.
The Vohra Report of 1993, submitted by the former Indian Union Home Secretary N.N.
Vohra, studied the problem of the criminalization of politics and of the nexus among
criminals, politicians and bureaucrats in India. The report contained several observations
made by official agencies on the criminal network which was virtually running a parallel
government. It also discussed criminal gangs who enjoyed the patronage of politicians – of
all political parties – and the protection of government functionaries. It revealed that
political leaders had become the leaders of gangs. They were also connected to the military.
Over the years criminals had been elected to local bodies, State Assemblies, and even the
Parliament.
The Right to Information Act of 2005 has helped civilians work effectively towards tackling
corruption. It allows Indian citizens (except those living in Jammu and Kashmir) to request
information, for a fixed fee of Rs 10, from a "public authority" (a body of Government or
"instrumentality of State") which is required to reply expeditiously or within thirty days.
Activists have used this to uncover graft cases against various politicians and bureaucrats,
one consequence being that some of those activists have been attacked and even killed.
Various scandals were discovered in the period 2010-2011, including the 2G spectrum scam,
Adarsh Housing Society Scam, and the Commonwealth Games scam. These involved various
Ministers and also members of the Armed Forces, and they demonstrated how entrenched
corruption had become in India. They led also to popular, non-political movements
campaigning to fight graft via new legislation.
The Jan Lokpal Bill is a proposal to establish an independent body to investigate cases of
corruption within a year and to ensure a speedy prosecution within two years of an
investigation being started.
India against corruption
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India against Corruption (IAC) is a citizen's movement to demand strong anti-corruption

laws. Lokpal bills were introduced several times since 1968, yet they were never passed by
the Indian Parliament. After a fast by veteran social activist Anna Hazare and widespread
protests by citizens across India the Government of India constituted a 10-member Joint
Committee of ministers and civil society activists to draft an effective Jan Local Bill. The
primary focus of IAC movement is to ensure a strong Local bill. The IAC is a strictly voluntary
organization and its participants are bound by the IAC code of conduct.
Anti-corruption organizations
A variety of organizations have been created in India to actively fight against corrupt
government and business practices. Notable organizations include:
5th Pillar is most known for the creation of the zero rupee notes, a valueless note designed
to be given to corrupt officials when they request bribes.
India against Corruption is a movement created by citizens from a variety of professions and
statuses to work against corruption in India. It is currently headed by Anna Hazare.
Jaago Re! One Billion Votes is an organization originally founded by Tata Tea and Janaagraha
to increase youth voter registration. They have since expanded their work to include other
social issues, including corruption.
Association for Social Transparency, Rights and Action (ASTRA) is an NGO focused on grass-
roots work to fight corruption in Karnataka.
One organization, the Lok Satta Movement, has transformed itself from a civil organization
to a full-fledged political party, the Lok Satta Party. The party has fielded candidates in
Andhra Pradesh, Tamil Nadu, and Bangalore. In 2008, it obtained its first elected post, when
Jayaprakash Narayan won the election for the Kukatpally Assembly Constituency in Andhra
Pradesh.
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44. Present anti-corruption systems & watch dog

agencies
Central Government level
There are various bodies in place for implementing anticorruption policies and raising
awareness on corruption issues. At the federal level, key institutions include the Supreme
Court, the Central Vigilance Commission (CVC), the Central Bureau of Investigation (CBI), the
Office of the Controller & Auditor General (C&AG), and the Chief Information Commission
(CIC).
The Supreme Court
The Supreme Court has taken a stronger stance against corruption in recent years, as
confirmed by the Bertelsmann Foundation Report 2008. It has challenged the powers of
states in several instances. For example, in 2007 in Uttar Pradesh, it challenged the state
governor’s powers to pardon politically connected individuals based on arbitrary
considerations. In other instances, judges have taken on a stronger role in responding to
public interest litigation over official corruption and environmental issues. In December
2006, in a landmark ruling, the Supreme Court ruled that prosecutors do not need prior
permission to begin proceedings against politicians facing corruption charges5. It has also
started addressing corruption in the police by mandating the establishment of a police
commission to look into these matters and has ruled that corrupt officers can be prosecuted
without government consent.
Central Vigilance Commission (CVC)
Central Vigilance Commission (CVC) is an apex Indian governmental body created in 1964 to
address governmental corruption. It has the status of an autonomous body, free of control
from any executive authority, charged with monitoring all vigilance activity under the
Central Government of India, and advising various authorities in central Government
organizations in planning, executing, reviewing and reforming their vigilance work. It was set
up by the Government of India in February, 1964 on the recommendations of the
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Committee on Prevention of Corruption, headed by Shri K. Santhanam, to advise and guide

Central Government agencies in the field of vigilance. Nittoor Srinivasa Rau was selected as
the first Chief Vigilance Commissioner of India. The Annual Report of the CVC not only gives
the details of the work done by it but also brings out the system failures which lead to
corruption in various Departments/Organizations, system improvements; various preventive
measures and cases in which the Commission's advises were ignored etc.
The CVC has the power to undertake inquiries or investigations of transactions involving
certain categories of public servants. It also has supervisory powers over the Central Bureau
of Investigations. The CVC can investigate complaints against high level public officials at the
central level, in cases where they are suspected of having committed an offence under the
Prevention of Corruption Act. The CVC is mandated to investigate public sector corruption at
the federal level and not at the state level. The CVC has an online whistle-blower complaint
mechanism available on its website. More recently, the CVC is working in collaboration with
Transparency International India on introducing Integrity pacts in all state-owned public
sector companies, industries and banks. In December 2007, the Commissioner issued a
directive to this effect which has resulted in 32 public sector undertakings having adopted
an integrity pact.
The CVC is not an investigating agency, and it either gets the investigation done through the
CBI or through the Departmental Chief Vigilance Officers. The only investigation carried out
by the CVC is that of examining Civil Works of the Government which is done through the
Chief Technical Officer. Central Vigilance Commission: CVC is the apex body for all vigilance
cases in Government of India.
However, it does not have adequate resources commensurate with the large number of
complaints that it receives. CVC is a very small set up with staff strength less than 200. It is
supposed to check corruption in more than 1500 central government departments and
ministries, some of them being as big as Central Excise, Railways, and Income Tax etc.
Therefore, it has to depend on the vigilance wings of respective departments and forwards
most of the complaints for inquiry and report to them. While it monitors the progress of
these complaints, there is delay and the complainants are often disturbed by this. It directly
enquires into a few complaints on its own, especially when it suspects motivated delays or
where senior officials could be implicated. But given the constraints of manpower, such
number is really small.
CVC is merely an advisory body. Central Government Departments seek CVC’s advice on
various corruption cases. However, they are free to accept or reject CVC’s advice. Even in
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those cases, which are directly enquired into by the CVC, it can only advise government. CVC
mentions these cases of non-acceptance in its monthly reports and the Annual Report to
Parliament. But these are not much in focus in Parliamentary debates or by the media.
Experience shows that CVC’s advice to initiate prosecution is rarely accepted and whenever
CVC advised major penalty, it was reduced to minor penalty. Therefore, CVC can hardly be
treated as an effective deterrent against corruption.
CVC cannot direct CBI to initiate enquiries against any officer of the level of Joint Secretary
and above on its own. The CBI has to seek the permission of that department, which
obviously would not be granted if the senior officers of that department are involved and
they could delay the case or see to it that permission would not be granted.
CVC does not have powers to register criminal case. It deals only with vigilance or
disciplinary matters.
It does not have powers over politicians. If there is an involvement of a politician in any
case, CVC could at best bring it to the notice of the Government. There are several cases of
serious corruption in which officials and political executive are involved together.
It does not have any direct powers over departmental vigilance wings. Often it is seen that
CVC forwards a complaint to a department and then keeps sending reminders to them to
enquire and send report. Many a times, the departments just do not comply. CVC does not
have any really effective powers over them to seek compliance of its orders.
CVC does not have administrative control over officials in vigilance wings of various central
government departments to which it forwards corruption complaints. Though the
government does consult CVC before appointing the Chief Vigilance Officers of various
departments, however, the final decision lies with the government. Also, the officials below
CVO are appointed /transferred by that department only. Only in exceptional cases, if the
CVO chooses to bring it to the notice of CVC, CVC could bring pressure on the Department to
revoke orders but again such recommendations are not binding.
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Appointments to CVC are directly under the control of ruling political party, though the
leader of the Opposition is a member of the Committee to select CVC and VCs. But the
Committee only considers names put up before it and that is decided by the Government.
The appointments are opaque.
CVC Act gives supervisory powers to CVC over CBI. However, these supervisory powers have
remained ineffective. CVC does not have the power to call for any file from CBI or to direct
them to do any case in a particular manner. Besides, CBI is under administrative control of
DOPT rather than CVC.
Therefore, though CVC is relatively independent in its functioning, it neither has resources
nor powers to enquire and take action on complaints of corruption in a manner that meets
the expectations of people or act as an effective deterrence against corruption.
Departmental Vigilance Wings: Each Department has a vigilance wing, which is manned by
officials from the same department (barring a few which have an outsider as Chief Vigilance
Officer. However, all the officers under him belong to the same department).
The Central Vigilance Commission (CVC) is conceived to be the apex vigilance institution,
free of control from any executive authority, monitoring all vigilance activity under the
Central Government and advising various authorities in Central Government organizations
in planning, executing, reviewing and reforming their vigilance work. The Commission
consists of: (i) a Central Vigilance Commissioner -Chairperson; and (ii) not more than two
Vigilance Commissioners – Members.
The present status of the CVC is that came into force the CVC Bill that was passed by both
houses of Parliament in 2003 and the President gave its assent and the Central Vigilance
Commission Act 2003 (No45 0f 2003). In addition, the resolution on Public Interest
Disclosure and protection of Informer” dated April 2004, the Government of India has
authorized the Central Vigilance Commission as the "Designated Agency” to receive written
complaints for disclosure on any allegation of corruption or misuse of office and
recommend appropriate action.
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The power and functions of the Central Vigilance Commission are to: (i) exercise
superintendence over the functioning of the Delhi Special Police Establishment(DSPE) with
respect to investigation under the Prevention of Corruption Act, 1988; or offence under
CRPC for certain categories of public servants and to give directions to the DSPE for purpose
of discharging this responsibility; (ii) review the progress of investigations conducted by the
DSPE into offences alleged to have been committed under the PC Act; (iii) undertake an
inquiry or cause an inquiry or investigation to be made into any transaction in which a public
servant working in any organization, to which the executive control of the Government of
India extends, is suspected or alleged to have acted for an improper purpose or in a corrupt
manner; (iv) tender independent and impartial advice to the disciplinary and other
authorities in disciplinary cases, involving vigilance angle at different stages i.e.
investigation, inquiry, appeal, review etc.; (v) exercise a general check and supervision over
vigilance and anti-corruption work in Ministries or Departments of the Govt. of India and
other organizations to which the executive power of the Union extends; (vi)chair the
Committee for selection of Director (CBI), Director (Enforcement Directorate) and officers of
the level of SP and above in DSPE; and (vii) undertake or cause an inquiry into complaints
received under the Public Interest Disclosure and Protection of Informer and recommend
appropriate action.
Since the officers in the vigilance wing of a department are from the same department and
they can be posted to any position in that department anytime, it is practically impossible
for them to be independent and objective while inquiring into complaints against their
colleagues and seniors. If a complaint is received against a senior officer, it is impossible to
enquire into that complaint because an officer who is in vigilance today might get posted
under that senior officer some time in future.
In some departments, especially in the Ministries, some officials double up as vigilance

officials. It means that an existing official is given additional duty of vigilance also. So, if
some citizen complaints against that officer, the complaint are expected to be enquired into
by the same officer. Even if someone complaints against that officer to the CVC or to the
Head of that Department or to any other authority, the complaint is forwarded by all these
agencies and it finally lands up in his own lap to enquire against himself. Even if he recuses
himself from such inquiries, still they have to be handled by those who otherwise report to
him. There are indeed examples of such absurdity.
There have been instances of the officials posted in vigilance wing by that department
having had a very corrupt past. While in vigilance, they try to scuttle all cases against
themselves. They also turn vigilance wing into a hub of corruption, where cases are closed
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for consideration. Departmental vigilance does not investigate into criminal aspect of any
case. It does not have the powers to register an FIR. They also do not have any powers
against politicians.
Since the vigilance wing is directly under the control of the Head of that Department, it is
practically impossible for them to enquire against senior officials of that department.
Therefore, the vigilance wing of any department is seen to soft-pedal on genuine complaints
or used to enquire against “inconvenient" officers.
Public Accounts Committee
The Public Accounts Committee (PAC) is a committee of selected members of Parliament,

constituted by the Parliament of India, for the auditing of the expenditure of the
Government of India.
The PAC is formed every year with a strength of not more than 22 members of which 15 are
from Lok Sabha, the lower house of the Parliament, and 7 from Rajya Sabha, the upper
house of the Parliament. None of the 22 members shall be a minister in the government.
The Comptroller and Auditor General
The Office of the Comptroller and Auditor General (C & AG) are praised by the 2007 Global
Integrity Report for being independent and well-staffed, with offices of Accountant Generals
(AG) in all states. The C & AG has produced several reports on state departments such as
railways, telecommunications, public sector enterprise, and tax administration. These
reports have revealed many financial irregularities, suggesting a lack of monitoring of public
expenses, poor targeting and corrupt practices in many branches of government. However,
since the C & AG has no authority to ensure compliance with its recommendations, the
government often fails to implement the reports’ proposals.
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The Chief Information Commission
The Chief Information Commission (CIC) was established in 2005 and came into operation in
2006. It has delivered decisions instructing government, courts, universities, police, and
ministries on how to share information of public interest. State information commissions
have also been opened, thus giving practical shape to the 2005 Right to Information (RTI)
Act. The commissions have not been immune to criticism, however. Of India's 28 states, 26
have officially constituted information commissions to implement the RTI Act. Nine
pioneered access to information laws before the RTI Act was passed. A state report card one
year on complimented the quality of the law, but criticised the apathy and lack of awareness
of many citizens.
The Central Bureau of Investigation
Introduction
The Central Bureau of Investigation traces its origin to the Special Police Establishment
(SPE), which was set up in 1941 by the Government of India. The functions of the SPE were
to investigate cases of bribery and corruption in transactions with the War & Supply
Department of India during World War II. The superintendent of the SPE was vested with
the War Department. Even after the end of the War, the need for a Central Government
agency to investigate cases of bribery and corruption by Central Government employees
was felt. The Delhi Special Police Establishment Act was therefore brought into force in
1946. This Act transferred the superintendence of the SPE to the Home Department and its
functions were enlarged to cover all departments of the Govt. of India. The jurisdiction of
the SPE extended to all the Union Territories and could be extended also to the States with
the consent of the State Government concerned.
The Central Bureau of Investigation (CBI) is a government agency of India that serves as a
criminal investigation body, national security agency and intelligence agency. It was
established on 1 April 1963 and evolved from the Special Police Establishment founded in
1941. Its motto is "Industry, Impartiality, and Integrity".
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The CBI is controlled by the Department of Personnel and Training in the Ministry of
Personnel, Public Grievances and Pension of the Union Government usually headed by a
Union Minister who reports directly to the Prime Minister. While analogous in structure to
the FBI, the CBI's powers and function are severely limited to specific crimes based on Acts
(mainly the Delhi Special Police Establishment Act, 1946). The CBI is the official Interpol unit
for India. CBI has powers of a police station to investigate and register FIR. It can investigate
any case related to a Central Government department on its own or any case referred to it
by any state government or any court. CBI is overburdened and does not accept cases even
where amount of defalcation is alleged to be around Rs 1 crore.
CBI is directly under the administrative control of Central Government.
So, if a complaint pertains to any minister or politician who is part of a ruling coalition or a
bureaucrat who is close to them, CBI's credibility has suffered and there is increasing public
perception that it cannot do a fair investigation and that it is influenced to scuttle these
cases.
Again, because CBI is directly under the control of Central Government, CBI is perceived to
have been often used to settle scores against inconvenient politicians. The Anti-Corruption
Division of the Central Bureau of Investigation (CBI) under the Ministry of Personnel, public
grievance and pensions, has handled cases against Chief Ministers, Ministers, Secretaries to
Government, Officers of the All India Services, CMDs of Banks, Financial Institutions, Public
Sector Undertakings, etc. CBI investigations have a major impact on the political and
economic life of the nation. The following broad categories of criminal cases are handled by
the CBI: (i)Cases of corruption and fraud committed by public servants of all Central Govt.
Departments, Central Public Sector Undertakings and Central Financial Institutions;(ii)
Economic crimes, including bank frauds, financial frauds, Import Export & Foreign Exchange
violations, large-scale smuggling of narcotics, antiques, cultural property and smuggling of
other contraband items etc.; and (iii) Special Crimes, such as cases of terrorism, bomb
blasts, sensational homicides, kidnapping for ransom and crimes committed by the
mafia/the underworld.
Therefore, if a citizen wants to make a complaint about corruption by a politician or an

official in the Central Government, there isn’t a single anti-corruption agency which is
effective and independent of the government, whose wrongdoings are sought to be
investigated. CBI has powers but it is not independent. CVC is independent but it does not
have sufficient powers or resources.
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CBI takes shape
As the CBI, over the years, established a reputation of being India's premier investigative
agency with adequate resources to deal with complicated cases, demands were made on it
to take up investigation of more cases of conventional crime such as murder, kidnapping,
terrorism, etc. Apart from this, the Supreme Court and even the various High Courts of the
country also started entrusting such cases for investigation to the CBI on petitions filed by
aggrieved parties. Taking into account the fact that several cases falling under this category
were being taken up for investigation by the CBI, it was found expedient to entrust such
cases to the Branches having local jurisdiction. It was therefore decided in 1987 to
constitute two investigation divisions in the CBI, namely, Anti-Corruption Division and
Special Crimes Division, the latter dealing with cases of conventional crime, besides
economic offences. The CBI is a central subject under the Constitution of India, meaning
that it reports to the Indian Government and not to the individual states.
Role and functions
The CBI is the premier investigating police agency in India. It is an elite force playing a major
role in preservation of values in public life and in ensuring the health of the national
economy. It is also the nodal police agency in India which coordinates investigation on
behalf of Interpol Member countries. The services of its investigating officers are sought for
all major investigations in the country. CBI as an organization is held in high esteem by the
Supreme Court, the High Courts, the Parliament and the public. The CBI has to investigate
major crimes in the country having interstate and international ramifications. It is also
involved in collection of criminal intelligence pertaining to three of its main areas of
operation, viz., Anti-Corruption, Economic Crimes and Special Crimes.
CBI investigations have a major impact on the political and economic life of the nation. The
following broad categories of criminal cases are handled by the CBI:-
Anti-Corruption Division: Cases of corruption and fraud committed by public servants of all
Central Govt. Departments, Central Public Sector Undertakings and Central Financial
Institutions.
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Economic Crimes Division: Deals with cases including bank frauds, financial frauds, Import
Export & Foreign Exchange violations, large-scale smuggling of narcotics, antiques, cultural
property and smuggling of other contraband items etc.
Special Crimes Division: Deals with cases such as cases of terrorism, bomb blasts,
sensational homicides, kidnapping for ransom and crimes committed by the mafia/the
underworld.
Jurisdiction powers, privileges and liabilities
The legal powers of investigation of CBI are derived from the DSPE Act 1946. This Act
confers concurrent and coextensive powers, duties, privileges and liabilities on the members
of Delhi Special Police Establishment (CBI) with Police Officers of the Union Territories. The
Central Government may extend to any area, besides Union Territories, the powers and
jurisdiction of members of the CBI for investigation subject to the consent of the
Government of the concerned State. While exercising such powers, members of the CBI of
or above the rank of Sub Inspector shall be deemed to be officers in charge of Police
Stations of respective jurisdictions. The CBI can investigate only such of the offences as are
notified by the Central Government under the DSPE Act.
Jurisdiction of CBI V/S State
Law and Order is a State subject and the basic jurisdiction to investigate crime lies with State
Police. Besides, due to limited resources, CBI would not be able to investigate crimes of all
kind. CBI may investigate.
Cases which is essentially against Central Govt. employees or concerning affairs of the
Central Govt. and the employees of the Central Public Sector Undertakings and Public Sector
Banks.
Cases in which the financial interests of the Central Government are involve.
Cases relating to the breaches of Central Laws with the enforcement of which the
Government of India is mainly concerned.
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Big cases of fraud, cheating, embezzlement and the like relating to companies in which large
funds are involved and similar other cases when committed by organized gangs or
professional criminals having ramifications in several States.
Cases having interstate and international ramifications and involving several official agencies
where, from all angles, it is considered necessary that a single investigating agency should
be in charge of the investigation.
Corruption in CBI
Because of its intensely political overtones, it has been exposed by its former bigwigs like
Joginder Singh and BR Lal who were Director and Joint Director respectively, to be engaging
in nepotism, mal-prosecution and outright corruption. In his book, Who Owns CBI, BR Lal, an
honest and upright officer details the modus operandi of manipulating and derailing
investigation this organization has become synonymous with corruption as information
obtained under the RTI Act has revealed. Even the Top Bosses are known for stooping to
illegal fund diversions. RTI activist Krishnan and Tripathi has alleged harassment from CBI in
order to save itself from exposure through RTI. CBI has now been exempted from RTI act.
Controversies
Normally, cases assigned to the CBI are sensitive and of national importance. It is a usual
practice for the respective state police departments, to initially register any case coming
under its jurisdiction, and if necessary, through mediation by the central government, the
cases may be transferred to the CBI. The CBI handles many high profile cases, and is never
far from controversy.
Bofors scandal
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In January 2006, it was found that CBI had quietly unfrozen bank accounts of Italian
businessman Octavio Quattro chi, one of the prime accused in the Bofors scandal of 1986
which had tainted the Rajiv Gandhi government. The CBI was responsible for the inquiry into
the Bofors Case. Associates of then Prime Minister Rajiv Gandhi were linked to alleged pay-
offs made in the mid-1980s by the Swedish arms firm AB Bofors, with $40 million in
kickbacks moved from Britain and Panama to secret Swiss banks. The 410 howitzer field
guns purchased in the $1,300 million arms sale were reported to be inferior to those offered
by a French competitor.
The CBI, which unfroze Rs 21 crore in a London bank in accounts held by Bofors scam
accused Quattro chi and his wife Maria in 2006, has facilitated his travel across the globe by
asking Interpol to take him off the “wanted” list on 29 Apr 2009. Following a communication
from the CBI, Interpol withdrew the Red Corner Notice against Quattro chi. the
development that came barely three weeks before the end of the Man Mohan Singh
government’s tenure, brought the issue of the Bofors scandal back to centre stage. It is
often suspected that ruling governments interfere with the work of the CBI, and the
handling of the Bofors investigation by CBI under Congress governments has created a new
synonym for CBI. After letting off the Bofors accused, Oppositions have never tried to call it
the 'Congress Bureau of Investigation.
ISRO spy ring case
In 1994 two scientists with the Indian Space Research Organization (ISRO) and two Indian
businessmen were arrested for allegedly conspiring to sell space secrets to two Maldivian
women, who were originally described by newspapers as agents of Pakistani intelligence, for
money and sex. The CBI investigation did not reveal the existence of a spy ring, and by early
1995 it was clear that the case was more a product of inexperience and over exoneration on
the part of the police and Intelligence Bureau. It was a well-planned scheme to remove the
then DGP Ramon S by concocted links to Maldivian lady. The scheme was plotted by some
officers of Kerala police, the media and Muslim League as DGP was made of sterner stuff.
Hawala scandal
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In 1991 an arrest linked to militants in Kashmir led to a raid on Hawala brokers, revealing
evidence of large-scale payments to national politicians. The prosecution that followed was
partly prompted by a public interest petition (Vineet Narayan), and yet the court cases of
the Hawala scandal eventually all collapsed without convictions. The CBI's role was again
criticized. In concluding the Vineet Narayan case, the Supreme Court of India directed that
the Central Vigilance Commission should be given a supervisory role over the CBI.
Priyadarshini Mattoo murder case
The CBI has been under a cloud owing to its handling of the Priyadarshini Mattoo case, in
which Santosh Kumar Singh, the alleged murderer of a 22-year old law student was
acquitted for what the case judge called "deliberate inaction" by the investigating team. The
accused was the son of a high ranking officer in the Indian Police Service, due to which the
case had been shifted from the regular police force to the CBI. However, the 1999 judgment
commented on how "the influence of the father of the accused has been there".
Embarrassed by the judgment, the-then CBI Director, R K Raghavan, requested two Special
Directors, P C Sharma and G H Achari, to study the judgment. Subsequently the CBI
appealed the verdict in Delhi High court in 2000, after which the High Court issued a bail
able warrant against the accused. The case was again prominent in 2006 after much media
coverage and public bashing (this was mainly due to a similar acquittal in another high
profile case, though not handled by the CBI). The CBI filed an application for early hearing in
July 2006. The High Court subsequently found Santosh Kumar Singh guilty of rape and
murder and awarded a death sentence for the same in October 2006.
Nithari Killings
The CBI was given the responsibility of investigating the murders of dozens of children in the
Nithari village near Noida, UP. This was after the local police was found to be incompetent
and lethargic in their investigations. The serial killings were in the Indian and international
media for weeks since decomposing bodies were found outside the house of the accused
Moninder Singh Pandher.
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Dawood Ibrahim case
In August 2007, the CBI asked its Pakistani counterpart, the Federal Investigation Agency, for
its comments on recent media reports about the detention of Dawood Ibrahim by
authorities in Karachi.
Sister Abhaya murder case
Sister Abhaya murder case concerns a nun, who was found dead in water well in Saint Pius X
convent hostel in Kottayam, Kerala on7 March 1992. Altogether there were five CBI inquiries
into the murder case so far without any tangible results. The powerful Catholic Lobby had
exerted their undue influence to subdue the case as a Priest and a nun were involved.
Abhaya had caught them in a compromising position.
Sohrabuddin case
CBI has been accused of acting for the ruling party Congress (UPA) to trap its opposition
party mainly BJP. CBI, which is dealing with the Sohrabuddin case in Gujarat, questioned
Geeta Johri an IPS officer, who claims the CBI is pressuring her to falsely implicate former
Gujarat Minister Amit Shah in the Sohrabuddin fake encounter case, Rajkot Police
Commissioner Geeta Johri has alleged in the Supreme Court.
Sant Singh Chatwal case
Sant Singh Chatwal was an accused in the CBI’s records for 14 years. CBI had filed two
charge sheets naming him as accused; sent Letters Rogatory abroad; even sent a probe
team to the US and put Chatwal and his wife behind bars from February 2 to February 5,
1997. On May 30, 2007 and August 10, 2008, former CBI Director Vijay Shankar and the
agency’s present Director Ashwani Kumar respectively signed orders saying there was no
need to challenge the discharge of Sant Singh Chatwal and his co-accused. This was done in
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spite of advice of a string of investigators — including a Special Director and Joint Director
— and it was decided not to appeal his discharge. This, in effect, closed the principal case of
bank fraud in which Chatwal had been embroiled for over a decade. Along with four others,
Chatwal was charged with being part of a “criminal conspiracy” to defraud the Bank of
India’s New York branch to the tune of US $8,992,815 (Rs 28.32 crore). In all, four charge
sheets were filed by the CBI, with Chatwal named as accused in two. The trials in the other
two cases are still in progress. RTI applicant Krishnan and Tripathi was denied access to
public information concerning the closed cases. CIC later ordered the CBI to disclose the
information. But CBI has recently been exempted from RTI act and it is unclear if this
information will be disclosed. Sant Singh Chatwal has been awarded with Padma Bhushan
despite these cases.
Malan Kara Varghese murder case
The Malan Kara Varghese murder case concerns the death of T.M.Varghese also known as
Malan Kara Varghese, a member of Malan Kara Orthodox Church's managing committee
and a timber merchant in 5 December 2002.On 9 May 2010 charged Father Varghese
Thekkekara, a priest and manager of the Angamali diocese in the rival Jacobite Syrian
Christian Church (a part of the Syriac Orthodox Church) with conspiracy in the murder of
Malan Kara Varghese and named him as the prime accused. Till date, the prime accused has
not been arrested; CBI is highly being criticized for this by Kerala High Court and Media.
Bhopal gas tragedy
The public perceived that the CBI was very ineffective in trying the Bhopal gas tragedy case,
the former CBI director has now confessed that he asked to remain soft on extraditing the
Union Carbide CEO Warren Anderson, and dropped charges, including culpable homicide,
against those accused in this case, who received two year sentences.
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Anti-corruption police and courts
The income tax department of India, Central Vigilance Commission and Central Bureau of
Investigation all deal with anti-corruption initiatives. There have been calls for the Indian
government to create an anti-theft law enforcement agency that investigates and
prosecutes corruption in government at national, state and local levels Special courts that
are more efficient than the traditional Indian courts with traveling judges and law
enforcement agents are being proposed. The proposal has not yet been acted upon by the
Indian government. Certain states such as Andhra Pradesh (Andhra Pradesh Anti-corruption
Bureau) and Karnataka (Lokayukta) have similar agencies and courts.
Directorate General of Economic Enforcement
The Directorate General of Economic Enforcement is a law enforcement agency and

economic intelligence agency responsible for enforcing economic laws and fighting
economic crime in India. It is part of the Department of Revenue, Ministry of Finance. It
comprises of officers of the Indian Revenue Service.
Objective
The prime objective of the Enforcement Directorate is the enforcement of two key Acts of
the Government of India namely, the Foreign Exchange Management Act 1999(FEMA) and
the Prevention of Money Laundering Act 2002.
45. E-Government
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Defining e-Government
‘E-Government' (or Digital Government) is defined as ‘The utilization of the Internet and the
world-wide-web for delivering government information and services to the citizens.’ (United
Nations, 2006; AOEMA, 2005)
'Electronic Government' essentially refers to the approach ‘How government utilized IT, ICT,
and other web-based telecommunication technologies to improve and/or enhance on the
efficiency and effectiveness of service delivery in the public sector.’
E-government describes the use of technologies to facilitate the operation of government

and the disbursement of government information and services. E-government, short for
electronic government, deals heavily with Internet and non-internet applications to aid in
governments. E-government includes the use of electronics in government as large-scale as
the use of telephones and fax machines, as well as surveillance systems, tracking systems
such as RFID tags, and even the use of television and radios to provide government-related
information and services to the citizens.
Examples of e-Government and e-Governance
E-Government should enable anyone visiting a city website to communicate and interact
with city employees via the Internet with graphical user interfaces (GUI), instant-messaging
(IM), audio/video presentations, and in any way more sophisticated than a simple email
letter to the address provided at the site” and “the use of technology to enhance the access
to and delivery of government services to benefit citizens, business partners and
employees”. The focus should be on:
 The use of Information and communication technologies, and particularly the Internet, as a
tool to achieve better government.
 The use of information and communication technologies in all facets of the operations of a
government organization.
 The continuous optimization of service delivery, constituency participation and governance
by transforming internal and external relationships through technology, the Internet and
new media.
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Whilst e-Government has traditionally been understood as being centered on the

operations of government, e-Governance is understood to extend the scope by including
citizen engagement and participation in governance. As such, following in line with the
OECD definition of e-Government, e-Governance can be defined as the use of ICTs as a tool
to achieve better governance.
Delivery models and activities of e-Government
The primary delivery models of e-Government can be divided into:
 Government-to-Citizen or Government-to-Consumer (G2C)

**In this model, the G2C models apply the strategy of Customer Relationship Management
(CRM) with business concept.
**By managing their customer (citizen) relationship, the business (government) can provide
the needed products and services fulfill the needs from customer (citizen).
**In United States, the NPR ([National Partnership for Reinventing Government National
Partnership for Reinventing Government]) has been implemented from 1993.
 Government-to-Business (G2B)
 Government-to-Government (G2G)
 Government-to-Employees (G2E)
 Government-to-Religious Movements/Hindu temple (G2R)
 Government-to-Households (G2H)
Within each of these interaction domains, four kinds of activities take place:
 Pushing information over the Internet, e.g.: regulatory services, general holidays,
public hearing schedules, issue briefs, notifications, etc.
 Two-way communications between the agency and the citizen, a business, or
another government agency. In this model, users can engage in dialogue with
agencies and post problems, comments, or requests to the agency.
 Conducting transactions, e.g.: lodging tax returns, applying for services and grants.
 Governance, e.g.: To enable the citizen transition from passive information access to
active citizen participation by:
1) Informing the citizen
2) Representing the citizen
3) Encouraging the citizen to vote
4) Consulting the citizen
5) Involving the citizen
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Non-internet e-Government
While e-government is often thought of as "online government" or "Internet-based

government," many non-Internet "electronic government" technologies can be used in this
context. Some non-Internet forms include telephone, fax, PDA, SMS text messaging, MMS,
wireless networks and services, Bluetooth, CCTV, tracking systems, RFID, biometric
identification, road traffic management and regulatory enforcement, identity cards, smart
cards and other Near Field Communication applications; polling station technology (where
non-online e-voting is being considered), TV and radio-based delivery of government
services (e.g., CSMW), email, online community facilities, newsgroups and electronic mailing
lists, online chat, and instant messaging technologies.
Laws/Acts
 E-Government Act of 2002
Controversies of e-Government
Disadvantages
The main disadvantages concerning e-government is the lack of equality in public access to
the internet, reliability of information on the web, and hidden agendas of government
groups that could influence and bias public opinions.
There are many considerations and potential implications of implementing and designing e-
government, including disintermediation of the government and its citizens, impacts on
economic, social, and political factors, vulnerability to cyber-attacks, and disturbances to the
status quo in these areas.
Hyper-surveillance
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210
Increased contact between government and its citizens goes both ways. Once e-government
begins to develop and become more sophisticated, citizens will be forced to interact
electronically with the government on a larger scale. This could potentially lead to a lack of
privacy for civilians as their government obtains more and more information on them. In a
worst case scenario, with so much information being passed electronically between
government and civilians, a totalitarian-like system could develop. When the government
has easy access to countless information on its citizens, personal privacy is lost.
Cost
Although “a prodigious amount of money has been spent” on the development and
implementation of e-government, some say it has yielded only a mediocre product. The
outcomes and effects of trial Internet-based governments are often difficult to gauge or
unsatisfactory. According to Gartner, Worldwide IT spending is estimated to total $3.6
trillion in 2011 which is 5.1% increase from the year 2010($3.4 trillion).
Inaccessibility
An e-government site that provides web access and support often does not offer the
“potential to reach many users including those who live in remote areas, are homebound,
have low literacy levels, exist on poverty line incomes.”
False sense of transparency and accountability
Opponents of e-government argue that online governmental transparency is dubious

because it is maintained by the governments themselves. Information can be added or
removed from the public eye. To this day, very few organizations monitor and provide
accountability for these modifications. Those that do so, like the United States’ OMB Watch
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211
and Government Accountability Project, are often nonprofit volunteers. Even the
governments themselves do not always keep track of the information they insert and
delete.
Advantages
E-government allows for government transparency. Government transparency is important

because it allows the public to be informed about what the government is working on as
well as the policies they are trying to implement. Simple tasks may be easier to perform
through electronic government access. Many changes, such as marital status or address
changes can be a long process and take a lot of paper work for citizens. E-government
allows these tasks to be performed efficiently with more convenience to individuals. E-
government is an easy way for the public to be more involved in political campaigns. It could
increase voter awareness, which could lead to an increase in citizen participation in
elections. It is convenient and cost-effective for businesses, and the public benefits by
getting easy access to the most current information available without having to spend time,
energy and money to get it. E-government helps simplify processes and makes access to
government information more easily accessible for public sector agencies and citizens.
Democratization
One goal of e-government will be greater citizen participation. Through the internet, people
from all over the country can interact with politicians or public servants and make their
voices heard. Blogging and interactive surveys will allow politicians or public servants to see
the views of the people they represent on any given issue. Chat rooms can place citizens in
real-time contact with elected officials, their offices or provide them with the means to
replace them by interacting directly with public servants, allowing voters to have a direct
impact and influence in their government. These technologies can create a more
transparent government, allowing voters to immediately see how and why their
representation in the capital is voting the way they are. This helps voters better decide who
to vote for in the future or how to help the public servants become more productive. A
government could theoretically move more towards a true democracy with the proper
application of e-government. Government transparency will give insight to the public on
how decisions are made and hold elected officials or public servants accountable for their
actions. The public could become a direct and prominent influence in government
legislature to some degree.
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212
Environmental bonuses
Proponents of e-government argue that online government services would lessen the need
for hard copy forms. Due to recent pressures from environmentalist groups, the media, and
the public, some governments and organizations have turned to the Internet to reduce this
paper use. The Indian government utilizes the website http://www.india.gov.in/ to provide
“internal government forms for employees” and thus “produce significant savings in paper.
Speed, efficiency, and convenience
E-government allows citizens to interact with computers to achieve objectives at any time
and any location, and eliminates the necessity for physical travel to government agents
sitting behind desks and windows. Improved accounting and record keeping can be noted
through computerization, and information and forms can be easily accessed, equaling
quicker processing time. On the administrative side, access to help find or retrieve files and
linked information can now be stored in databases versus hardcopies stored in various
locations. Individuals with disabilities or conditions no longer have to be mobile to be active
in government and can be in the comfort of their own homes.
Public approval
Recent trials of e-government have been met with acceptance and eagerness from the
public. Citizens participate in online discussions of political issues with increasing frequency,
and young people, who traditionally display minimal interest in government affairs, are
drawn to e-voting procedures.
Although internet-based governmental programs have been criticized for lack of reliable
privacy policies, studies have shown that people value prosecution of offenders over
personal confidentiality. Ninety percent of United States adults approve of Internet tracking
systems of criminals, and fifty-seven percent are willing to forgo some of their personal
internet privacy if it leads to the prosecution of criminals or terrorists.
SATISHCHANDER
213
Technology-specific e-Government
There are also some technology-specific sub-categories of e-government, such as m-

government (mobile government), u-government (ubiquitous government), and g-
government (GIS/GPS applications for e-government.
E-government portals and platforms the primary delivery models of e-Government are
classified depending on who benefits. In the development of public sector or private sector
portals and platforms, a system is created that benefits all constituents. Citizens needing to
renew their vehicle registration have a convenient way to accomplish it while already
engaged in meeting the regulatory inspection requirement. On behalf of a government
partner, business provides what has traditionally, and solely, managed by government and
can use this service to generate profit or attract new customers. Government agencies are
relieved of the cost and complexity of having to process the transactions.
To develop these public sector portals or platforms, governments have the choice to
internally develop and manage, outsource, or sign a self-funding contract. The self-funding
model creates portals that pay for themselves through convenience fees for certain e-
government transactions, known as self-funding portals.
Social networking is an emerging area for e-democracy. The social networking entry point is
within the citizens’ environment and the engagement is on the citizens’ terms. Proponents
of e-government perceive government use of social networks as a medium to help
government act more like the public it serves. Examples can be found at almost every state
government portal through Facebook, Twitter, and YouTube widgets.
Government and its agents also have the opportunity to follow citizens to monitor
satisfaction with services they receive. Through List Serves, RSS feeds, mobile messaging,
micro-blogging services and blogs, government and its agencies can share information to
citizens who share common interests and concerns. Government is also beginning to
Twitter. In the state of Rhode Island, Treasurer Frank T. Caprio is offering daily tweets of the
state’s cash flow. Interested people can sign up at here. For a full list of state agencies with
Twitter feeds, visit Real Life Live document. For more information, visit transparent govt.
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214
NeGP
NeGP (National e-Governance Plan) is a plan of the Government of India to make all
Government services available to the citizens of India via the electronic media.
This plan was an outcome of the recommendations of the Second Administrative Reforms
Commission". It is under the administration of the Department of Information Technology of
Ministry of Communications and Information Technology, Government of India.
Background
With the widespread usage of IT, computers, mobile phones, Internet and other
components of the ICT technologies in India over the last couple of decades, the need for e-
Government in India was finally articulated in the form of the 11th report of Second
Administrative Reforms Commission titled "Promoting e-Governance - The Smart way
Forward". According to the Paragraph 83, Report of the Working Group on Convergence and
E-Governance for The Tenth Five Year Plan (2002–2007), Planning Commission, November,
2001, SMART government is defined as ‘Simple, Moral, Accountable, Responsive and
Transparent’ government. The ARC report was submitted to the GOI on 20 December
2008.The report cited several prior initiatives as source of its inspiration including reference
to the Singapore ONE programme. The ARC report defined the need for eGovernance to
bring the government closer to its citizens (G2C) and businesses (G2B) while promoting
inter-government agency cooperation in a friendly, convenient, transparent and inexpensive
fashion. According to this report the goals of e-Governance were defined as follows:
1) Better service delivery to citizens

2) Ushering in transparency and accountability
3) Empowering people through information
4) Improved efficiency within Governments
5) Improve interface with business and industry.
The report recognized the existence of ongoing eGovernment initiatives in India at that time
and recommended them to be consolidated under NeGP for coordinated implementation.
SATISHCHANDER
215
Introduction
With the Last mile service delivery, as its core objective, the National e-Governance Plan
(NeGP) has been formulated by the Department of Information Technology (DIT) and
Department of Administrative Reforms & Public Grievances (DAR&PG). This would involve
several focus areas including development and delivery of citizen-centric services through
Common Services Centers. This requires application development of government services in
transparent, service oriented and citizen centric format. Additionally, development of ICT
infrastructure, digitization of current records, establishing connectivity and setting up
delivery outlets would be the other aspect of project implementation. Besides improved
governance and improvement in quality of life for Indian citizens, the project also aims to
deliver substantial cost savings in governance. Given that NeGP aims to provide a whole
host of Union & State Government services to the common man, it is planned as a
centralized initiative with decentralized implementation.
For this purpose, other than the citizen-centric application development, interoperability of
applications and a common and robust nationwide infrastructure is also required.
Vision
The NeGP has the following vision: “Make all Government services accessible to the
common man in his locality, through common service delivery outlets and ensure efficiency,
transparency & reliability of such services at affordable costs to realise the basic needs of
the common man.” This vision articulates the priorities of the Indian government for
improved governance through use of technology leading to the improvement in quality of
life for the average Indian citizen.
Programme Governance
NeGP is monitored and coordinated at the highest level by the National e-Governance
Advisory Group. The latest appointments to the Group were done in First week of
November, 2010 with its first scheduled meeting on 12th Nov 2010. It is headed by the
Minister of Communications & Information Technology, Government of India. It is the apex
SATISHCHANDER
216
advisory body to the government on policy issues and strategic interventions necessary for
coordinated progress across the various Union/State government departments/ministries
for timely implementation of eGovernance across the country. Currently it includes various
eminent personalities of India including Nandan Nilekani Chairman, Unique Identification
Authority of India (UIDAI); Shashi Kant Sharma, Secretary, Department of Information
Technology; R. Chandrasekhar, Secretary, Department of Telecommunication; Dr.
Mrutyunjay Sarangi, Additional. Secretary, Cabinet Secretariat; D.V. Singh, Special Secretary,
Department of Administrative Reforms & Public Grievances; Dr. B.K. Gairola, Director
General National Informatics Centre among other Central Government, State Government,
industry and academia representatives. Appropriate authorities have been identified and
assigned the duties of laying down standards, providing technical support, developing policy
guidelines, undertaking capacity building, R&D work, etc. Department of Information
Technology (DIT), National Informatics Centre (NIC), Standardization Testing and Quality
Certification (STQC), Centre for Development of Advanced Computing (C-DAC) and National
Institute for Smart Government (NISG) are just some of the organizations at the national
level working on this project.
Implementation
Infrastructure
This would include development of National/State Service Delivery Gateway (NSDG/SSDG),

State Wide Area Networks (SWAN), State Data Centres (SDC), Common Services Centres
(CSC) and development of eForms for service delivery. This infrastructure is supposed to be
common for all projects under the NeGP umbrella. It is being created in every State and
Union Territory to ensure seamless and single-window delivery of public services to the
common man. The infrastructure requirements of NeGP are broken down into core &
support infrastructure requirements.
The core infrastructure consists of National eGovernment Intranet(NICNET, ERNET and

other service providers), State wide Intranets, National eGovernment Data Centres, State
Data Centres, Security Infrastructure(PKI etc.), Resource Centre for eGovernance, GIS
National Spatial Data Infrastructure and Language Resource Centre.
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217
The support infrastructure includes Service delivery infrastructure at State, District, Block
and Village levels including Wireless infrastructure for last mile connectivity. Further E-post
and Integrated Service Delivery Front ends like the proposed Common Services Centers
(CSC) are required as part of the support infrastructure.
The three primary pillars of NeGP infrastructure are SWAN (State Wide Area Networks)
(SWAN), SDC (State Data Centers), and CSC for web-enabled anytime-anywhere services &
information.
Web enabled delivery of public services
Mission Mode Projects (MMPs)
NeGP comprises 27 Mission Mode Projects (MMPs) encompassing 10 Central MMPs, 10

State MMPs and 7 Integrated MMPs spanning multiple Ministries/ Departments. It was
approved on 18 May 2006 by the Government of India. "Mission Mode" implies that the
objective and the scope of the project are clearly defined, that the project has measurable
outcomes and service-levels, and the project has well-defined milestones and time-lines for
implementation. These MMPs include the following:-
SATISHCHANDER
218
Central MMPs State MMPs Integrated

MMPs
Banking Agriculture CSC
Central Excise & Commercial Taxes e-Biz
Customs
Income Tax (IT) e−District e-Courts
Insurance Employment e-
Exchange Procurement
MCA21 Land Records EDI For e-

Trade
National Citizen Municipalities NSDG

Database
Passport, Gram Panchayats India Portal
Immigration & Visa
Pension Police
e-Office Road Transport
Foreigners Treasuries
Registration &
Tracking
Capacity Building, Awareness, Communication
The stakeholders of NeGP include at least 20 central departments, 360 departments across
35 states/UTs and nearly 500 implementation agencies. Given the complexity of this
mammoth task estimated at more than 70,000 man-years of effort, proper estimation and
implementation of capacity gaps are required. The three specific capacity gaps in the states
envisaged to be filled are:-
 Lack of personnel with appropriate background and aptitude,

 Inadequate skill sets of personnel already deployed
 Lack of appropriate institutional framework to handle the specific program
To address these, the following steps have been planned:-
 Support for creation of State e-governance Mission Teams (SeMTs)

 Support to Central Project e-Mission Teams (CPeMTs)
 Support to State Administrative Training Institutes
 Human resource management - This component addresses several areas including
training for: -
o E-Governance policy makers like Chief Information Officers, etc.
o Project specific training
SATISHCHANDER
219
o General IT Skills and Competencies along with Special training programs for
specialists
o Security, use of local language solutions, advanced courses architecture, language
technologies
o Equipping National/State Institutions of Public Administration for eGovernance
Training etc.
 Creating awareness about NeGP - Various strategies for change management and
raising awareness are planned including:-
o E-Readiness assessment of various States/ Departments
o Setting up of Virtual eGovernance Forums
o Assessment of e-Projects
o Best practices for eGovernance
o EGovernance National Resource Database
o Newsletters on eGovernance, workshops/ seminars/ Conferences
o Competitions and Awards
o EGovernance forum for NGOs, Pvt. Sector, Academic Training Institutions
o Publicity and Awareness (media, films etc.)
Standards, quality & security
These would require implementation of the following:-
 National Policy on Open Standards

 Localization and Language Technology Standards
 Biometrics, Digital Signature, Interoperability etc.
 Quality Assurance & Conformance
 Network and Information Security
E-Gov. Knowledge exchange
In order to assist the government in ensuring the high quality of implementation of the
NeGP initiatives, the NISG (a non-profit organisation) started a portal project called E-Gov.
Knowledge exchange. It is a collaborative effort to collect, develop and share knowledge
and material on eGovernance initiatives across the different government agencies, stat
government, union government and private institutions of India. The objective is collective
learning from each other’s projects and learning lessons. Just like other collaborative
portals, content development is a community effort shared by the different stakeholders of
SATISHCHANDER
220
eGovernance namely the Department of Information Technology (Government of India),

Central Ministries & State Governments in India, Academics, and Industry working in the
domain of e-Government. This portal aims to develop conceptual knowledge about
eGovernance domain from public, private and government levels.
E-Government – an alternative approach
Recent government policy updates have seen a shift away from e-Government towards a
much more radical focus on transforming the whole relationship between the public sector
and users of public services. This new approach is referred to as Transformational
Government. Transformation programs differ from traditional e-Government programs in
four major ways:
 They take a whole-of-government view of the relationship between the public sector
and the citizen or business user.
 They include initiatives to e-enable the frontline public services: that is, staff
involved in direct personal delivery of services such as education and healthcare –
rather than just looking at transactional services which can be e-enabled on an end-
to-end basis.
 They take a whole-of-government view of the most efficient way managing the cost
base of government.
 They focus on the “citizen” not the “customer”. That is, they seek to engage with the
citizens as owners of and participants in the creation of public services, not as
passive recipients of services.
SATISHCHANDER
221
सतीशचन्द्र यादव
1/1/2012
SATISHCHANDER

Culture of Corruption in India

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PUBLIC WORLD PRESS

About the Author

Satishchander lives in Mohindergarh Town, Haryana. He currently teaches English at the

SATISHCHANDER B.A DED.BED MBA (HR)

“Corruption and hypocrisy ought not to be inevitable products of democracy, as they

"Ethical and responsible behaviour needs to become the cornerstone of corporate

भारत में भ्रष्टाचार की संस्कृतत

12) Corruption in India 58

21) Black Money 111

25) Mafia Raj 129

29) Bankruptcy 148

32) Transparency International 156

From the enforcement point of view, corruption is a contract. It is an informal contract

Basic Types of Corruption

(monopolized) vs. decentralized pattern of corruption. The crucial prerequisite for

Basic Causes of Corruption

situations in which procedural legislation is violated. Such a framework increases the

Accordingly, the wage scheme as a segment of an anticorruption strategy should always be

Nonetheless, the most important prerequisite for effective anticorruption strategies is

Furthermore, it was demonstrated that rent-seeking activities are closely related to

Corruption increases basic business uncertainty, particularly regarding protection of

3. IS CORRUPTION GLOBLE TYPOLOGY?

4. The Donors’ Interest in Tackling Corruption

corruption is a major hindrance to economic development. More and more development

-Preventing fraud and corruption within Bank-financed projects.

-Helping countries that request support in their efforts to reduce corruption.

-Greater consideration of corruption in country-assistance strategies, country-lending

-Adding its voice and support to international efforts to reduce corruption.

5. Prevention an important tool for fighting corruption

The approach presented in this paper is essentially holistic. Corruption is viewed as a

IMPACT OUTCOME OUTPUT COST

INTEGRITY CAPACITY RESULTS ORIENTION

MACRO ECONOMIC FRAMEWORK

Figure 1: Key Focus Areas for Institutional Reform

Three areas of focus combine to promote better delivery of public services.

6. Underlying principles of this new governance

• Accountability through transparency (access to information)

• Focus on prevention rather than enforcement

• Raise awareness and expectations of civil society

• Focus on results-oriented service to the public

• Develop the capacity of “Pillars of Integrity” to fight corruption

New Paradigms of a Governance Strategy

B. Prevention through Increased Accountability

C. Raising Public Awareness

• Public education and awareness campaigns (radio, newspapers, TV).

• Conduct annual broad based national/municipal integrity workshops were all

Stakeholders are invited to discuss problems and suggest changes.

• Production and dissemination of a national integrity strategy and an annual corruption

• Production of integrity surveys at the municipal or sub-national level.

• Investigative journalism and information by the media.

D. Broad Based Capacity Building to strengthen all Pillars of

INPUT TRADITIONAL CAPACITY BUILDING NEW APPROACH OUTPUT

INFORMATION,INCENTIVES. CIVIL SOCIATY,MEDIA.

Capacity Building - A New Definition

(4) Watchdog agencies

(6) Private sector (Chambers of Commerce, etc.)

(7) Civil society

(8) Law enforcement agencies

E. The Role of the National Integrity Unit in Integrating Reforms

2. Information and public awareness-raising

4. Facilitate integrity-building activities as part of the implementation of the government’s

5. Conduct SDSs, public-education and awareness-raising activities, integrity-building