Demonetisation effect? Corruption index ranking improves but a long way to go

Global perceptions regarding India’s corruption levels remain high, going by Transparency International’s Corruption Index ratings for 2016. India has improved its standing, rising two points to 40 from last year. The trend line is positive if extremely gradual. India has improved perceptions regarding its degree of corruption by 10% since 2012. But the base figure is extremely low -- 40 points still places India, if not among the blackest of economies, then among the strong grays. The Transparency International survey tends to be taken seriously because its figures are drawn from a compilation of a dozen other surveys and indices of corruption.
As the figures are for 2016, the impact on black money of the so-called demonetisation effort will be unclear for some months to come. What the figure does indicate is that the Narendra Modi government’s earlier efforts against corruption including setting up a Special Investigation Team and the like have only had a marginally impact. That is not a surprise as corruption is deeply embedded in Indian society -- many poor Indians assume that paying a government official to provide the service that should be part of his job is the norm. Such petty corruption has barely been touched by events. The evidence is that reforms have gradually helped in reducing the macro-economic potential for corruption. The scope of discretionary power among bureaucrats, for example, has been reduced. Digital payments have received a boost and they also reduce the scope for illegal hoards of wealth. India seems to have done well here. The Economist’s Crony Capitalism Index, a measure of billionaire wealth derived from politically controlled sectors of the economy, showed such cronyism dropping from nearly 12% of GDP to less than 4% between 2014 and 2016. There is a case for saying that India should be compared to similar emerging economies rather than developed countries. But this does not cut any ice: There is an inherent moral laxity in claiming that a people should suffer from greater corruption because they happen to be poorer. Using that criterion, however, India is doing well. South Africa and Brazil have been dropping points on Transparency International’s index over the past several years. Turkey has fallen a remarkable nine points since 2012. India can still do more. For all its progress on crony capitalism, it is still worse off than comparable economies like Brazil and China.


Source: Hindustan Times, 26-01-2017
The Modi government’s ambitious plans on digitalising economies, including using the planned Goods and Service Tax to push all business transactions online, should reduce the scope of corporate corruption drastically. However, the government’s dilution of the Whistleblower’s Act and dilly-dallying on the Lokpal and Lokayutkas Bill seem to indicate that government corruption remains as much a low-level priority in New Delhi as it has in the past.