Sunday, January 1, 2012

India highly corrupt…..but so also are others in its comparison set….

Of course India is a highly corrupt country. We experience corruption every single day. This is the only reason that Anna’s movement caught the fancy of the common person on the streets who has to deal with corruption on a daily basis. Economists have written that if India could eliminate corruption – or significantly reduce it – it could spur economic growth by an additional 1-1.5% in terms of GDP growth. So this much is clear. The question is just how corrupt is India in relative terms? The other question is whether corruption in India has been rising or declining over the years? And the third and most important political question is whether corruption was lesser during the NDA regime or during the UPA regime?

The source for this post is the latest index of corruption released by Transparency International in October last year (suddenly 2011 has become “last” year!). The index ranges from 9.5 which is the scrore that the lease corrupt country (New Zealand) has been given on a scale of 10 to 1.0 which the most corrupt countries (North Korea and Somalia) have been given. India’s score in 2011 was 3.1 and that placed us at 95th position (out of some 178 countries) alongwith unseemly countries like Kiribati, Swaziland and Albania.

Now let’s take the first question first. Just how poor is India’s relative position with respect to relevant peers. Take the BRICS countries first. South Africa is ranked 64th and has a score of 4.5, Brazil is ranked 73rd with a score of 3.8, China is 76th with a score of 4.1, India is 95th with a score of 3.1 and Russia is at a poor 143rd position with a score of just 2.1. So India is at the 2nd worst position in this very august grouping.

Let’s take a slightly more expanded grouping and look at other countries in Asia Pacific that compete with India for the honors. Thailand (80th, 3.4), Malaysia (60th, 4.3), Indonesia (100th, 3.0), Phillipines (129th, 2.6), Vietnam (112th, 2.9) are some of the other countries that one must look at. Clearly, there are countries worse than India in the region – even countries that have experienced high growth rates in the last 20 years.

Take South Asia as a regional grouping of sorts. Pakistan (143rd, 2.3), Bangladesh (134th, 2.4), Sri Lanka (86th, 3.3), Nepal (154th, 2.2) and Burma (amongst the worst three, 1.4) are obviously worse off than India as a grouping (with the exception of Sri Lanka).

Now let’s take the second question: How has India’s corruption scores fared over the last 10 years or so? Has corruption declined or increased? While much political discourse has indicated that corruption has increased very significantly, the truth is that it has decline very significantly. India’s current score is 3.1 and it had reached a peak of 3.5 in 2007, but it was a lowly 2.7 in the year 2002. So India’s corruption index has actually declined from 2.7 to 3.1 over the last ten years or so. The slight dip in the index in the last three years is a pattern seen across many countries – it is nothing unique to India. But it is worrying nonetheless….

How has the corruption index done during the NDA rule (date is available for 2002 to 2004 during the NDA period) and in the UPA rule (2004 onwards till 2011 for which data is available). Now as mentioned earlier, the index was just 2.7 during 2002. It was 2.8 during 2003 and 2004 – so the NDA for all its loud noises cannot really claim to have offered a better regime. And remember, these are numbers towards the end of their six year regime – so they cannot claim that this was an index they inherited.

In the UPA regime, as mentioned earlier, the index improved consistently from 2.9 in 2005 to 3.3 in 2006 to 3.5 in 2007 before declining to 3.4 in 2008 and 2009 and finally reaching 3.1 in 2011. Much better numbers than in the UPA regime.

What about relative rankings around the world. At 95th, there is no doubt that India is in a terrible place. But interestingly, so are many other countries that we consider to be better off. Mexico and Egypt are at the 98th place, Argentina at 105th. Even many European countries are placed quite low – Italy at 69th with a score of just 3.9 being one that stands out quite a bit.

This post is not at all meant to be a justification (or support as some would say) for the corruption in India. It is only a factual comparison of where we stand. Anna’s movement was timely – and I hope the slew of measures the government is promising to take will lead to the score going up. The downturn in the last couple of years has to be reversed and that’s what is going to test the governance in the country.

The real truth is that corruption is the bane of several countries that are in the same relative position as India. It makes us ask the question: Is corruption inversely related to growth. Logically, it is. But the second question is more difficult to answer: Does higher growth lead to lower corruption or is it viceversa? Logically, lower corruption should improve growth rates – but countries like China show that high growth can co-exist with high corruption. In any case – our objective should be clear irrespective of which way the correlationship works. We want low corruption and high growth….

1 comment:

  1. Very good article. Glad to have read it. Made some very informative points about he issue of corruption, as this is an issue which is widely discussed in regards to India today. I feel positive about the issue, and feel that eventually India can become an example to other nations hoping to combat corruption, as it is an example for poor and developing countries today, with its high GDP growth despite being a developing country in some areas today.