The government's move to make corporate failure to prevent bribery an offence is well intentioned, given Prime Minister Manmohan Singh's assessment that big-ticket corruption mainly involves large commercial interests. This may curb consensual bribery to the extent a piece of paper can fight crime, but it certainly does not address the issue of harassment bribes that businesses in India are subjected to. Projects awaiting official clearances bind companies to delivery timelines negotiated with lenders or shareholders. India Inc is at its most vulnerable to extortionate demands from public servants when it is building capacities. This is where economic growth becomes correlated with scams, a nexus the government has been alluding to in various forums, sometimes with an air of fatalism. India must get rid of the negativity that is attaching itself to development.
A systemic response would be to lift the bureaucratic burden on economic activity in the country. India ranked 132 among 183 countries the World Bank monitors on the ease of doing business. It takes 166 days to start a business, 181 days to get construction permits, 98 days to get electricity and 97 days to get property registered. In Singapore, which tops the rankings, the first three can be done in under a week and the last in a fortnight. Any initiative to tackle endemic corruption in the country must involve improving the way we go about regulating ourselves. Information technology not only acts as a wall between applicants and issuers, but also speeds up data processing. The evidence shows e-governance works in India. We need to roll it out faster.
Bribes offered voluntarily are widely different from those paid under duress. Devising a common deterrence for both may not be the way to go. Kaushik Basu, as chief economic adviser in the finance ministry, last year floated a radically new approach for the fight against corruption. He suggested sparing the giver if it was a harassment bribe, like those paid for driving licences after all formalities are complete. Mr Basu reasoned the law as it exists today induces the giver and taker of a bribe not to talk about it. If, however, the giver is let off, his interest diverges after paying a bribe and this could encourage whistle-blowers. The government will have to dip into traditional and novel methods for holistic deterrence. Consensual bribery needs tougher laws, but harassment bribes must be tackled more innovatively. A light hand on regulation with stricter policing can work on both the demand and supply of bribes.