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Saturday, Jul 12, 2003

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Belling the corruption cat that has nine lives

D. Murali

WHAT is the single greatest obstacle to economic and social development? What is it that undermines development by distorting the rule of law and weakening the institutional foundation on which economic growth depends?

The answer, according to the World Bank is, `corruption'. Ah, you sigh, because corruption is too common a part of our lives — as much as the neighbourhood madcap who goes about ranting on the streets.

The Bank is keen on poverty reduction and it finds that "corruption sabotages policies and programmes that aim to reduce poverty", so Enemy No 1 is corruption. For those at the top, harmful effects of corruption surface only when the scam itself surfaces and the CEO or the auditor, the minister or the officer loses his job and ends up in jail.

However, the poor are the worst hit by corruption, states the Bank, because they are the "hardest hit by economic decline, are most reliant on the provision of public services, and are least capable of paying the extra costs associated with bribery, fraud, and the misappropriation of economic privileges."

What would be an effective anticorruption strategy? There are five key elements, states the recent posting in the Bank's site. These are: Increasing political accountability, strengthening civil society participation, creating a competitive private sector, institutional restraints on power and improving public sector management.

This is not the first move against corruption, because over the last about six years, the Bank "has supported more than 600 anticorruption programmes and governance initiatives developed by its member countries".

Corruption imposes a cost — not only tangibly in the form of the `extra' that one has to pay to get what is due, nor the stigma that many have got used to. When new businesses are not able to get set up because of the kickback culture, you find corruption deterring investment and hindering growth. Wealth gets concentrated in a few hands — as for instance, those who run educational institutions that stipulate a big fat fee — and thus corruption could spur inequality and erode macroeconomic and fiscal stability.

Development programmes come to a nought when funds get hijacked by corrupt crocodiles. And when quick money entices, environment takes a backseat and corruption enhanced by avarice leads to depletion of natural resources on an accelerated pace. State's resources get diverted from `low-yield' sectors, which could be health or education, and move to corruption-prone sectors for personal enrichment. "It erodes the rule of law and harms the reputation of and trust in the state," notes the Bank.

How to combat corruption? An anticorruption strategy, suggested by the Bank "requires courage and a long-term commitment by a variety of anticorruption actors" such as political leaders, public servants, civil society, media, academics, and the private sector.

"Corruption prevails where there is ample opportunity for corruption at little cost," is an interesting insight into the `cost-effectiveness' of being corrupt. To dissuade people from the corruption path, there should be a high cost element, where there risk of being caught and severely punished.

The study by the Bank goes into the details of how one might achieve political accountability — through political competition, party financing, transparency and rules and legal instruments. Political competition increases when there is "the likelihood that alternative candidates and parties will seek to expose corruption in government or hold politicians accountable for the poor performance associated with high levels of corruption". The area of party financing is a tricky one — because it subsists on corporate corruption to a large extent — and there is no one-size-fits-all.

A few suggestions are: to ensure that all donations and other sources of party revenue are made public, and that state resources (such as funds, postal services, cars, computers, or other assets) are not used for political purposes. What our bosses may find irksome is the suggestion to install "a meritocratic public service that will resist party bias and will encourage decision-making in the public interest."

If you are among the majority that feels corruption is here to stay, the World Bank report could strike a discordant note — that there is still some hope left in combating corruption.

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