Evil of Corruption

Corruption is the abuse of public or private office for personal or political gain, and it is linked to fraud, tax evasion and money laundering.

Corruption in India is an issue which affects the economy of central, state and local government agencies in many ways. Corruption is blamed for stunting the economy of India. A study conducted by Transparency International in 2005 recorded that more than 62% of Indians had at some point or another paid a bribe to a public official to get a job done. In 2008, another report showed that about 50% of Indians ha first hand experience of paying bribes or using contacts to get services performed by public offices, however, in 2020 their Corruption Perceptions Index ranked the country 86th place out of 180, reflecting steady decline in perception of corruption among people.

The largest contributors to corruption are entitlement programs and social spending schemes enacted by the Indian Government. For Example include the Mahatma Gandhi National Rural Employments Guarantee Act and the National Rural Health Mission. Other areas of corruption include India’s trucking industry which focused to pay billions of rupees in bribes annually to numerous regulatory and police stops on interstate highways.

Causes

The causes of corruption in India include excessive regulations, complicated tax and licensing systems, numerous government departments with opaque bureaucracy and discretionary powers, monopoly of government controlled institutions on certain goods and services delivery, and the lack of transparent laws and processes. There are significant variations in the level of corruption and in the government’s efforts to reduce corruption across India.

Black Money

Black money refers to money that is not fully or legitimately the property of the owner. A government white paper on black money in India suggest two possible sources of black money in India, the first includes activities not permitted by the law, such as crime, drug trade, terrorism and corruption, all of which are illegal in India and secondly, wealth that may have been generated through lawful activity but accumulated by failure to declare income and pay taxes. Some of this black money ends up in illicit, such as deposits in tax haven countries.

Domestic black money

India companies are have been reported to misuse public trusts for money laundering. India has no centralized repository like the registrar of companies for corporate’s of information on public trusts.

  • Gold purchases-In Gujarat, Delhi and many other major cities, sales of gold increased on 9 November, with an increased 20% to 30% premium surging the price as much as Rs.45,000 from the ruling price of Rs.31,900 per 10 grams.
  • Donations-Authorities of Sri Jalakanteshwarar temple at Vellore discovered cash worth Rs. 4.4 million from the temple.
  • Multiple bank transactions-There have also been reports of people circumventing the restrictions imposed on exchange transactions and attempting to convert black money into white by making multiple transactions at different bank branches. People were also getting rid of large amounts of banned currency by sending people in groups to exchange their money at banks. In response, the government announced that it would start making customers with indelible link. This was in addition to other measures proposed to ensure that the exchange transactions are carried out only once, by each person. On 17 November, the government reduced the exchange amount Rs.2,000 to discourage attempts to convert black money into legitimate money
  • Municipal and local tax payments-As the use of the demonetized notes had been allowed by the government for the payment of municipal and local body taxes, leading to people using the demonetized rs.500 and Rs.1000 notes to pay large amounts on outstanding and advance taxes. As a result, revenue collections of the local civic bodies jumped. the Greater Hyderabad Municipal Corporation reported collecting about Rs.1.6 billion in cash payments of outstanding and advance taxes within 4 days.

Efforts on corruption

However, just as elsewhere in the word, the negative effects of corruption are the same, it reduces foreign direct and domestic investments, increases in-quality and poverty, raises the number of freeloaders in the economy, distorts and exploits public investments and reduce public revenues.