Corruption and Economic Growth By Dr. Bobby Srinivasan and Dr. Sudhakar Balachandran


This is the ongoing conversation with Joe and Swami.

Joe       : I recently read ane Indian paper  in the internet which contained news mostly about scams, corruption and the court trials about accumulated wealth of individuals.

Swami: I am not fully informed on this topic. But it is clear that the amount involved is almost the size of GDP growth rate of India.

Joe       : Can you tell me why this is happening and how it is attractive as a news item?

Swami: Generally in India, the paper readers enjoy news that can create a conversational topic. Movie and corruption news is at the top of the list. We don’t talk much about the weather since it is always the same most of the time.

Joe       : Psychologically how do you justify corruption? Isn’t it shameful for an individual to engage in this?

Swami: We don’t view it that way. The other day I was in Singapore. In front of every immigration officer, there is a tray filled with candies and passenger, if they do desire, can take one or two for his or her personal use. But I saw an Indian lady, grabbing a handful of candies. I also saw the immigration officer noticing this with a big grin on his face. I found out later that she was a co-passenger in my flight. I asked her out of curiosity whether she was a low sugar patient and needed this amounts of candies to bring her sugar level to a comfortable level. She answered and I quote “I picked it up to distribute it to my grandchildren”. I said I understand but then I asked myself what I understood.

Joe       : Really. Why would you ask this question when it is not your business and what did you understand?

Swami: It was my impetuous behavior. I am always nosy and don’t get good sleep if I don’t get involved in other people’s affair. But I can explain to you as to why corruption is a big economic activity in India. If you have some patience, listen to me.

Joe       : Go ahead.

Swami: In India it is a common habit to save heavily to meet future expenditures namely for children’s education, retired parents upkeep and to meet ones retirement expenses. This is an enormous responsibility and the salary will hardly meet the current expenses. This puts a pressure to hoard. This culture of saving for the rainy day meeting different types of family obligation puts a great pressure on us to cheat wherever and whenever possible.

Joe       : Sorry to hear that. Can this not be stopped?

Swami: It is easy for you to say. Obama care takes care most of everybody’s medical expenses. Your social security system offers a decent sum of money for old people to survive and they don’t have to depend on their children. Your medicare program takes care of their medical needs. We do not have any social security program. So while in power, we use the opportunity  to gain some extra money by violating the rules and we justify saying that this is the only way to accumulate enough money to pay for our future expenses, says the civil servant. The politician spends enormous amounts of money for his election. It is not that every candidate wins the election and when it happens they try to amass as much money as they can. There is never an upper limit on corruption. They take away together hundreds and thousands of crores of rupees illegally from the government budget. The money taken away reduces our growth rate substantially.

Joe    : Now I understand. Thanks Swami.

 

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