Indian rulers have traditionally been a corrupt lot

For the Love of Money, Hand in Graft

India should take lessons from some of its neighbours to put an end to corruption

Indians have always been hopelessly divided amongst themselves. Small states, enclaves, principalities and kingdoms dotted the landscape in the past. So much so that at the time of Independence, there existed more than 500 principalities spanning from Khyber to Kohima, and from Karakorum to Kanyakumari.

Nevertheless, one of the remarkably consistent features about India as a nation has been the failure of its rulers to protect the borders from adversaries. Virtually every aggressor, from Alexander the Great to the Mughal king, Babur, and later, the British, was able to conquer this nation with considerable ease.

There indeed appears to be something peculiar in the collective psyche of Indians. Indian rulers have traditionally been a corrupt lot. The vice was born out of their inherent love of money. Generations of Indians have been brought up with the belief that what matters most in life is wealth.

Things haven’t changed for the better, even six decades after Independence. How else can one explain the action of Babubhai Katara, a member of parliament, who chose to smuggle out people by issuing false passports in return of a hefty payment?

Unfortunately, the Indian ruling class has always hesitated to take punitive action against corrupt elements who are hell-bent on jeopardizing the security of the nation. One wonders whether there is any real need of ‘foreign hands’ such as the ISI, or militant outfits like Ulfa and the Maoists when Indians themselves appear to be committed to break the system from within! Perhaps India could lessons from one of its powerful neighbours, China, to take corrective action before it is too late.

It is true that even China is not free from the scourge of corruption. But the Chinese government has taken a hard stance to curb the malady. Thus, the Chinese president, Hu Jintao, has launched a high-profile campaign against institutional corruption in his country. The beauty of the Chinese story is that the government decided to act tough instead of making grand promises which are never fulfilled.

Zhang Enzhao, president of China Construction Bank, one of the leading State-owned commercial banks in Beijing, resigned in March last year over allegations that he had taken bribes from an American contractor. Among government officials arrested or sentenced for corruption in 2005-2006 were the deputy governor of Sichuan province, the deputy party secretary of the ruling communist party in Shanxi, the transportation bureau chiefs in Henan and the deputy mayor of Suzhou.

In Indonesia, perceived as one of world’s most corrupt nations, anti-corruption measures proved to be surprisingly effective. A newly constituted anti-corruption commission and the ad hoc courts put the governor of Aceh province behind bars for 10 years for his role in a multi-million-dollar bribery scandal.

It would be better for India to emulate the Chinese in order to rid the country of corruption. The strictest punishment should be meted out to those who compromise the nation’s polity, economy and security for money. Else, our founding fathers would continue to turn in their graves to find their successors making a mockery of their cherished ideals.

ABHIJIT BHATTACHARYYA, The Telegraph, June 07, 2007

Widespread corruption in the Public Food Distribution System causing starvation deaths in India

May 31, 2007
A Written statement submitted by the Asian Legal Resource Centre

The Prime Minister of India in his foreword in the ‘Report to The People’ dated May 22, 2007, claims: “In this 60th year of independence, the country should have the satisfaction of recording for the fifth year in a succession a rate of economic growth of over 8.5%.” The Asian Legal
Resource Centre (ALRC) however is not sure whether the estimated over 200 million Indians who are presently suffering from malnourishment, and the many more million who have done so during past decades, will be satisfied with this growth.

The country’s overwhelming population is often given as an excuse to justify poverty and starvation in India. This theory is applicable only if the State itself is poor and has no means to procure enough food for its people. India is not poor, even though 70% of Indians are. India’s
projected defense budget for 2007-08 is 24 billion US$ and it plans to spend further on its weapons upgrade programme. Defense spending of such proportions in a country where a section of the population equivalent to 2/3rds the size of that of the United States is undernourished or
suffering from malnourishment, is difficult to stomach. The United Nations Special Rapporteur on the Right to Food has highlighted this contradiction of priorities in his report following his mission to India in 2005.

India is a country of contradictions. A country that has a projected 9% development index performs worse than some Sub-Saharan countries with regard to addressing starvation and malnourishment within its territory. The National Minimum Programme promulgated by the Government of India in 2004 speaks about the Rural Employment Guarantee programme, which is also reflected in India’s voluntary pledge to the United Nations Human Rights Council. However, millions of Indians in rural villages are not benefiting from this programme and remain unemployed. The programme is not properly implemented and in places where there are possibilities of implementation and thus employment, recruitment to the programme is based on caste bias and nepotism.

Poverty and resultant starvation in India is not limited to the lower caste, although they suffer the most. The lower caste forms only about 20% of the Indian population, whereas starvation and malnourishment affect about 53% of its entire population. Starvation and malnourishment are the  direct result of the failing administrative system in India. A malfunctioning administrative system has a direct bearing upon the living conditions of the poor. For example, for the distribution of food to targeted population the government has established the Public Food Distribution System (PDS). However, the management of this system suffers from corruption; particularly black marketing, caste prejudices and the utter failure of various local governments.

The targeted PDS was introduced in India in 1997. The shift from a universal PDS to a targeted PDS was performed with the intention of avoiding the misuse and wastage of subsidised food materials.  However, owing to a lack of proper screening methods and transparency in the
procedure, the PDS is still a failure in India. For example, the licensing procedure for running a PDS shop is plagued by corruption. Licenses are awarded by the respective state governments and the authority to issue them is delegated to the district administrations, which are notoriously
corrupt.

To receive subsidised food a family is required to posses a ration card, which also serves the purpose of determining the family’s financial status. This process involves obtaining certificates from the village-head and officers at the district administration. While the village-heads often
refuse to issue such certificates, district administration officials demand bribes. The ALRC has documented several cases where the refusal of the village-heads to issue certificates to the poor is the part of a larger plan; to prevent the poor, particularly those from the lower castes, from accessing government welfare schemes such as the PDS shop. This is because the longer the people remain poor and near starvation, the easier it is for the village-head to continue subjecting them to bonded labour.

The continuation of caste-based discrimination is yet another factor that perpetuates poverty and deprivation of food, as was briefly mentioned in the Special Rapporteur’s report. 60 years after independence, the prevention of caste-based discrimination remains on paper rather than
being enforced in practice. Due to this, caste-based discrimination is widely practiced and discrimination prevents the lower castes from accessing food. Additionally, the lower castes are deprived of landed property and those who have titles to particular pieces of land are
frequently prevented from actual possession by local feudal lords.

In addition to this, large-scale land holding still continues in various States, including States that have enacted the land ceiling laws. Holdings of large extents of land (by individuals or families) deprive the poor from having arable lands of their own. However, the poor can still benefit
from such large-scale cultivation, by being employed by the landlord, although in reality this tends to be for much less pay than that stipulated in the Minimum Wages Act. However, when landlords find that agriculture is not profitable for various reasons and sell off their land to property developers, the most affected are the poor landless communities, as this often results in the starvation of the agricultural labourers who depended upon such large-scale cultivations.

In addition to poverty caused by human interference, large-scale poverty exists in remote regions of the country. One such example is the Murshidabad district of West Bengal. This district shares a border with Bangladesh. Land erosion by the river Padma has rendered large numbers of persons landless. Those who could afford to, left well in advance, but the poor had to stay until their land was taken by the river. This situation is exploited by cross-border smugglers based in the state who employ the poor to smuggle articles across the border to Bangladesh.

The smuggling involves crossing the river at night, which often claims peoples’s lives, while others are shot and killed by the Border Security Force stationed along the Indian border. Ironically, a major portion of the smuggling involves food — grains collected from PDS shops are smuggled across the border to be sold on the black market. The West Bengal State Government considers the people living along the international border in Murshidabad as being illegal immigrants from Bangladesh and does nothing for their welfare.

The situation of hundreds of families in the Jalangi block of Murshidabad involves grave cases of exploitation, starvation and malnourishment, many of which have been documented by the ALRC’s sister origination, the Asian Human Rights Commission, and which has also been mentioned by the Special Rapporteur. The state and central government schemes remain highly ineffective and are totally failing the starving population in Jalangi. However, the government of India has not taken any credible action regarding this issue.

The government of India has formulated and is executing several welfare programmes intended to prevent starvation and malnourishment in India. While proper planning and implementation of these programmes are necessary, what has been mostly ignored is the poor state of functioning of the PDS. The system itself, as claimed by the government, covers only 16% of the total population. The actual number of households using the PDS is around 91 million, significantly less than the 160 million being claimed by the government. 78% of these persons are trying to make use of the system – 26% are from urban areas while 52% are rural households. Of these 91 million households an alarming 61% claim that the PDS is plagued by corruption and 49% claim that corruption has increased in the past year. The PDS is viewed as the most corrupt institution in India.

Such corruption exists in the PDS due to the failed criminal justice system in India. Illegal dealing with rationed articles is a crime in India. A crime registered under the relevant domestic law must be tried in a special court constituted in each state. However several states are yet to establish such a court, meaning that cases registered under the law in those states will have to wait for years to be decided through the regular courts. Additionally, states most frequently withdraws from prosecutions related to cases registered under the Essential Commodities Act as compared with other prosecutions. This shows not only the tolerance that various state governments exhibit towards corruption within the PDS, but also the influence of the licensees upon the government.

Even though the Rapporteur expresses his concerns about corruption in the PDS, there are no concrete proposals suggested by the Rapporteur in his report to address this issue. To achieve any improvement in addressing the food security in India, there must be a multifaceted approach to the issue focusing on: the implementation of welfare schemes; increasing the existing network of the PDS within the country; and taking effective steps to prevent corruption within the PDS.

The prevention of corruption within the PDS cannot happen in a vacuum. It will require equipping the criminal justice mechanism in India to specifically address this problem. In addition to an increase in the number of special courts to try offenses related to the distribution of rationed food articles, a separate and independent mechanism must be constituted to investigate such cases.  This must be independent from the local police since the latter is itself corrupt and will therefore fail to effectively investigate crimes related to food distribution. There is also a need to change domestic law, in particular the Essential Commodities Act, 1955.

As a country that has a surplus of food, it is a pity that in India, food that is distributed to the poor does not reach them, but is either spoiled and lost or sold on the black market. To change this, there are no quick-fixes. However, the prevention of corruption within the PDS is a critical starting point. The specifics of this are often ignored or overlooked in favour of various other issues.

In this context, the Asian Legal Resource Centre requests the Human Rights Council to:

1. Recommend that the Government of India take immediate steps to prevent widespread corruption within the PDS — these steps must include the establishment of independent and separate mechanisms to investigate cases of corruption in the PDS. This mechanism must be independent from the local police, as the latter is corrupt and therefore inefficient in investigating corruption. This requires a change in the existing domestic law — The Essential Commodities Act, 1955, and the government of India must be urged to make such changes and facilitate this process;

2. Request the UN Special Rapporteur on the Right to Food to further study the specifics of corruption within India’s PDS system, so that the Rapporteur can help the government to address this issue more effectively;

3. Request the Government of India to urge its state governments to set-up the required number of special courts to deal with cases of corruption within the PDS;

4. Urge the Government of India to expand a functioning PDS network within the country, so that it covers not only the 16% currently being covered, but covers all persons in need of food security assistance.

5. Request various UN bodies such as the UNDP and the FAO to assist the Government of India in addressing the issue of hunger and starvation in India, particularly through proper and vigorous implementation of development programmes in the country.

6. To further request the Government of India to immediately implement the recommendations made by the UN Rapporteur on Right to Food in his report – E/CN.4/2006/44/Add.2 – and to make necessary policy changes required to address this situation.

About ALRC: The Asian Legal Resource Centre is an independent regional non-governmental organisation holding general consultative status with the Economic and Social Council of the United Nations. It is the sister organisation of the Asian Human Rights Commission. The Hong Kong-based group seeks to strengthen and encourage positive action on legal and human
rights issues at local and national levels throughout Asia.

186 million Indians don’t have voter ID cards!

A decade-and-a-half after the electoral photo identity card (EPIC) scheme began, and despite Rs 1,500 crore having been spent so far on the project, more than 186 million Indians — or more than a quarter of all eligible voters — still do not have these cards. It is a failure that could lie at the heart of voter fraud and low voting percentages. Until recently, even former Chief Election Commissioner (CEC) JM Lyngdoh was among them. “We have been living in this area for four years now. Our photographs were taken about half a dozen times, but it was only recently that we were issued the cards,” Lyngdoh said on the telephone from his home near Chevella in Ranga Reddy district, Andhra Pradesh.

Only about 510 million out of more than 697 million voters in the country — or 73 per cent of the electorate — have so far received the cards, according to Election Commission records accessed by HT. The scheme was begun in 1993 when T.N. Seshan was the CEC.

Assam — the state represented by Prime Minister Manmohan Singh in the Rajya Sabha — has had no cards distributed at all. “As it always happens, the last-mile problem affects this work also,” CEC N Gopalaswami told HT.

There are 18 other documents — such as passports, driving licences, PAN cards, government ID cards and ration cards, among others — that voters are allowed to use to establish their identity at polling booths.

But officials feel that millions of rural voters still have no access to any of the 18 documents. Gopalaswami said a new strategy of preferentially covering the rural population with EPIC was being planned.

Neelesh Misra, Hindustan Times, New Delhi, May 15, 2007

Human Trafficking to US: India’s Hindu party legislator recieved 20,000 US $ per person

I got Rs 800,000 per person, Katara says

Sahil Makkar, Indo-Asian News Service New Delhi, April 28, 2007

Bharatiya Janata Party (BJP) MP Babubhai Katara, arrested for allegedly trying to smuggle people abroad, has told the police that he was paid Rs 800,000 for every person he helped to go abroad illegally, with his aide and travel agents pocketing most of the money made in the deals.

“I was given only Rs 800,000. I really don’t know if they charged Rs 3 or 4 million for sending people abroad with me,” Katara told officers interrogating him.

He stated this when confronted with statements of his aide Rajender Gampa and some travel agents that they used to charge Rs 3 to 4 million from each person who flew abroad in the company of the MP on the latter’s family’s passports.

Police say they have evidence that Katara and his associates were involved in flying out at least 12 people to the US and Britain. The Gujarat politician had personally taken six people with him.

“They have fooled me,” a police official quoted the MP as telling investigators during interrogation.

“Though he was paid a handsome amount, it were the agents and others involved in the human trafficking racket who arranged for the passports and clients and so took a larger share of the booty,” a senior police official told.

“Our investigations show that these travel agents were in some kind of agreement with the MPs and paid them a fixed amount every time they smuggled out a client abroad. Katara was given Rs 800,000. The rest of the money was distributed among the MP’s aides and agents,” the officer added.

Katara, who had reportedly earned around Rs 3.5 million through human trafficking, was apparently not aware that Sunder Lal Yadav, a travel agent, earned more than him simply by arranging the clients and documents.

The investigating officer also revealed that travel agents identified people who could cough up Rs 3 million to travel abroad. The agents had a wide and well-organised network spread through the small towns and cities in Punjab to the big cities in Andhra Pradesh.

The Crime Branch of Delhi Police, which is conducting the investigation, has identified five travel agents involved in the racket. Three are from Punjab (Joginder Singh, Santhu Masih and Harbhajan Singh), Hyderabad and New Delhi.

The racket came to light on April 18 when Katara was arrested at the airport in New Delhi while trying to fly out a woman, Paramjeet Kaur, and a 15-year-old boy Amarjeet Singh on the passports of his wife and son.

Police later arrested Gampa, Sunder Lal Yadav and their female accomplice Kiran Dhar on charges of forging documents and passports. Yadav was charged with arranging the visas.

Kiran allegedly taught women flying abroad how to act like an MP’s wife – and how to conduct before immigration officers.

Yadav told a court in New Delhi that three Bahujan Samaj Party (BSP) MPs from Uttar Pradesh – Mitrasen Yadav, Ashok Rawat and Mohammed Tahir Khan – and Ramswaroop Koli of BJP from Rajasthan were also involved in the racket.

And Gampa told the court that Katara as well Mitrasen Yadav and Ashok Rawat knew that he was using their letterheads to help people immigrate illegally.

Defence spending causes poverty in India

NEW DELHI, April 2 (Reuters) – South Asian nations need to cut defence spending and increase funding for women and children’s welfare, healthcare and education to curb poverty in one of the world’s poorest regions, activists said on Monday.

The call by a coalition of about 200 voluntary groups — representing women, tribal people, trade unions and refugees — came on the eve of a summit in New Delhi of a regional grouping which aims to boost trade and development.

The group, the South Asian Association for Regional Cooperation, or SAARC, includes Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka. Afghanistan is set to join it as the eighth member during the April 3-4 conference.

But the People’s SAARC, as the coalition is called, urged the governments to cut defence spending by 10 percent.

“We realise that the lavish spending on weapons by poor South Asian countries is one of the major causes of rampant poverty in the region,” Arjun Karki, a coordinator of the coalition, told a news conference.

“We also demand that India and Pakistan stop the arms race and give up nuclear weapons, which pose a great threat to the 1.5 billion inhabitants of this peaceful region.”

India raised its defence budget by nearly 8 percent to $22 billion this year while its traditional rival Pakistan increased it by nearly 4 percent to $4.2 billion in 2006 despite their new moves to make peace.

Activists said money spent on arms not only fuelled tensions in the region but also diverted crucial funds meant for development.

“It helps to accentuate tensions within SAARC nations and it takes away food from the children and employment from the unemployed … it is a senseless expenditure,” said Kamal Mitra Chenoy, who teaches at New Delhi’s Jawaharlal Nehru University.

Activists said Nepal spent $260 million on defence last year, compared to about $29,000 on agriculture despite the fact that 80 percent of the population depended on farming for its livelihood.

The group also called on governments to do more to help stem violence against women, human trafficking and adhere to global conventions on respecting human rights.

“The tragedy of the situation in SAARC is that there is very little discussion on human rights, and if we follow the World Trade Organisation’s rules, we should also follow the principles we have committed to under various human rights conventions,” said Chenoy.

(Additional reporting by Manjusha Chatterjee)

Indians are worlds most undemocratic people: Book

New Delhi, March. 4 (PTI): Indians are perhaps the world’s most undemocratic people, living in the world’s largest and most plural democracy where a person’s self-worth is almost exclusively determined by the rank he occupies, says a new book. A profoundly hierarchical society, in India the determination of relative rank (Is this person superior or inferior to me?) remains very near the top of subconscious questions evoked in an interpersonal encounter, says the book The Indians, Portrait of a People by psychoanalyst and culture commentator Sudhir Kakkar and anthropologist Katherina Kakkar.The gratification of the 300 million middle-class consumers, does not lie in their being consumers in a global marketplace but in being somebody in a profoundly hierarchical society, the authors say. You must be somebody to survive with dignity, since rank is the only substitute for money. Thus retired judges, ex-ambassadors and other sundry officials who are no longer in service are never caught without calling cards prominently displaying who they once were, authors say.

Irrespective of his educational status and more than in any other culture in the world, an Indian is a homo hierarchicus, the book says.

Although at first glance the notion of Indian-ness among the one billion population speaking 14 major languages with pronounced regional differences may seem far-fetched, yet from ancient times European, Chinese and Arab travellers have identified common features among India’s peoples, it says.

Some of the values that govern Indian institutional and work life empirically demonstrated by the GLOBE (Global Leadership and Organizational Behavior Effectiveness) revealed that South Asia has the greatest power distance – that is, the degree to which people are separated by power, authority and prestige. In other words, the difference in status between the chief executive and the office peon, the raja and the runk is at its maximum in this region and in India, the book says.

Second only to the family as a pervasive social dimension of Indian identity is the institution of caste, the authors say. The ancient divisions of Hindu society into the priest (Brahmin), warrior (Kshatriya), tradesman (Vaishya) and servant (Shudra) classes, in that order of ranking is still used to locate a person in the wider social space, the book says and quotes an example political commentators speaking of mobilising the Brahmin, Vaishya or the backward classes (as the Shudras are called now) during elections.

The authors also say that although the cliched relationship between an overpowering mother-in-law and a silently suffering daughter-in-law is a bitter reality for many young women, the changes that are taking place in the power structure of the educated middle class have made many a mother-in-law views herself as a loser across the board. She feels bitter and shortchanged that although she suffered under the whims and moods of older family members when she was young bride, now, when it is her turn to reap the fruits of being the family matriarch, she can neither take the respect of her better educated daughter-in-law or the loyalty of her son for granted.

The Indians: Portrait of a People by Sudhir Kakar and Katharina Kakar
Published by Penguin Books India Price: Rs 395.00, ISBN: 0670999237

Nearly 70,000 killed in 17-year Kashmir insurgency: rights group

SRINAGAR, India: Nearly 70,000 people have died in the 17-year conflict in India’s portion of Kashmir, a local human rights group said Friday, a figure markedly higher than the latest police count.

The Jammu-Kashmir Coalition of Civil Society came up with the death toll after reviewing news reports and conducting door-to-door surveys in every district in Kashmir, Khurram Pervez, the head of the group, told The Associated Press. Most of dead were civilians.

Pervez said his group’s survey of news reports alone shows about 50,000 people have died, but he added, “We don’t subscribe to this figure as newspaper reports are mostly based on police handouts. Neither do we accept the government figure of 41,000.”

The latest police estimate said 19,987 rebels, 16,253 civilians and 4,982 security forces’ personnel were killed between January 1990 to November 2006.

However, Kashmir’s inspector-general of police, S.M. Sahai, acknowledged that many deaths went unreported in the early years of the violence.

“The initial years (of Kashmir insurgency) were chaotic … and hundreds of incidents went unreported,” Sahai said.

The All Parties Hurriyat Conference, the main separatist political alliance in the state, says more than 100,000 people have been killed in the nearly two decades of violence. A combination of police and human rights figures compiled by AP have previously put the death toll at 68,000.

Kashmir is divided between India and Pakistan, but both claim it in its entirety. The two nuclear-armed neighbors have fought two of their three wars over Kashmir since independence from Britain in 1947.

More than a dozen Islamic groups in Kashmir have been fighting for independence or a merger with predominantly Muslim Pakistan since December 1989.

International human rights groups have accused both the rebels and the Indian army of abuses in Kashmir. India says Pakistan arms and supports the Islamic insurgents, but Pakistan says it only gives the rebels diplomatic and moral support.

The Associated Press  IHT , December 8, 2006

10 % of the rural housholds are landless in India: Survey

Despite the emphasis on land reforms, the survey found that about 10% of rural households were landless — owning either no land or less than 0.002 hectare. The corresponding urban figure is 49%. This would indicate that high rates of migration are creating an increasing number of people who do not own their dwellings. The percentage of landless households as estimated by the latest survey (2003) was not very different from 1971-72, which was 9.6%.

The latest survey by National Sample Survey Organisation (NSSO) shows that the average land owned per household in the rural sector was highest in Rajasthan (2.077 hectare) and lowest in Kerala (0.234 hectare).

When it comes to maximum number of landless households in rural areas, the percentage in the rural sector was Sikkim (31%), followed by Arunachal Pradesh (22%), Maharashtra (18%), Tamil Nadu (17%) and Himachal Pradesh (15%). This would show that a large state like Maharashtra still has a significant number of landless persons, perhaps reflecting poverty figures of deprived areas of Vidarbha and Marathwada.

The estimated total area owned by households in rural sector during 2003 was 107.23 million hectare. The corresponding area in the urban sector was 7.21 million hectare. The per household average land owned in the rural sector in 2003 came to 0.725 hectare, about 27% less than the corresponding figure in 1992 which could suggest fragmentation as well as creeping urbanisation in some cases.

The share of land owned by different social groups was 11.2% for STs, 9% for SCs, 43.5% for OBCs and 36% for others in rural areas. The per household land owned by OBCs, at 0.758 hectare, was higher than the national average of 0.725 hectare.

According to the survey, land owned per household was 0.767 hectare for STs, 0.304 hectare for SCs, 0.758 hectare for OBCs and 1.003 hectare for others.

The figures of the survey are drawn from a nation-wide sample and could reflect a trend on well-to-do OBCs purchasing land in rural areas even though there are no comparisons with the previous years. In urban areas, OBCs control over 36.8% of the land. The percentage of land owned by STs was 3.3%, SCs was 4.8% and others controlled 55.2%. The per household land ownership was about 0.145 hectare for STs, 0.041 hectare for SCs, 0.139 hectare for OBCs and 0.151 hectare for other groups, while it was 0.130 hectare for all households in urban areas.

http://www.mospi.nic.in/mospi_nsso_rept_pubn.htm

India do have world’s most extensive tax administration system : Wolrd Bank Report

A World Bank report rates the Indian Ocean islands as the easiest place on the planet for a company to pay taxes while India with 9,000 pages of primary tax law and the dubious honour of the world’s most extensive tax administration system and ranked with a low rating of 134.
The World Bank’s Doing Business Project assesses how many obstacles the tax system puts in the way of a business in every one of 175 nations on earth.

The aim is to encourage faster administration, leading to more profitable business activities and hence economic growth. Reduced paperwork and lower taxes are the hallmark of wealthier nations, the World Bank notes.

The report says that an Indian medium-size company should pay a total tax rate on the profit of 81.1% and should take 264 hours of administrative burden with 59 steps. Even though such a high rated tax system is in place, the tax revenue receipts have remained below 10 per cent of GDP of Indian economy due to corruption of the civil service regime.

To enforce a commercial contracts in India is not an easy job.It takes 56 procedures and 1420 days and will cover a cost of 35.7% of the debt!

The time to resolve bankruptcies in India take 10 years but getting credit for companies in India is relatively easy. Import and export procedures in India is a very hard process which is rated at 139.

In India,the number of steps entrepreneurs can expect to go through to launch of a new business is 11 and it takes on average 35 days, and the cost required as a percentage of gross national income (GNI) per capita is 73.7%.

In India, dealing with licences take 270 days and the number of procedures will be 20. It requires an amount closer to of 606 % GNI (Income Per Captia).

Paper avalanche

Corrupt practices are most likely to be found in the highest taxing nations, as entrepreneurs find themselves forced to bribe officials in order to cut through red tape or just to operate outside of the official economy altogether.

The bureaucrats of some nations are in love with tax rules. The top 20 nations in terms of GDP have widely differing amounts of tax law. Within this group, the report ranks the UK as the second-worst offender in terms of the number of pages of primary tax legislation.

The UK has 8,300 pages of tax rules, compared with 1,300 in France and 1,700 in Germany.

This comes as no surprise to the World Bank. “The complexity of the systems in rich nations is astounding,” Ms McLiesh said.

Middle Eastern states such as the United Arab Emirates and Asian locations like Hong Kong come in the top five of easy tax locations.

Latin America and Africa impose the highest costs on complying with regulations and score poorly. The place on earth with the most difficult tax regime is the former Soviet republic of Belarus.

Tax perspective

The picture is not a simple one of Western economies beating the developing world.

The Project’s calculation of Total Tax Rate (TTR) looks beyond normal percentages of tax to include the cost incurred in dealing with the local tax regime.

The Maldives is the winner in this table, with an ultra-low TTR of 9.3%. There are some surprising entries. Cambodia has the number eight slot, beating Switzerland with a TTR of 22.3%.

The report, compiled by the World Bank and business advisors PricewaterhouseCoopers, employs an imaginary flowerpot manufacturer with 50 staff as its guinea-pig for assessing the TTR in each country.

Caralee McLiesh, a World Bank economist who is one of the report’s authors, points out that most people have a false impression of the way tax affects business.

“People think of business tax in terms of a corporate income tax,” she told BBC News, “but there are a whole range of labour tariffs and municipal rates that add to the bill.”

The World Bank takes account of the amount of time it takes its mythical flowerpot maker to deal with the bureaucracies in every country to measure TTR.

Excessive red tape can create a TTR that seems astronomical. Gambia scores worst of all, with a TTR of 291.4%.

The report is not anti-taxation, its authors point out. “Of course there is a need for taxes,” says Ms McLiesh, “but they should not deter businesses from paying and complying because of too much complexity.”

Denmark and the Netherlands have tried to point the way ahead for Europe, with moves to simplify business administration via a standardised business tax model that they are pushing the European Union to adopt.

One of the report’s observations is that businesses are more willing to pay taxes if they see the money raised being used to improve public services.

However, the developing world has a bad habit of raising taxes without producing a corresponding improvement in business infrastructure.

Online relief from Egypt

This aspect of tax administration comes with a warning that a bewildering tax regime is counter-productive. “When tax legislation becomes too voluminous, compliance drops more through ignorance than deliberate evasion,” the report states.

The internet is riding to the rescue in many countries, with online tax return filing seen as a boon for business. Allied to a policy of cutting out exemptions for large businesses or specific rules for particular sectors, the web has a real role in simplifying tax law.

The report holds up Egypt as an example of how to eliminate complexity. Inspired by the example of flat-tax adherents such as Estonia, it went for radical change.

In 2005, Egypt introduced a 20% flat rate corporate income tax, abolishing 32% or 40% sector-specific rates. A total of 3,000 detailed tax rules relating to certain activities and services were slashed. And all businesses could file electronically.

The result of tax reform in Egypt was startling. The number of businesses paying tax jumped to two million in 2005, double the 2004 total.

Report is here

Indian companies are most corrupt on Transparency Bribe Payers Index

October 04, 2006 ; NEW DELHI:

In a global recognition to the “Much Merited Upper Class Rule”, India has been ranked as the worst performer by Transparency International on its global Bribe Payers Index, which is based on the propensity of companies from the world’s 30 leading exporting countries in bribing abroad.  India has been ranked at the 30th position in the Transparency International 2006 Bribe Payers Index (BPI), with a score of 4.62.  A score of 10 indicates a perception of no corruption, while zero means corruption is seen as rampant.  India’s major weapon supplier,  Israel  also ranked as one of the most bribing nation, with a score of 6.01. Israel accounted for 0.4% of global trade in 2005.

Upper castes — that is, Brahmins, Kshatriyas, and Vaishyas — constitute less than 20 per cent of the Indian population but controles the business and civil service sector of the country. They claim perhaps 80 per cent of the jobs in the new economy, in sectors such as software, biotechnology, and hotel management. The large corporates and MNCs in India prefer candidates come from the upper caste families, so that they can get their jobs done using their contacts and networks. The scores of corruption among these groups explain why they want to shut every door for the Dalits and backward communities in the name of ‘Merit’.

The BPI Index results draw from the responses of more than 11,000 business people in 125 countries polled in the World Economic Forum’s Executive Opinion Survey 2006. In first place Switzerland scored 7.81 points out of a possible 10 in the BPI.  Israel tied with Hong Kong with 6.01 points (Hong Kong accounted for 2.8% of global trade in 2005). The US, which accounts for the 8.9% of global trade, the highest proportion, received a score of 7.22 points. China, with 5.5% of global trade, and India, with 0.9%, closed the list.

Under BJP’s rule, India became Israeli arms industry’s prized market and there were also reports in 2003, of the Israeli defense establishment dispatching “scores of agents” to persuade the Indian armed forces in to buying weapons resulting in large scale bribes among civil servants and politicians. The ideological bond between Zionism and Hindutva made India as the second largest trade partner for Israel in Asia, after China. It is currently working hard with their old “Hindutva bureacrats” to make India as  their “biggest trade partner”. Since the advent of Hindutva’s grip on the Indian elite castes, every visit by a delegation of Israeli officials either preceded or followed the cementing of ties involving the purchase of weapons, or the training and/or expansion of cooperation between Israeli armaments interests and their Indian counterparts.

In 2005, Israel has achieved a four-fold increase in the bilateral trade with India which stood at $2.4 billion. Business Week reported in 2005 that India became Israel’s largest importer of weapons the previous year, accounting for about half of the $3.6 billion worth of weapons exported by that country. Not coincidentally, that year also proved to be the second best recorded year for the Israeli weapons industry, making Israel the 5th largest weapons exporter in the world and accounting for about 10 percent of the world’s weapons trade. Obviously the Israeli armaments industry values India as a major new market for its weapons, and as such has much to gain from maintaining and deepening the appetite for arms by the Indian state.

The international corruption watchdog on Wednesday said overseas bribery is still common among the world’s export giants despite the existence of international anti-bribery laws, while companies from emerging export powers India, China and Russia are the worst performers. Switzerland has been ranked at the top slot with a score of 7.81, followed by Sweden, Australia, Austria and Canada at the top five positions on the index. The US and UK have been ranked at 10th and sixth positions respectively.

Transparency International said that Switzerland has managed a leading score of only 7.8, which is far from perfect. This indicates there might be variations here but there are no real winners, it added.

According to the report, businesses from India, China and Russia, who are at the bottom of the index, have the most propensity to pay bribes.

This year’s BPI data shows that leading exporters are undermining the development with their dirty business practices overseas, while the foreign bribery by emerging export powers is disconcertingly high.

Companies from the wealthiest countries have been ranked in the top half, but they still routinely pay bribes, particularly in developing economies, it added.

“In the case of China and other emerging export powers, efforts to strengthen domestic anti-corruption activities have failed to extend abroad,” the report said.

“Bribing companies are actively undermining the best efforts of governments in developing nations to improve governance, and thereby driving the vicious cycle of poverty,” said Transparency International Chairwoman Huguette Labelle.

“It is hypocritical that Organisation of Economic Cooperation and Development (OECD) based companies continue to bribe across the globe, while their governments pay lip-service to enforcing the law,” Transparency International CEO David Nussbaum said.

“The enforcement record on international anti-bribery laws makes for short and disheartening reading,” he added.

“Domestic legislation has been introduced in many countries following the adoption of the UN and OECD anti-corruption conventions, but there are still major problems of implementation and enforcement,” he added.

The index has been prepared on the basis of responses of more than 11,000 business people in 125 countries polled in the World Economic Forum’s Executive Opinion Survey 2006.

The watchdog said that India consistently scores worst across most regions and sub-groupings, while China is the world’s fourth largest exporter and ranks second to last in the Index.

Transparency International Chairwoman said, “With growing influence comes a greater responsibility that should constitute an opportunity for good.”

“This is the right time for Russia, China and India to commit to the provisions of the OECD Convention against bribery and contribute to the vitality of tomorrow’s markets. In doing so they will become part of the effort to make corruption history.”

Transparency International says the countries can be divided into four groups. In the first group – those whose companies are least likely to pay bribes – are Switzerland (which came top in the survey), Sweden, Australia, Austria, Canada, the UK, Germany, the Netherlands, Belgium, the US and Japan.

In the second group – somewhat more likely to bribe – are Singapore, Spain, the United Arab Emirates, France, Portugal and Mexico.

The third group – even more likely to bribe – are Hong Kong, Israel, Italy, South Korea, Saudi Arabia, Brazil, South Africa and Malaysia.

Finally – and most likely of all to pay bribes – are Taiwan, Turkey, Russia, China and India (which came bottom in the survey).

Before countries near the top of the list start patting themselves on the back, it’s worth noting that their companies often apply different standards, according to where they are doing business. “Companies from the wealthiest countries generally rank in the top half of the index, but still routinely pay bribes, particularly in developing economies,” Transpency International says. It continues:

Even high scorers are in major need of improvement. The behaviour of the Australian Wheat Board in the UN oil-for-food programme is just one example.

In March of this year, German-US motor company DaimlerChrysler admitted that an internal probe confirmed allegations of “improper payments” made by their staff in Africa, Asia and Eastern Europe.

Turkey, in 27th place, is nearly at the bottom of the BPI. This is a crucial result as the country pursues its bid for European Union membership. The poor score also raises troubling questions about the country’s commitment to the OECD (Organisation of for Economic Cooperation and Development) Anti-Bribery Convention, which entered into force there in 2003 …

The United States, which blazed new trails with its Foreign Corrupt Practices Act of 1977, ought to be leading the way, but ranks behind many OECD countries.

The United Kingdom has demonstrated minimal enforcement of the Convention, despite scandals implicating firms such as British Aerospace.

Companies often try to shrug off bribes as a way of fitting in with local customs and practices, and there is a popular notion that the recipient, not the giver, is the guilty party. Apart from the fact that such payments are often illegal, they undermine any efforts to promote good governance in developing countries. Bribes also have a corrupting effect on the firms that pay them. Often, the payments are made by local subsidiaries – allowing parent companies to pretend that their hands are clean.

Transparency International warns:

Multinationals cannot be absolved of the corrupt activities of their foreign branches, subsidiaries or agents, and they must conduct due diligence before engaging with joint venture or alliance partners. The purchasing, export, and marketing and sales departments remain the business functions most vulnerable to bribery and corruption.

It adds:

The cost of a tarnished image “back home” can be immense. And companies with a culture of bribery overseas face a heightened risk of being undermined by the unethical acts of their own employees. In the long run, it pays for companies to take proper measures to end corrupt practices.

About 150 years ago, there were no Black Chief Executive Officers (CEOs) in the US, there were no rights for Blacks and there was no cultural influence from Blacks. But now, 75 Black CEOs are working in major US companies. On the contrary, there are no Dalits as CEOs in any private company in India today.

In 1930, the IBM Company in America gave reservation to Blacks, and at present almost all business houses there are accommodating Blacks, Native Americans, and Hispanics. Since the intention of our Govt. is not to empower Dalits otherwise on similar lines how US had done for Blacks and others, Dalits can be given participation in govt. contracts and the supply-chain of different articles. After millennia of oppression, it was the British in 1932 which gave reservation through the historic Poona Pact. English and public school education in India is undoubtedly out of reach for Dalits, and this is resulting in lack of English knowledge which is blocking Dalits to take up high profile jobs.

In India, the perception is that if you are a Backward then you do not deserve anything. And the worst is that the Backward is being touted as the hurdle to the ushering in the era of competitiveness. The reservation policy is only to deceive the rest that we have been properly taking care of the Backwards. But India is absolutely clueless about what results have been achieved through the huge money allocated and the policies being pursued for the development of SC/ST/BCs over the last 50 years. According to NSSO, Census of India and NFHS-II, 37 percent of Dalits living below poverty in India while 45 percent them don’t know how to Read and Write. When any insurgent or terrorist strikes, the ready answer is: “foreign hands bent upon to destabilizing our social fabric and economy”. If the reservation is introduced, our industrial giants would put the blame on reservations.

The Govt. of India protected our industry from foreign direct competition. Are they not reservations? If they talk of survival on the basis of “merit” then let the Indian market be open to foreign companies.
Who is to blame for the dismal performance of PSUs or their closure? Why do we forget that “meritorious” professionals are heading most of the PSUs since their inception? Why only PSUs enjoying a monopoly in the Indian economy are doing well? In whose interests a few PSUs (even the profit-making ones) are forced to either close down or are sold to private parties at a paltry sum?

When a person born Untouchable as per the Hindu caste system is condemned to carry the cross then why is this bogey of “merit” raised constantly by the educated elite? Let us not forget that a caste-ridden society like ours hardly provides a level playing field for a large section of Indian society. A person’s station in life is largely determined by birth. In such a system, there is little space for “merit” and efficiency. The recruitment practices in the private needs scrutiny. The upper castes have been enjoying unstated birth-based reservation since centuries. And extending the benefits of reservation to Backwards at any cost can only neutralize this. When can we see 17.5% IAS officers from Dalits, 27.5% from backward communities and 7.5% from tribal?

Someone who is familiar with the Indian social fabric know the age old doctrine of exclusion legitimised and sanctified by the Brahminical ideology. This upper caste elite controles the Business and Civil Service structure in India, by culminating “Bribing” as a ‘routine matter’ in India’s daily life. Transparency International’s BPI Index proves how this dangerous ideology of “self purity and pollution” has extended its wings to the “Globalization of Corruption.”

Website: Transparency International India