Report of the Santhanam Committee is the basis for the existing administrative and legal structures and processes for combating corruption. Vigilance Manual (Part 1) mentions four major causes of corruption which the Santham committee identified. These are:
(i) administrative delays;
(ii) government overstretching its capacity and assuming too many regulatory functions;
(iii) scope for personal discretion in the exercise of powers vested in different categories of government servants; and
(iv) cumbersomeprocedures of dealingwith variousmatters whichare of importance to citizens in their day to day affairs.
These causal factors can also explain the various forms of corruption prevalent today. SARC has made an extended analysis of the sources or originating circumstances of corruption. We will presently outline SARC’s ideas. But we will first note how these four factors increase scope for corruption. From the point of view of the businessman, delays postpone business operations, cash flows and profits. He would prefer to reduce these by bribing or paying ‘speed money’. For him, it becomes a simple matter of calculating the loss due to delay against the illegal payment. As this payment is usually a small fraction of his likely losses due to delay, he will pay it.
Administrative decisions, as noted earlier, are taken after following the prescribed procedures. Further, there are criteria or rules for decision-making. But the situations which arise in any area of administration are too complex to be captured by invariant, iron clad rules. Hence, decision making which is rule bound, has to be supplemented by the discretion of individual officers. While exercising such discretion, government servants can ask for money; for the applicant knows that the decision depends on discretion and not on any fixed rule.
Governments regulate many activities in public interest. For example, governments regulate buildingconstruction or townplanning.Overyears,therange of activitiescovered by regulationshas increased. Increase of regulations brings more activities under control of governments and increases scope for corruption.
Ordinary citizens face the most vexing forms of corruption. A large lower bureaucracy extracts money from them for simple services like a ration card, driving license, birth certification or copies of their land holding. Such items, though seemingly trivial, often form part of the documentation for accessing other services like a gas connection or a bank loan. It may not be farfetched to describe these bureaucraticexactions, in a famousMarxianphrase, as “primitiveaccumulation”.
Coercive and Collusive Corruption
SARC makes a distinction between two kinds of corruption which it calls coercive corruption and collusive corruption. An act of corruption has two players: the bribe-giver and the bribe-taker. In cases of coercive corruption, the bribe-giver is a victim of extortion. It is like a forcible payment at gun point. The bribe-giver is forced to pay for simple services like copy of his school certificate or entry in his land record. If he does not make the payment to the public servant, he loses far more than the bribe. He undergoes, to use a term from economics, psychological disutility on account of delays, harassment and uncertainty. The economic cost he pays consists of lost opportunity, loss
of work and wages. Compulsions of earning daily bread force poor people into a vicious cycle of corruption.
Besides this coercive corruption, there is also collusive corruption in which the bribe-giver and bribe-taker act as partners androb society. In thissituation,the bribe-giver is as great an offender as the bribe-taker.The actsinvolvedinthesesituationsdefraudpublicexchequer andalso harmpublic welfare. Among such instances are – execution of substandard works, distortion of competition, robbing the public exchequer, kickbacks or commissions in public procurement, tax evasion by collusion, and causing direct harm to people by spurious drugs and violation of safety norms.
Public works such as roads, bridges, buildings, canals have to be built to the specifications mentioned in thetenderdocuments.Tendersarethe means by whichcontractorsbidforgovernment works. The lowest bidder is generally selected and does work according to standards mentioned in the tender documents. Of course, he can earn more profit by scaling down standards during execution with the connivance of project engineers.
The purpose of the tender procedure of executing public works is to encourage competition among contractors and to get reasonable prices. At times contractors form rings and collude with government servants to jack up prices. The tender bids are usually padded with amounts for paying bribes. In this way, competitive process is vitiated. It is believed that corruption payments get built into the tender costs of works. The risks of supplying substandard drugs into public health stores are too obvious to need any elaboration.