Reflections on the state of corruption in India

India's 76th rank on the corruption watchdog’s index paints a positive picture, considering its last held position at 85th place

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Measuring a meandering force such as corruption is almost impossible. Nevertheless, this is a task which Transparency International (TI) has undertaken, in a sense, through their Corruption Perceptions Index (CPI). Although the index is focussed on capturing perception toward the public sector in the region, it also depicts (to a certain extent) the social ethos that the particular region possesses. The release of the 2015 CPI index, which ranked India at 76th among the 167 countries included in its analysis, was met with mixed sentiments within the industry. While a higher rank was indicative of improvement on this front, a closer look at the score achieved, which was 38 points, still placed India below the median level of 50 points – thus creating a dichotomy of sorts.

This result is inevitably an expected one, as rectifying any issue of such magnitude takes considerable time and effort.

A take on India’s improved ranking on Transparency International’s (TI) Corruption Perceptions Index (CPI) 2015

India’s ranking at 76 on the renowned corruption watchdog’s index paints a positive picture given that it was ranked 85th previously. Additionally, India has increased its score a couple of paces since 2013 where it stood at 36 points. This improved perception can be attributed to a number of factors – regulations, enforcement, public outcry against corruption, as well as the government’s propaganda in highlighting India as a preferred investment destination among foreign investors. With India being the large growth economy, the government is leaving no stone unturned to empower businesses and encourage investor sentiment.

Evaluating the regulatory terrain
Recent steps taken by the government of India (New Companies Act 2013) to improve governance standards in the country are encouraging and are garnering support of various sections of society, for example, investors, corporate organisations and the general public. The Prevention of Corruption (Amendment) Bill (PCA), 2013, introduced by Parliament (expected to be enacted in 2016) is expected to substantially alter the way corruption is dealt with, having drawn inspiration from key global anti-bribery and anti-corruption laws.

Dealing with fraud, bribery and corruption has become more effective with increased enforcement. Latest statistics reveal that law enforcement officials at the state and local level have aligned themselves with the country’s anti-corruption laws. For instance, according to the Central Vigilance Commission’s 2014 annual report, approximately 70 percent of all cases registered by the Central Bureau of Investigation (CBI) in 2014 were being handled by the Anti-Corruption Division. Additionally, there has been a notable increase in inquiries and investigations driven by enforcement agencies i.e. Enforcement Directorate (ED), Anti-Corruption Bureau (ACB), Central Vigilance Commission (CVC), CBI and many state-level anti-corruption agencies. This is demonstrative of a nation ramping up its drive against graft and this changed approach will inevitably drive a more positive outlook for India’s future.

How India stacks up against the other BRICS nations
India is yet to gain traction to take the lead on the index, with regard to the BRICS nations. The current position on the index places India second in line, at par with Brazil. South Africa has seen some significant traction in the last year and has managed to advance by six spaces to the 61st rank on the current index. In retrospect, this could be a result of the 2014 enactment of the ‘Prevention and Combating of Corrupt Activities Act’. Such iterations to law play a crucial role in shaping perception, with enforcement trends emphasising commitment. China and Russia surpassed their previous ranks and went from 100th to 83rd place and 136th to 119th place in 2015 respectively. The factors for China’s gain on the index could be owed to a focussed commitment by the ruling regime and an increased level of enforcement. Russia has been gradually encouraging a change perception due to its high economic potential and improved tax policies and practices. Brazil suffered a setback and dropped to 76th position this year from 69th in 2014. The fate of Brazil was largely owed to recently uncovered scams, prolifically covered by the media, which impacted the nation.

Be the drop that causes the ripple
An often overlooked aspect which was highlighted in the analysis presented by TI is that ‘reversing corruption is not solely down to the government’. The corporate world too contributes to fuelling this ‘monster’ and appropriate measures need to be implemented to avert such instances. In a few scenarios, corporates and individuals too, prefer resorting to corrupt practices given the ease involved. Hence, mechanisms that address both external and internal factors need to be put in place to eliminate such threats. From a corporate perspective, ethical corporate governance practices enable organisations create a culture that inherently abhors such methodologies.

Nevertheless, this anti-graft evolution is intrinsically based on the principles of an individual or organisation. This task therefore, will require companies to follow norms, not just in form but more importantly in spirit. This approach would ensure that both companies and the public develop a renewed stance toward rejecting such practices.

- By Arpinder Singh, Partner and National Leader, Fraud Investigation & Dispute Services, EY India

The thoughts and opinions shared here are of the author.