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Greek Lessons For India's Corruption Crutch

Greek Lessons For India's Corruption Crutch

May 21, 2011

Corruption effectively destroyed the Greek economy. Could the same thing happen in India?

“I’d sit down with someone who knew the inner workings of the [government]: a big-time banker, a tax collector, a deputy finance minister, a former M.P. I’d take out my notepad and start writing down the stories that spilled out of them. Scandal after scandal poured forth. Twenty minutes into it I’d lose interest. There were simply too many: they could fill libraries, never mind a magazine article.”

Despite what you might think, the above passage is from an article about Greece, not India – however easy it may be to imagine the same words applied to this country.

Last year, in addition to a very successful book about the global financial crisis, Michael Lewis wrote an article called 'Beware of Greeks Bearing Bonds' for Vanity Fair. In it, he detailed the deep, vast chasm that corruption had ripped into Greece's financial structure. Taxes went almost universally unpaid, and everyone – from the waitress in a hotel bar to the highest offices of government – both took advantage of and contributed to a society that encouraged corrupt practice at every juncture.

It all had to come crashing down somewhere, and eventually someone realised that the Greek government had accumulated an official, trackable debt of $1.2 trillion US dollars, with the unofficial figure likely to be even higher. Greece is now desperately planning to privatise huge portions of their economy as it begins to tackle its mountain of debt. It's like if India's national debt became so inflated that it had to sell off the Indian Railways to the private sector.

India's national debt, by the way, is substantial. Figures in 2009 (via an intriguing map by Visual Economics) indicated that India owed $2.5 trillion – 78% of the country's GDP at that time. The map demonstrates at least two things: 1) that India's national economy has now overtaken that of European countries and is a genuine global contender; 2) that this growing economic boom is, like in so many other countries, fuelled by money that the government simply doesn't have.

In the meantime, as we all acknowledge after Anna Hazare's recent crusade, corruption penetrates every level of Indian society. Last month, senior ministers A. Raja and Suresh Kalmadi were arrested and charged with criminal conspiracy and cheating to the tune of crores upon crores of rupees. In Raja's case, the 2G Spectrum scam, he oversaw the largest case of political corruption in modern Indian history, totalling approximately Rs. 1.76 lakh crores (US$40 billion) in losses for the Indian government.

In a country where the average annual income is around US$1000, the figures surrounding corruption are sickening. Of course, corruption isn't the only factor that contributes to national debt, but when you add high-level cases like Raja and Kalmadi to the cases that exist at every level on down, through state governments to local muncipality officials, corruption makes up a very sizeable chunk. The question is, could India's burgeoning economy be torn apart by corruption? Could India be another Greece?

Well, there's a key difference between the types of corruption of Greece and India. In Greece, the government was denied money that it was owed by law, and which it counted on in its yearly budgets. People would simply lie barefacedly about their income in order to avoid paying any tax whatsoever. Indian corruption, on the other hand, tends to take care of the government's share – keeping it as low as possible, doctoring the numbers if necessary – and then pocket the rest.

In other words, the Indian government isn't being denied money that it expects. It's being denied money that it doesn't know anything about on paper. It strikes me, then, that a Greece-like collapse, where someone suddenly notices a trillion dollars is missing, is highly unlikely; instead, India's corruption will merely hold it back from reaching the heights it should inevitably be scaling. I say 'merely' as jogging in the same spot is a much more attractive prospect than falling face-first into the ground, but for India to sit still with all its abundant resources would be a great shame.

And there's always the possibility that if left unchecked, corruption could very well destroy India. It is admittedly a long way off – India has some distance to go before it approaches the heights of mistrust and institutionalised pocketing of government money that Greece attained – but where corruption is concerned, the slope is a slippery one. It's a natural human desire to want more than you currently have, and for people like Raja and Kalmadi who attain those extra crores through underhand means, the temptation to delve even deeper into the rabbit hole is great.

Even if the lessons of Greece don't directly apply to India and Indians yet, they should be heeded, because they could be the lessons that save the country and push it forward in the years to come. 

1 Comment

  • Vidya Bhandarker
    By
    Vidya Bhandarker
    22.05.11 10:57 PM
    When I came to Hyderabad in December2010 I was heartsick at the scams that were swirling in the air. I could not understand why a nation with so much grey matter was not standing up-and before I knew it the Anti-Corruption storm blew across-my first opportunity to participate and register my discontent in the 46th year of my life!! I was grateful- most important it was peaceful and I said okay there is still a pulse here people have had it and if the anti-corruption movement has shown the Government can still be made to heed to the power of the people. Brand India was tarnished. Your article ofcourse says it all hopefully we will see some change.

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