Tackling Corruption: A Multi-pronged Approach

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2. Tackling Corruption: A Multi-pronged Approach Vikram K. Chand The World Bank April 21, 2005

3. The Anatomy of Corruption in India • Corruption pervasive in India: India ranked in ninetieth place on the TI index in 2004. • Petty corruption hurt the poor the most • Understanding corruption requires a focus on the incentives that lead to corruption. • Technical solutions (e-governance) by themselves will not reduce corruption.

4. Electoral Incentives for Corruption Intense competition to win seats in fragmented, multi-party contests Push up cost of campaigns and demand for money to fund elections Funding by parties and individuals not considered part of campaign ceiling costs under Explanation 1, Sec. 77, RPA. Contributions by companies banned in the early 1970s, without alternative funding sources for parties in place.

5. Black Money and Politics • Growing dependence on black money after decision to suppress company contributions. • Congress Party accused in the 1980’s of securing money through defense contracts. • BJP depend heavily on smaller traders for funding. • Flow of black money into politics aided by over-regulation, complex tax laws, and desire for anonymity by donors.

6. Criminals Enter Politics • Electoral corruption opened door to the entry of criminals. • Supreme Court in 2003 require all candidates to release information on past criminal cases and assets/liabilities. • According to PAC Study: • Nearly 25% of all MP’s had a case registered against them in 2004. • Four states accounted for 50% of all MP with cases against. • Regional Parties were more prone to criminalization than national parties. Question: Do such politicians have an incentive to reform the system?

7. Impact of Electoral Corruption • Electoral ‘upstream’ corruption induce corruption further ‘downstream’ as well especially in public administration. • Posts in lucrative ministries bought and sold routinely. • Procurement focus of corruption especially large infrastructure projects. • Rent-seeking pervasive in service delivery.

8. Market in buying and selling of posts. Source of patronage for politicians. Frequent transfers hurt service delivery. Make administering development projects more difficult. The Problem of Transfers

9. A Typical Development Project Rural Women’s Empowerment and Development Project (1998-2001) State Number of Average tenure MDs (in months) 3 8 Bihar Gujarat 7 3.1 Karnataka 4 6 MP 4 6 UP 5 4.8 Source: e: Rao Seshadri (2003)

10. Aggregate Transfers, Karnataka, 2000-05

11. Cadre management committees. Quantitative caps on transfers. Computerized transfer process. Mass transfers reduced – sustainable? Less success in controlling elite transfers. Can GOI frame rules to encourage stable tenures at the state level? Controlling Transfers

12. E-Governance • Important tool to reduce corruption and improve service delivery • 50% of all e-governance projects fail (OECD). • What explains success? • Political Champions. • Departmental capacity and drivers. • Process re-engineering along with computerization.

13. Registration in Maharashtra • Highly corruption department by reputation • Chief Secretary/Chief Minister want reform to show Maharashtra could compete with Naidu. • Stable tenure for new IG, Stamps, N. Kareer. • New IG begin with consultation; then BPR including redefining service standards, reducing discretion, new software program to calculate guidance values, and public-private partnership. • PPP raise funds, inject new skills, facilitate better performance management.

14. Results of Registration Reform • Major Decline in Corruption: Only 8% said they paid bribes in Maharashtra • Less Reliance on Touts: Only 40% got help compared to 94% in Karnataka. • 75% said behavior of staff was polite. • Time taken to register a document fall to just 30 minutes.

15. Computerized Checkposts in Gujarat • Inter-state check-posts important source of revenue for government. • Massive leakage at checkposts. • Reformer posted as Transport Commissioner begin change in 1999. • E-Governance introduced on a massive scale using a PPP model.

16. CCIP: The Empire Strikes Back • Project bedeviled by Tenural Instability. • New Chief Minister less supportive. • PPP model unravel. • Technology switched off and bypassed. • Corruption continue unabated. • Price of an Inspector’s post – two crores in political marketplace.

17. Access to Information • Rajasthan: Public hearings to encourage dissemination of critical information. • Government respond with legislative changes including new RTI law. • Delhi pass RTI law in 2000: Strong support of CM. • NGOs use it widely to cut corruption in PDS and other services. • Citizen-friendly Public Grievances Commissioner hear appeals: Of some 4, 000 requests for information filed in 3 years, some 1, 200 appeals resulted of which 75% were granted.

18. Report Cards in Bangalore • Public Affairs Center (PAC) conduct three report cards on city services. • Report cards prod agency reformers into action, mobilize public pressure. • Report cards not a magic bullet. Can GOI promote use of report cards for agencies at the national and state levels?

19. Improvements in Satisfaction: Public Services in Bangalore. Source : PAC

20. Large Decline in Corruption Corruption across Three Report Cards 100 80 60 25 % who paid 40 32 20 19 14 9 22 0 1994 1999 2003 Year General Households Slum Source: PAC

21. Karnataka’s Lok Ayukta: Focus on Service Delivery • Most powerful of 16 Lok Ayuktas in India. • Investigations: • Drug adulteration • Public hospitals (absenteeism, exploitation) • Transport and registration departments. • Corruption in municipal government Wide publicity may be the best way to check corruption when courts don’t work...

22. Lok Ayukta In Action

23. Reforming Elections • Clubbing party and individual expenses with candidate expenses under ceiling. • Broad-base contributions to prevent a few donors from dominating. Risk of capture. • More transparency in disclosure: Parties have still not identified donors in 2004.

24. What about Public Funding? • Public funding reduce pressures for extraction from system. • Media time already subsidized under new legislation. • Public funding work only if parties democratized internally with penalties for mismanagement. • Public funding financed by closing MPLAD.

25. Anti-corruption Enforcement • End Single-Directive and vest permission to prosecute with an independent body. • Reform article 311 to make it easier to discipline corrupt civil servants. • Discourage the fragmentation of anti-corruption institution. • Judicial Reform to speed up case disposal and check corruption in the judiciary.

26. Sparking Demand for Change • Encourage the wider use of report cards. • Pass amended Right to Information law for the country with stiff penalties and universal application. • Government schemes to reflect community priorities and be implemented by the community rather than bureaucratic priorities.