DECEMBER 27, 2014

By Dr Awdhesh Singh

The Transparency International (TI) has recently published the Corruption Perception Index (CPI) for 175 countries. India is ranked 85 with a score of 51.72 on a scale from 0 (perceived to be highly corrupt) to 100 (perceived to be very clean). It is easy to see that India is perceived to be among the most corrupt countries of the world and that calls for close introspection and deep analysis of the state of governance in our country.

We are often disturbed by perceptions of others about us even though perceptions are not truths but often reflect the biases and prejudices of the perceiver.

Two salesmen were sent to an African country by a shoe manufacturing company to scout new markets where they could sell their company shoes. The salesmen spent a couple of weeks there, then came back to report their findings to their manager.

The first salesman said, 'There is no market in that country. I did not see anyone wearing shoes there.'

The second salesman said, 'There is a huge market for shoes in that country. I did not see anyone wearing shoes there.'

It is interesting to note that both salesmen observed exactly the same facts but they perceived the truth in just the opposite way. It is easy to see that one salesman was a captive of the past while the other has the vision for the future.

How Corrupt We Are

We Indians are a confused lot. On one extreme we feel extremely proud of our ancient civilization, culture, non-violence and spirituality but on the other end, we are ashamed of our caste system, the poverty of our masses and corruption in Governments. Our media is full of stories of corruption, crime, rape as if nothing good is happening in our country. Most people believe that government officers and politicians are corrupt beyond any hope of redemption and that nothing moves in this country without bribes.

The perception, however, vary dramatically when you switch sides. If you are in government, you can see many officers who are honest and lead a simple life. I personally know many officers who retired as Member and Chairman, the top position of the revenue service, and still live in a two/three bedroom apartments in a not-so-posh colonies. However, the public perception is fueled by the exceptionally corrupt officers, whose rag-to-riches stories are flashed all over the newspapers and electronic media.

Our perceptions often become our reality as we don't want to change them which give us sadistic pleasure and moral superiority. When 99% of the people in India are not part of Government, it is easy to sell the fallacy of corruption as the remaining 99% of the people feel better when government officers are defamed and condemned.

Let us try to understand the truth as it is without praise or condemnation. It is here that the data provided by "Transparency International" becomes of a great value. We can trust this data more than our own perceptions of corruption in India-which are biased and subjective.

The Missing Link of Corruption

Before we proceed any further, please answer the following question-

The height of boy A is 4 feet and the height of boy B is 5 feet.

Which boy is tall?

You must have answered the questions within a fraction of a second- 'Boy B is tall.'

You may not even realize your mistake in answering the question, without knowing the full facts. I now give you the additional information-

The age of boy A is 5 years and the age of boy B is 15 years.

I am sure that your answer is different now. You now realize that boy A is exceptionally tall (for his age) while boy B is quite short (for his age).

We are immediately able to correct our answers once we know that boys between the age of 5 and 15 in the growing-age. Our earlier answer was wrong because we presumed that both boys were of the same age. We know for sure that after 10 years or more, the boy A would become much taller than boy B.

In the same way, there is an important factor which is missing, when we decide about the issue of corruption in any country. The most important factor that affects corruption is the economic development of the country, which can be measured by the per capita income (GDP) of the country. Let us now take a complete view of corruption by analyzing the data provided in Table 1.

Table 1: Integrity and Prosperity Scores of Least and Most Corrupt Countries

I have taken the data of the per capita income based on IMF staff estimates for the year 2013, made in April 2014. This data is available for 185 countries while the data of Transparency International is for 175 countries. Hence, in order to rationalize the two data sets, I have taken the percentile score of integrity (based on CPI score) and prosperity (based on Per Capita Income) for the purpose of comparison.

It is evident from the perusal of Table 1 that ALL the most honest countries are those who are also the richest. In fact the poorest country figuring in top 10 of the CPI rank is New Zealand which is richer than 89.25 percent of the countries with per-capita-income of USD 40516. The average per capita of top 10 honest countries is USD 65908. On the bottom of the Integrity list are the countries which are mostly poor with average per capita of USD 3987-a good 16 times lower than that of the top nations.

It is, therefore, evident that integrity and prosperity have a positive correlation.

It is not possible for any country to become honest unless it is prosperous.

It is remarkable here that even though India is poorer than 88% of the countries but it is more honest than 51.72% countries of the world.

Let us try to understand why it is not possible for nations to become free from corruption unless they achieve a certain level of prosperity.

Lack of Money is Root of All Evil

You must have seen the news regarding the placements made by Indian Institutes of Technology (IIT) and Indian Institute of Management (IIM) students. There are hundreds of students who were offered more than a Crore rupees of salary by multinational companies for the international jobs and more than 30 lakhs of salary for Indian jobs. Some of these graduates would become CEO of the private sector companies soon and earn a salary of several crores per annum in India itself.

Now compare these salaries with the salaries of the top civil servants like IAS, IPS or IRS officers, who are selected through the prestigious Civil Services Examinations (CSE) conducted by UPSC. On the average, 4-5 lakhs candidates appear for the examination for around 1000 positions. Aspirants must complete a three-stage process, with a final success rate of about 0.2% of the total participants. Thus getting into Civil Services is far more difficult than getting into IITs and IIMs. There are thousands of civil servants in India who have IIT and IIM degrees.

Yet the salary of a civil servant is hardly Rs. 5 lakhs per annum with an annual increment of just 3%. Most newly joined IRS officers have to arrange for their own accommodation with the small HRA. They have no vehicle at their disposal. Yet, these officers are expected to maintain the highest level of integrity and perform their job without any fear or favour.

It is wisely said: If you pay peanuts, you will get monkeys. Yet no country has taken this dictum as seriously as Singapore, which has consistently occupied the position of the most honest country of Asia. In October 1994, Government issued a White Paper entitled "Competitive Salaries for Competent & Honest Government", where it was recommended that salaries of Ministers and senior Civil Servants be pegged at 2/3 rd the average income of the top 4 earners in 6 private sector professions. The annual pay of the Prime Minister of Singapore was set at USD 3,072,200 (Rs 15 Crores approx) in 2010 and all other Ministers and bureaucrats are also paid the salary which was in tune with the salaries paid in the corporate for the commensurate work.

Lee Kuan Yew, the first Prime Minister of Singapore, who is widely recognized as the founding father of modern Singapore said in 2000 -

"… Singapore will remain clean and honest only if honest, able men are willing to fight elections and assume office. They must be paid a wage commensurate with what men of their ability and integrity are earning for managing a big corporation or successful legal or other professional practice. … If we underpay men of quality as ministers, we cannot expect them to stay long in office earning a fraction of what they could outside. With high economic growth and higher earnings in the private sector, ministers' salaries have to match their counterparts in the private sector. Underpaid ministers and public officials have ruined many governments in Asia. Adequate remuneration is vital for high standards of probity in political leadership and high officials."

If we adopt the similar yardstick for Indian Ministers and top civil servants and judges in India, their salaries should be several crores per annum. However, even the Prime Minister of India draws a meager monthly salary of Rs. 1.6 lakhs, which is even less than the salary of many fresh IIT/IIM graduates. The salaries of top bureaucrats and Judges are no better.

It is impossible for any Government in India to pay such high salaries as we simply don't have such revenues as the developed countries have at their disposal. Hence, unless the economy improves, we can't expect the government servants and common people to display the same level of integrity as expected from them.

The Measurement of Character

While it is easy for politicians to give slogans and promise to remove poverty and corruption within days of coming to power, it is difficult to fulfill such promises. Often citizens develop distrust and contempt against the politicians who can't keep their promises. Yet citizens too have to share the blame as they tend to vote for a party, which makes maximum promises, rather than a party which promises what it can truly deliver.

The path of economic growth is slow. At present, the per capita income of India is only USD 1509, yet people try to compare India to a developed country – whose per capita is often USD 30,000 or more. We must know that it is going to take time grow from USD 1509 to USD 30,000. Even if we take an annual growth rate of 8% per annum, it will take at least 40 years to reach to the level of a developed country presuming that they don't grow at all.  With the growth rate of 6% per annum, the time needed is more than 50 years to become a developed country.

There are unfortunately no short cuts for removing corruption, though we are often tempted to believe that stricter laws and severe penalties can curb corruption. One of the best examples is the case of China where corruption is punishable with the death penalty if the sums acquired illegally go beyond a certain threshold. China executes more people in the world than rest of world put together. Yet they have failed to tackle corruption. As a matter of fact China is placed much worse than India at number 100 even though its per capita incomes of USD 20925, which is 14 times more than India. The other totalitarian country Russia performs even worse being ranked136 in honesty even though its per capita income is USD 14591.

The Character of Indians

There is no doubt that integrity is extremely important for the growth of a nation. Hence, if a country is relatively more honest than the nations of similar income level, it has better chance of development. The nations whose people are able to resist the temptation are more likely to succeed in future than those who are giving in to temptation.

I have tried to measure the Character of nation by assigning the "Character Score", which is derived by comparing the Integrity Score with the Prosperity Score. If people can resist being corrupt despite being poor, they certainty have higher character than those who give in to corruption despite being rich. Let us now see where India stands on the 'Character Score' chart.

Table 2: The List of Major Countries based on their "Character Score"

It is hearkening to see that India is almost on the top of Character Score, just behind Ethiopia. There is no country in the world which is as honest as India with the same level of economic development. Ethiopia, the only country which excels India, is much smaller with a population of merely 85 million as compared to 1250 million inhabitants of India.

Proud to Be Indian

It is evident that the future of India is bright as Indians are better in resisting temptations as compared to people of other nationalities. The same conclusion was drawn by the world famous experiment called "The Marshmallow Test" conducted in the late 1960s by Walter Mischel at a Stanford University nursery school.

In the experiment, 4 and 5-year-olds were presented with a difficult choice. They could eat one treat i.e. Marshmallow (Sugar candy) immediately or wait for 15 minutes longer to be rewarded with two.

Years later, Mischel followed up with children in his original study and discovered a surprising link: The kids who had waited for two treats (resisters) had higher SAT scores, greater workplace success, a lower body mass index and they were less likely to take drugs.

The effect of high character is quite visible for India which is constantly improving its ranking in the honesty front. We have improved over 9 points in a single year as we climbed from 94 in 2013 to 85 position this year. However, it would be unreasonable to believe that we can occupy the top position soon as we have long way to go to remove poverty in India and become a developed nation. What we need is patience, constant economic growth and confidence in our values.

[About the Author - Dr Awdhesh Singh is posted as Commissioner of Central Excise and Service Tax in Large Taxpayer Unit (LTU) Chennai. His first book "Practising Spiritual Intelligence" has been on the bestseller list. His new book "The Secret Red Book of Leadership" has been launched recently. The views expressed by the author are strictly personal.]