When India liberalised its economy in 1991, the cheerleaders of the free market economy declared that this would minimise, if not eliminate, corruption in the country. If there was no licence-permit raj and petty officials did not have any discretionary powers, it stood to reason that there would be no need to grease palms at every stage of a deal.
Instead, in the two decades since Prime Minister Manmohan Singh’s Budget, what do we see? Petty corruption flourishes as it did then. Getting a phone line may have become easier, but the citizen still has to deal with demands for speed money to get things moving. But, as the economy has grown, the scandals have become bigger and more brazen. And the old rent seekers have now changed their ways; no longer do the bigger fish want a cut; now they want to be stakeholders.
Two recent examples will illustrate this. In the recently-concluded Commonwealth Games scam, we saw not merely that influential people allegedly asked for a percentage to get a contract passed, or inflated costs so that there would be enough to share, but they were even involved, through front outfits, in the tendering process. Thus, it wasn’t just about clearing a file; now the subversion begins at the bidding stage itself. By skewing the system and keeping it opaque and confusing to all but insiders, those in positions of power ensure that only the chosen ones get the contracts. And quite often, these selected contractors happen to be connected to those who take the crucial decision.
Something similar can be seen in the Adarsh Co-operative Housing Society scam. When the purpose of the plot was changed and a society was floated, anyone in the government or in the defence establishment who was in a position to hold up a file, was obliged. Several other laws, including the Coastal Regulatory Zone (CRZ), which prohibits construction of buildings 500 metres from the shore, were flouted. Security concerns (there is a military and Navy base close-by) were discarded. The powerful insiders used their muscle and, more important, their privileged information to get something. They are not rentiers, they are racketeers.
Those in the construction industry will tell you that many a powerful politician is a stakeholder in housing projects. No longer are they content with getting a flat or two; they are now businessmen who want huge profits, not peanuts. They have the power, the money and, most of all, the inside information that they leverage to their advantage. This is the big change from the corruption of yore.
The other difference from the pre-liberalisation days is the sheer scale of the scandals. The Bofors scandal, said to be in the range of `64 crore (and shared among several people along the way) looks like a pittance today. The auction of 2G spectrum and the scams around the Commonwealth Games on the other hand run into thousands of crores; even a tiny fraction of that could translate into a tidy sum.
Liberalisation has meant a lot of more money in the system; naturally, corruption too has increased manifold.
The most stark divergence from an earlier time is the institutional rot that has set in. Politicians or petty officials at the lowest levels no longer hold the monopoly on corruption. Senior bureaucrats, Army officers and heads of prestigious organisations too now routinely get outed for being corrupt.
This is true of the private sector too. Just in the last one year, a well-known architect in Mumbai and the chief of the Medical Council of India have been among those arrested for shady practices, the former being charged for demanding money to pass building plans, the latter to clear medical colleges.
As for the Army, though it still retains a sheen of incorruptibility, many officers have been indicted in recent times. The stain of corruption has now spread even to the judiciary. No one seems immune.
It may be too simple to blame this rise in scale and depth of sleaze on economic liberalisation alone. The post-1991 years have after all brought unprecedented growth and prosperity and have released the entrepreneurial energies of millions of young Indians, many of them scrupulously honest. The India story is not totally built on malfeasance and bribery.
True enough. But while the shortage economy is now behind us, the discretionary powers in the hands of powerful elements remain. The regulatory regime that has replaced the licence raj of old is not completely transparent. Earlier political contacts could be used to get that all-important import licence; today it is critical for a businessman to keep the political class and senior babus happy because the stakes are that much higher and the former still wield enormous clout to make or mar a business plan.
At the same time, the politician and the civil servant has begun to ask himself, why shouldn’t I (or my son, daughter or mother-in-law) benefit if I am the one whose notings on a file can make such a difference? Some do it by taking a benami stake in a company or by ensuring that their son gets a lucrative contract from the group and still others make sure that their relatives get an apartment in a building.
The pie has grown humungously, and naturally the proportion of corruption has grown along with it. Adarsh is but one scandal that made the headlines; who knows how many more are around which we don’t know anything about?

n The writer is a senior journalist and commentator on current affairs based in Mumbai