The nation was shocked at the news of USD 1.77 Bn alleged banking fraud by Nirav Modi in collusion with bank employees. This wasn’t a one of such fraud, and to make it worse, like Nirav Modi many fraudsters in past had managed to leave the country. Then came in the news that India’s ranking in corruption index had fallen to 81st position and India was one of the “worst offenders” in the Asia-Pacific region. Well prevalence of corruption is a reality in India (as I write this, Lalu Yadav is convicted in fodder scam) and common man does face corruption everywhere. So one can’t resist asking, “Are we a dishonest society?” “Are we Indians inherently dishonest?”
To begin with, dishonesty isn’t the only root cause of corruption. Two other factors – dysfunctional systems and deprivation of equal opportunities – also play a role in breeding corruption.
Our administrative ‘system’ comprising municipalities, police department, judiciary, etc. on the average, functions at a sub-par level and have poor service and surveillance capabilities leaving an open ground for the corrupt. Nirav’s LoU frauds thrived not just because a few complicit bank officers were dishonest, but also because the entire system – internal auditors, auditors, risk function and the board – failed in their duties (arguably, not all of them were dishonest). A toothless machinery meant that a few dishonest individuals kept milking the system to make easy money. Magnify this phenomenon across the country and it’s evident that corruption is often a result of ineffectual systems. When the crooks know that the police and justice department are slow and ineffective, they have a freer hand. Also, the number of police personnel (and judges) to people ratio for India is one of the lowest in the world and such thin staffing results in the stressed out police force and delay in closing legal cases.
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The second factor, lack of equal opportunities, also plays a role in increasing corruption. When capable, aspiring citizens don’t get enough avenues for channelizing their creativity and labor in gaining income and wealth through legal means, they tend to resort to corrupt means. When one crore young applicants are aspiring for just a few government jobs, the tendency is to beat the system to acquire those jobs.
As for honesty (or lack of it), it is difficult to measure it but some observations could be made. Firstly, in spite of high poverty and poor systems in India, there isn’t widespread cheating and lawlessness to the extent of creating a culture of trust deficit among the masses. Yes, dozens of corrupt leaders and businessmen hoard power, bend rules or use influence for their own benefits but the larger masses can’t be accused of being dishonest on a mega-scale. The fact is, large financial frauds and political corruption aren’t rare even in countries like Japan and USA in spite of having much better systems and richer populations. Secondly, even when opportunities are available (e.g. natural disasters), we aren’t prone to anarchical behavior or looting the kinds that happen in California following the wildfires. Thirdly, dishonesty is most evident among the Indian masses at daily, tactical levels (offering speed money, breaking signals, not paying taxes, examination cheating) for securing self-interests while not directly harming others. Such dishonesty by the masses is often a result of Chalta hai attitude of the municipalities, police department, judiciary or PWD in terms of not offering timely & good quality services, not sharing information transparently with citizens and poor check on the non-performers or the dishonest staff. The citizens are then motivated to take shortcuts like offering speed money, breaking the queue or use agents to get daily things done.
It is obvious that such widespread, daily, tactical dishonesty can be reduced if well-functioning systems are in place which not only ensures quality services to citizens but also nab criminals who try to manipulate the system. Clearly, the greater problem is our extremely poor system rather than our visible dishonesty which is not permanent. After all, the same Indians are very law-abiding when traveling abroad where systems work more efficiently.
So how do we improve our systems? Our systems have remained ineffectual partly because they have been controlled by a few corrupt and partly because the honest masses have not shown will and perseverance to change the systems for better. Our weakness is not a few dishonest sinners, but millions of silent, lethargic non-sinners who let things be with their Chalta hai attitude. Developed countries have lesser corruption not because the people there are more honest than us Indians. In Japan and USA too, there are dishonest people who commit crimes, but the difference is, they often get caught because the good people are stronger, persevere more than the bad ones and are backed by better processes, technology, and systems. It’s high time a critical mass of honest Indians challenged the old system and permanently overpowered the dishonest ones.
About Alpesh Patel:
Alpesh Patel is an author, is the founder of rSutra Analytics & Consulting. He has been a management consultant, BFSI expert, AI & Technology specialist and a mentor to start-ups with 20 years of corporate experience. As a consultant with Big4 Advisory firms, Alpesh guided corporates & government in formulating strategy, mergers & acquisitions and undertaking large transformations. He has advised Banks and companies in Insurance, Payments and Micro-finance sectors and was instrumental in setting up a Payments Bank. He has been a part of many new ventures set up in India during the last two decades. He was one of the co-applicants to RBI for setting up a payments bank in India.