The Art Of Graft…..Arvind Panagariya
It will take more than legalising bribe giving to reduce petty corruption
It will take more than legalising bribe giving to reduce petty corruption
Corruption in India has attracted much commentary. Given the large number of members in Parliament and state legislative assemblies facing criminal charges, Bimal Jalan has proposed that candidates with pending criminal cases be subject to fast-tracking of such cases once they are elected. Jagdish Bhagwati has suggested opening up legal sources of campaign finance to curb the current reliance on illegal sources.
More recently, Kaushik Basu, the chief economic adviser in the ministry of finance, has proposed that bribe givers in a particular class of bribery cases be given immunity from prosecution to encourage more “whistleblowing”. Given that the proposal has come under fire mostly for the wrong reasons, a more careful examination of it is required.
Economists distinguish between two types of bribes: Type 1 given to (often lowlevel) bureaucrats to do what they are supposed to do and Type 2 given to (usually highlevel) public officials and politicians to do what they are not supposed to do. In the former case, the bribe giver is the victim with no loss to the state; in the latter case, he is a partner in crime and shares in the profits created by defrauding the state.
Thus, when a railway official extracts a payment over and above the price of a train ticket to issue the ticket, he is taking a bribe for a service legitimately due to the passenger. This is a Type 1 bribe. If, instead, the official takes a bribe and lets the passenger travel with no ticket issued, he and the passenger jointly benefit by defrauding the state. This is a Type 2 bribe. The 2G, Adarsh Society and Commonwealth Games scandals are the more high-profile examples in this category.
The proposal by Basu would make giving (but not receiving) Type 1 bribes legal. (He calls these bribes “harassment bribes,” which is a misnomer since all bribes involve harassment of the citizenry vis-a-vis a smooth-functioning corruption-free state.) The rationale behind the proposal is that such legalisation will free bribe givers from the fear of prosecution and lead them to massively report the corrupt officials to the appropriate authorities. Indeed, one can go a step further and argue that, anticipating the increased prospects of being reported, public officials might stop extracting bribes in the first place.
But this seemingly plausible argument is flawed on three counts.
First, getting service from a government office is not a onetime affair; in most cases, a citizen must repeatedly return to the same office for the service. Therefore, a potential whistleblower must consider the impact his action will have on his ability to access the same service in the future. Two factors make it likely that he will suffer on this count. One, given the slow pace with which our administrative and judicial system moves, whistleblowing will result in either no action or very slow action. Therefore, the probability that the whistleblower will find the same official behind the desk when he returns for the service is high. Two, Type 1 cases overwhelmingly involve low-level public officials who are highly organised in India. Therefore, even if a particular official is successfully suspended on charges of bribery, the successor officer, in solidarity with other members of his service, will retaliate by denying the whistleblower the service the next time the latter returns.
Second, even assuming that whistleblowing does not impair future access to the service, the potential whistleblower must take into account the cost incurred in delivering testimony to the courts. In our legal system, officials charged with bribery can themselves use Type 2 bribes in the lower courts and in any case exploit multiple appeals to delay the decision for years. This means that the whistleblower must be prepared to spend a great deal of time and personal expense to see the case through.
Add to this the non-negligible probability of the accused official sending goons to inflict violence on him and his family and the option of paying the petty bribe each time without blowing the whistle begins to look attractive. It is presumably for these reasons that a law exempting bribe givers from prosecution in the Philippines, which has been on the books since 1975, has been rarely used.
Finally, there is even a possibility that the immunity from prosecution would increase rather than decrease the incidence of bribes. Under the current system, at least someone like me is afraid to offer a bribe for fear that the official behind the desk might turn out to be honest with embarrassing consequences. But once the proposed immunity is in place, everyone will feel free to offer the bribe rather than go an extra mile to avoid it. Indeed, those able to afford it will likely openly compete with offers of ever-higher bribes to get ahead in the queue.
What then can India do to combat Type 1 bribes? Three avenues come to mind. First, NGOs and the press may be mobilised to more vigorously blow the whistle on corrupt officials. Second, we must push for administrative and judicial reforms for better enforcement of laws against bribes. Finally, we must continue to expand the use of technology, which allows customers to access services electronically as, for example, is the case with respect to the sale of railway tickets.
The writer is a professor at Columbia University.
* Whistleblowing in the wind