India: Corruption can’t be cleared with one stroke
08 Nov 2017

Jaideep Gupta is a senior advocate based in India, where he studied before going on to become a graduate at Cambridge University. He was called to the Bar from Lincolns Inn in 1985.

Jaideep is originally from Kolkata, and still has his roots there. He works from New Delhi.

Corruption is a huge problem in India.

One of the main problems is that it is rampant in the informal or unorganised sector.

It is almost inevitable that India would have an informal sector considering that the high number of businesses, country-wide, are based in villages, and there is also a high rate of illiteracy.

The existence of this sector makes it easy for a lot or people not to declare their income. And here lies one of India’s most serious problems: tax evasion. People earning money and not declaring it to the government for tax purposes.

Tax evasion is not only happening with the poor or rural communities, but also with the rich or middle class groups. They too use the unorganised sector to hide their money.

For example, if a wealthy person has some money he wants to hide, he speaks to a contact in the unorganised sector to open a bank account to keep the money under a different name. He then physically hands the cash to the contact and the contact deposits the money into the bank account.

The wealthy person will not acknowledge ownership of the money in the account.

This is a common issue in India.

Tax evasion remains a problem largely because there is a lack of political will amongst government workers to deal with it. I believe this is because the workers themselves are corrupt, using the same informal sector that they are meant to be cleaning up.

India has the Prevention of Corruption Act, which provides for a special court to deal specifically with situations where government workers are found to have taken bribes. There are so many such cases being heard on a daily basis, lots of records of public servants engaged in this.

Take the case of Jayalalithaa Jayaram, the former minister of one of India’s most prosperous regions Tamil Nadu.

It was found that she too was involved in corruption. However the ruling came after she had died. The case had taken a long time.

We have had several cases where the government does take action, but usually that is when the alleged perpetrator is out of power; and by that time the money has moved down the chain and it is hard to recover it.

Generally, it is usually very hard to get corrupt money back from an individual as it is usually held in assets by then.

So this is a cycle, and breaking the cycle is difficult!

What can be done?

On a practical level, the next step is to look for places where people have parked their money in other people’s names. The government has expressed the intention to do so.

In addition, banks have to be more diligent in recovering money involved in such schemes.

Also, the government needs to improve its investigations, prosecutions and collection of taxes.

I believe staff that work in tax collection departments lack motivation. Public servants need to get rid of the culture of evading taxes and taking bribes too.

So it’s mainly an issue of the need for political will and a change of the corruption culture, which is ingrained within some government workers.

Fixing India’s corruption problem will take a while – it cannot be done in one stroke, but more likely over many years.

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