July

    2011

      Vol. 11 - No. 1


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GLOBAL ISSUES


 

A Tale of (Not Just) Two Corrupt Nations

BY NIJANAND BABLESHWAR

As the Greek economy unravels like a Greek tragedy, Canada watches nervously from the sidelines. What would have been considered another country's routine fiscal problem in the past, unfortunately, has become every other country's problem today. We live in an age where barriers of all aspects, especially economic ones, have been falling at a brisk rate.

With the fall of socialist states in the past twenty years, implementation of trade liberalizations and unfettered exchange of goods, capitalism has virtually ensnared the world in an economic Gordian knot. Markets have never been as sensitive or interdependent at any moment in history as today.

An announcement in China, a report from Iran or an economic statement in England can send the markets tumbling all over the world well before North Americans wake up to turn on their coffee machines. With such uncertainty and fickleness ready to undermine its economy Canada can only stay awake wringing its hands as it looks for some form of stability.

Economic forces notwithstanding, Canada needs to look at another underlying aspect of this global economic crisis and assess whether the same aspect can equally undermine its economy loose, irresponsible spending without any government oversight.

If the Auditor-General's report has any weight the Conservative Government would do well to pay heed. The free spending on the G20 summit is one recent instance that can be compared to the swashbuckling spending spree that has brought Greece to its current plight and that plagues most other countries, India being one of them.

However, despite the notoriety in similarities, Greece and India present a starkly contrasting state of debt that Canada needs to pay keen attention to whereas one looks at the outside world to bail it out, the other seems to thrive and grow in spite of it. And the reasons are far more intriguing than surprising.

In discussing the plight of Greece's economy, one word, however apt, seems lost in the discussion, but, yet, never fails to surface whenever the economy of third world countries like India and its neighbours are mentioned.

The word corruption is so joined at the hip with India's economic progress it is somewhat of a sad testimony that despite an impressive growth rate of 7 to 10 percent for the past 10 years, despite attracting billions of dollars of investments and raising millions out of poverty, the world by and large refuses to remove that word or associate it with India's economic progress.

On the other hand, when a country like Greece teeters on economic collapse due to fiscal irresponsibility, its leaders struggling to formulate an economic plan, the western world reluctantly drags its feet on calling the problem what it is: systemic corruption.

2008 was the year when the financial books of the world were made open to the public. With the spectacular market collapse countries that had no serious financial reforms, countries that overspent, over-borrowed, and without a fiscal plan found themselves looking at a disaster unfolding in slow motion. Greece found itself with $ 413 billion in debt, an amount bigger than the country's economy. The detail of this massive deficit was nothing less than stunning.

As per a report in the New York Times, only a few thousands declared an income over $132,000 in a population of 11 million people. Professionals such as doctors routinely understated their income with some reporting $40,000 a year while others going down to as much as $13, 300, a figure that exempted them from paying taxes at all. Yet they lived in the most expensive neighbourhoods, driving the best of cars.

In other affluent neighbourhoods residents refused to divulge their true wealth by not declaring items such as swimming pools. In a tax declaration only 324 swimming pools were declared for one particular suburb. When investigators took an aerial photograph they found 16,974 pools for the same suburb. The roots of corruption, it seems, run deep in Greece's underground economy that it accounts for 20 to 30 per cent of its GDP. With such flagrant tax evasion it is no surprise that someday the circle would come full and reveal that the Emperor, truly, had no clothes.

LESS CATHARTIC

India's corruption problem is a story less cathartic but no less pathetic. Most will agree that the turn to Socialism after Independence and virtually a single-party rule pushed the levers of power into the hands of a few over many.

The ruling Congress Party that is in power today has virtually ruled India for almost fifty years since Independence, on its own for most of the first few decades and with the help of coalitions of regional parties for the past two.

It can therefore safely be assumed that the culture of corruption known as License Raj seeped in and took roots mostly under Congress rule. Due to lack of reporting it is unclear how much of India's GDP is lost to corruption but to give a fair idea the past year can be used as a measure of the amount of money that we are talking about.

The Commonwealth Games held in 2010 saw crumbling infrastructure. Yet $6 billion were spent on it. The corruption was so blatant that the courts ordered a full review of the accounting process and in turn pushed out the minister involved in the Games.

On the telecom front the Government swung into action after finding out that $40 billion was lost due to favouritism by the telecom minister in awarding licenses. In one of the most expensive cities of the world, Mumbai, apartments built for widows of the Kargil War, priced at $1.8 million each were sold to politicians and bureaucrats for a paltry $130,000 each.

A sweeping glance unveils that just in one year over $50 billion was lost by way of corruption. Not to mention other ways at the State level where Chief Ministers routinely accept kickbacks with impunity and at the every-day-level where the story is played out on the streets by the local cops, railway employees, contractors. . . and the list goes on.

India's record of corruption is undeniable; however, the last twenty years of economic progress has underlined the fact that in spite of the monkey of corruption on its back India has not sunk to the depths of Greece. Having skilfully liberalized its economy, opened its doors to foreign investments and sealing its position as an "emerging country" by providing a better than average growth rate the world at the least can acknowledge that India got something right and give due credit where it is due. Why should there be one set of measure for India's corruption and another for Greece? Greece has largely been dependent only on tourism to feed its economy whereas India's private sector has ranged from the IT Industry, to steel to manufacturing. If anything at all there at least needs to be some form of acknowledgement to the Indian spirit of entrepreneurship and innovation.

RIGHT OR WRONG

No nation is bereft of problems, whether social or economic. As a human race we seek to progress in all aspects of life. But, based on our identities the pace of progress varies according to what we see as right or wrong, doable or undo-able.

Economically, the West has had an edge over the East due to its colonial past. But, today, in an age where the playing field has by and large been levelled, where information is accessible pretty much at the same time anywhere in the world due to the Internet it is time that perceptions of others change as well.

Third world countries can be chided for not doing enough for the poor or for not meeting standards set by the West but the West in turn shouldn't shy away from looking into the mirror and weighing its own flaws.

The global crisis that pulled the curtain on Greece was not a third world creation. The exotic Investments that were pedalled by the United States and that wiped away economies were not the doing of corrupt India. It was birthed, nurtured and let loose in the West by the West before engulfing the rest of the world. Ironically, India was amongst the few countries that weathered the global crisis but the accolades have been spare in coming by.

India or Greece, corruption is something that knows no borders. As long as a people opt to take the easy way out rather than shoulder the pain with the rest there can be no universal prosperity, economic or social. Living in a global village, it is rather childish when we cannot see the flaws for what they are but instead favour some over the others.

The European Union can rush to rescue Greece and they might have their vested reasons to do so, but, as long as they do not acknowledge the deeper roots of human failing all efforts will be in vain.

India for all its "emerging country" status cannot ignore the fact that unless it makes a determined effort to pull the millions from under the poverty line it will be practically impossible to eliminate corruption in all its ugly forms. Therefore, corruption, for whatever it is, wherever it is, should be called out without discrimination or partiality as it is one thing that knows no borders and does not differentiate between people. It's a manifestation of human failings.

Nijanand Bableshwar is a Technical Writer/ Web Content Writer based in Toronto, Ont. Canada. This article is an updated version of the one that first appeared on www.oyetimes.com 

[Source: 2011 IDN-InDepthNews | Analysis That Matters]

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