By: Nikhil Bontha
In 2010, a group of Indian politicians and government officials were accused of taking bribes from telecom company executives in the biggest corruption scandal in India’s post-independence history. India, the world’s second-largest cell phone market with almost 700 million customers, was in the process of auctioning off second-generation (2G) frequency allocation rights to the country’s biggest telecom companies. These rights are highly lucrative because the number of frequency allocation licenses that a company owns determines a company’s potential 2G-subscription market share. Indian law requires that public-private contracts be awarded at no less than market value. However, when the negotiations were completed in 2010, nearly all of the 2G contracts were sold at prices far below the officially calculated market value. Although the exact figures are still unknown, prosecutors in the bribery cases claim that top government officials took millions of dollars in bribes from telecom companies in exchange for cheaper infrastructure rights. According to one independent auditor, the government sold the rights for $40 billion less than market value.[i]
The scandal, popularly referred to as the “2G spectrum scam,” attracted widespread media attention and caused a national uproar about the role of corruption in government affairs. The 2G scandal is not an isolated incident of corrupt business dealings in India. The country ranks 94th on Transparency International’s 2012 Corruption Perceptions Index, and finished only slightly above notoriously corrupt countries such as Egypt and Sierra Leone.[ii] The underlying cause of corruption is the high and disproportionate concentration of wealth among a few Indian families. Despite having a population of almost 1.3 billion people, the World Bank estimated that India’s overall GDP in 2012 was around $1.8 trillion.[iii] While this number seems large at first, the average yearly income in India equates to just over $1,500 per person, compared to approximately $50,000 per person in the United States.[iv] In 2012, there were 55 billionaires and over 100,000 millionaires in India, yet over 800 million Indians live on less than $2 a day.[v]
Most wealthy Indians are heads of multinational corporations. Since India began to liberalize its economy in the 1990s under finance minister Manmohan Singh, many of these conglomerates have benefited handsomely from their political connections. After the 2G spectrum scam made news, high-level executives from the telecommunications branches of conglomerates Reliance Industries and Unitech were arrested by Indian authorities under allegations of offering bribes for lower licensing costs. However, the telecommunications industry is not the only one that has been involved in large-scale corruption cases. Several other economic sectors such as large mining operations and real estate ventures, have also been implicated in other major scandals. Recently, an investigation has been launched to investigate Karnataka assemblyman G. Janardhana Reddy and his connections to large-scale illegal mining operations in his home state. Prosecutors say that Reddy opened the mines by using bribes and his political connections to bypass the usual permit process.[vi] The 2G scam and the illegal mining operations are just two examples of how money has corrupted much of the political process in India and authorities are opening new investigations into corruption every day. Even worse, there are many more cases that have yet to be discovered and may never be prosecuted.
Even though several perpetrators of corruption have been brought to justice, India’s poor remain the major losers in these cases. While there has been tremendous progress and development in major Indian cities, much of the rural population in India still lives without adequate supplies of clean water, food, and electricity. Out of the more than 800 million Indians that live in rural areas, more than 230 million live below India’s poverty line.[vii] The Indian government has taken significant steps to help the country’s poor, but its infrastructure and social programs cannot succeed unless they are better funded. India’s booming economy should theoretically be strong enough to support its growing population, but social programs rely on healthy government revenues through taxes and other fees. Corporate executives bribe government officials to avoid paying these fees and taxes. The result is that the Indian treasury has essentially been robbed of billions of dollars that it could use to fund infrastructure projects and social security programs. In the case of the 2G spectrum scam, the government lost out on over $40 billion that could have been used to enhance rural infrastructures and fund social welfare programs.
Luckily, there is hope for India. The Indian court system, particularly the Indian Supreme Court, has taken a tougher stance on corruption in the past few years. In July, the Indian Supreme Court ruled that convicted felons could no longer run in national and state elections or hold public office. This is a major milestone in India for two reasons. First, criminals in many different districts in India are actually quite popular and frequently win re-election because their illegal activities benefit their constituencies in one way or another.[viii] Even though G. Janardhana Reddy was eventually thrown in jail, his illegal mining operations created thousands of jobs for his state and made him a popular figure. The ruling also says that if a politician is found guilty of a felony while in office, that politician can no longer serve in the legislature even if he or she is appealing the decision.[ix] This should act as an immediate deterrent for all politicians thinking about engaging in corruption and puts a tremendous amount of pressure on those who are already engaging in illegal activities. Even though corporations are the ones who are giving out bribes and taking advantage of their political connections, ultimately the responsibility for combating and preventing corruption lies with the elected officials themselves. India prides itself on being the “world’s biggest democracy,” but if government officials don’t serve with integrity and don’t take their public duties seriously, that title will become meaningless. Thus, the Supreme Court’s recent decision is not just a small victory for India’s poor, but it is also a major victory for Indian democracy.
Nikhil Bontha is a junior and political science major at Emory University. He is also a member of the Barkley Forum, Emory’s national debate and outreach program.
[i] Yardley, Jim, and Heather Timmons. "Telecom Scandal Plunges India Into Political Crisis." New York Times. Dec 13, 2013. http://www.nytimes.com/2010/12/14/world/asia/14india.html?pagewanted=all.
[ii] "Corruption Perceptions Index 2012 View Results Table View Brochure." Transparency International. 2012. http://www.transparency.org/cpi2012/results.
[iii] "GDP (current US$)." The World Bank. 2013. http://data.worldbank.org/indicator/NY.GDP.MKTP.CD.
[iv] "India." The World Bank. 2013. http://data.worldbank.org/country/india.
[v] Yardley, Jim, and Heather Timmons. "Telecom Scandal Plunges India Into Political Crisis." New York Times. Dec 13, 2013. http://www.nytimes.com/2010/12/14/world/asia/14india.html?pagewanted=all.
[vi] Harris, Garinder. "As Corruption Abates, Hope Amid a Slowdown." New York Times, Sept 9, 2013. http://www.nytimes.com/2013/09/10/world/asia/as-corruption-abates-hope-amid-a-slowdown.html?_r=0.
[vii] "Rural Poverty in India." Rural Poverty Portal. International Fund for Agricultural Development. Nov 10, 2013. http://www.ruralpovertyportal.org/country/home/tags/india.
[viii] Mandhana, Niharika. "India Supreme Court Bars Felons From Legislatures." Wall Street Journal. July 12, 2013. http://online.wsj.com/news/articles/SB10001424127887324879504578601630174274740.