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Corruption – Cause or Symptom?


Typically every argument about India’s progress starts with poverty and ends with corruption. If you ask people to define corruption, most of them they give you a blank stare or run to get a dictionary. Then if you ask people to identify the exact corruption incidents and the rough estimate of monetary costs in their life, most of the time you get that blank stare.

Yet everybody seems to be very sure that corruption is the problem.

Let me tell you one story here. Around 1985, the performance of Bombay Telephone, only telephone company in Bombay, operated by government, was very poor. You had to register to get telephone and it could easily take 4-5 years (from the date you registered) to actually get a telephone connection in your home. It was a well known secret that you could bribe somebody inside to get your name ahead in the queue and get you telephone earlier.

In 1990 the privatization began and several new schemes were introduced. One of the schemes was “Immediate connection”, wherein you could pay a large amount as a deposit and you would get connection immediately. The scheme was nicely packaged as new era customer friendly deal.

What is the difference? In both cases the “deal” so to speak served customers who could afford to pay more for a connection (like traders, businessmen, etc.) and who needed connection a lot sooner. In first case the money went to the individual employee, in second case it went to the organization. So does the first case qualifies as corruption, as second as service?

The reality is tiered service is the need of the time. Demand – Supply is the basis of any economic theory. And if the demand is not being met by system, then it will be met by bypassing the system.

Corruption is not the main problem in most of the cases. The main problem is poorly designed systems.

Indeed there are some cases where corruption is the problem. There was a case before some days when in UP, some people found the medicine bottles in the pharmacy were filled with water. This is not a corruption, this is crime. This is not system bypass, this is atrocity. There is no justification for this.

But for a large range of other cases, we must stop expecting something else. We must stop expecting people to behave differently.

I remember before a few days, we were waiting outside a railway station. It was raining heavily. We were looking for a taxi. A taxi driver stopped next to us and asked for double the fair. My friend got irritated and refused. The taxi driver left.

Since both of us have visited USA, the argument obviously turned to taxi drivers in USA. We talked about how impolite and how corrupt the taxi driver was.

Some time later I was reading in newspaper about the Bandh, and how it stopped the Rikshaw and taxi business that day. I wondered, would anyone go and give some money to the taxi driver to cover him up for this type of days? If not, then what is the option for him other than taxing more money from me when I am in need? That is his way of providing “insurance” for the days he will lose business because of Bandh and Rail Roko and Riots and worst case, auto accidents.

In several countries, there is a system of tip. To all people whose income depends on the time they work everyday, people add about 10-15% extra on the charge for the service. This is precisely to cover them on rainy days.

So if we do not have any voluntarily provided cover for rainy days, it makes sense that the Taxi driver would solicit more fair when he is in stronger position.

The more I think, the more I see basic human dynamics at work. What we need is redesigning “systems”, not redesigning “human nature” to reduce corruption.

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