Posted by: Vikram | September 19, 2012

Why India is corrupt and what the middle class can do about it

Modern India does not meet middle India’s expectations and corruption has been declared the number one culprit. In the last decade, the discourse and activism regarding corruption has reached a high decibel, with the popular agitations of Anna Hazare (IAC) and Baba Ramdev. This heightening disgust and mobilization has been fueled by allegations of massive corruption in the Commonwealth Games, the huge sums involved (the literally lakhon karodon rupya of the 2G and coal scams) and the relative ease of middle class mobilization due to social media.

So why is there so much corruption in India ? Is it because of ‘corrupt politicians’ ? The lack of a good law to tackle corruption perhaps ? Or as some commentators like to put it, ‘Corruption is in the DNA of Indians’ ? It is perhaps useful to take a step back, and ask a broader question. Corruption, while present in India, is by no means solely an Indian phenomenon. In fact, corruption seems prevalent across the world (see Figure below) and the only countries where it is low appear to be the Western nations and Japan, while the vast majority of the world appears to suffer from high levels of corruption.

Countries of the world colored by corruption levels (World Corruption Index 2010: Transparency International) Darker red means more corrupt.

I think we can understand corruption in India better if we first try and understand why corruption is so widespread in India-like countries. Then we can add in the India-specific factors to get a better understanding of the corruption phenomenon in India. Three common factors seem to drive corruption in India and many other post-colonial nations:
1) Very high levels of ethnic diversity which result naturally in a fragmented polity and low levels of societal trust
2) State control of the economy
3) Low levels of literacy, awareness and the consequent distance between the general population and government officials

I will first discuss the second factor. In many post-colonial nations, state led economic development was the stated goal of the political leadership. Specifically in India, the goal was for the state to take control of the ‘commanding heights of the economy’. Some statistics can shed light on how this state led program of economic expansion proceeded.

Distribution of GDP between the public and private sector in India 1961-1999
Source: ‘Why Ethnic Parties Succeed’, Kanchan Chandra, Pg 117

We see that since the 1960’s and upto the late 1980’s, India’s economic growth was concentrated almost entirely in state hands. This system naturally placed great economic power in the hands of government officials, who controlled production, expansion and most importantly, enjoyed great discretion in appointing personnel to jobs. Thus, the government officials in India came to wield both administrative and economic power.

Now for the first factor. In a democratic setup, one would expect a strong public pressure to tackle corruption, which would lead to corruption being a high priority for politicians to campaign on and fix. However, the presence of ethnic diversity greatly reduces the chances of such an effect. In ethnically diverse countries, ethnic parties dominate. This is as true of India, as it is of Nigeria, Congo and any other ethnically diverse country. In ethnically diverse societies, ethnic divisions are the most salient political phenomenon most individuals experience on a day to day level. In addition, when levels of literacy are low, voters can most easily differentiate between candidates and parties based on their ethnicity. The information costs of campaigning based on ethnicity are very low, in contrast to campaigns based on issues/ideologies which require much more communication and outreach. In other words, it is much easier to identify what community a candidate belongs to than finding out what important issues are and the candidate’s stand on them. In India, deciphering the caste and religion of a candidate is simply a matter of knowing their name.

In such an ethnic democracy setup, voters cast their votes as part of a transaction in which they expect returns for their ethnic groups in exchange for their votes. In a state led economic system, with few jobs; jobs and other economic resources (land, minerals) become the items that politicians offer in exchange of votes. Such a political setup necessitates corruption, without which such resources cannot be delivered to the victorious ethnic groups after their political victory.

We can certainly not make India or any other country ‘less diverse’, that will just have to wait for these divisions to become less salient. However, one can certainly reduce the state’s direct role in economic activity. However, recent evidence suggests that such a system has limited success, from the perspective of reducing corruption. In fact, the spate of recent scams (2G, coal) have arisen due to the misallocation of economic resources to private players and the non-enforcement of regulations. A liberal economic system can retain the same levels of corruption that a state led econmic system does.

The third factor is the low levels of literacy and consequent distance of the general public from the state. For example, in India, a large amount of official business is carried out in English, and lack of English knowledge puts the citizen in a much weaker position than the official. In addition, since Indian society (and other post-colonial societies in general) are only emerging from a pre-modern feudal/tribal social setup to a modern egalitarian setup, awareness of legal rights and laws is low. Democracy can address this social inequality only incrementally.

In India, the second and third factors are exacerbated by the secession of the Indian middle classes from electoral politics. The fact that the middle classes dont depend on the state for many of their daily necessities and the revulsion to caste-based politics has rendered the middle class a marginal force in India’s electoral landscape. This has led to an excessive dependence on the media (which is elite and middle class dominated) to achieve political goals. Although such politics through media can give the illusion of success, it is neither effective nor democratic. In addition, such domination of the media by middle class interests crowds out the problems of the weaker sections of the society, lowering the credibility of the media in the overall society.

A Lokpal can reduce and control corruption in high places, but there is no way any independent body can monitor the approximately 5 crore (50 million) transactions1 that take place between the citizens of India and their government every day. The participation of the middle class in electoral politics is essential. It should also be kept in mind that such participation will not yield instant results. Kanchan Chandra in her book ‘Why Ethnic Parties Succeed’ notes that:

voters and politicians [who] are amateur mathematicians and statisticians. They count the heads of co-ethnics across parties and the electorate, use these head counts to attach probabilities to different outcomes, and choose their strategies according to the result of these calculations.

Until India’s middle class makes itself statistically significant in these electoral calculations, it cannot expect much from its government.

1: This is complete guesswork. There are approximate 2 crore (20 million) government employees in India (central, state and local) If we assume that about a quarter of them interact with the public, and that there are 10 transactions per day, we get approximately 5 crore (50 million) transactions.


  1. Corruption in the developed countries is not less, but it is different. Supporting corrupt regimes in other countries in order to gain control over that region, manipulating the lives of large populations in strategically important(to them) places, these are forms of corruption on a larger scale than even our spectrum/coal scams. Then there are lobbies that influence legislation… these are also huge manifestations of corruption. The difference is that in such countries, people don’t pay bribes to get telephone connections and as ordinary not-highly-educated citizens, feel there is no corruption.

    • Welcome latmidway. Yes, the developed countries do still have corrupt behaviour, but as you point out it seems that this is mainly in the realm of policy making.

      Of course, we must be aware that even developing countries suffer the same kind of corruption (in addition to the day to day stuff). Take for example India and China’s policies in the Middle East and Africa.

  2. very good article, vikram. very apt analysis of the situation in india and similarly placed countries and as latmidway says in his/her comment – corruption is also prevalent in developed countries, just that they are on a much larger scale and mainly in their foreign policy related sphere.

    but now the question arises – how to tackle corruption. you suggested two ways- one is democracy which can bring incremental changes in people’s outlook and narrow the ethnic divide and the other being the middle class playing more participatory role in electoral politics but how exactly is that going to happen? and why should they do it? (just because it is good for their ‘country’?? …bah!) …i would love to hear on your views on the dearth of quality leadership the country is facing now which is a prime concern for me.

    also how do you explain the supposed ‘lack of corruption’ in state like gujarat? or is it a big hogwash?

    on a more deeper level, what do you think about the nature of corruption psychologically? is it inherent in us? another expression of self-preservation and self-promotion?

  3. I am more than 50 yrs old. In my younger days, people did look upon bribe taking and even bribe giving as if it was a great offence. It was socially unacceptable. But this societal view has changed in the last 20- 25 years. So Abhishek, it is societal but not inherent in our society. Therefore, maybe we can hope for change.

  4. Abhishek and latmidway, can corruption be inherent in any society ? Most societies produce some kind of moral framework (mostly in the guise of religion), and corruption is usually recognized as immoral behavior.

    Quite frankly, the widespread immoral behavior despite almost 5000 years of human civilization is something that confounds me. I have tried to explain it in structural terms here, but as both of you point out, this immoral behavior continues even after the structural factors diminish.

    Perhaps if people were more aware of the consequences of their corrupt actions, they would be more likely to be non-corrupt ? Most of our religious ideals point out the consequences of corruption on one’s own self, but the kind of corruption we see today has consequences for others that may be located far away. The centralizing tendencies of the nation state and modern economic systems mean that one’s actions (or inaction) can affect people that are quite distant from one self (both physically and cognitively).

    I have also noticed that people tend to introspect about corruption more when a supposedly non-corrupt outsider (usually from a ‘superior’ place) points it out. Take for example, the response to the CWG fiasco due to its coverage in the Western press.

  5. Why is corruption practised in India although India is a democratic country?

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