Convenience Fees


Convenience or “Impact” Fees is another terminology for organized corruption.

Corruption cannot be justified under any circumstances as it robs the average citizens of a country to get things done which otherwise would either not cost anything or could be done for a minimal official government fee.

It is estimated that for a large country such as India, corruption reduces the GDP by between 1.5 to 2.0%, which means India can achieve a GDP growth rate close to 9% or even 10% without corruption. This fact is not understood by the average citizen, who continues to bribe officials to get normal things done within a short time frame.

Corruption figures hugely in almost all transactions in India which has an “official” interface – not necessarily always however. It depends on luck, or the presence of a honest official in a property registration office for instance. Corruption is a complex issue anywhere in the world, and there have been serious arguments that developed nations such as the U.S. also have corruption of some sort or the other – for example, Presidential election candidates sell dinner attendance at USD 10,000 per  dinner plate to their sponsors. Or, the Congress gets influenced by business interests which promise a quid pro quo if they are not taxed or regulated heavily by the government. There are election funding contributions in the U.S. which defy belief – some businesses contribute millions of dollars to facilitate their candidate getting elected ! If this is not “official” or “legalized” corruption, then what do you call these monetary contributions ? The only face-saving gesture is that all such contributions (hopefully !) are accounted for formally and published in the websites of the respective political parties or the candidates themselves.

Corruption is a serious topic, but it is critical to understand its origins, its continuing practice and impact, and its harmful societal ramifications. I had an entertaining discussion with a group of close friends recently on this topic of Corruption (and Reservation for Minorities and Disadvantaged/Untouchables in India, which is a more difficult topic which I will explore in a separate post). Most of us agree that there is fresh thinking needed to fight the menace of Corruption which has been institutionalized in the Indian society (there are many other societies / countries in which Corruption plays a predominant role, but it is better that I do not elaborate here). Further, the system of Corruption currently prevalent in India could continue to be practiced by the next generation to get things done, and I am afraid that they might even come up with some form of e-Corruption !

In my view, Corruption has been in existence from time immemorial. When the U.K. invaded and annexed India, they offered the Indian kings largesse and protection, in return they wanted the tax revenue share. This is a form of Corruption, couched in a different language at a vastly different time. If someone offers a service in return for a personal or unaccounted gratification, that is Corruption. In the case of the U.K., the government of Great Britain approved such transactions. In many Western countries, there are lobbyist firms which lobby the senators and parliamentarians for exemption from stringent provisions of laws which affect their corporate clients. This is accepted as normal practice in the Western world. Many large industries such as Oil and Gas, Pharmaceuticals, Tobacco, etc., offer inducements to lawmakers by offering to site their next office or factory in a particular state, and donations to political parties. If this is not organized and documented Corruption, what is it ?

Coming back to India, the Corruption at lower rungs of operational levels in the government is totally institutionalized (may be because the government servants are so poorly paid and because citizens wish to get their things done fast) – I would challenge someone to register his/her property in India without paying a single rupee unofficially. Such unofficial “black money” payments are legion in India, and this is the reason why the unaccounted parallel economy in India is probably as big as the organized economy – black money circulates outside of the banking system in cash.

While in advanced Western countries, the softer variety of corruption (the influence-peddling type described above) is proportional to economic wealth, other countries like India have “democratized” corruption ! It percolates to all levels, horizontally and increases in intensity as it goes up vertically !!

The lower level bureaucrats have been left out of the economic growth story of India, especially with the onset of IT over the past couple of decades. They feel threatened by the introduction of e-Government technologies offering direct e-Services to citizens, eliminating the need for a physical governmental interface. This is the way most advance countries operate and one objective for doing so is of course to eliminate even the semblance of corruption to get normal things done, apart from its ease and convenience of operation by the citizens.

While the influence-peddling and corruption of the softer variety increases in subtle ways in advanced countries, in the developing and poor countries the corruption is mostly at the operational levels when the citizens face the corrupt officialdom. Of course, millions of dollars (in Rupees probably) exchange hands at the higher levels for things like industrial licenses, etc., but that translates at a later stage to higher producer prices by manufacturers. Money also exchanges hands for buying parliament seats or assembly seats at the political level. Money is paid for ensuring success in defence sales and large procurements.

However, there is simply no excuse for Corruption to pervade our society. Unless the government of the day demonstrates examples of probity and punishes erring ministers and officials, there will be no change at the middle and lower levels of the bureaucracy.

I would also blame the citizen in this context. The average citizen wants shortcuts and is unwilling to wait for government services. He wants to complete his work (like registering a property) in double quick time. This leads to acceptance of Corruption in Indian society as a way of life, and it is not uncommon for people to budget 5 or 10% as “bribery” budget. Unless citizens realize their folly in encouraging corruption, and even avoid the subtle endorsement of systemic Corruption, there will not be much of a change.

Any discussion on Corruption is not simple, it is an endemic which cannot be simply banned with a law. Active societal cooperation is crucial, people have to demand changes from their legislators and political parties. The political parties corrupt the people by buying their votes, and so on and so forth………..some strong-armed strategy with teeth is called for.

I was shocked to learn from one of my erudite friends (who is more religious than I am) that election to some of India’s major Temples for the position of Chief Priest can only be achieved via paying heavy bribes. I have always known that university / college seats for coveted degree programs like Medical or Engineering can only be obtained by paying very heavy bribes – the current rate is at a minimum of USD 150K (or Indian Rupee one hundred lacs) in many states of India. This is complete bribery and against meritocracy. Many deserving candidates are being left out of the system.

So, in conclusion, the Indian citizens are facing a fight between their inability to change the country’s entrenched way of doing business and their urgent craving to solve their most immediate and pressing problems – such as registering a car, a marriage, a property – and are facing the huge challenge of finding a political party which has eradication of Corruption as their #1 Objective.

A lot to think about a problem facing society which defies a solution even in the medium term – passing a law like FCPA (Foreign Corruption Prevention Act of the U.S. which implies that only foreigners commit Corruption !) or the U.K. Anti-Bribery Act, will not eliminate Corruption.

Let us ruminate intensely !

Cheers,

Vijay Srinivasan

3rd Jan 2016

 

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