India’s Telecom Scam: How Can a Corrupt System Be Cleaned? – Part 4

To explain how deeply corruption has penetrated Indian society, let me narrate a few stories I have heard from friends and business associates. It is only when one hears these true stories that one realizes how flawed our system is.

  • A large company won a contract for a waste management project in a global tender. Soon, it got a call from a political party demanding money. The company paid up for fear that its work would be disrupted. Then a second political party demanded even more money. Again it paid up. When a senior leader from a third political party called up, the company had had enough and refused to give in. Then it received a letter from a government ministry stating that the project was on hold. The CEO went to meet the senior leader and was abused and told that unless the company paid, the project would not go through.
  • Real estate prices in all major metropolitan areas in India have gone through the roof. Rates as high as Rs. 100,000 (US$2,200) per square foot in South Mumbai are not uncommon. These reflect the well-known fact that real estate is one of the major avenues for politicians to generate funds. About a third of the cost of land and construction is attributed to bribes paid to the political system — starting from the municipal corporation officials, all the way up to the highest offices of the government.
  • The other day, a friend who is in the construction industry told me about the cost and time escalation in his business. At every stage he had to pay off people who had the power to delay and disrupt operations. Among the scores of officials with whom he had the misfortune to interact for a hotel project he completed, he found only one who was honest. Even now, my friend has to keep cash ready at hand to pay off ‘inspectors’. Projects typically take twice as much time and money than would be reasonably expected.

Continued tomorrow.