law,corruption and development vivek sai

8/10/2019 Law,Corruption and Development Vivek Sai

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LAW,CORRUPTION AND DEVELOPMENT

ECONOMICS Page 1

Project work on

Law, Corr uption and Development

Prof . Hanumant Yadav

(FACULTY OF ECONOMICS)

SUBM ITTED BY:

Vivek kumar sai

(I I I rd Semester, Roll No.146)

Sec- C

B.A. LL.B.

SUBMITTED ON:

19 September, 2011

HI DAYATULLAH NATIONAL LAW UNI VERSITY

Raipur (C.G.)


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Table of Contents:

Acknowledgment..(i)

Objectives.....(ii)

Research Methodology.(ii)

Introduction.5

(a) Law, (b) corruption 5

(c) Development .....5

Causes of corruption and development5

Indian economy,development under the law and corruption

......6

Measurement taken by government for the law,corruption and

development 9

Corruption perception index12

The law deals with the corruption and development14

Conclusion.17

References.18


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ACKNOWLEDGEMENT

Thanks to the Almighty God who gave me the strength to accomplish the project with sheer

hard work and honesty.

May I observe the protocol to show my deep gratitude to the venerated Faculty-in-charge

Prof. Hanumant Yadav , for his kind gesture in allotting me such a wonderful and

elucidating project topic. Her sincere and honest approach have always inspired me and

pulled me back on track whenever I went astray.

Last, but by no means the least, I would like to thank all the members of HNLU family in

general and my blooming and charismatic friends in particular for their wholehearted co-operation throughout the odyssey.

Vivek kumar sai

(B.A-LL.B, III SEMESTER)


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Objectives:

Law terms to economic

Economic corruption or causes

Economic development

Research Methodology:

This research paper is descriptive and analytical a doctrinal in approach. It is

largely based on secondary and electronic sources. Books and other reference

materials from the Hidayatullah National Law University library are primarily

helpful for the completion of this research paper.


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INTRODUCTION

Law :-the law of variable propotion,then return to scale and in the next chapter

equal product curves .there are three laws of returns known to economist ,the

law of diminishing ,increasing and constant return. There is said increasing,

constant returns according as the marginal return rise, fall or remain unchanged

as the quantity of a factor of production is increased in term of coast .there three

laws are only three aspects of one law. The law of variable proportion

(b) Corruption:- its is not easy to define the corruption .but in narrow sense,

corruption is mostly concerned in bribery and it takes several forms

.demanding and accepting pecuniary favours by public person either for

performing an assigned job or for extending out of turn favour .offering bribes,

particularly for undue and out of turn favour .pilferage and seepage of public

funds. use of public office for personal pecuniary gains and demanding and

accepting commission

(c) Development:-in a development sense, corruption appears as a factor

reflecting deviation from the avowed objectives the state consequently

,institution to govern the inter relationship between the citizen and the state are

used instead for personal enrichment and the provision of benefit to the

corruption1.

Causes of l aw, corruption and development

1. were there the scarcity of goods and services, corruption raised iths

head and these scare goods are made available to needy at the price which

include a premium.

2. the system of control and licence provide bureaucrats opportunities to

force the people to pay hush money .it make a major cause of corruption

in the post independence model of our country.

1Rose Ackerman(1999),corruption and government, causes consequence and reforms


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3. Coplex law and procedures which are prescribed by the state for the

certain approvals and sanction provides dishonest bureaucracy enough

scope to harass the public and thus force it to pay the official.

4. low salaries of public servant especially the lower level bribes act as

incentives payment to clear files .

5. Protection provides to industrialist and businessman to steel power also

led to corruption by department official and in some case .connivance of

politician also found for receiving kickbacks.

6. Incresing tolerance in Indian society about corruption, treating as a

way of life also perpetuates the growth of corruption. Failure of society to

create institution to tackle case of corruption .more especially in high

palce,create feeling of helplessness about the corruption among the

masses

I ndian economy development under the law and corruption

In many parts of the world, however, there are serious challenges and resource

Constraints to development, as defined above. Large segments of the population

face crushing poverty. Infrastructures and services in housing, health, education

and employment are not sufficient to meet basic needs. Vast numbers of people

are unemployed or under-employed. in a globalizing world the increasing

interconnectedness of nations and peoples has made the differences between

them more glaring. A girl born in Japan today may have a 50% chance of seeing

the 22nd centurywhile a newborn in Afghanistan has a 1 in 4 chance of dyingbefore age 5. And the richest 5% of the worlds people have incomes 114 times

those of the poorest 5%.13 Moreover, many countries have recently

experienced or are experiencing strife and conflict, and citizens do not have

guarantees that their basic human rights will be respected. Under these difficult

conditions, public officials in developing countries have to take the lead in

settling conflicts, rebuilding nations, setting up infrastructures, and striving todevelop prosperous societies. In highly centralized states, public servants owe


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their positions exclusively to party loyalty or are pressured to become partisan,

facing punishment upon refusal. Their decisions in carrying out their duties will

be shaped more by party expediencies than public interest. In rapidly

decentralizing states, public officials wield enormous power as they decide on

the future of state assets. If their societies offer few opportunities for economic

advancement for them or their family members, they will face enormous

temptations to profit personally while divesting of these assets. These

conditions make corruption seem inevitable and a necessary evil in developing

countries and countries in transition. So does underdevelopment cause

corruption or does corruption cause underdevelopment? The two processes

seem to be iterative. There are pressures from many sides that developing

countries and countries in transition are facing to tackle the problems such as

conflict, corruption and crime. Bottom up, spreading democratization is giving

voice to citizensdemands for more transparency and accountability from their

governments. Philippines and Indonesia witnessed crowds calling the Estrada

and Suharto governments to account which ended up in new regimes. Leaders,like Obasanjo in Nigeria, are being elected on the difficult platform of cleaning

up governments. In addition, an international advocacy organization,

Transparency International, has been setting up country chapters to monitor

corruption since 1993. Sideways, the fiscal pressures of the 1990s in donor

countries have led to a reduction in bi-lateral aid. A decline in living standards

and worse socio economic indicators in many developing countries have led tocalls for stricter accounting of foreign aid. Top down, multi-lateral donors such

as the World Bank and the International Monetary Fund have come out strongly

against.

(a) Impact of Corruption on Development:- the idea of the three utilities of

corruption: economic, political and managerial. Of the utilities of corruption,

Klitgaard notes that they refer to the benefits from specific corrupt acts, not

from systematic corruption pervading many or most decisions and the


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assumption that if the prevailing system is bad, then corruption may be

good. Other scholars also see more costs than benefits. They agree that though

corruption may be beneficial in isolated instances, the its cumulative effect in

the long run is detrimental to development. In fact, corruption diverts public

resources from their intended purposes to private pockets and distorts the

composition of government expenditure. Empirical evidence based on cross-

country comparisons does indeed suggest that corruption has large, adverse

effects on private investment and economic growth. Regression analysis shows

that a country that improves its standing on the corruption index from, sabeing

the most corrupt, 10 the least) will experience a 4 percentage point increase in

its investment rate and a 0.5 percentage point increase in its annual per capita

GDP growth rate. In addition, cross- country analysis shows that corrupt

governments spend less on education and health, and probably more on public

investment. If corruption negatively affects economic growth due to deterred

private investment, what are the precise factors that make private investors

nervous? Generally, domestic and foreign investors want to be assured of apolitically stable and economically predictable environment in a country before

they commit their resources. The rule of law, transparency and accountability in

the public sector affect not only the economic development but also play a

critical role in the governance of a nation. Given this tendency, how can the rule

of law, transparency and accountability in the public sector be improved to

combat corruption in developing countries. Some fairly robust statisticalevidence has now been furnished showing that higher corruption is associated

with (i) higher (and more costly) public investment; (ii) lower government

revenues; (iii) lower expenditures on 15 operations and maintenance; and (iv)

ensuing lower quality of public infrastructure. The evidence also shows that

corruption increases public investment, by making it more expensive, while

reducing its productivity. A recent study by the Peruvian economist Paolo

Mauro (1995 and 1998) found that a corrupt country is likely to face aggregate


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investment levels of approximately 5 percentage points less, than a relatively

incorrupt country. The evidence from India is particularly stark. If corruption

levels in India were reduced to that in the Scandinavian countries, investments

rates could increase annually by some 12 percent and the GDP growth rate by

almost 1.5 percent each year (Gandhi 1997). Corruption also acts as an

additional tax on investment by lowering the potential return to an investor on

both the initial investment and on subsequent returns. In India, current

corruption levels mean that the implicit corruption tax on investment. The

impact of corruption on the quality of public infrastructure is all too clearly

visible in the towns and cities of India. The Public Works Department and the

State Electricity Boards which are largely responsible for the maintenance of

roads and management of power distribution respectively, are among the most

corrupt government departments in India. In the capital city of Delhi itself the

transmission and distribution losses in the power sector are estimated to be over

50% out of which almost 30% is attributed to theft which is done with the

Connivance of the electricity board employees.(a)

Corruption under development:-in short, corruption raises the cost

of development it breeds in efficiency in departments to produce in

inferior quality of goods-roads, water works, sub standard houses built

by the (PWD), etc.it also reduces the realization in the form of tax

revenue to the government and thus it lower the capacity of the

government to reduce the budget deficits. It equally true thatcorruption creates black or parallel economy, but black economy has

its own dynamism to perpetuate corruption.

For the growth of healthy society ,it is

vitally important that corruption should be eliminated or considerably

reduced so that the phenomenon of black money does not destroy the

vitals of the society .the real problem in identifying corruption

,however has been highlighted by katuliya in the following words :-


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It is also dealing with the government fund not to taste .at least a litlle

bit ,of kings wealth .just as fish moving under the water cannot

possibly be found out either as drinking or not drinking water,so

government work cannot be found out while taking money for

themselves.

Measurement taken by government for the law, corruption and development

The Indian Government and its regulatory bodies during the course of last year

have introduced various legislations and regulations having a direct and indirect

bearing on corruption, corporate frauds and questionable practices being

followed by the private sector companies. Some of the important ones are as

follows:

Consent Orders: Countrys capital market regulator Securities and

Exchange Board of India (SEBI)2came out with an important circular on

Consent Orders. What it meant in practice was that the person who had

committed a violation could go the regulator, accept his guilt and get ridof past sins by paying a monetary penalty, proposed by him and agreeable

to the regulator.

Although the very concept of Consent Orders involves ethical issues, one

may appreciate that it would substantially reduce the workload of the

overworked the SEBI and at the same time help individuals, companies

and firms to get petty violations resolved by payment of a penalty termed

as consent fee.

Unfortunately, the provisions are being used by large corporate houses

and brokers to wash away bigger sins like involvement in the Ketan

2Security and exchange board in india


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Parekh securities scandal, the initial public offer (IPO)3 scam and even

violation of insider trading norms of the SEBI.

If the scope of Consent Orders is not narrowed down, they will only

encourage private companies and habitual offenders to become bolder,

take advantage of the loopholes and make money at the cost of ordinary

investors.

The extent to which these Consent Orders should be used could be a

matter of debate, but no useful purpose would be served if everyone starts

taking advantage of the provisions freely and frequently.

Countrys apex court Supreme Court of India, stayed the

operationalisation of the vital provisions of the Act and asked the

government to amend the law. The government after much deliberations

and delay amended the Competition Act in August 2007, as assured to the

Supreme Court during the course of arguments.

In addition to advocacy role, which the Commission is performing even

today, it will be able to check corporate malpractices like abuse or misuse

of dominance and cartelization. It will also have the powers to inquire

into mergers and acquisition and prevent formulation of conglomerates to

the detriment of consumers

Measurements by the development: - Developing Code of CorporateGovernance. Working together with civil societies, government and

private sector to develop and disseminate anti corruption messages..

Regional and international initiatives provide a forum for private sector,

public sector, and civil society actors to come together with a common

goal of reducing vulnerability to corruption .India is a signatory to

3Initial public offering


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UNCAC4 and UN5 Convention against Transnational Organized Crime

but not yet ratified. We are pushing the Government for it and we need

your support. Finally, attitudinal change is necessary. By changing our

thoughts, we can change our attitude and thereby change our behavior,

which can change our lives. The quality of our thoughts equals the

quality of our lives. Let us all work towards changing our attitude

towards corruption. Letssay No to corruption

Corruption perception index

It was noted that Indias rank in CPI6 slipped to 71 among 102 countries

surveyed in 2002 whereas it was 88 among 158 countries surveyed in 2005.its

score decline from 2.9 in 1998 to 2.7 in 2002 and rose again to 2.9 in 2005 and

further to 3.5 in 2007. For the year 2010 this index has further decline to 3.3 this

is not a healthy development

Country (CPI) rank among 180 countries

4

United nation convention against corruption5United nation

6Corruption perception index


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1.newzeland 9.3

2.sweden 9.2

3.united kingdom 7.1

4.india 3.3

5.indonesia 2.8

6.pakistan 2.3

7.bangladesh 2.4

1

4

20

87

110

143

143

(CPI perception index for selected index for selected countries (2010)

In given CPI index table the index of corruption of India id 3.3 and thus it is far

behind the level of achievement by Newzeland , Sweden and Switzerland with

CPI above 9 .at the other end of the spectrum Pakistan, Indonesia and

Bangladesh can be classed as very highly corrupt countries .while India has

performed somewhat better than this latter group of countries .the Indian

government should initiate measure to improve its CPI closer to the levels

achieved by countries such as newzeland and Sweden .decline in corruption

perception index for India in recent years is a matter of concern


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The law deals with the corruption and development

THE PREVENTION OF CORRUPTION ACT, 1988:-

(a) "election" means any election, by whatever means held under any law forthe purpose of selecting members of Parliament or of any Legislature,

local authority or other public authority;

(b) "public duty" means a duty in the discharge of which the State, the public or

the community at large has an interest;

Explanation.-In this clause "State" includes a corporation established byor under a Central, Provincial or State Act, or an authority or a body

owned or controlled or aided by the Government or a Government

company as defined in section 617 of the Companies Act, 1956.

(c) "public servant" means-any person in the service or pay of the Government

or remunerated by the Government by fees or commission for the performance

of any public duty; Any person in the service or pay of a local authority ; any

person in the service or pay of a corporation established by or under a Central,

Provincial or State Act, or an authority or a body owned or controlled or aided

by the Government or a Government company as defined in section 617 of the

Companies Act, 1956; any Judge, including any person empowered by law to

discharge, whether by himself or as a member of any body of persons, any

adjudicatory functions; any person authorised by a court of justice to perform

any duty, in connection with the administration of justice, including a liquidator,

receiver or commissioner appointed by such court; any arbitrator or other

person to whom any cause or matter has been referred

(D)Power to appoint special Judges :- (1) The Central Government or the State

Government may, by notification in the. Official Gazette, appoint as many

special Judges as may be necessary for such area or areas or for such case or

group of cases as may be specified in the notification to try the following

offences, namely: -

(a) Any offence punishable under this Act; and

(b) Any conspiracy to commit or any attempt to commit or any abetment of any

of the offences specified in clause (a).


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(2) A person shall not be qualified for appointment as a special Judge under this

Act unless he is or has been a Sessions Judge or an Additional Sessions Judge

or an Assistant Sessions Judge under the Code of Criminal Procedure, 1973.

(E) OFFENCES AND PENALTIES:- Whoever, being, or expecting to be a

public servant, accepts or obtains or agrees to accept or attempts to obtain from

any person, for himself or for any other person, any gratification whatever,

other than legal remuneration, as a motive or reward for doing or forbearing to

do any official act or for showing or forbearing to show, in the exercise of his

official functions, favour or disfavour to any person or for rendering or

attempting to render any service or disservice to any person, with the Central

Government or any State Government or Parliament or the Legislature of any

State or with any local authority, corporation or Government company referred

to in clause (c) of section 2, or with any public servant, whether named or

otherwise, shall be punishable with imprisonment which shall be not less than

six months but which may extend to five years and shall also be liable to fine.

Explanations.-(a) "Expecting to be a public servant." If a person not expecting to be in office

obtains a gratification by deceiving others into a belief that he is about to be in

office, and that he will then serve them, he may be guilty of cheating, but he is

not guilty of the offence defined in this section.

(b) "Gratification." The word "gratification" is not restricted to pecuniary

gratifications or to gratifications estimable in money.(c) "Legal remuneration." The words "legal remuneration" are not restricted to

remuneration which a public servant can lawfully demand, but include all

remuneration which he is permitted by the Government or the organisation,

which he serves, to accept.

(d) "A motive or reward for doing." A person who receives a gratification as a

motive or reward for doing what he does not intend or is not in a position to do,

or has not done, comes within this expression.


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(e) Where a public servant induces a person erroneously to believe that his

influence with the Government has obtained a title for that person and thus

induces that person to give the public servant, money or any other gratification

as a reward for this service, the public servant has committed an offence under

this section.

(f) INVESTIGATION INTO CASES UNDER THE ACT: -Notwithstanding

anything contained in the Code of Criminal Procedure, 1973, no police officer

below the rank,-

(a) In the case of the Delhi Special Police Establishment, of an Inspector of

Police;

(b) in the metropolitan areas of Bombay, Calcutta, Madras and Ahmadabad and

in any other metropolitan area notified as such under sub-section (1) of section

8 of the Code of Criminal Procedure, 1973, of an Assistant Commissioner of

Police;

(c) Elsewhere, of a Deputy Superintendent of Police or a police officer of

equivalent rank,Shall investigate any offence punishable under this Act without the order of a

Metropolitan Magistrate or a Magistrate of the first class, as the case may be, or

make any arrest therefore without a warrant:

Provided that if a police officer not below the rank of an Inspector of Police is

authorised by the State Government in this behalf by general or special order, he

may also investigate any such offence without the order of a MetropolitanMagistrate or a Magistrate of the first class, as the case may be, or make arrest

therefore without a warrant:

Provided further that an offence referred to in clause (e) of sub-section (1) of

section 13 shall not be investigated without the older of a police officer not

below the rank of a Superintendent of Police.


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CONCLUSION:

Those norms that are intended to ease the application of the regulations. Such

norms include the provisions governing the declaration of the secondary income

of public officials. It can also be stated that, with care and proper interpretation,

premature assumptions about contradictions with other international standards

can be shown to be invalid. The law develops and changes and must be adapted

to new circumstances. The degree of flexibility that is normally assumed to be

Implicit in a provision of general application is perhaps also permitted in respect

of the presumption of innocence. Common sense for example dictates that the

prosecution should not be required to shoulder the virtually impossible task of

establishing that a defendant does not have a licence when it is matter of

comparative simplicity for the defendant to establish that he or she has one.

To me .the Indian public was suffering. According to me the corruption is the

major problem for the Indian public and they were harass by the bureaucracy

and their offices members but important problem is faces towards the corruption

over by the Indian people. And Indian government has made the laws forpreventing the corruption and the development corruption raises the cost of

development it breeds in efficiency in departments to produce in inferior quality

of goods-roads, water works, sub standard houses built by the (PWD), etc.it also

reduces the realization in the form of tax revenue to the government and thus it

lower the capacity of the government to reduce the budget deficits.


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REFRENCES:

K .sudarshan and v. pandit on corruption and development,indian economic review ,vol

ix,new series number 2,october 1976

Government of india, ministry of finance, report on the committee control subsides, may

1979

s.gurumurthy, bribery and capital flight, financial express, July 26, 1987

Datt & sundharam, indian economy, 63nd revised edition, new Delhi

Dewitt k.k, modern economic theory , New delhi,2004

law,corruption and development vivek sai

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