Does India need more corruption?
posedly brave Bollygarchs have downed tools. In theory, east Asian corruption could perk up their animal spirits. So should India try a bit of growth-enhancing graft? No — but it is important to understand why.
Here the critical distinction is not just between good corruption and bad, but between kinds of political systems. Research from economist Shrabani Saha shows that what we might call “strategic corruption” can indeed be growth-enhancing, but only in autocratic regimes. In emerging market democracies it is much less successful.
The difference is one of commitment. “In democracies, it is often difficult to believe what political leaders say,” as Saha puts it. “They can’t deliver what they promise. And then they lose power, so nothing gets done.”
Put another way, if a democratic political leader offers a businessman a piece of the action, the politician might not deliver on that promise. The businessmen knows this. The investment does not happen. Then there is another problem particular to India, namely that the media, judiciary and civil society are by now so attuned to the scent of graft that it would be near suicidal for either Modi or Gandhi to attempt a policy of strategic corruption in the first place.
In its boom years in the mid-2000s, India developed something akin to this east Asian model, producing high growth but with very high corruption. India’s graft system was not as orderly as it used to be in Malaysia or South Korea. But for a few years in the mid2000s it just about worked, until the wheels fell.
Now, though, that strategic corruption option is off the table. Whoever becomes India’s next prime minister instead faces a tragic trade-off, in which they are very unlikely to be unable to deliver the two things they want above all: sustained, very rapid growth and very little graft. Slower growth is the likely result.
James Crabtree is an associate professor of practice at Singapore’s Lee Kuan Yew School of Public Policy, and a former Mumbai bureau chief for the Financial Times. He is author of The Billionaire Raj, which has its public debate this evening at 6pm at New Delhi’s Nehru Memorial Museum Library. The views expressed are personal