A Glimpse of Venality in India


– Dr. Pooja Dasgupta

Asst. Professor, Indore Institute of Law

– Ms. Khushbu Dubey

Asst. Professor, Indore Institute of Law


The concept of having a good governance in our system which is long awaited and has only become the talk of the town as of today. This concept is gaining popularity and is being used unsparingly in the international community to promote development, peace and security. There is a mode of realisation that the introduction of a good system can only be done by robust engagement that the civil society is the centre of a good management system. This paper aims at studying the parallel scams and events as a case study for good governance since lack of accountability and transparency have been often cited as impediments to governance.

India’s Interaction with aid and corruption

Right after 1947, i.e. after attaining independence, India has been highly dependent on Official Development Association (ODA), also known as foreign aid or external assistance. Making its roots from its policies of non-alignment and anti-colonialism, India has always been gaining huge assistance from net economic aid. The United States, Japan, Germany and the United Kingdom have been key donors to the Aid- – India Consortium, formed in 1958 to assist India to address its growth needs in different sectors. The nature of providing foreign assistance in India has developed over leaps and bounds. Initially India was provided aid to improve food security through the US-India bilateral food assistance programme PL-480. India is a diverse country which is divided into different sectors. There are different initiatives in the social and economic sectors, which not only need proper nodes to deal with but also financial aid from different resources. Aid has been an extremely lucrative way to fulfil the needs of these social as well as economic sectors and also to maintain the parity in the balance of payments of the country. Prior to the 1980s, external aid covered around 18% of the total gross budgetary support for the central government development programmes and for their assistance to states. The major donors towards such aid are World Bank, Japan, Germany, the UK and the US. Most of the aid gained from these sources are pumped into infrastructural projects like coal, transport and communications. This sort of foreign assistance has also helped India to usher into the Green Revolution of the 1960s which has led to enhancement of the food security in the country. Between 1951 and 1956, India received about Rs 1430 crores (approx US$ 92.19 million) as aid and as of 2008, aid stands at US$ 2.10 billion. External assistance has supplemented the national government’s funding of state and central initiatives and Roughly 20 percent of aid flows are accounted by the social sectors.

In the year 2003, India made some major announcements:

• To provide bilateral assistance to other countries

• To accept aid only from five countries

• Not to accept any more tied aid

Due to these huge announcements, it became a mandate for bilateral donors to contribute their aids by channelizing them via NGOs, the UN or other multilateral agencies. This signalled a substantial change in its image from ‘aid taker’ to ‘aid giver’ and has since then proactively providing assistance to other developing and neighbouring countries like Nepal, Bhutan and Afghanistan. Interestingly, researchers observe three important ideas influencing India’s attitude towards aid: assistance is given for political or economic purposes and that can be a highly effective means of improving relations, the wrong type of assistance is counter-productive and conditional or tied can be degrading to the recipient.

Corruption in India

Time and again corruption has been identified as the biggest challenge in development in India. The culture of corruption has become well entrenched in the society and is expected to be a part of any transaction. In the past, people paid a bribe or an additional fee to get an illegal benefit, but mow public servants have to be bribed even for a legitimate demand or for services citizens are entitled to. A number of government commissions have noted corruption as being systematic in India because of the concentration of power among bureaucrats and politicians, “who flourished on the basis of mutual dependence and institutional abuse of power structures. Many trace the growth of corruption to its colonial roots. They believe that culture of secrecy in governance, which began during the British rule and continues now, has perpetuated corruption, where large amount of public money is diverted from development projects and welfare schemes for private use by the authorities. In India, the continuing existence of corruption has been attributed to the weak system of governance, the societal structure based on caste and kinship, the differences in the states of development, nepotism, society’s tolerance of amassing of wealth as it is viewed as a “symbol of competence growing consumerism and the practice of the dowry system. Corruption is also believed to be a result of policy distortion, institutional incentives and governance. Experts say people are not concerned with corruption on higher levels, instead worry about corruption at the cutting edge level of administration, which they experience on a daily basis. A detailed empirical research in 2007-08, focussing on 22,728 households living Below the Poverty Line (BPL), found that they paid about Rs. 9,000 million (approx US$ 192 million) in bribes to access basic and need-based public services.

Corruption aid in India

Foreign assistance often supplements existing government programmes and projects at the national and state level. Our research relies on the available literature on corruption in different welfare schemes, mainly aimed at poverty alleviation. A need to properly examine the sense of urgency and necessity to address corruption in food aid and humanitarian aid is felt lately.

Food For Work (FFW)

the year 2002, a scam involving food aid, which was introduced for millions of poor farmers suffering from drought affected condition in the Southern State of Andhra Pradesh had received considerable attention. Under this programme, rice was being given to workers who were working on different developmental projects initiated by the government. Different allegations of corruption were raised in the supply of rice which was intended only for poor farmers and agricultural labourers. The Government of India had allocated more than three million metric tons of rice, enough to feed 20 million workers for nearly a year. This massive aid was stopped as a consequence towards the allegations and the aid towards the FFW scheme was curtailed. However, it was found that members of the ruling party in the state and other officials were selling the rice back to the Food Corporation of India, an agency of the central government, and adding fictitious names of labourers to claim more rice. Authorities were found to have wielded unfair influence in the employment of contractors, the selection of beneficiaries, wage- setting and for payments. All means of these labourers to contact higher officials was destroyed and the people were kept away from informing or even talking to any person among the high officials or the media.

Good governance and aid effectiveness: Aid effectiveness: The endless debate

There are many views and perspectives when it comes to good governance and aid effectiveness and we have tried to consolidate existing views in the international aid community. The impact of aid relies wholly on the quality of governance and the quality of how a country’s governance system proves its ability to pursue sustainable economic as well as development. Experts are of the opinion that aid will not have the desired impact if governance is not properly improved. However, before examining the role of governance, it is imperative to look at the complex topic of aid effectiveness.

In the year 1997, a significant drop in the allocation of aid by the Organisation for Economic Cooperation and Development (OECD) countries was noticed. A year later a World Bank study concluded that “foreign aid in different times and different places has been highly effective, totally ineffective and everything in between. The study lays emphasis on governance and tries to urge a rethink on aid has tried to make a blueprint for the future. World Bank economists Burnside and Dollar argued that on an average “aid had little impact on growth and their study further resonated with the Bank’s findings, linking foreign aid to sound economic policies. It is very likely to observe that making aid more systematic and stringent specially on terms of quality. Such systematic control is expected to increase its impact on economic growth and development. It is further concluded that such aid has a positive impact in good environments and has been proven to be ineffective in countries with poor governance and policies. These two studies have also given further impetus to the concept of conditionality or tied aid, which will be later explored. Besides paving the way for discussions on good governance, the Burnside and Craig research provided the basis for policy recommendation to increase foreign aid which was heavily contested by economist and aid sceptic William Easterly.

The relationship between good governance and corruption in aid

There have been major disputes around the fundamental issue of aid effectiveness. But despite these ongoing disputes, there also exists a consensus among aid advocates and critics that corruption, lack of accountability and absence of transparency are major deterrents to foreign aid delivery. There has been an increasing discussion over the phenomenon of tackling corruption to be the centre for aid to have its desired results and the antidote for the same is good governance. Therefore, good governance has become a recurring theme in foreign aid. The World Bank has identified it as a key factor for enriching the aid effectiveness. It has a very conducive approach towards good governance as it has placed corruption and government accountability as two pillars of the distinguished dimensions of the same. A World Bank report illustrated how foreign aid has been an unmitigated failure in some countries, notably the Democratic Republic of Congo and Tanzania, where heads of states channelled development aid in to their personal bank accounts. At the 2002 Monterrey Conference in Mexico, the former World Bank President noted, “We have learned that corruption, bad policies, and weak governance will make aid ineffective”. Academics, who have sought to answer what constitutes good governance, note that the shift from the notion of governance to good governance “introduces a normative dimension addressing the quality of governance”. Surely, the notion of good governance has gained momentum over the years as a response to the instances of corruption in aid. However, the concept would have to be expanded to include political dimensions rather than just economic dimensions, which is what the World Bank’s approach has been confined to.


1. Sukhtankar, Sandip, (2015), “The Impact of Corruption on Consumer Markets: Evidence from the Allocation of 2G Wireless Spectrum in India,” Journal of Law and Economics 58.2.

2. Sridharan, E. and Milan Vaishnav (forthcoming), “The Evolution of India’s Political Finance Regime,” in Pippa Norris and Andrea Abel van Es, eds. Checkbook Elections? Political Finance in Comparative Perspective.

3. The Economist (2014), “Campaign Finance in India: Black Money Power,” Banyan weblog (May 14).

4. Transparency International (2011), Daily Lives and Corruption: Public Opinion in South Asia, South Asia Corruption Barometer.