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  • Service: Advisory
  • Type: Business and industry issue, Survey report
  • Date: 10/6/2011

Survey on Bribery and Corruption 

Impact on Economy and Business Environment

KPMG in India conducted this survey with certain leading Indian corporates in order to understand their perception of how corruption is corroding the economy as well as the corporate environment. This report is a compilation of the findings of this survey as well as our analysis of these findings.

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Over the last two years, India has seen an increase in the number of scams spanning across the public as well as the private sector. These scams, to some degree, have highlighted the prevalent levels of bribery and corruption in the country.

The World Bank has identified corruption as among the greatest obstacles to economic and social development.* Economists have said that countries with a higher perception of corruption not only deters financial institutions from long term investment but can actually result in capital outflows, creating a volatile economic environment. Capital inflows, international trade and private and public enterprise have helped contribute significantly to India’s growth since liberalisation. We therefore thought it is necessary to understand how corruption is impacting each of these pillars and eventually the economy at large.

With this backdrop, KPMG in India conducted this survey with certain leading Indian corporates in order to understand their perception of how corruption is corroding the economy as well as the corporate environment. Not surprisingly, the results have highlighted that corruption has a significant impact on economy and businesses. A majority of the respondents believe that India can achieve a higher growth rate if corruption could be contained. However, 50 percent of the participants believe that despite certain measures such as the Central Vigilance Commission’s (CVC) proposed National Anti-Corruption Strategy and the Right to Information Act, 2005 corruption is expected to remain at the same level in the next two to three years. Interestingly, a large number of the respondents believe that corruption is a two-way street and people who pay bribes are as much to blame for the current environment as those accepting such payments.

The regulation in India tends to focus on the bribe taker rather than the bribe payer and hence corporates do not shy away from adopting corrupt practices. However, the global environment is rapidly changing and it will only be a matter of time before Indian regulations align themselves to global anti-bribery and corruption laws and practices. In the recently concluded budget speech honourable Finance Minster also highlighted that controlling corruption is a key agenda of the Government. All these developments indicate that the environment is set to change in the coming years.