India's growth story at risk due to corruption: Parekh
Legislation against corruption would make companies more accountable for their actions and those of supposedly rogue employees
BY David Shaftel
Tighen the noose Deepak Parekh says legislation against corruption is need of the hour
Corruption has become synonymous with Indian society, as ethical lines are crossed in all professions on a regular basis, and as the country's moral universe shrinks, said Deepak Parekh, chairman of Housing Development Finance Corporation Ltd (HDFC).
Stating that India's growth story was at risk due to the current environment of negativity, Parekh emphasised that legislation against corruption would make companies more accountable for their actions and those of supposedly rogue employees.
"Strong economic growth has transformed India from a small voice in the global community into an influential power," Parekh said while addressing a session on corporate governance at an event organised by the Confederation of Indian Industry (CII).
However, he said: "While we should be celebrating India's newfound confidence, we are in the throes of something that is eating India from within. Current concerns such as high inflation, and eternal woes such as lack of adequate infrastructure, all take a back seat today to India's invasive vice, corruption."
"Open the newspaper today, and you are bombarded by scams, one right after the other. Even if one will die, another one is sure to come up.'' Adding that "enforcement is weak in India,'' said Parekh. "Even if you are detected, you can get off scot-free."
Citing recent legislation in the UK, he called for similar laws to be instituted in India.
"The clear intention of the (UK) bill is to induce companies to invest more effort into preventing dishonest practices. Such a law should be in place in India, so that corporate India would lay more emphasis on monitoring its code of conduct," said Parekh.
He stated the need for laws that could fine corporate entities that break laws. The legislation should also make it difficult for companies to deflect blame to an independently acting employee if a company fails to prevent bribery and graft within its ranks, said Parekh.
"Why not haul up the payer of the bribe, rather than only the receiver of the bribe?" he asked.
He cited a recent study by Global Financial Integrity, a US-based think tank, that reported that between 1948 and 2008, India lost $213 billion (Rs 9.65 lakh crore) to "illicit financial flows," in other words, corruption.
The think tank estimated the total value adjusted for inflation to be $462 billion. The study aded that in the five-year period between 2004 and 2008, India lost assets to corruption at a rate of $19 billion per year.
Lauding the recent momentum towards e-governance in India, whereby citizens can request and check into any government service online, the HDFC chairman said this would go a long way in reducing bureaucracy while increasing transparency and accountability. Currently, though, the systems that are in place are flagrantly abused and encourage corruption.
"Most troubling is that there is not even a sense of remorse from the people who are involved. It is difficult to tell the younger generation to be ethical, when the very preachers of morality are embroiled in controversy," he added.