Combating corruption

For a country which has ambitions of walking in step with Western countries, it is surprising that the Centre has developed cold feet towards including private companies in the Prevention of Corruption Act (PCA). The accepted wisdom is that elimination of corruption improves the business climate as well as national security. That is why the 34-member Organisation of Economic Cooperation and Development (OECD), accounting for 63 per cent of the world's GDP, made corruption-free environment within their home countries its top priority. Some private companies had initially chaffed at the rules but the dissenters gradually fell in line due to pressure from a bulk of the business elite and civil society.

The government has obviously been spooked by suggestions that jitters in the stock market were due to the Special Investigating Team (SIT) on black money suggesting tighter norms for participatory notes. Following the fall in stock market indices, the Centre has said it will not take any precipitous action even though the SIT feels PNs are a major source of black money. The SIT has merely confirmed what most observers have come to conclude: the P-note route is a black economy channel. Industry captains have pointed out that such a step would not be in tune with the government's efforts to create an industry-friendly image within the country as well as overseas. 

The SIT on black money, set up by the Supreme Court, has identified four major avenues of black money: cricket, religious entities, educational institutions and stock markets. While two Indian Premier League (IPL) teams have been suspended, the arm of the law is yet to reach some dark recesses. The country has paid a heavy price in the past for corruption. Bent customs officers had allowed RDX to land on the Gujarat coast and this was later used for the 1993 bomb blasts in Mumbai. The fact is that a corruption-free environment encourages the best in the industry to invest. The Modi government's decision to go soft on corrupt practices in the private sector is a regressive step.