Effects of Corruption on Economic Growth Essay
Effects of Corruption on Economic Growth
Corruption has been around for a very long time and will be around in the future unless governments can figure out effective ways to combat it. This is not going to be easy. Corruption in any form is treated as an incurable disease cause of many social and economic evils in the society and it damages the moral and ethical fibers of the civilization .Indisputably, it is correct that corruption breeds many evils in the society & once corruption start take place ,slowly and gradually whole country passes through its net and it becomes after some time incurable diseases .from the economic point of view ,there seem to be no clear cut correlation between corruption and the economic growth of a country. There may be some social maladies like inequality of income among the people ,moral degradation of people due to the prevalence of corruption ,the parameter of economic growth which are taken on percentage or an average basis are entirely different
To begin with, in the presence of corruption, businessmen are often made aware that an up-front bribe is required before an enterprise can be started and that afterwards corrupt officials may lay claim to part of the proceeds from the investment. Businessmen therefore interpret corruption as a species of tax–though of a particularly pernicious nature, given the need for secrecy and the uncertainty that the bribe-taker will fulfill his part of the bargain–that diminishes their incentive to invest. Empirical evidence suggests that corruption lowers investment and retards economic growth to a significant extent.
Moreover, when it takes the form of tax evasion or claiming improper tax exemptions, corruption may bring about loss of tax revenue.
What is more, the allocation of public procurement contracts through a corrupt system may lead to lower quality of infrastructure and public services.
Then, Corruption may distort the composition of government expenditure. Corruption may tempt government officials to choose government expenditures less on the basis of public welfare than on the opportunity they provide for extorting bribes. Large projects whose exact value is difficult to monitor may present lucrative opportunities for corruption. A priori, one might expect that it is easier to collect substantial bribes on large infrastructure projects or high-technology defense systems than on textbooks or teachers’ salaries.
So far Indian economic is concerned the slow progress is the result of lack of decision making at higher level .Many politician who take money but could not enforce their will because of powerful lobby of bureaucrats at many place and a democracy like India ,voice of media ,voice of opposition could suppress the wish of the leader .
India’s economic growth on an average 6 % GDP despite considerable corruption is because of the stability and the liberalized measure taken by the present govt., gradual privatization of various sector, reducing bureaucratic intervention in routine work & other measure adopted by govt.
In brief it can be concluded that corruption and economic growth has no clear correlation .strong institution, political stability, fast and reasonability in decision taking are some of the requirement for fast economic growth.