India’s Telecom Scam: How Can a Corrupt System Be Cleaned?

My colleague Rajesh Jain has an opinion piece in the University of Pennsylvania publication Knowledge@Wharton on the Indian telecom scam. The editorial introduction to the piece says, “Since telecom is an industry that links backward and forward to several others, the total economic cost could well be hundreds of billions of dollars. This scandal shows that corruption has deep roots in Indian society, but informed voters and the democratic process can help eradicate it, argues Rajesh Jain, managing director of Mumbai-based Netcore Solutions, in this opinion piece. Jain, a member of the India Knowledge@Wharton Advisory Board, blogs every day at” Here are a few extended excerpts from it, for the record.

The telecommunications infrastructure of an economy is the equivalent of the nervous system of a body. Without a robust, affordable, efficient and reliable telecommunications system no economy can prosper in what is called the “information age.” Corruption in the licensing of spectrum can be expected to damage the roll-out and use of the telecommunications infrastructure. Telecommunications have significant backward and forwards links with all other sectors of the economy. The economic cost to India could well be in the hundreds of billions of dollars.

Corruption has unfortunately become an all-encompassing feature of India. Indians are all too familiar with it. For citizens dealing with all levels of government, routine abuse of power has lost its ability to shock or even to evoke comment. Most people accept corruption as a fact of life. What should truly disturb us is corruption in the public sector. The telecom scam is a terrible example of public sector corruption which Transparency International (TI) defines as “the abuse of entrusted power for private gain.”

The magnitude of the telecom scam is massive, but it is hardly unique. In resource-rich states, scams involve mining rights; in major cities, they often deal with real estate. The details vary but the underlying story is the same.

Just in the last few months, the Commonwealth Games in New Delhi were marred by allegations of massive financial corruption amounting to billions of dollars. Another case of high corruption that recently came to light — called the Adarsh Housing Society scam — involved politicians, builders, and defence top brass. These financial misappropriations are nothing new. The Washington, D.C. based Global Financial Integrity report, The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008, released this month estimates that the present value of India’s total illicit financial flows is at least US$462 billion, an amount that is twice India’s current external debt of US$230 billion.

Rajesh concludes the piece optimistically.

In the final analysis, the prevalent level of public probity and integrity is a function of society’s demand for them. In a democracy, the people ultimately decide who gets to govern. The solution to the problem of corruption of public officials lies absolutely with the public. The kind of leaders and policy makers that people demand ultimately determine who gets to make the rules by which society functions.

India is a democracy. In the words of Abraham Lincoln, the country has a “government of the people, for the people, and by the people.” But Indians have to understand that most of India’s maladies are a consequence of their abdication of the responsibility that necessarily accompanies the rights Indians have in a democratic system. Democracy is not just about voting but rather informed voting. Citizens have to act collectively against those who have brought ignominy and shame to the country. They have the responsibility to clean up the corruption. This they can do most effectively by refusing to vote for criminals.

The news is not all bad. Citizen groups are springing up that seek to address the problem of corruption. It is a collective problem that can only be solved through the mobilization of informed voters. Among many others, one such nascent group, called “United Voters of India,” is an association of people who agree to vote only for candidates who are capable and clean.

Our problems have to be solved within the system through the democratic process. The good news is that advances in information and telecommunications technologies have shifted the balance of power from the government to the people. People now have the means to inform themselves and collectively organize to force reform on the system. The telecom scam should serve as a wake-up call to all Indians that it is time to take action. If it does that, perhaps the scam will have served a positive purpose after all.

Go read it all here.

Author: Atanu Dey


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