DOING BUSINESS IN INDIA

Corruption & Cronyism

Introduction:
With the economies of developed countries picking up, India risks being
left behind as concerns grow over its economy and the viability of
investing in its markets and companies. Investors are now turning their
attention back to the US and Western Europe as the economic giants start
to come round from five years in a virtual coma. The life support of
quantitative easing has worked to a degree, but with that now being
wound down there is less cash sloshing around and emerging markets are
missing out. Despite some very stringent rules controlling the flow of
rupee out of the country, India has been unable to stop its currency
plunging this year. But Indias biggest problem is what underlies this
malaise: corruption and cronyism. The country has seen its economy grow
to the point where its major companies have stretched out into the rest of
the world. Foreign investment has in turn been invited into the region, but
with that investment has come a level of scrutiny that has revealed the
extent just how corrupt Indias economy is. Many will argue it has always
been there, but the level of scrutiny and foreign investment has not. India
has to reform and take an iron grip on this corruption or risk losing further
confidence from investors. Until this is solved investors will continue to
pull out of the country. Almost every day there is a story about corruption
in the Indian media. Sectors such as mining, real estate and telecoms
have been particularly affected. Given the improving economic news in
the developed world, foreign investors will be eager to find a more secure
and trustworthy place for their money. The continual diet of corruption has
battered the image of India as a reliable investment destination and low
investor confidence has led to less capital formation, less employment,
less tax collection and less consumption. All of these have a combined
effect on driving the decline of the rupee.

Difference between Corruption & Cronyism:

Corruption is bribery or similar dishonest dealings and involves an explicit,
reciprocal, short-term, and date-bound transaction. A corrupt exchange is
basically a commodity and is devoid of any relationship between the
agents. Cronyism usually gets lumped with corruption but has its own
dynamics and patterns. The fundamental distinction between cronyism
and corruption is that cronyism is based on a tie or a connection or a
relationship between actors and involves implicit, unspecified, and
reciprocal transactions with no stipulation of a time period during which
favours must be returned. Unlike corrupt exchanges, cronyistic exchanges,

more often than not, are based on trust, loyalty, and long-standing
friendship. Corruption is by far more commonly used term than cronyism
in the Indian parlance, although cronyism appears to be for more
pervasive in India and underlies even the acts of corruption. The cronyism
is preferential treatment shown to old friends and associates, without
regard to their qualifications and it occurs in two basic forms: instrumental
and relational. Instrumental cronyism is motivated primarily by task,
utilitarian, and self-interest considerations. Relational cronyism, on the
other hand, has relationship, affection, and loyalty at its core, and is longterm in its orientation.

Corruption & Cronyism in India:

There are a number of issues that need to be understood to have a good
grasp of the dynamics of corruption and cronyism in the Indian context.
Corruption in Asia comes in four basic varieties: influence market
corruption, elite cartel corruption, oligarch and clan corruption, and official
mogul corruption. The basic nature of corruption in India falls under the
oligarchs and clans type, although it seems that India is evolving into the
elite cartel corruption, the type of corruption currently prevalent in Hong
Kong, Singapore, and South Korea, which is less detrimental to economic
growth. One unique feature of corruption in India is known as elite and
petty corruption. In elite exchange, India is notorious for its influencepeddling politicians, money-seeking bureaucrats, and bribe-dispensing
entrepreneurs. Petty corruption is endemic at the lower, clerical levels of
administration precisely the point at which the ordinary citizen comes
into daily contact with officialdom. People are forced to pay bribes for
securing virtually any service connected with the government, even that
which is theirs by right and law. The petty corruption does not cost as
much in terms of money but it extracts very high costs in terms of
inefficiencies, delays, and frustration in common people. Cronyism is
usually common at the upper echelons of the society and administrative
corruption at the lower strata of the society.
An interesting question that puzzles scholars is whether corruption and
cronyism can coexist with fast economic growth. There are several
examples that suggest that it is possible to grow rapidly despite pervasive
corruption and cronyism in the system, although it depends on whether a
system is following a liberal economic strategy or a statist-nationalist
strategy. China and India both suffered from stagnant economies when
they pursued the statist-nationalist economic strategy. However, since
liberalization both countries have exploded despite the fact that the level
of corruption might have increased rather than decreased. Another great
example is that of Indian and Indonesian economies, in a period of 30

years, from 1960 to 1990. Indonesia pursued a liberal economic strategy,

whereas India mostly followed a statist-nationalist strategy. It was this
difference in strategy that led to Indonesias spectacular economic
success over the three decades and a very dismal economic performance
of India over the same period. During this time, Indonesia was as corrupt
as India, perhaps more so.
Is there any positive or negative connection between democracy and
corruption? Democracy and elections in the absence of an informed and
educated citizenry seem no better than dictatorship since elections fail to
overthrow the corrupt politicians who keep blinding citizenry with
populous economic policies. Public welfare is enhanced when leaders
depend on a large coalition to keep them in office. Under such conditions,
those motivated to stay in power have no choice but to promote the
publics welfare. To do otherwise is to risk being ousted from the office.
Since mid-1980s, there has been gradual erosion of the Indian National
Congress Party and credible political challenges have emerged. The
emergence of many strong coalitions has resulted in political checks and
balances. Now it appears that Indias democracy is its main competitive
advantage over its arch rival China.
Is Indian culture inherently more prone to corruption and cronyism?
Cultures can be classified in their levels of cronyism and corruption
tendencies along two major dimensions of verticalness-horizontalness and
individualism-collectivism. Indian culture is high on verticalness and
collectivism, thus making it susceptible to the highest level of cronyism
since vertical collectivist cultures are suggested to have the highest level
of cronyism, followed by vertical individualist, horizontal collectivist, and
horizontal individualist cultures, respectively.
The Indian political culture has played a significant role on the extent of
cronyism and corruption in India. The Indian National Congress has ruled
India for most of the time since its independence. Administrative systems
and social, economic and political institutions that exist in India today
show a deep imprint of the congress Partys philosophy and policies. The
Congress Party has a peculiar culture that rewards sycophancy, which is
also the case with other political parties and may be true of larger Indian
culture as well. A result is that strong, competent individuals do not
survive in such a milieu, but mediocre yes men thrive. Further, India has
long practiced economic planning or command capitalism through
extensive state regulative controls of industry and cumbersome licensing
schemes, partly due to political and bureaucratic corruption. Netas
(politicians) and babus (bureaucrats) have run the show and strangulated
tremendous human potential, creativity, and entrepreneurship of Indians.

Indian politicians do not take kindly to administrative reforms that

separate policy making from policy implementation because doing so
takes away from them their ability to shower favouritism on their cronies.
Similarly, elite civil services have been the vanguard of resistance to any
attempt to change the status quo and have been largely successful
because of the political leaderships undue dependence on them.
Oligarchic family control is more prevalent in the large corporate sectors
of countries like India whose bureaucracies are less efficient, whose
governments direct more economic activities, whose political rent-seeking
opportunities are more lucrative, and whose financial markets are less
functional. India has the second-largest number of billionaires per trillion
dollars of GDP, after Russia. Three factors land, natural resources, and
government contracts are the predominant resources of the wealth of
Indian billionaires and all of these factors come from the government. The
countries with more extensive family control over their large corporate
sectors tend to have worse socio-economic outcomes. Highly
concentrated economic power that has existed in India perpetuates poor
institutions, which are bad for growth. At the time of independence, India
inherited a fairly corruption-free, robust administrative system. Individuals
heading various central government bodies (for example, the chief of the
army staff, the judges to the supreme-court and high-courts, vicechancellors of universities, etc.) were chosen based on merit. Nehru, the
first Prime Minister of India from 1947 to 1964, did not interfere in
important appointments and the Indian administrative system remained a
decent one. Since then, because of the interference of government in
appointments, the Indian administrative system and institutions have
unravelled. Now most central government departments and institutions
and state government departments have become politicized and corrupt.
Almost the entire nation seems to be gradually becoming more and more
disorderly and lawless.

Cronyism (Detailed):
It basically refers to conditions where some businesses and entrepreneurs
are able to gain and accumulate wealth due to their proximity to the seat
of power. Businesses may gain from the allocation of natural resources or
licences and permits on favourable terms, which can lead to super normal
profits. Crony capitalism affects the overall business environment and the
wellbeing of the economy in the long run. For example, if the government
allocates a piece of land to a person or a company at a cost that is below
the market price, the cost of setting up a project gets reduced, which can
undermine competition as the competitor may not get land on similar
terms. Also, if the land was sold at the market price, the state exchequer

would have gained and the money could have been used for development
by the state. Further, the company which got the land at a cheaper rate
could sell it at market price in the future and pocket the difference.
A rapidly growing economy needs a variety of resources, such as land,
minerals and telecom spectrum, to keep the momentum going. This also
opens up opportunities for cronies. Crony capitalism leads to
concentration of wealth in a few hands. It affects competition and also
results in misallocation of resources. Therefore, in the long-term interest of
the economy, it is important for the state to devise systems that are
transparent and do not discriminate between businesses or entrepreneurs.
In public perception, India is a country rife with crony capitalism. Big
borrowers, mostly industrialists, borrow money, spend it poorly and then
walk away from bad debts. The bigger the borrower, the easier it is to
escape. Conversely, small borrowersfrom farmers to middle class
householdshave nowhere to run. The fate of Kingfisher Airlines and the
UB group are synonymous with this kind of bad behaviour. The other side
of this perceptions story is that banks collude with these borrowers. This is
no longer stuff of allegations and conspiracy theories. In recent years,
restructured loanssimply bad loans whose recovery is postponed to the
futureexceeded the non-performing assets both in number and the
amount involved.
Why is this happening? The governor of the Reserve Bank of India (RBI),
Raghuram Rajan, explained this as, put simply, in India today, the debt
contract, where the debtor promises to pay back the lender and the latter
can recover his money in case things go wrong, is being violated
systematically. He said that, perhaps the reason we have been so willing
to protect the borrower against the creditor is that the hated moneylender
looms large in our collective psyche. But the large borrower today is not a
helpless illiterate peasant and the lender today is typically not the sahukar
but the public sector bankin other words, we are the lender. When the
large promoter defaults wilfully or does not cooperate in repayment to the
public sector bank, he robs each one of us taxpayers, even while making it
costlier to fund the new investment our economy needs. The reason why
so many large borrowers are able to default with impunity is not hard to
find. The government, the judicial system and the banks are locked in a
game of chicken. Once a borrower decides to treat a bank loan as junior
debtwhere banks dont have the first claim on the borrowers assets
the lending institution is effectively forced to kneel and take whatever is
on offer. The statistics should be an eye opener. The outstanding due to
be recovered by banks was Rs.2.37 trillion in 2013-14. The sum that was
recovered was just Rs.30,590 crore, barely 13% of what was due. In the

last five years Rs.1.61 trillion of debt1.27% of Indias gross domestic

producthad to be written off by banks.
Conventional wisdom has it that there is only one equilibrium: big
borrowers hawk away with money and banks dove their losses. This is
misleading and textbookish even if governments in the past one decade
have encouraged this behaviour. A close observation of the Chicken game
as it unfolds over time (instead of simultaneous play) shows there is one
more equilibrium: if the lender and the government simply deviate from
dovish behaviour and turn hawks, they can recoup their losses and
penalize the recalcitrant borrower. In practical terms this requires that
three conditions be met. One, banks close the doors for regulatory
forbearance. Loans should not be restructured or postponed. If the
distinction between bad loans and restructured loans is not enforced
rigidly, then banks balance sheets will have meaningless numbers and in
reality they will continue to make losses. The road to recovery thus
requires a strict end to the practice of restructuring loans. Two, for the
banks to have adequate spine to do this, they need the support of RBI and
the government. At the moment, there are signs that this condition may
be met. The third condition may well be the most important: preventing
defaulters from getting judicial support. Cases decided by debt recovery
tribunals should only go to the specialized appellate tribunal and high
courts should not entertain any appeals on this score. Further, the process
of appeals should be expensive: a significant fraction of the debt should
be deposited before the appeal can proceed.

Conclusion:
There are four drivers that set the stage for the vast majority of corruption
in contemporary India. The first twolack of enforcement capacity and
regulatory complexityare deep causes, or foundational characteristics of
Indias institutions. The other twoinadequate regulation of political
finance and shortcomings in public sector recruitment and postingsare
more proximate offshoots of Indias institutional infirmities. These four
drivers give rise to three distinct types of malfeasance: facilitative,
collusive and extractive corruption. Most Indians will immediately
recognize facilitative corruption from their regular interaction with the
state machinery: officials demanding bribes to perform or expedite the
basic functions of their job, like issuing passports or ration cards. Collusive
corruption involves bribes paid to circumvent regulations, kickbacks from
government procurement, and bribes paid to illegitimately obtain
government contracts or licences all fit into this category. Extractive
corruption comprises diverse crimes, from embezzlement and harassment

bribery to shirking and simply not showing up to work. The empirical

evidence of these three categories of corrupt activities is widespread.
From a policy perspective, the most relevant question is: what, if anything,
can India do to decrease corruption? Fortunately, Indias federal system
has been a hotbed of experimentation and states are slowly learning
which innovative strategies work and which do not. Anti-corruption
experiments have rigorously tested a broad range of tools, including:
information provision and bottom-up monitoring, technological solutions,
financial incentives, as well as legal and policy reform. There are five
general principles that should guide future reform efforts.
First, information provision is an important tool in the toolbox, but, on its
own, it is not always an effective anti-graft strategy. Studies in India show
that increasing the level of transparency about government performance
produces the greatest returns when it is accompanied by reforms that
enhance the bargaining power of ordinary citizens, improve coordination
and collective action, or strengthen the States ability to punish impunity.
For instance, when it comes to the persistence of criminal or corrupt
actors in electoral politics, there is compelling evidence that the factors
that give rise to this nexus have more to do with social divisions
embedded within Indias weak-rule-of-law society than information
asymmetries.
Second, technological approaches to tackling corruption are appealing but
face their own set of challenges. Technological innovations still rely on
higher levels of government to monitor and enforce punishments for
malfeasance, which they may be loathe to do for political economy
reasons. In addition, the logistical details of last-mile delivery can severely
hinder effectiveness. Technology-based solutions work best with concerted
institutional support, and when they decentralise enforcement, circumvent
middlemen bureaucrats, and empower ordinary citizens. For example, a
technologically innovative programme in Andhra Pradesh used
biometrically authenticated smartcards to decentralise payment-making
authority for the rural jobs guarantee scheme and social security
pensions, resulting in a more than 40% reduction in leakage. In light of
this success, the federal government has a unique opportunity to leverage
the Aadhaar unique identity number programme to further marginalize
middlemen in service delivery.
Third, political reform is perhaps the most straightforward component of
anti-corruption policy. In fact, a wide-ranging and sensible legislative
agenda to reduce corruption already exists. With an assist from the
government, Parliament should pursue it with greater vigour. The Election

Commission has succeeded in minimising the most blatant forms of

electoral fraud, but it has struggled to contain the flow of dirty money in
politics. Amending the bodys legal authorities so it can insist on absolute
transparency for political contributions and sanction would-be violators is
an easy first step. In addition, pending measures such as the Right to
Services and Public Procurement bills can constrain the abuse of
government discretion and shift bargaining power in favour of ordinary
citizens. While these bills are promising, they require more serious
thinking about implementation capacity. For instance, a new right to
services bill, which guarantees citizens right to a specified list of services
in a fixed period of time, adds a new channel for redressing grievances to
a system already overburdened with legislative mandates.
Fourth, as reformers and legislators debate new ideas to counter
corruption, they should bear in mind that progress is only possible if the
effort to pass new laws is accompanied by an equal effort to repeal
outdated laws. It is both natural and politically convenient for legislators
to focus on creating new anti-corruption regimes, but neglecting the less
flashy task of streamlining Indias legal regime is short-sighted. The
complexity and sheer volume of laws in India make both compliance and
enforcement needlessly difficult. Simplifying the legal code may also have
anti-corruption value beyond increasing enforcement capacity. Labour
regulation, for instance, is a domain badly encumbered with onerous and
excessive laws that do more to provide venal government officers with
tools to extort businesses than to protect the rights of workers. A simpler,
more logical legal regime would reduce corrupt incentives.
Finally, circumventing weak institutions may be necessary to curb
corruption today, but it is not a sustainable or even desirable state of
affairs in the long term. While the local state has often preyed on the aam
aadmi rather than advocated on its behalf, anti-corruption efforts can only
achieve a limited amount without engaging and strengthening the state.
At the end of the day, even the most immaculate laws require competent
State institutions to enforce them and effective judiciaries to adjudicate
disputes. Yet police vacancy rates in India hover around 25% while
existing forces are poorly trained, starved of resources, and subject to
political interference. Similar shortcomings plague the judiciary even as
the volume of litigation is rapidly increasing. The Right to Information law
gives average Indians greater recourse to redressing grievances than ever
before, but if government information officers remain in short supply and
appeals processes remain backlogged, empowerment could quickly turn
into disenchantment. In reforming the state, the right balance must be
struck between restraining the governments worst excesses while
simultaneously allowing government functionaries to do their jobs. For

example, elements of the 1998 Prevention of Corruption Act are so poorly

drafted that even the most upright bureaucrat can be charged with taking
a decision that results in anyone obtaining for himself or for any other
person any valuable thing or pecuniary advantage.

How does
companies?

tackling

Cronyism

negatively

affect

major

Prime Minister Narendra Modi promised to end high-level corruption and

cronyism in Delhi. He appears to be having some success, judging by the
chorus of laments from CEOs about their lack of access to government
officials. Perhaps a bit too much success. Consider these statistics. Over
the last year, the five best-performing stocks on BSEs benchmark Sensex
include three pharmaceutical companies (Cipla, Sun Pharmaceuticals and
Dr. Reddys), Indias biggest carmaker Maruti Suzuki and consumer-goods
company Hindustan Unilever. None rely on government largesse for their
survival and profitability. All operate in highly competitive sectors that are
open to foreign investment.
On the other hand, the five worst-performing companiesTata Power and
Tata Steel, minerals company Vedanta, ONGC (a state-owned oil-and-gas
exploration company) and petrochemicals giant Reliance Industriesall
depend crucially on access to natural resources that are doled out or
otherwise influenced by the government. Historically, these sectors have
been the most prone to accusations of crony capitalism, with connections
to ruling-party officials thought to matter as much if not more than
business plans. The record thus far would seem to indicate that Modi has
cut back on backroom dealing just as he promised. But while greater
transparency and an end to kickbacks would be welcome news, the
broader economy also suffers if these companies do. To fulfill Modis
development ambitions, private players involved in telecom, natural gas,
power, steel and roads need to thrive and invest. In some cases,
government policy is making that harder. The state, for instance, fixes
natural gas prices in India and has an incentive to keep them low; any
demands from producers such as Reliance and ONGC to raise the price
inevitably look like favour-seeking. Modis government has increased gas
prices slightly using a new formula. But the new level still falls far short of
what companies say they need in order to operate at a profit and explore
and exploit new fields.
Similarly, Tata Power and Tata Steel both depend on access to coal, which
is a government monopoly. The government has justly celebrated its
successful and transparent auctions of several coal blocks to private

companies, which has largely eliminated suspicions of collusion. (Indeed,

Jindal Steel and Power, one of the biggest beneficiaries under the previous
system, is now valued at 87% less than its peak.) But by pricing the blocks
too high, authorities have made it harder for private-sector companies to
operate their businesses. Something similar has taken place with auctions
of telecom spectrum, which has burdened companies with stiff bills.
The key to ending corruption and cronyism in India isnt to elect an
incorruptible leader. The challenge is to open up these sectors to
competition and to reduce the discretion the government has over their
functioning. Until Maruti Suzuki entered the market in the 1980s,
remember, Indias automobile industry was the preserve of just two
private-sector players, protected by government restrictions on new
entries. Now, driven by competition and an influx of foreign investment,
its the countrys only real success story in heavy manufacturing. Indias
pharma companies may be aided by a weak patents regime and penalized
by a strict regime of price controls. But at least such policies apply equally
to all players. The industry is brutally competitive, with no single company
having a market share over 10%. And the sector exports heavily, requiring
companies to be competitive in tougher markets, too.
Ending Coal Indias monopoly would both reduce the scope for corruption
and create a much more efficient power industry. In other areas, the state
should at least stop fixing prices. That includes administrative prices such
as gas prices, but also includes setting unreasonably high reserve prices
for competitive auctions. Large government-financed infrastructure
projects which require private-sector participation should be given out
through open competitive bidding. At Indias stage of developmentand
given its weak state apparatuscitizens need to accept the fact that there
will some transfer of resources from taxpayers to the private sector. By
doing this in a transparent fashion while creating competitive markets, the
government can kill cronyism without undermining critical businesses

In End:

In recent years so many major scandals involving high level public officials
have shaken the Indian public services. These scandals suggest corruption
has become a pervasive aspect of Indian political and bureaucratic
system. Some of them major scams are following
1. The Coal Scam:
The coal scam clearly shows our nations shot to shame. It has already
been termed as the mother of all scams, as the black money involved
here has swallowed all the other previous scams. The report on coal scam
by CAG (Comptroller and Auditor General), an authority established by the
Govt. of India, who audits all the receipts and expenditures by the central
government as well as the state governments) of India, has accused the
Government of India for illegally and irregularly providing our nations coal
deposits to private and state run entities instead of auctioning them in the
public. And this has resulted a loss of a whopping 1,86,000 crore rupees to
our national treasury in the period 2004 2009. There have been
estimates released by the media that the actual loss was 10,60,000 crore
rupees. And what is more sickening is, in that period of five years, all the

major coal dealings in the country went right under the nose of our Prime
Minister.
2. Hawala Scam:
Hawala Scandal is another much talked about incident of politics and
corruption in india which came to mass notice in 1996 and it was all about
a bribery at the national level worth $18 millions. Indias well-known
politicians accepted hefty bribes from the hawala brokers. Opposition
leader Lal Krishna Advani was involved in this scam. This scam was an
evidence of open political loot taking place in the country.
3. Stock Market scam by Harshad Mehta:
Harshad Mehta, the former employee of New India Assurance, entered the
stock market and soon became one of the most reliable and revered icon
of the market. He alone decided the fate of the stock market and even
banks trusted him with their ready forward deals. However Harshad
managed to produce seamlessly original looking fake bank receipts and
many banks lent him huge amounts of money assuming that they were
doing this in return of government securities. In short he siphoned lump
sum from the banking system and raised a large fund for himself. Though
he was convicted and banished from the stock market scenario, he had
already caused loss worth more than 4000 corers INR.
4. Bofors Scam:
Bofors scam is accepted as the hallmark in the list of top 10 corruption in
India. It took place in the 1980s and Prime Minister of that time Mr. Rajiv
Gandhi and several powerful names were found involved in it. The wellknown NRI family Hindujas connection was identified in the Bofors scam.
They were accused of taking bribe from Bofors, the largest arms
manufacturing corporation of Sweden for a contract they won to supply
155 mm field howitzer to India. A shocking report was broadcasted by the
Swedish radio to reveal the scam wherein Rajiv Gandhis congress
accepted $16 million as kickback. This was a sensitive issue as the matter
was related with Indias security. However, with the political heads
involved in this scam, no proper punishment was given to the offenders.
5. Fodder Scam:
Fodder Scam, popularly known as the Chara Ghotala took place in 1996,
in Bihar. In this major corruption in India an uncouth connection was
detected in the production of vast herds of fictitious livestock for which
animal husbandry gears, medicine and fodder worth 900 crore INR was

allegedly procured. It was indeed a major waste of nations funds and

caused severe damage to the legal and economic situation of the country.
6. Ketan Parekh Scam:
Ketan Parekh also executed similar scam and looted Bank of India of
around $30 million. It evidently shows the efficiency of the Indian banking
system and marks the failure of the judiciary set up that failed to prevent
two similar scams that took place consecutively.
7. Satyam Scam:
The scam that took place in Satyam computer Service which is considered
one of the most promising IT companies in India, certainly startled the
investors, foreign clients and Indian masses. The 14000 crore worth
Satyam fraud is the largest corporate scam in the history of India. The
companys chairperson Ramlinga Raju executed his fraudulent endeavors
throughout a decade and kept everyone else in dark. However Indian
governments intervention in this matter saved a number of young
workers from unemployment and finally the company was taken over by
Tech Mahindra.
8. Telgi Scam:
Abdul Karim Telgi, the maestro of conning, managed to print fake stamp
papers and then he sold them to various financial institutions and banks.
It affected various states and the scam was worth more than 20000 crore
INR. This scam became possible because the offender has strong
connections with high government officials and this is indeed the major
failure of the Indian political and judiciary system.
9. Commonwealth Game Scam:
The open scam and loot that took place during the Commonwealth Game
is probably one of the most shameful incidents in Indian history. It
certainly disgraced the nation in front of other countries and an
international audience. According to estimations, 70000 crore INR was
spent on the game of which only half the amount was actually spent for
the event. The investigation performed by Central Vigilance Commission
revealed that various hefty
payments were made in the name of non-existent parties and voluntarily
delay was made in the preparation process which collective lead to misuse
of the funds.
10.

2G Spectrum Political Scam :

The much speculated about 2G Spectrum Scam has been one of the most
expensive scams in the nations record. Former telecom minister Mr. A.
Raja was the person who skilfully siphoned 1.76-lakh crore INR by evading
the 2G licensing norms. He awarded the 2G accounts at the price rate of
2001 instead of the increased rate in 2008. As a result India lost an
unbelievable huge amount of money and this might have severe effect on
the countrys economy.