Sanjeev Ahluwalia | Clear, Transparent Rules Vital to Fight Graft in Govt

How to ensure that State powers — concentrated at the top -- reconcile with the liberties and rights of citizens, has been an ancient puzzle. The Arthashastra, circa 329 BC — an ancient treatise on statecraft and political power — cautions that it is easier to detect the barely discernible movements of a fish in water than to prevent corruption by officials.

The problem persists in modern times despite AI and digital surveillance. It takes fire to fight fire, so Praveen Ganesan, the owner of @WinTrack, a Chennai businessperson, used his account on X last week to lay bare the malpractices of the Chennai Customs in not clearing his import of electronic lifestyle goods — massagers and related equipment. So frustrated was he that he decided to shut down his import business. In a follow-up TV interview on the India Today news channel, he elaborated that Chennai Customs regularly charge Rs 5,000 to Rs 15,000 for clearing imported goods, but this time around the demand was in several lakhs, which makes his business unviable. The post quickly attracted hits from fellow sufferers, who shared their own litany of woes about having to pay bribes to get household goods cleared on relocation to India, or harassment in commercial imports to extort bribes.

To the credit of Chennai Customs, they reacted to the post on X with a clarification from their own handle on the same platform. Apparently, Mr Ganesan, a regular importer, had failed to file the Extended Producer Responsibility (EPR) certificate. When told that an EPR was essential compliance, he tried to go around the problem by filing a second application through a related company for the same goods.

Undeclared wires and chargers were also found during a physical examination. Previously, in 2022, he had a similar problem with Bengaluru Customs, making him a repeat offender. He later appeared mollified when the department of revenue promised a high-level inquiry.

Extended Producer Responsibility (EPR certificates) are obligatory for importers and domestic producers of electronics, plastic goods, and batteries. Issued by the Central Board of Pollution Control, it fixes responsibility on the producer or the importer for the lifecycle management of waste — a frontline application of circular economy principles. Anther certificate for specified imports is from the Bureau of Indian Standards, to ensure that imports comply with Indian standards, thereby enlarging the domestic supply of similar-use products and lowering the price for consumers. Similarly, since 2011, the Legal Metrology (Packaged Commodity) certificate, issued by the Union government for all-India sales, or by the state government where sale is intended, protects consumers from being duped by misleading packaging.

All three compliance requirements are commonplace in any socially conscious, advanced country. So, what is the problem in India? For long, Indians have used the flexibility of Chinese manufacturers to churn out the same product functionality at a range of prices, depending on the quality and durability characteristics required by the customer. Indian importers flock to China to buy electronic goods suitable for our hyper price sensitive mass market. There are 8,71,000 dollar millionaires in India as per Harun’s list. But that is just 0.1 per cent of the number of families in India.

Many, even amongst this group, look at the fuel usage of the car they buy, before putting their money where their heart leads them. For importers catering to the middle-class market, fancy, copy-cat electronics at affordable prices are the route to big profits. Compliance requirements do not directly improve the functionality of a product. They provide social benefits of a greener environment or create a competitive environment for manufacturing. These are indirect generalised benefits for the economy, neither of which consumers are willing to pay for.

Is corruption pervasive in India because we never shed the trappings of our colonial past, which embeds the sense of government being external or removed from society in general? Exclusive residential enclaves for government officials, in tony locations, extend the aura of “otherness” linked to government, creating a sense of social irresponsibility amongst citizens, including often having no compunctions about evading tax imposed by a “distant” government. Perversely, tax revenue is the foundation for enhancing the social responsiveness of government. So, is it a case of citizens undermining their own welfare by avoiding tax payments?

A global index for measuring the pervasiveness of corruption is the Corruption Perception Index (CPI), published annually, since 1993, by the Germany based nonprofit Transparency International. In 1995, India was ranked 35th (higher ranks mean more transparency and less corruption), Pakistan was 39th and China 40th out of 41 countries. This was soon after India commenced economic liberalisation (1991), the Soviet Union imploded (1989), and China was already a decade into mainstreaming itself into the global economy with American help.

By 2000 the CPI had been expanded to include 90 countries. China had pulled ahead of India and ranked 63rd whilst India ranked 69th. Coverage of the CPI doubled to 180 countries in 2025. China now ranks 73rd, well ahead of India at 98th rank and Pakistan at 134th rank out of 180 countries. The stellar performance in 2025 is by Bhutan, which ranked 19th, just above Seychelles and Japan, whilst Nepal ranked 110th, Sri Lanka 123rd and Bangladesh 150th.

The South Asian region does not fare well on the CPI. Just as surely it is not a perfect index. It relies on the perceptions of three to thirteen business sources per country, not hard facts. But it matters despite no explicit link to verified data.

Perceptions drive prices and define risk margins, both of which impact the availability and cost of finances — building blocks for growth. It is telling that the South Asian region is the least integrated, with regional trade at about five per cent versus 15 to 25 per cent in Asean, 55 per cent in the East Asian region, where China is the primary mover, and 65 per cent in the European Union.

How can things be improved? Two options are low-hanging fruit. First, write unambiguous, clear rules, easily understood by users to reduce the scope for disputes and divergent interpretations — both fertile ground for corruption. Second, bureaucratic corruption is not a disease afflicting the officials in power, curable by replacing them with others. It is a symptom of the underlying porous rules, poorly governed institutions, and lackadaisical oversight, all of which offer opportunities for illegal gratification. Cure the underlying disease and the symptoms will automatically abate.