The country has suffered potential losses of Rs 36,400 crore due to corruption cases reported in the media from October 2011 to September 2012 that excludes large scams such as 2G, Commonwealth Games and mining, said a report titled "Bribery and corruption: Ground reality in India" released by FICCI and Ernst & Young (E&Y) on Monday.
Last year, India ranked 94 out of 176 countries in the Corruption Perception Index of Transparency International. Corruption will have a detrimental impact on the economy resulting in skewed distribution of wealth and inefficient utilization of resources.
More than half of the respondents surveyed agreed that it is the lack of will of corporate enterprises to obtain licenses and approvals the right way encourages bribery and corruption. Around 83% of the respondents felt that the recent spate of scams would negatively impact FDI inflows into the country.
The respondents represented a mix of Indian enterprises with domestic operations, as well as Indian and foreign multinationals in the US and the UK, whose annual incomes range from Rs 5,000 crore to Rs 10,000 crore. The principal respondents were from various departments internal audit & finance, legal & compliance, and vigilance & risk management from banking and financial service institutions, technology, media and entertainment, and manufacturing sectors.
Some 73% of the respondents from PE firms, a company operating in a sector that is perceived as highly corrupt, may lose ground when it comes to a fair valuation of its business, as it bargains hard and factors in the cost of corruption in the sector during a transaction. Around 77% of the respondents think that it is the responsibility of the managing directors to handle the bribery and corruption-related issues in the organizations, the report said.
"Clearly, to stay ahead in this competitive world, we need to improve our governance systems. Given the state of India's economic development, good governance is absolutely critical to give us a competitive edge and sustain growth. Corruption invariably increases transaction costs and uncertainty in an economy while lowering efficiency by forcing entrepreneurs to divert their scarce time and money to bribery rather than production." said Naina Lal Kidwai, president of FICCI.
A large number of respondents appeared to be aware of unethical business conduct, including irregular accounting to hide bribery and corruption, gifts being given to agents and third parties being used to pay bribes.
Around 89% respondents felt that inadequate enforcement of laws is adding to the rampancy of bribery and corruption in India. Two-thirds of the respondents were optimistic that new regulations such as the Companies Bill 2012 will make a difference and help in reducing fraud, bribery and corruption in the country, the report added.
"Though many companies show awareness of the risks and have intensified their anti-corruption compliance initiatives, the results of this survey show there is still much to be done. Companies will have to ensure high level of transparency in business conduct and take a steadfast long-term view to resist the pressure or temptation to pay bribes," Arpinder Singh, partner & India leader - fraud investigation & dispute services in Ernst & Young.
India suffered Rs 36,400 cr loss due to corruption: Report - The Times of India
Last year, India ranked 94 out of 176 countries in the Corruption Perception Index of Transparency International. Corruption will have a detrimental impact on the economy resulting in skewed distribution of wealth and inefficient utilization of resources.
More than half of the respondents surveyed agreed that it is the lack of will of corporate enterprises to obtain licenses and approvals the right way encourages bribery and corruption. Around 83% of the respondents felt that the recent spate of scams would negatively impact FDI inflows into the country.
The respondents represented a mix of Indian enterprises with domestic operations, as well as Indian and foreign multinationals in the US and the UK, whose annual incomes range from Rs 5,000 crore to Rs 10,000 crore. The principal respondents were from various departments internal audit & finance, legal & compliance, and vigilance & risk management from banking and financial service institutions, technology, media and entertainment, and manufacturing sectors.
Some 73% of the respondents from PE firms, a company operating in a sector that is perceived as highly corrupt, may lose ground when it comes to a fair valuation of its business, as it bargains hard and factors in the cost of corruption in the sector during a transaction. Around 77% of the respondents think that it is the responsibility of the managing directors to handle the bribery and corruption-related issues in the organizations, the report said.
"Clearly, to stay ahead in this competitive world, we need to improve our governance systems. Given the state of India's economic development, good governance is absolutely critical to give us a competitive edge and sustain growth. Corruption invariably increases transaction costs and uncertainty in an economy while lowering efficiency by forcing entrepreneurs to divert their scarce time and money to bribery rather than production." said Naina Lal Kidwai, president of FICCI.
A large number of respondents appeared to be aware of unethical business conduct, including irregular accounting to hide bribery and corruption, gifts being given to agents and third parties being used to pay bribes.
Around 89% respondents felt that inadequate enforcement of laws is adding to the rampancy of bribery and corruption in India. Two-thirds of the respondents were optimistic that new regulations such as the Companies Bill 2012 will make a difference and help in reducing fraud, bribery and corruption in the country, the report added.
"Though many companies show awareness of the risks and have intensified their anti-corruption compliance initiatives, the results of this survey show there is still much to be done. Companies will have to ensure high level of transparency in business conduct and take a steadfast long-term view to resist the pressure or temptation to pay bribes," Arpinder Singh, partner & India leader - fraud investigation & dispute services in Ernst & Young.
India suffered Rs 36,400 cr loss due to corruption: Report - The Times of India
