India’s Corruption Curse

NEW DELHI – Is corruption crippling India? At first glance, such a question seems absurd. After all, India has had a functioning democratic order since before 1947, and its economy weathered the recent global economic crisis when most others faltered. Yet a combination of factors that have mushroomed over time has raised serious concerns about the threat that corruption poses to the very fabric of the Indian state.

Of course, India is not experiencing any Arab-style “youth quakes” in response to the current corruption scandal plaguing the Congress Party-led government. Nor is it likely to do so. India’s economy continues its robust 8.5-9% annual GDP growth, a figure that is the envy of many. Competitive elections are routine.

But disparity and discontent are rising, driven in part by food-price inflation, which recently topped 20% year on year. Indeed, wholesale inflation now stands at more than 9%. Manufacturing growth has turned sluggish, and the fiscal deficit has risen above 5% of GDP, gravely straining the economy. As a result, inward foreign direct investment has slowed and interest rates are climbing.

Moreover, almost one-third of the country’s administrative districts are now affected by extreme left-wing “Maoist” violence. Externally, India’s immediate neighborhood, with Pakistan teetering, is more disturbed than ever.