To grease the palm or not to: that is the question

By Magnus Linklater (THE TIMES, 28/02/07):

There is nothing harder for the Western tourist in India than confronting the pain of abject poverty – and ignoring it. In a crowded market near the Red Fort in Delhi, an emaciated young girl, carrying her baby brother, plucks at your jacket and gestures towards her mouth.

You know that a five rupee coin — just a few pence — could buy her enough to feed her for a day. But you have been sternly warned that to give to one beggar is to invite mayhem from the rest, that you will be surrounded by a hundred others and that you will never satisfy the demand. “Walk on, look straight ahead, do not make eye contact,” instructs your guide. And so you do. But the memory of those pleading eyes never quite leaves you.

Last week The Times reported that poverty in parts of India was worse than that of sub-Saharan Africa. I can believe it. After two weeks driving through the villages of the so-called “golden triangle”, from Delhi to Agra and Jaipur, far from the most deprived region, the abiding images are those of almost medieval conditions on the muddy cart-tracks that pass for roads — the ramshackle hovels in which whole families live, the open sewers along the streets, the heaps of rubbish where pigs, dogs and children scrabble for anything worth salvaging.

And then, amid the squalor, a glimpse of the unexpected: a line of schoolchildren, immaculate in blazers and ties, setting out for school; an elegant procession of women in blazing saris, picking their way through the puddles; a young boy, hair perfectly Brylcreemed, flashing a smile from the back of a camel-drawn cart. The resilience of rural India is heart-warming — and humbling.

What we were witnessing was the underbelly of the Indian economic miracle, the bit that is submerged by flashy stories of booming industries, global takeovers, Bollywood stars and the inexorable rise of the upwardly mobile Delhi-wallahs, with their BMWs and their BlackBerries. In case we had mistaken the signs, they were rammed home to us in the course of a conference held in Delhi last week to explore relations between the media and government. A clutch of angry young journalists railed against the failure of politicians to tackle grinding poverty, and the media to expose it. We were told about the 25,000 farmers, trapped by debt and falling prices, who have committed suicide in India since 1997. We heard about the police who treat them as criminal suspects. And we learnt about the endemic corruption that takes its toll on the poorest of the poor.

Last November, in Vidarbha, North East India, a 25-year-old farmer, Rameshwar Kuchankar, killed himself in the offices of the local agricultural committee. The government subsidy that he had been promised had never arrived. His scribbled suicide note revealed that he had not been able to afford the bribe that might have secured him the money. He was one of three farmers from the same area who died that week — one of them shot by police for some unspecified crime.

Corruption was to become a recurrent theme of our trip. Wherever we went, we were told about the politicians with criminal records, the greedy and incompetent bureaucrats who demand their share of any contract, the police who can be bought, the officials who trade influence for money. Sir Mark Tully, the veteran India hand, calls it the “neta-babu raj”, neta being the local slang for politicians, babus the bureaucrats. Each of them scratches the other’s back, he says — “that’s why the vacuum the British left has come to be filled by the neta-babu raj”.

Corruption is a key issue for the world’s largest democracy as it bids to become the economic superpower of Asia. It is a challenge too for every Western company that wants to be part of the Indian miracle. Does it buy into the system, pay the middlemen, oil the wheels of power and speed its way to the nearest contract? Or does it play by the rules that would constrain it in the business communities of the West, and take a moral stand against corruption? There is a choice. Tata, India’s biggest private company, which has just bought the Corus steel company, has become, over the years, a byword for incorruptibility. It has made it a point of principle to have nothing to do with government channels of influence, and refuses to engage on any level with Indian officialdom; it is a matter of pride for its chairman, Ratan Tata, that last week Baroness Amos, Leader of the House of Lords, presented the company with the Golden Peacock Award for Social Responsibility — the highest award of its kind in the international business world.

Other companies, particularly those in the fast-growing communications and software business, have achieved similar success, but many of them have chosen a different route, linking themselves closely to government at every level. They believe in fostering contacts with ministers and officials, trading favours and securing an inside track with a little well-placed investment in the right quarters. The question for any international company doing business in India — Tesco, for instance, or Wal-Mart, eager to muscle in on a lucrative retail market — is whether they intend to emulate Tata and forswear corruption, or join a system that a former assistant to the UN Secretary-General once described as “the biggest enemy to the country’s economic progress”. Will they become part of the neta-babu raj, or stay outside it, and perhaps, at the same time, shame others into doing the same?

Taking a stand against corruption should be the benchmark against which modern capitalism measures itself, not just because corruption is inherently inefficient and ultimately self-destructive, but because those who suffer from it are the ones at the bottom of the pile — the suicidal farmer, the family in its hovel and the girl with the pleading eyes.