Dr. Kaushik Basu, Chief Economic Advisor to Ministry of Finance, past and future economics professor at Columbia University, proposed, in a working paper, that changing legal status of a bribe giver would potentially reduce what he calls harassment bribes – those bribes that are demanded by babus simply because they can obstruct flow of paper work.

The central message of this paper is that we should declare the act of giving a bribe in all such cases as legitimate activity. In other words the giver of a harassment bribe should have full immunity from any punitive action by the state.

It should be clarified that the act of bribery is still being considered illegal, and the total punishment meted out for bribery may still be the same. That is, if under the old system, the bribe giver and the bribe taker are fined Rs. x each, what I am suggesting is that we fine the bribe taker 2x and the bribe giver 0. In other words, what is being argued is that this entire punishment should be heaped on the bribe taker and the bribe giver should not be penalized at all, at least not for the act of offering or giving the bribe. We may in fact go further and say that, in the event of a case of bribery being established in the court of law, the bribe taker is required to give the bribe, to the extent that its size can be uncovered, back to the giver.

Although Dr. Basu provides no empirical, or any type of, research to back his idea, other than to contrast self-interest, a foundation of most economic theories, with morality, as though they are mutually exclusive, the impact of the proposal seems plausible.

Two things quickly come to mind:

1) Dr. Basu presumes potential bribe giver fails to complain about demand for bribe, before giving a bribe to get things done, because of impediment of law; and

2) there is cost associated with bribe giver pursuing the case after giving the bribe even if the bribe giver is legally in the clear and bribe giver retrieves the bribe paid.

So change in legal punishment for bribe giver may reduce potential corruption that deal with large bribe amounts of harassment bribes because of deterrence, but it will probably have little impact on harassment bribes that deal with small bribe amounts, which is where the harassment mostly is.

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Dulam Chandrasekhar

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