Tuesday, November 13, 2012

EMERGING ECONOMIES CORRUPTION IS ABOUT TO INCREASE.

Often the debate about corruption is being heard in our day to day activities of life. Corruption is being blamed for the slow growth of the economy. But I would place it as the path of growth. Since corruption increases the speed of a process, saves time and final achieves the desired end results. With global slowdown I find that the emerging economies particularly India is going to face new heights and altitudes of corruption. Global slowdown has compelled to invest in emerging economies and within emerging economies India and China are the biggest absorbers of foreign capital.

To make my thoughts to be well read to all of you I will give an example from our day to day to life where one will get an idea about the level of corruption growth to be achieved in coming years in emerging economies.

I am Deputy General Manager of an overseas company dealing in cosmetics looking for penetration of my products in to India. Now if want to do the business directly in India I will not be able to do since according to the Indian guidelines I have to have an company registered in India under the companies act 1956.Now I hope everyone knows the cumbersome process of opening up an company in India. Now as I is employee of my company heading the Indian business I would not wait for the normal procedure of opening an company in India. I will place bribe on the table and get my work done easily without much fuss. For getting trade license I will bribe and get it without much fuss and in the same process I will clear the rest of the requirements for opening up my shop in India.

Now my readers will find that I am the culprit who is spreading the seeds of bribes into India. Well just try to look into the glass of water from the other way round. If my company is stuck with long and delayed and harassment full legal procedures then what should be the role of the company in that case. It very easy to be said than done, Indian governments declaration about various FDI policies and other policies which invites foreign capital itself is an open opportunity of the corruption to gain momentum. But are we prepared to handle such things is a question of endless debate.

We might write thousands of quality books and papers on integrity and corporate ethics and principles but if the government policies are against the economic growth of a country then what should be the step for that economy is a question of great thought. In US and Europe we find government agencies being formed to track the malpractices being adopted by corporate as well as by government agencies to promote capital profits. Well thankfully in India we don’t have such things and even if it comes its around beyond lacs of corer being stolen from the exchequers pockets. Well the point is not restricted to opening up new business but also related to export, import and even to small social factors too. To generate stupendous growth corporate coming into emerging economies bribery and corruption is going to the strongest tool to be utilized. Hence the first conclusion that can be drawn is that emerging economies are trapped under their own shield of corruption.

Indian needs a GDP growth of 8% above hence that can only be achieved if legal network is user friendly. Only pumping inflow of capital into the economy cannot be path to success of an economy.

The next part I will focus towards Capital Integrity. Well the word might sound new but it has old meaning and highly required at the corporate level. Capital Integrity needs to be planted at the higher levels of the management. Well this too might sound like an strange theory. Its very common that most of the targets and instruction of achieving deadlines comes from the higher level of management. They are the parents of the corruption which is being acted and implemented by the junior or lower level management.

It took lot of guts to write the above statements but the truth can be understood by the ones how the game under pressure plays. No one dreams to take the responsibility of slowdown but it’s high time that corporate who are coming into emerging economies needs to identify that legal bottlenecks are a part of the culture of the emerging economies and it will take a decade to replicate the process with the current developed economies.

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