Executive Briefings

Indian Economist Suggests Fighting Bribery by Making Some Kinds of Bribes Legal

Corruption conjures up images of shadowy deals among lobbyists, corporations and crooked government officials. But it is often more mundane, as officials demand bribes even to deliver routine public services. Economists argue that such small-scale graft does great damage - that official extortion erodes trust.

Kaushik Basu, the chief economic adviser to India's finance ministry, notes that Indian law may be counterproductive in that it treats both bribe-giving and bribe-taking as crimes. This makes it hard to blow the whistle on corrupt officials, because the bribe-giver has also broken the law. If he complains, he risks prosecution or, more likely, being asked for another bribe by the police. In a provocative paper based on game theory, Basu argues for the legalisation of some kinds of bribe-giving. His proposal has instigated a furious debate in India.

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Corruption conjures up images of shadowy deals among lobbyists, corporations and crooked government officials. But it is often more mundane, as officials demand bribes even to deliver routine public services. Economists argue that such small-scale graft does great damage - that official extortion erodes trust.

Kaushik Basu, the chief economic adviser to India's finance ministry, notes that Indian law may be counterproductive in that it treats both bribe-giving and bribe-taking as crimes. This makes it hard to blow the whistle on corrupt officials, because the bribe-giver has also broken the law. If he complains, he risks prosecution or, more likely, being asked for another bribe by the police. In a provocative paper based on game theory, Basu argues for the legalisation of some kinds of bribe-giving. His proposal has instigated a furious debate in India.

Read Full Article