Real estate and construction has been voted as the most corrupt sector in India, according to a survey by global consultancy firm KPMG. Telecom, under limelight in recent months due to the 2G scam, has been voted as the second most corruption-prone sector in the country.
Nearly half of the respondents in the survey are of the view that real estate, construction and telecommunication sectors are most prone to corruption because government and political intervention is considered higher in these sectors, KPMG said. Large capital investments, multi-level approvals, complex processes and huge projects give immense opportunity for corruption, the survey said.
The survey, covering corporate India, also found that a huge majority of corporates believe India can surpass an annual growth rate of over 9 per cent if corruption is controlled, while self-critically admitting that private sector is greatly responsible for bribery and nepotism.
The survey is based on responses from 100 Indian and multi-national corporations operating in the country in diverse areas, including transportation and logistics, aviation, oil and gas, consumer goods, financial services, auto and chemicals.
As per the final results, 32 per cent of the respondents named real estate and construction sector as most prone to corruption. In second place came telecommunications, which was named by 17 per cent respondents as the most corruption prone sector in India.
The telecom sector has been in spotlight due to the 2G scam in which many top industry players have been embroiled.
Among others in the KPMG survey, development sectors such as education and poverty alleviation came third with 13 per cent respondents terming it as the most corrupt.
It was followed by financial services such as banking and insurance with 10 per cent, defence with 9 per cent, IT/ITES/BPO with 6 per cent and energy and power with 5 per cent.
“The survey shows that corporates cannot just claim to be victims of corruption. They are also responsible for it,” Transparency International India Executive Director Anupama Jha said during the launch of the survey.
According to the KPMG survey, 51 per cent respondents expressed apprehension that rising corruption will make India less attractive for foreign investments, while 90 per cent were of the opinion that corruption increases volatility in the stock markets preventing long-term investors from coming to the country.
As many as 99 per cent of the corporations were of the view that the biggest impact of corruption on business was that it skew the level playing field.
“Besides, 68 per cent respondents were of the view that in many cases corruption is induced by the private sector,” KPMG India Executive Director (Forensic Services) Rohit Mahajan said.
While praising certain rules like the Right to Information Act (RTI), majority of the corporate houses surveyed, however, believe the level of corruption in the country will remain the same irrespective of legislation.
As many as 84 per cent of corporate houses said the government in India has not been effective in enforcing anti-corruption rules.
“Merely having a set of laws is not enough if there is lack of implementation,” Mahajan said.
The KPMG report said: “Strict enforcement of existing provisions under law, both for the taker and giver, is believed to be the need of the hour to prevent further erosion of trust and credibility of India’s economic success. The industry appeared poised to actively participate by willing to support a legislation…”
As per the global report of Transparency International, India ranked 87th out of 178 countries in the corruption index last year for the government sector. For corruption in private sector, India’s rank was 19 among 22 countries.
“It has been said by experts that for every 1 per cent increase in corruption, there is an 11 per cent per capita reduction in FDI flows,” Mahajan said.
Speaking on the occasion, senior economist and former faculty of the Delhi School of Economics Surjit Bhalla said that despite a plethora of scandals, the share of “black money” as percentage of total GDP has consistently stayed below the 1 per cent mark.
