A week before India comes under the mandatory 'review mechanism' at the United Nations Convention Against Corruption in Vienna, two reports released on Wednesday tore into India's preparedness to beat corruption. The two laws specifically mentioned that India doesn't have laws on public procurement and addressing corruption in the private sector.

“India has approximately 35 different ministries at the central level alone and no central procurement mechanisms,” said the report released by the UN Office on Drugs and Crime (UNODC).

Commenting on the lackadaisical attitude of states in enacting such legislation, the reports said that only two states (Karnataka and Tamil Nadu) have legislation for public procurement while others do not. According to Organisation for Economic Co-operation and Development (OECD) estimates on India, public procurement forms 20 to 30 percent of country’s GDP. In fact, procurement forms 50 percent of budget of ministries like defence, railways and telecom.

Procurement is still governed by General Financial Rules, 2005. “These rules do not have status of legislation and violations do not attract much penalty,” said the report titled ‘India: Probity in Public Procurement’. Meanwhile, the public procurement Bill 2012 still awaits clearance in the Rajya Sabha. “This bill needs to be passed by Parliament,” said T.R. Raghunandan, former civil servant, who was a consultant for the preparation of the report.

The report said that there is growing trend of PPP in India, yet the country is devoid of legislation and procedures that address probity issues in PPPs. There are 758 such projects in different sectors -- roads, ports, energy, urban development, airports, tourism, education, health care and railways.

“Twenty two percent respondents from private sector and 42 percent from government sector identified roads sector as needing more sensitisation on anti-corruption measures in procurement under PPPs as compared to other sectors,” said the report. The report is based on response from 100 officials from government and private companies.

According to the report, “Majority of respondents from the government sectors (47 percent) believe that the contractors should be debarred, followed by respondents (28 percent) who wanted internal measures against procurement officials involved in corrupt practices.”

“Consultants are not independent of the concessionaire,” it noted. Twenty five percent respondents from the private sector and 37 percent from the government said independent external consultants are unable to check leakages and monitor integrity during execution or monitoring of PPP projects.

However, 40 percent respondents said that manipulation of prequalification criteria remains the largest worry of private sector.

Addressing private sector corruption

Another report prepared by the same organisation said, “India has no specific legislation addressing corruption in the private sector.”  It said that real estate (20 percent) and mining (18 percent) are two sectors where it is impossible to do clean business.

Sixty six percent respondents named corruption in government and private sector as concerns for their business. “Eighty nine percent respondents agreed ethics code is lacking in a private company. It just exists on paper,” said the report titled ‘Corporate Integrity’.

The report also highlighted corruption within the sector hapopening within corporations, viz, cartelisation and insider information exchange. “High targets and tight deadlines, low orientation of the management’s focus on ethical issues along with a highly dynamic and competitive market are some fo the reasons cited for corruption in the Indian business sector,” the report added.

“We have to walk the talk. We have to translate into action,” said R Sri Kumar, vigilance commissioner, central vigilance commission.