Corruption remains major barrier to growth in India, says a report by the World Economic Forum.
Indian firms pay 50 per cent of total project cost, on an average, as bribes to speed up clearances for real estate and infrastructure ventures, according to a report by the World Economic Forum (WEF) on corruption in the country.
“Boosted by low energy prices and expected implementation of structural reforms, India has taken over as the fastest-growing large economy, especially as China’s economy has recently slowed down… Despite this positive outlook, corruption remains a major barrier to growth in India,” the Forum said in a report titled ‘Building Foundations for Transparency’ under its Partnering Against Corruption Initiative.
The Forum chose to focus on the real estate and infrastructure sectors in its report as they are perceived to be among the industries most affected by bribery around the world.
“An expert opinion survey conducted with business and civil society as part of this project confirms that this is no different for India: more than two-thirds of the respondents perceive that the Indian IU (infrastructure and urban development) industries are more affected by corruption than other industries in the country. In addition, more than half perceive that the Indian industries are more affected than neighbouring Asian countries,” according to the Forum’s report released on Tuesday.
Within India, the Forum chose to examine the regulatory system for construction permits, land acquisition and land title registration in Maharashtra as a pilot as it contributes the maximum share to the Indian economy and attracted 22 per cent of the country’s real estate investments in 2014-15.
These regulatory domains faced the most pressing corruption risks, it found after consulting civil society and industry executives.
Highlighting ambiguous norms for change in land use that are exploited by influential developers, dodgy land records and the need for multiple clearances as the top reasons for project developers paying ‘speed’ money, the WEF said these findings have ‘strong implications for the competitiveness of the Indian markets.’