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India suffered $6.1 billion loss due to corruption

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Staff writer ▼ | July 23, 2013
FICCI and Ernst & Young released a Report titled "Bribery and corruption: ground reality in India". The report shows that the country lost $6.1 billion due to widespread corruption.
India corruption
India corruptionFICCI and Ernst & Young released a Report titled "Bribery and corruption: ground reality in India". The report shows that the country lost $6.1 billion due to widespread corruption.


The report was done on the basis of a survey conducted from March to May 2013 via an online questionnaire. The respondents represented a mix of Indian enterprises with domestic operations, as well as Indian and foreign multinationals in the US and the UK.

The principal respondents belonged to business functions such as Internal Audit & Finance, Legal & Compliance, and Vigilance & Risk Management from banking and financial service institutions, and the technology, media and entertainment, and manufacturing sectors.

"Today, India is one of the most sought after investment destinations. Several reports place India among the top three countries globally in terms of an attractive investment destination ranked by global corporations. Corruption invariably increases transaction costs and uncertainty in an economy while lowering efficiency by forcing entrepreneurs to divert their scarce time and money to bribery rather than production," said Naina Lal Kidwai, president of Federation of Indian Chambers of Commerce and Industry (FICCI).

Around 83% of the respondents felt that the recent spate of scams will negatively impact FDI inflows into the country. According to 73% of the respondents from PE firms, a company operating in a sector that is perceived as highly corrupt, may lose ground when it comes to a fair valuation of its business, as it bargains hard and factors in the cost of corruption in the sector during a transaction.

ome 77% of the respondents think that it is the responsibility of the managing directors to handle the bribery and corruption-related issues in the organizations. The survey revealed that the sectors most vulnerable to corruption include the government & public sector, infrastructure & real estate, metals & mining, aerospace & defense, and power & utilities sectors.

More than 50 percent of the respondents felt that it is the lack of will to obtain licenses and approvals the "right way," which leads to bribery and corruption. Complicated taxes and licensing system also fuel corruption.

Majority of the respondents were optimistic that new regulations such as the Companies Bill 2012 will make a difference and help in reducing fraud, bribery and corruption in the country.


 

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