Act_Giving_Bribe_Legal - Why, for a Class of Bribes, the...

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0 Why, for a Class of Bribes, the Act of Giving a Bribe should be Treated as Legal Kaushik Basu March 2011 Chief Economic Adviser Ministry of Finance Government of India New Delhi – 1
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1 Content Page No. Foreword 2 Disclaimer and acknowledgements 3 Abstract 3 The Thesis and the Proof 4 Institutional Details 6 Non-Harassment Bribes 8 Caveats 9 References 11
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2 Foreword In the rush to produce urgent policy documents and briefing notes that any government has to do, it is easy to let matters that may not be quite as urgent to go unattended. However, the not-so-urgent often includes matters of great importance for the long-run well-being of the nation and its citizenry. Research papers on topics of strategic economic policy fall in this category. The Economic Division in the Department of Economic Affairs, Ministry of Finance, has initiated this Working Paper series to make available to the Indian policymaker, as well as the academic and research community interested in the Indian economy, papers that are based on research done in the Ministry of Finance and address matters that may or may not be of immediate concern but address topics of importance for India‘s sustained and inclusive development. It is hoped that this series will serve as a forum that gives shape to new ideas and provides space to discuss, debate and disseminate them. Kaushik Basu March 21, 2011 Chief Economic Adviser
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3 Disclaimer and Acknowledgements I briefly spoke about the main idea behind this paper in my inaugural remarks at a conference organized by NIPFP in New Delhi on 15 March. It generated a lot of discussion and I am grateful for comments and criticisms I received from Supriyo De, Sean Dougherty, Arun Duggal, K. P. Krishnan, H. A. C. Prasad, Ajay Shah, Shekhar Shah and T. C. A. Srinivasa- Raghavan. I am also grateful to Sayali Phatak and Jyoti Sagar for drawing my attention to some of the relevant legal literature. The ideas presented in this paper are personal and do not reflect the views of the Ministry of Finance, Government of India. Since I have been talking about these ideas informally for a while and the main argument is fairly nuanced, I decided it is worth putting this out as a fully spelled out paper to minimize the risk of misinterpretation. Abstract The paper puts forward a small but novel idea of how we can cut down the incidence of bribery. There are different kinds of bribes and what this paper is concerned with are bribes that people often have to give to get what they are legally entitled to. I shall call these ―harassment bribes.‖ Suppose an income tax refund is held back from a taxpayer till he pays some cash to the officer. Suppose government allots subsidized land to a person but when the person goes to get her paperwork done and receive documents for this land, she is asked to pay a hefty bribe. These are all illustrations of harassment bribes. Harassment bribery is widespread in India and it plays a large role in breeding inefficiency and has a corrosive effect on civil society. The central
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Act_Giving_Bribe_Legal - Why, for a Class of Bribes, the...

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