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“About 20 percent people in India today would be honest, regardless of the temptations… Around 30 percent would be utterly corrupt. The rest are on the borderline.”—Pratyush Sinha, who recently retired as India’s Central Vigilance Commissioner (CVC).

Sinha’s remarks have created a furor, but many net denizens think these numbers are too low. In a response to the question “Are Indians Corrupt?”, comments ranged from, “Corruption is part of our blood,” to “It’s the Indian mentality.” Corruption is often looked upon as a moral problem in India. But there is also an alternative view: we are neither culturally nor racially dishonest, but are instead faced with a governmental system that is corrupting.

A simple example: Twenty years ago, to get a telephone connection involved a multi-year wait. This government-controlled scarcity created a parallel economy to sell phone lines. The phone repair person—a government employee—would also need to be paid something “extra”. Now, you can walk into a shop and buy a phone line. If I have a problem with my net connection, which is provided by Airtel, the company promptly sends a repair person—no bribe needed. How is it that the same culture that’s producing corrupt people in the government office is producing moral Airtel employees?

The answer is not hard to find—it’s not the people, it’s the system. Our system of government was never designed for service. The British created this system for the extortion of taxes. In response, the Indians created a parallel system. We are entrepreneurs, after all. The Government was not legitimate; we felt no moral obligation to pay taxes. So, we started maintaining parallel sets of books and understating revenue to avoid taxation. In an environment of enforced poverty, it was every man for himself.

Come Independence and nothing much changed. The entire structure of bureaucracy and governance remained the same. Even our constitution largely borrowed from the Government of India Act of 1935, which was a bill moved in the British parliament. This entire structure was not—and is not—designed to serve the people of India. To expect this system to support moral people is unrealistic. The relationship between bureaucrats, government officials, the police force and the aam aadmi remains a colonial master-slave relationship. Since the official’s job is not to serve, service of any kind must necessitate a payment outside the system.

Our government semi-functions because there are some extraordinary people in government who, despite operating in an extremely corrupting environment, remain honest. But it shouldn’t require extraordinary morality to remain honest in a well-functioning system.

There are, everywhere, crooks that need to be caught and punished. But the majority, “the borderline,” are given incentive to act dishonestly in the current setup. The burden is borne by the people. A study in the Wall Street Journal recently noted while comparing India and China: “India’s entrepreneurs… believe they succeed in spite of the state, while in China they think they succeed through their connections to it.” Luckily, we don’t need to fix the people or our culture. We need to transform our governance. Then Pratyush Sinha’s statistics will look different.

SANKRANT SANU  is the founder of Miloka Inc. (www.miloka.com). He lives in Gurgaon and Seattle. If you have an entrepreneurial story to tell, write to him at sankrant@msn.com.

©Entrepreneur October 2010

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Central Vigilance Commissioner, China, corruption, government, India, Pratyush Sinha