Monday, April 18, 2011

Harassment Bribes: Kaushik Basu's new idea

The 2G scam and the Anna Hazare movement has galvanised the media and large sections of the population to lash out at the powers that be against corruption.However, all I could hear was criticism (even at the jan lok pal bill) and no constructive argument on how to curb corruption. Until of course, Kaushik Basu's trenchant working paper titled "Why for a class of bribes, the Act of Giving a bribe should be treated as legal" came out on the finance ministry's website
Its a very well written paper. He argues that bribe givers who are forced to give bribes to receive legal entitlements should not be treated as criminals. Currently the law does not distinguish between bribe giver and bribe taker. Basu says that incidence of such bribes (he calls them "harassment bribes") will go down once the bribe giver is given legal immunity. Under this scenario, since the interests of the bribe giver and the bribe taker are orthogonal, the bribe giver will want to report such instances of harassment bribes because he will no longer be considered as abetting the act of bribery and also he will receive the amount he gave to the bribe taker. In other words, the comfort zone that currently exists between the two parties will not exist under the proposed change.
Of course, he states that in case of non-harassment bribes, the bribe giver should not have legal immunity but the punishment meted out to the bribe taker should be substantially higher.
Of course, there are caveats in place. Basu says that giving such immunity will not lead to complete disappearance of bribes in our society.Other important steps like use of e-technology to minimise the interface between the public servant and the citizen would be helpful in curbing corruption. Also, it is only when we build up values of honesty and integrity in society will be there a great reduction in corruption. Of course, Basu does contend that economics as a subject considers human beings as endlessly self-seeking.But he does provide evidence that we are not always endlessly self-seeking and that market economies (which we are trying to build) will not be efficient unless human beings are endowed with a minimal amount of integrity and pro-sociality.

(For those interested in reading the full working paper, here is the link)


  1. It is like an initiative to legalize each criminal activity that goes with human nature. Good article for churning minds...

  2. Kaushik Basu has churned a paper based on theory not practicality. It is not only myopic in its claimed objectives but also detrimental in socialist republic.

    Legalising some categories of bribes and some not is a futile exercise with numerous loopholes, waiting to be exploited.

    He might be a notable economist but he definitely is not a realist when it comes to current scenario in our country.


  3. @PSR: Unfortunately, I cannot contest your assumption on the "practicality" bit of Mr.Basu's suggestion. I am not aware of any empirical evidence of such measures' effectiveness in any country. And in my opinion, socialism as a concept in India is only in theory. The notion of socialism was thrown out way back in 1991. It only exists in "theory"
    The bribe (categorised as harassments bribe) per se is not legal.It provides legal immunity to the bribe giver. He is asking for more clarity in the current laws.
    And use of e technology which he suggests are also very important in curbing corruption