PM tells IIM grads how corruption can be curbed

Prime Minister Manmohan Singh addressed the Golden Jubilee of Indian Institute of Management-Calcutta in Kolkata on August 22, 2011.

Following is the text of the Prime Minister's address on the occasion:

I am delighted to be here in Kolkata today on the occasion of the golden jubilee of this great institution. The IIM-C has placed Kolkata on the business management map of the world.

The competence and capability of your alumni is matched by an impressive diversity. From a globally recognised and respected CEO like Indira Nooyi, to one of the fastest climbers of Mount Everest, Malli Mastan Babu, this institution has produced outstanding citizens of India and the world.

Their leadership, their dedication and their talent are a source of inspiration for each one of us.

I am sure IIM-C will continue to produce new generations of managerial talent, good corporate and social citizens and enterprising and creative professionals. I compliment your faculty and wish you well in your noble endeavours.

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The 21st century has been called an Asian century because a shift is taking place in economic power from the industrialized countries of the West to a new dynamic Asia, characterized by a large number of emerging market economies that are seen to be well placed on the path of rapid growth.

I am happy to say that India is playing its part in this transformation. We were once viewed as a slow growing economy. Two decades ago, when most of today's graduate students had not yet entered their school years, we launched a comprehensive, but gradual programme of economic reforms.

The reforms programme was controversial at the time, but we persevered. We are also fortunate that all the different governments that have ruled at the Centre since the reforms were launched have more or less pushed the reforms forward.

There have been differences of emphasis but the direction has remained the same. Most State governments have also acted in the same spirit.

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Because of our gradualist approach, it took time for the economic reforms to have an impact. However, it is now clear that their impact has been remarkable.

India has been transformed into one of the fastest growing emerging markets in the world. If we can continue to grow at this rate, we are well positioned to be the country with the third largest GDP in the world by 2025.

With our growing economic weight, our voice is also heard more carefully in the councils of the world.

From being a relatively closed economy at one time, we have become much more open both for trade and technology flows.

We are today viewed as one of the most attractive destinations for FDI. Most of the world's major corporations have a presence in India, with substantial expansion plans. Those that don't are asking themselves why they don't.

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What is more important, India's corporations are expanding their footprint abroad through investments and mergers and acquisitions.

These changes have profound implications for you. As the business managers of the future, you will have a major role in this flowering of Indian enterprise and of Indian brands, not only domestically, but also on the world stage.

I must emphasise that while this rosy future is within our reach, it is not an assured outcome. On Saturday, I chaired a meeting of the full Planning Commission in New Delhi to discuss the Approach to the Twelfth Plan, which begins next year.

We reviewed the many challenges we face in the years ahead. We set ourselves the objective of achieving faster, sustainable and more inclusive growth, with a growth target of 9 per cent per year for the next five years.

Since we have already achieved about 8.2 per cent in the Eleventh Plan period, it may seem that a transition to 9 per cent growth is not difficult.

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However, it is in fact a very ambitious target given the current global economic situation, which is full of uncertainties about the prospects in industrialized countries and their implications for global capital markets.

Our own economy has also slowed down compared to last year, and this year's growth may be around 8 per cent or a little more, at best.

Despite this sobering environment, we concluded that we should aim at 9 per cent growth. This is because we are not planning for today, or even for the rest of this year.

We are planning for the five-year period from 2012-13 to 2016-17. I believe India has the inherent economic strength to achieve this target provided we can do some of the difficult things needed to get there.

Many countries have grown rapidly at 9 to 10 per cent per year for two or three decades before slowing down. Japan did it in the middle of the last century. Korea repeated the same performance in the second half of the last century.

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China too has been growing at this rate through the last two decades of the last century, and the first decade of this century.

India is now capable of repeating the performance of this group of Asian countries. But we must remember that it will not happen automatically, by simply proceeding on a business as usual basis.

There are many difficult challenges we must overcome to achieve the transition to 9 per cent growth. Some of these challenges are themselves the consequence of rapid growth and the structural changes that it brings.

Many of these challenges are techno-economic. How to reach the agronomic potential of our agricultural land to close the productivity gap which exists between our agricultural productivity and that in other countries of Asia?

How to build and finance the infrastructure without which rapid and inclusive growth is impossible? How to achieve energy efficiency and rational energy pricing? How to evolve a rational and holistic policy for management of our limited water resources?

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How to plan for the rapid pace of urbanization which faster GDP growth will bring? How to ensure an expansion in education and health services without which inclusive growth is not possible?

All these issues are being examined in the Planning Commission and elsewhere, and they will be fully addressed in the Twelfth Plan. They may be viewed as management challenges which the Centre and the State governments have to face.

As managers you can contribute to finding a workable solution and I urge you to get involved in looking for solutions to these difficult problems.

In addition to these techno-economic challenges, we must also address the much more complex challenges of combating governance failures which are now at the forefront of public concern.

In this context, we must particularly address the problem of corruption, which currently occupies centre-stage in the perception of many concerned citizen.

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There are some who argue that corruption is the consequence of economic liberalization and reforms. This is of course completely mistaken.

Many of the areas which have actually seen systemic reforms have also seen the disappearance of corruption. Industrial licensing, import licensing and rationing of foreign exchange are good examples.

These areas were earlier associated with widespread corruption. The abolition of licensing has eliminated corruption in these areas.

But corruption has not disappeared from the system. It surfaces in many forms. The aam aadmi faces corruption when he has to pay a bribe to facilitate ordinary transactions with government.

Beneficiaries of government programmes face corruption when those in charge of implementing the programmes misappropriate funds.

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And there is also corruption on a larger scale. Large government contracts can breed corruption when procurement procedures are inadequate.

Wherever there is government discretion in the allocation of scarce resources, whether it be land, or mineral rights, or spectrum, if the method of allocation is not transparent, there is a possibility of corruption.

These problems arise both in the Central government and in State governments.

We cannot ignore this problem. Corruption not only weakens the moral fibre of our country, it also promotes inefficiency and cronyism which undermine the social legitimacy of market economics. It also creates a trust deficit which ultimately weakens our ability to act unitedly.

I believe all right thinking persons are agreed on the need to act to tackle all these forms of corruption. But I feel the complexity of the task is not adequately appreciated.

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In my Independence Day address from the Red Fort last week, I said there is no magic wand that can solve the problem in one stroke. There is no single solution. We need to act on multiple fronts.

It has long been argued that we need an institution like the Lok Pal. We have introduced a Bill in Parliament which is now before the Standing Committee. There are differences of view on details of the Bill.

We have made it clear that all concerned individuals should convey their concern on different aspects of the Bill to their representatives in parliament and to the Standing Committee.

The Standing Committee has the power to propose any amendment. We are open to a reasoned debate on all these issues.

The creation of the Lok Pal as an institution will help. But it will not solve the problem. It needs to be supported by improvements in the pace and quality of judicial processes.

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Speedy trials and timely judgements will do a great deal to discourage corruption and dispel the notion that those who break the law can get away scot free. This requires a number of judicial reforms.

We need to thoroughly revamp existing government procedures to reduce discretion and to make the basis of decision making as transparent as possible.

I have asked a group of ministers to look into this issue and I am confident we will come up with systemic solution. As managers, you can contribute to the process by suggesting mechanisms that would increase transparency.

Many countries have a law to govern government procurement. We propose to introduce legislation along these lines.

The United Nations Commission on International Trade Law has recently modified its earlier model procurement law. We can benefit from this latest 'model law' and internalise international best practices. I would urge State governments to do the same.

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Many of the controversies that have arisen in the recent past arise because of the inadequacies of our regulatory institutions. We need to strengthen this regulatory framework, including strengthening their technical capacity.

The funding of elections and of political parties happens to be yet another area which calls for reforms to reduce the scope for generation of black money.

A comprehensive restructuring of government system and procedures along these lines is necessary if we want to clean up the system. Clean it up, we must.

The economic reforms were aimed at unleashing India's enormous entrepreneurial potential to accelerate the pace of economic development.

Along with the techno-economic issues which we deal with in our planning process, we also need to change our system of governance to eliminate corruption. It will take time and effort but it can be done.

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If we succeed, we will ensure that our economy is firmly placed on the path of rapid growth. The future augurs well for our country.

It also augurs well for West Bengal and Kolkata. Kolkata has been a great centre of learning and creativity in the past. It lost that position over several decades. However, I sincerely believe that a new sun is rising on our East, and Kolkata can once again regain its glory as India's window to Asia.

One of the greatest Indians who re-discovered India's Asian identity and Asia's links with India was Gurudev Rabindranath Tagore, the first Asian Nobel Laureate and a proud son of Bengal and India. His travels to the East helped India reconnect with its civilisational neighbourhood.

The time has come to build on this great civilisational heritage and to pool all our wisdom, knowledge and experience to revitalize West Bengal's economy, polity and society so as to scale new heights of human endeavour and achievement in the service of the people of West Bengal and India as a whole." -- PIB