Deepening global corruption as a pointer for India

Syllabus: GS2/Governance

Context

• The Corruption Perceptions Index (CPI) 2025, published by Transparency International, highlights a troubling global trend of deepening corruption that is eroding democratic accountability.
• Against this backdrop, India’s performance reflects a state of “governance stagnation,” highlighting a critical gap between its rapid economic expansion and its institutional evolution.

Status of India in the Corruption Perceptions Index (CPI) 2025

• Rank and Score: India ranks 91 out of 182 countries with a score of 39, placing it in the lower half of the global table.
• A Decade of Stagnation: Despite emerging as the world’s fourth-largest economy with aspirations of becoming a developed nation by 2047, India’s CPI score has narrowly fluctuated between 38 and 41 over the past decade (scoring 38 in 2014).
• Global and Regional Comparison: While India performs better than neighbors like Pakistan and Bangladesh, it trails behind China (score of 42) and is roughly on par with Sri Lanka
• Furthermore, India lags behind many upper-middle-income democracies and East Asian/European countries that have successfully strengthened their transparency frameworks and institutional independence.

Impacts and Implications of Corruption

• A low CPI score signals persistent weaknesses in oversight, accountability, and public sector integrity, directly influencing sovereign risk assessments and long-term capital allocation
• The implications are multidimensional:
  • Direct Economic Drain: Corruption increases transaction uncertainty and diverts entrepreneurial energy into navigating rent-seeking systems rather than value creation.
    • For India, corruption costs an estimated 0.5% of GDP annually in direct terms, and total losses could be between 1% and 1.5% of GDP when factoring in indirect growth effects
    • This equates to tens of billions of dollars lost that could otherwise fund infrastructure, health, and education.
  • Overburdening Compliance Architecture: A major structural flaw in India’s governance is the highly complex regulatory environment. Currently, entrepreneurs face 26,134 imprisonment provisions embedded across Indian business regulations.
  • Criminalization of Business: Even with supportive policies like the Union Budget 2026-27’s ₹10,000 crore SHAKTI initiative for biopharma, a single pharma manufacturing start-up must navigate 998 compliance obligations, nearly 49% of which carry potential criminal liability.

Why CPI Matters?

• Indicator of Governance Quality: CPI measures perceived corruption, not just reported cases. It aggregates 13 data sources, including expert assessments and business surveys.
  • CPI significantly influences policy credibility and global perception of governance.
• Economic Implications of Corruption: Corruption increases transaction costs, regulatory uncertainty, and rent-seeking behaviour.
  • Global estimates suggest corruption costs ~5% of global GDP.
  • A negative relationship between corruption and economic growth, especially in developing economies.

Related Efforts & Initiatives

• Digital Public Infrastructure (DPI): India has successfully minimized leakages in welfare schemes by utilizing direct benefit transfers (DBT) linked to bank accounts and digital identities
• Digitization of Payments: The RBI’s Digital Payments Index (RBI-DPI) has grown significantly, rising from 493.22 in March 2025 to 516.76 in September 2025, showing deep penetration of traceable digital transactions
• Taxation and Procurement: The Goods and Services Tax (GST) network has vastly improved formalization and traceability in indirect taxes, while e-procurement portals have effectively reduced discretionary power and rent-seeking opportunities.
• Lokpal and Lokayuktas Act, 2013: Establishes independent anti-corruption ombudsman; and covers public servants including higher officials,
• Right to Information (RTI) Act, 2005: Empowers citizens to seek government information; and enhances transparency and accountability.
• Central Vigilance Commission (CVC): Apex vigilance institution; and supervises anti-corruption activities in central government.
• Comptroller and Auditor General (CAG): Audits public expenditure, and ensures financial accountability.

Way Forward

• Regulatory Simplification: Reduce criminal provisions; and promote ease of doing business.
• Judicial and Institutional Reforms: Faster dispute resolution; and strengthening watchdog bodies.
• Transparency Measures: Open data systems; and public procurement reforms
• Leveraging Democratic Strengths: India already possesses strong constitutional foundations, a capable judiciary, competitive elections, and robust digital capacity
  • These existing pillars must be utilized to build better transparency frameworks.

Conclusion

• India’s economic rise has been substantial, but its governance indicators remain relatively static. Strengthening institutional quality, improving transparency, and simplifying regulatory frameworks are essential to align governance with economic ambition.

Source: TH