Deepening Global Corruption as a Pointer for India

UPSC Syllabus: Gs Paper 2- Important aspects of governance, transparency and accountability, e-governance applications.

Introduction

The Corruption Perceptions Index 2025 shows a clear global decline in integrity, with the average score falling to 42 out of 100. A total of 122 out of 182 countries score below 50, and only five countries score above 80, compared to 12 earlier. Corruption is deepening where oversight weakens. India, with a score of 39 and rank 91, reflects this stagnation despite rising economic scale.

Global and Indian Trends in Corruption

1. Global deterioration in scores: The global average has dropped to 42, with 122/182 countries below 50, showing widespread decline in governance quality.
2. Decline in high-performing countries: Only five countries now score above 80, compared to 12 a decade ago, indicating shrinking top performers.
3. India’s stagnant trajectory: India’s score moved narrowly between 38 and 41 over the past decade, from 38 in 2014 to 39 in 2025.
4. India’s global ranking: India stands at 91 out of 182 countries, placing it in the lower half despite being the world’s fourth-largest economy.
5. Comparative country performance: China scores 42, Sri Lanka is close to India, while Bangladesh and Pakistan score lower, but India trails several East Asian and European economies.
6. Role of institutional reform: Countries with better CPI scores improved through institutional independence, transparency frameworks, and regulatory predictability.

Why CPI Matters for India

1. Nature of the index: CPI measures perceived public sector integrity, not actual corruption cases.
2. Multiple data sources: It uses 13 independent data sources covering procurement, regulation, judiciary, and safeguards.
3. Signal of governance gaps: A score of 39 indicates weaknesses in transparency, oversight, and accountability.
4. Impact on economic decisions: CPI affects investment decisions, sovereign risk assessments, and long-term capital allocation.
5. Governance as economic variable: Governance credibility now acts as a competitive economic factor influencing growth outcomes.

Impacts of Corruption

1. Global economic burden: Corruption costs at least 5% of global GDP, equivalent to over $2.6 trillion annually, including bribes and inefficiencies.
2. India’s direct economic loss: Corruption leads to around 0.5% of GDP loss annually in direct terms.
3. Total economic impact in India: Including indirect effects, losses rise to 1%–1.5% of GDP, amounting to tens of billions of dollars each year.
4. Reduced economic efficiency: Corruption increases transaction uncertainty and compliance costs, lowering productivity.
5. Misallocation of resources: It diverts efforts towards rent-seeking instead of value creation, affecting growth.
6. Loss of public trust: It weakens fiscal efficiency, regulatory credibility, and social trust, creating long-term institutional damage.

Challenges to Overcome Corruption

1. Extensive legal burden: There are 26,134 imprisonment provisions across India’s business regulations.
2. High compliance requirements: A pharmaceutical start-up must comply with 998 obligations before starting operations.
3. Criminalisation in regulation: Nearly 49% of these compliances carry criminal liability, increasing risk for businesses.
4. Policy and compliance mismatch: Even with ₹10,000 crore allocation under the SHAKTI initiative (Union Budget 2026–27), regulatory burdens remain high.
5. Expansion of discretion: Complex rules increase official discretion, creating conditions for rent seeking.

What Should Be Done

1. Digital public infrastructure impact: Direct Benefit Transfers linked to bank accounts and digital identity have reduced leakages in welfare schemes.
2. Growth in digital payments: The RBI Digital Payments Index (base March 2018) increased from 493.22 (March 2025) to 516.76 (September 2025).
3. Improved tax transparency: The Goods and Services Tax network has increased formalisation and traceability in indirect taxation.
4. Reduction in corruption opportunities: E-procurement systems and digital payments reduce human discretion and rent-seeking scope.
5. Need for institutional strengthening: Improvements are required in transparency, judicial efficiency, regulatory simplification, and institutional independence.
6. Balance between growth and governance: Rapid economic expansion without parallel governance reforms creates structural imbalance.

Conclusion

The CPI 2025 should be seen as a benchmark, not a verdict. India has strong constitutional foundations, competitive elections, a capable judiciary, and growing digital capacity. Sustained improvements in transparency, judicial efficiency, regulatory design, and institutional independence can improve outcomes. Countries improved through continuous reform. India’s governance must match its economic ambition to ensure balanced and durable progress.

Question for practice:

Evaluate how the global decline in corruption control reflected in the CPI 2025 highlights India’s governance challenges, and examine its economic implications and required reforms.

Source: The Hindu