By PRASENJIT BHATTACHARYA
NEW DELHI—Increased scrutiny of bureaucrats, politicians and executives at state-run companies by India’s anticorruption authorities and federal auditors has had an unintended, chilling effect on some pending government and company initiatives.
Many citizens welcome the increased attention being placed on allegedly corrupt practices and see it as long overdue. Graft is frequently cited as a major impediment to business here and a reason some foreign investors stay away. In 2011, global advocacy group Transparency International ranked India 95th among 182 nations in terms of perceived corruption. (New Zealand was the least corrupt at No.1, while Somalia held the 182nd spot.)
Several ranking Indian ministers and bureaucrats have been arrested and charged with corrupt activities over the past two years. Read more about them.
But some government officials say they fear that decisions made in good faith today may haunt them in years to come because of the increased oversight. It is much safer, they think, not to take any action at all.
“Decision-making at the highest levels of government is never quite black and white,” said Naresh Chandra, India’s former cabinet secretary and a former ambassador to the U.S., in an interview. “And the fear that decisions taken on complex subjects would be subject one day to some police officer’s investigation and determine a senior bureaucrat’s peace of mind and future is a genuine worry.”
As a result, just when economists say that India needs to push ahead with new projects to kick-start its slowing economic growth, it is being hamstrung by an approvals process that has slowed.
Andimuthu Raja and others face inquiries following the government’s growing anticorruption push.
Prime Minister Manmohan Singh in April told a conference of bureaucrats that he wanted to ensure that antigraft probes don’t get out of hand. “It should be our endeavor that there is no witch hunting in the name of fighting corruption,” he said.
Last month, after Mr. Singh took over the finance minister’s portfolio as well, he sought to encourage ministry officials to be less reluctant to act by telling them to “reverse the atmosphere of pessimism and revive the animal spirits in the country’s economy.”
T.S.R. Subramanian, a former top civil servant, said what is needed to deter corruption is “early recognition of the corrupt and swift punishment, which serves as deterrent.” He said that when probes into corruption drag on, even honest officers shy away from taking bold decisions.
Corruption has long been a concern in India, but the focus has sharpened since the Comptroller and Auditor General, a federal audit agency, in November 2010 reported that the telecommunications ministry’s 2008 allocation of mobile-telephone spectrum caused more than $38.9 billion in lost potential revenue for the government because of alleged corruption.
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The telecom minister at the time, Andimuthu Raja, was forced to resign, and he and two former bureaucrats have been on trial since November for conspiracy, cheating, criminal misconduct and abusing an official position in relation to what became known as the “2G scam.” They are accused of taking bribes from companies that received licenses at below market prices. They deny wrongdoing and are out on bail.
Other scandals erupted around the same time, including alleged improprieties in contracts related to the October 2010 Commonwealth Games. Meanwhile, the Times of India in March cited a draft report by the Comptroller and Auditor General, which alleged a potential loss to the government of more than $200 billion through the allocation of coal blocks from 2004 to 2009 to companies without auctions. The CAG has said it is still working on the final version of the report.
Last month, Virbhadra Singh, the minister for medium and small enterprises, resigned from the cabinet after a court in the state of Himachal Pradesh said there was sufficient evidence to try him on corruption charges related to an audio recording of his allegedly accepting bribes from a businessman in 1989. He has been charged with criminal misconduct and misusing his office. He has denied wrongdoing and remains in Parliament.
R. Sri Kumar, one of three commissioners at the Central Vigilance Commission, which investigates alleged corruption by government officials, said bureaucrats following the rules needn’t worry about unwanted attention.
“The CVC has heard talk of vigilance measures making bureaucrats overcautious, but this needn’t be the case,” he said. “We keep telling bureaucrats, ‘If you minimize use of discretionary powers and work transparently and keep higher authorities informed of your decisions, there’s nothing to worry about.’”
He said only a “minuscule” number of allegations of corruption that CVC investigates lead to administrative punishment or prosecution.
Still, fear of being second-guessed even for legitimate decisions lingers, officials say. The impact of bureaucratic dithering has been felt acutely in the inability of India’s large state-run resources companies to acquire mines and oil and gas blocks abroad.
India’s largest thermal-power producer, NTPC Ltd.,
has halved its targets for adding capacity for the next five years because a lack of domestic coal supplies has hampered production at many of its plants. Its quest for coal mines overseas so far hasn’t borne fruit.
“In public-sector companies, decision-making on issues like overseas acquisition is slow because of the uncertainties involved,” said NTPC Chairman Arup Roy Chowdhury. “There is fear of CAG and the CVC in the minds of public-sector companies like mine to take a decision on commercial businesses where uncertainties are involved. If anything goes wrong, there will be no one standing by my side.”
—Saurabh Chaturvedi contributed to this article.
Write to Prasenjit Bhattacharya at email@example.com
A version of this article appeared July 14, 2012, on page A9 in the U.S. edition of The Wall Street Journal, with the headline: India Graft Push Stirs Doubts.