NEW DELHI: The US embassy in July 1976 said corruption in India was a "cultural/political/economic fact of life", and that it was not a Western import but historically a local phenomenon. It called the Congress party India's "united givers fund".
"It is impossible in any single message to give a description of the extent and modalities of corruption in India. Entire books have been written on this subject and there is little doubt but that these only dealt with the tip of the iceberg. It should be added that corruption is not a phenomenon which was brought to India bythe West. Kautilya, the ancient philosopher, in his treatise Arthasastra refers to various kinds of corruption and prescribes corresponding punishments."
The cable said corruption was not confined to the business or political world. "Hindu and other religious shrines in India have long been known for their corrupt practices," the cable said.
The cable came in response to New Delhi's reply to the US state department's request for an inventory of Indian statutes relating to corruption. It was probably prompted by the discussions in Washington DC about tightening American anti-corruption measures in the wake of the Watergate scandal. Among the outcome of the US move was its powerful Foreign Corrupt Practices Act.
The cable said India's many anti-corruption laws "may give the misleading impression that corruption/illegal payments are well under control in India".
"In fact, the opposite is true. Corruption in India affects virtually every transaction of any size, domestic and external. Moreover, while there has been a reduction in smuggling and illegal remittances and some cuts in tax evasion, there is no indication that other forms of corruption are decreasing since the imposition of the emergency. One could easily come to the cynical conclusion that there is a direct and positive relationship between laws against corruption and the extent of corruption itself, i.e., each such law only means that there are more people to bribe," the cable said.
The embassy pointed out that there was no meaningful statistics on the extent of corruption in India. A government inquiry committee in 1971 estimated that "black money" transactions accounted for about 23% of GNP. It said scarcity was one of the principle reasons for corruption. "Scarcity is more than a shortage of goods or food, it encompasses a scarcity of jobs, of opportunities and a plethora of controls. There are probably few countries which have tighter controls on all aspects of economic life. These range from omnipresent licensing, confiscatory taxation to a checks and balances system which is designed to make any form of corruption impossible. All of this panoply has but one amid, social justice, and but one principal result, social injustice," it said.
It also went on to analyse the nuanced position most Indians adopt towards corruption: they distinguish between different forms of corruption but the distinction which is made has no legal base, it said. "For example, virtually all transactions require "speed money", a small payment required to move papers, secure admission to a hospital, obtain a train ticket, etc. This is illegal but not considered corrupt since it is supposed to balance the niggardly income normally given to recipients of such payments. Similarly, nepotism, whether it benefits one's family, caste or language or regional group is considered acceptable. The dividing line between acceptable and reprehensible transactions seems to be governed in part by amount. Large payments, whether or not legal, are considered "bad". Furthermore, a distinction is often made between corruption for political purposes and that for personal purposes."
So it is "more acceptable" to take money for the Congress than for one's own personal comfort. "While it is illegal for a corporation to make a contribution to a political party it is perfectly legal for the same corporation to make an equal payment to the prime minister's relief fund or other organization which essentially serve the same purpose. It is legal to purchase advertising in party publications whether or not they are ever published," the cable said.
It has long been the practice, and continues to be the case today, that every large firm and most small enterprises are approached for their contribution to India's "united givers fund", the Congress party. The collectors vary, sometimes they are the politicians themselves, sometimes a "bagman" for the party, sometimes, most recently, even a bureaucrat, the cable said.
It said a British Aircraft Corporation (BAC) team that visited India to compete against Dutch and American aircraft suppliers was approached and offered the assistance of the Maruti company, a firm controlled by Sanjay Gandhi.