Global Policy Forum

By Rahul Bedi

Bribery, long a way of life in India, is being threatened by a new fraud: Bribes in Punjab and other northern Indian states are now being paid with counterfeit notes.

Recently, a police officer in Punjab state paid close to US$100,000 in bribes to ensure that his daughter secured a job in the government, coveted mainly because of the access it provides to more bribe money. But the beneficiaries, who ensured her enrolment by hyping up her grades in the entrance examination, were soon to discover that they had been paid in counterfeit money.

A senior minister in Punjab who received a large sum of money for services rendered found that a bank in the state capital Chandigarh refused to accept the cash for the same reason - it was counterfeit.

The corrupt in Punjab and other northern Indian cities are in a fix these days, as enterprising criminal syndicates on either side of the porous Pakistani frontier are redefining the unwritten but well-accepted rules of graft. It seems that bribe-givers, resigned to a well-entrenched system of graft, are now trying to minimize their losses by purchasing cheaply available counterfeit currency to ensure their work gets done.

Indian officials blame the large amounts of counterfeit notes in circulation on attempts by rival Pakistan's shadowy Inter Services Intelligence (ISI) agency to destabilize the Indian economy.

In neighboring Nepal, where the Indian currency is valid, Rs500 notes (worth about $40) have been banned because of the large number of fake notes of that denomination discovered to be in circulation there. The ban was part of measures taken by Nepal after the hijack of an Indian airliner with 150 passengers on board from Kathmandu to Kandahar, Afghanistan, in December 1999 by jihadist militants based in Pakistan.

India's charges that the ISI was involved in the circulation of fake currency through Nepal appeared to gain credence when a Pakistani embassy staffer was arrested in Kathmandu and deported this year after being found in possession of counterfeit Indian rupees. According to Indian officials, Pakistan's spy agency prints fake Indian currency notes, apart from providing weapons and training to jihadist militants fighting to liberate disputed Kashmir state from Indian rule.

The prevailing price for counterfeit currency in Punjab is Rs40-60 (83 US cents-$1.25) in exchange for every Pakistani-made Rs100 note - the range depending on the buyers' bargaining skills and the volume required. The right contacts can ensure that Pakistani counterfeit currency is available even cheaper, admitted a police officer who is a conduit for the contraband. He declared that the ra te dipped even further in instances where the amount required was large.

Free-market rules, it seems, apply even here.

Meanwhile, an 18-month search for one honest government employee in Punjab some years ago proved futile, but led to uncovering nearly 300 corrupt officials. Punjab, India's most prosperous province, failed to find any official worthy of the Rs100,000 award for the "most honest officer" announced by former chief minister Prakash Singh Badal. But in its search, the state Vigilance Department paid out Rs660 million in rewards to informers who tipped them off about corrupt officers. But the informers, after collecting their rewards, refused to depose as witnesses to ensure convictions.

According to a survey conducted recently by Transparency International, the Berlin-based anti-corruption watchdog group, India is the world's eighth most corrupt country.

Senior officials secretly support the deep-rooted corruption in India. After taking office in 1997, then prime minister Inder Kumar Gujral publicly declared that corruption had permeated every aspect of Indian life and the state was helpless in countering it. A federal Home Ministry report compiled by senior officials, including heads of India's internal and external security agencies and tabled in parliament, declared that corruption across the country was "endemic". It said crime syndicates had corrupted India's state machinery at all levels, virtually running a parallel government. "All across India, crime syndicates have become a law unto themselves, making rules and ensuring that everyone obeys," the report stated.

Even in smaller towns and rural areas, musclemen and hired assassins control vast areas through terror and violence. The criminal justice system too has broken down, unable to deal with widespread chaos. "Such elements have acquired considerable clout, seriously jeopardizing the functioning of the administration and safety and property of the common man," stated the report. It said violence and organized crime had reached "chaotic proportions", totally corrupting the state machinery.

Even the most fundamental survival levels were fraught with corruption and violence that, if not suitably indulged and pandered to, invariably led to disaster.

A "national bribe index" drawn up by the popular weekly magazine Outlook revealed that bribes had to be paid for birth certificates, admission to schools and universities and even to get bank loans. Bribes also had to be paid for passports, ration cards, driving licenses, electricity, water and telephone connections, for housing plans to be cleared and even to get menial jobs.

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