Religiosity impacts perceptions of crony capitalism within the country
4 min read . Updated: 06 Mar 2023, 12:20 AM IST
PremiumSurveys suggest an inverse relationship between religious beliefs and tolerance of corruption in government dealings with big business
Government-business corruption is not new. It existed and grew during India’s previous United Progressive Alliance (UPA) regime. What is both striking and worrying are signs of its growth during the National Democratic Alliance (NDA) regime. A withdrawal of the state and greater reliance on markets has been on the NDA agenda. That this has not resulted in lower corruption suggests that the government continues to enjoy considerable discretionary power over the awarding of contracts to build and manage ports, airports, highways, telecom systems, electricity generation and distribution and infrastructure, as well as over land and water resources, all of which can create economic rents. These rents accrue to major industrialists/investors whose profits soar without necessarily any productivity gains. The Adani imbroglio—the meteoric rise in recent years of this business group and dramatic collapse of its traded equity upon the Hindenburg report’s release—under investigation draws general attention to the fragility of government-business collusion and corruption. The reputation of Hindenburg Research, a US-based investment firm with a dubious short-selling record, is a distraction, since Adani valuations sank precipitously; allegations of fraud, manipulation of share prices and tax evasion by the group couldn’t be shrugged off after the response of stock and bond markets signalled a loss in confidence. While rent-seeking behaviour remains pervasive and persuasive, there are other ways of studying collusion between government and business and examine the corruption entailed by the practice of crony capitalism.
We develop an explanation based on religiosity. It may seem far-fetched, but it is not. Our empirical analysis draws upon a recent Gallup World Poll Survey of India covering the period 2018 to 2021.
We present a distillation of our econometric analysis, which has two stages: an explanation of religiosity and an explanation of corruption between government and business in terms of (predicted) religiosity and other covariates, including demographic and socio-economic characteristics.
Religiousness is defined in terms of attendance at places of worship and adherence to other religious beliefs and practices. These underlie the Gallup survey’s measure of importance attached to religion. Corruption is defined as “the abuse of entrusted power for private gain", equally applicable to governments and businesses. As measuring ‘abuse of entrusted power’ is not straightforward, this and other surveys mainly rely on ‘corruption perceptions’ instead of actual corruption levels. Besides, the focus is on perceptions of corruption between government and business, and findings are drawn from survey respondents who perceive corruption between these entities.
Religious affiliation matters. Muslims, Sikhs and Others are more likely to be religious than Hindus. Women are more likely to be religious than men. OBCs, SCs and STs are more likely to be religious than the Unreserved group (including Brahmins and Other High Castes). The regional contrast is striking. Respondents in India’s eastern, central and southern regions are less likely to be religious, as compared with those in the north. Regional affluence measured in terms of per capita income makes a difference too. The more affluent a region is, the less religious are its respondents. It is not self-evident why affluence goes with reduced faith in religious beliefs and practices. The more dissatisfied a respondent is with lack of freedom in life, the lower is the likelihood of his/her being religious. The greater the degree of civic engagement, the greater the likelihood of being religious. Finally, relative to 2018, perceptions of religiosity rose in subsequent years. Apparent in this is a likely defence response of minorities to the aggressive and relentless pursuit of Hindutva by forces allied with the Bharatiya Janata Party (BJP), which holds power at the Centre and in most Indian states either directly or as a partner in the ruling coalition.
In the second stage, we examine the roles of (predicted) religiosity and other covariates in corruption between government and business. The greater the religiosity, the greater is the likelihood of perceiving corruption. We believe that religiosity lowers the threshold of tolerance of corruption. In other words, religious respondents are more likely to disapprove of even minor acts of corruption (such as favouritism in granting benefits to this or that business on suspicious grounds). The more affluent a respondent is in terms of per capita income, the less likely s/he is to disapprove of corruption at higher income levels. This is presumably indicative of greater tolerance of corrupt business practices. Those located in urban areas are more likely to be aware of corrupt business practices in collusion with government agencies through exposure to mass media, relative to rural respondents. What is also noteworthy is that people with higher educational attainments (those with secondary level education and graduates) are more likely to perceive corruption than those with lower levels of education (including illiterates). Although the association of civic engagement with perceiving corruption is positive, the magnitude is small. Whether a high degree of civic engagement is akin to religiosity in lowering corruption tolerance or the highly engaged are much better informed are difficult to disentangle with the data at hand. Do large shares of respondents who believe businesses are corrupt within a state influence perceptions of corruption between government and business? The answer is an emphatic yes, as the association is strong. This is not surprising, given the clustering of
perceptions. Finally, relative to 2018, perceptions of corruption fell in 2019, a national election year, but rose in subsequent years. The rise is worrying, since 61% of respondents on average believe that there is corruption between government and business.
Such perceptions damage trust in governments, regulatory bodies and the judiciary, and deepen resentment of inequality. Beyond a point, growth decelerates, innovation is discouraged and foreign direct investment inflows tumble.
In conclusion, while rent-seeking behaviour could be curbed by strengthening regulatory bodies, ensuring greater transparency in the awarding of business contracts and a more competitive business environment within the Indian economy overall, perceptions of corruption are harder to influence, as these involve moral beliefs and norms.