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Overcoming Procedural Shortcomings in Legalising Harassment Bribe-Giving in India

Updated: Oct 18, 2021

A Response to Kaushik Basu’s Proposal

- Siddharth Sonkar*


The Prevention of Corruption (Amendment) Bill, 2013[1] [“Bill”] was included in the legislative business of the Rajya Sabha this August.[2] Despite being listed, it could not eventually be discussed. This Bill, which seeks to address bureaucratic corruption, has been pending since 2013. Initially, when the Bill was introduced, it treated bribe-givers in all cases similarly, holding them all accountable for bribe-giving. In 2012, Kaushik Basu, former Chief Economist of the World Bank, proposed that bribe-giving should be legal if it is for the purpose of receiving entitlements. Subsequently, in 2016, the Select Committee’s Bill carved out an exception to this rule: A bribe-giver who pays the bribe to receive an entitlement which he would otherwise be denied and reports the same within seven days shall be exempt from punishment. The exception seems to be incorporating Basu’s proposal. It is in this context that I seek to revisit Basu’s paper and respond to the same.

Basu’s Proposal

Kaushik Basu observes that in status quo, the illegality of both receiving as well as giving bribes incentivises concealment of evidence of the act of bribery, making prosecution difficult and contributing to an increased incidence of the offence.[3] He proposes legalisation of bribe-giving and restoration of the bribe upon prosecution and conviction. Through this, he argues that the bribe-giver, after achieving the desired object, will disclose the bribe in pursuit of restoration. The central idea behind Basu’s proposal is that bribery can only take place as a result of convergence of interests of two parties. According to Basu, the possibility of prosecution by the bribe-giver creates mistrust between the parties, discouraging bribe-takers from accepting bribes, consequently reducing the incidence of bribery, regardless of an increased desire to bribe. Legitimization of bribe-giving allows divergence of both these interests. Basu limits the scope of his proposal to harassment bribes, describing them as payments made towards receiving entitlements.[4]

While I agree with the central idea behind Basu’s proposal, I find procedural shortcomings in his proposal that may undermine its effectiveness. In this paper, I shall restrict myself to analysing three of them.

I. When the Bribe-Type is Chosen by the Bureaucrat

Basu argues that his proposal will reduce bribery.[5] Oak[6] refutes this generalisation by epitomizing situations where the bribe-type is determined[7] endogenously,[8] arguing that in such cases, non-harassment bribes[9] may increase, reducing social welfare instead. He illustrates the case of entrepreneurs who need sanction for construction projects from bureaucrats.[10] Due to decriminalisation of bribe-giving, bureaucrats will be disinterested in charging ‘harassment-bribes’ on ‘compliant projects’.[11] However, bureaucrats can still charge ‘non-harassment’ bribes for approving non-compliant projects, since entrepreneurs will be unwilling to report the same.[12] The lucrative nature of ‘non-compliant’ project will lead bureaucrats to make non-compliant projects more attractive for entrepreneurs.[13] They can do so by unreasonably stalling sanctioning of ‘compliant’ projects[14] to compel entrepreneurs to opt for ‘non-compliant’ projects. This increase in risk-taking will arguably make industrial projects more volatile, consequently reducing social welfare.

II. The Impracticality of Restoration

Basu proposes ‘restoration’ as incentive[15] to report bribery such that the fear of prosecution deters bribe-taking. He suggests,

“The law should say that once the fact of bribery is established in court, the amount of the bribe has to be returned to the person who gave the bribe.”[16]

Restoration, however, is arguably impracticable.[17] In reality, it will be impossible to determine the exact amount of the bribe in the absence of receipts. The bribe may often be entirely spent, rendering it untraceable.[18] Commonly, the bribe may be non-monetary, making restoration increasingly complicated.[19]. For ordinary[20] individuals, the fear of getting caught while collecting evidence and the retributive aftermath of the same[21] may render it impossible to substantiate claims, let alone the exact amount that changed hands.[22] This will make the bribe-giver consider the trade-off between the opportunity costs[23] involved in litigation[24] and the mere probability of restoration. This trade-off becomes a crucial concern in contexts such as India where the delivery of justice is “notoriously slow[25] and the need for entitlements is greatest amongst stakeholders belonging to weakest sections of the society. The bribe amount, especially in case of small bribes[26] may often be negligible compared to opportunity cost, thereby discouraging reporting. Aversive behaviour of bribe-givers in the long run may undermine the credibility of the threat, rendering the proposal ineffective.[27] Moreover, specifically in cases involving repeated interaction with the bureaucrat, it will almost never be in the interest of the entrepreneur in the long run to report due to subsequent bureaucratic backlash, rendering the trade-off that Basu talks about as a virtual concept.[28]Despite this drawback, Basu’s proposal may still be more effective than status quo, since in many cases, either the bribe may still outweigh the opportunity costs or the bribe-giver may be ‘intrinsically motivated’[29] to report the bribe. Moreover, Basu’s central idea is not to convict and subsequently restore but to deter bribe-taking in the first place.

III. Missing Bureaucratic Accountability

Lastly, Basu assumes that reduction of harassment bribes is in the interest of the bribe-giver.[30] By doing this, he overlooks the possibility of deliberate bureaucratic negligence that may arise in the absence of bureaucratic accountability and bribery as incentives. In the absence of incentives such as bribes and accountability, bureaucrats may not be nudged into effective delivery of entitlements. Bureaucrats may just stall the delivery of entitlements or indefinitely sit over a file, since now the additional incentive (of a bribe) to responsibly perform their duties is removed. Generally, bureaucrats are not held liable for non-performance of duties. Even in case of harassment bribes, individuals arguably desire bribery to enable actualisation of their entitlements. Basu does not explain why in the absence of bureaucratic accountability, in a trade-off between payment of bribes and indefinite postponement of entitlements, the bribe-giver will always prefer the latter.

One way in which bureaucratic accountability could be created would be through a nation-wide framework that imposes liability on public servants for failure to deliver goods and services on time.[31] An attempt to create such a framework would be ‘The Right of Citizens for Time-bound Delivery of Goods and Services and Redressal of their Grievances Bill, 2011’ that envisaged a right to time-bound delivery of entitlements.[32] Even though the Bill was tabled in the Rajya Sabha, it eventually lapsed due to the dissolution of the fifteenth Lok Sabha.[33] While a handful of states including Bihar have enacted laws in the past to create bureaucratic accountability, even these are subject to criticism for not addressing bribery.[34] To put it simply, the absence of a national framework for bureaucratic accountability may undermine the implementation of Basu’s proposal.


To conclude, while Basu’s insistence on asymmetrical punishment is well-founded, creating safeguards for implementing his proposal will ensure its effectiveness. Enabling inexpensive and effective appeals against non-approval of compliant projects[35] [36] and making non-compliance less attractive through improved detection[37] coupled with harsher punishments upon detection will ensure a greater pay-off[38] for an entrepreneur who reports and complies.[39] This will negate the effect of bureaucratic manipulation, reduce non-harassment bribes and result in an overall reduction of bribery.[40] Enabling speedy delivery of justice through institutional changes will improve the credibility of the threat to report. Lastly, creating bureaucratic accountability through liabilities for lack in due diligence will reduce bribe-giver’s interest in harassment bribes and safeguard social welfare.

*Siddharth Sonkar is a 3rd year under-graduate student of law at the West Bengal National University of Juridical Sciences, Kolkata.


[1]The Prevention of Corruption (Amendment) Bill, No. 53 of 2013 (India).

[2]Prianka Rao, While in Session: Analysing the Prevention of Corruption (Amendment) Bill, The Wire, Aug. 5, 2017,

[3]Kaushik Basu, Why, for a Class of Bribes, the Act of Giving a Bribe should be Treated as Legal, 5, (March 21, 2011),

[4]Basu argues that harassment bribes differ from non-harassment bribes, which are paid for unjust enrichment. The bribe-giver has an interest in the detection of the former but not the latter.

[5]Supra, note 5, at 3-4.

[6]Mandar Oak, Legalization of Bribe Giving when Bribe Type is Endogenous, 4, (The University of Adelaide, School of Economics Working Paper No. 06. 2013),; See also Lin Hu, The endogenous choice of Bribe Type under Asymmetric Punishment, School of Economics, 32-34, (University of Adelaide, School of Economics), (2016), available at

[7]The word ‘determined’ has been used to denote the choice that the bureaucrat has between charging a harassment bribe and a non-harassment bribe. For a detailed explanation, see Oak, Id., note 11, at 4-5.

[8] The word ‘endogenous’ has been used since the nature of the bribe, i.e., harassment or non-harassment, is determined by the bureaucrat herself; For a detailed explanation, see Oak, supra, note 11, at 5.

[9] Non-harassment bribes are exchanged for obtaining approval for non-compliant projects. These are in the private interest of the entrepreneur but may be detrimental to social welfare. See Oak, Id., note 11, at 4-5.

[10]Supra, note 11, at 3-4.

[11] This is because compliance with the legal requirements entitles the entrepreneur to sanctioning regardless. For a detailed explanation, see id., at 2.

[12]Since non-compliant projects reduce social welfare, it is not in the interest of the bribe-giver to report such bribes; See Oak, supra note 11, at 3 (for a detailed explanation).

[13]Supra note 11, at 5-6.

[14]Supra note 11, at 6-7 (Oak explains how unreasonably “sitting on a file” until receipt of bribe will frustrate the entrepreneur).

[15]Basu proposes that individuals could collect evidence of bribe-giving to substantiate their claims. For a detailed explanation) see supra, note 5, at 7.

[16]Basu in his paper further assumes, “We may in fact go further and say that, in the event of a case of bribery being established in the court of law, the bribe taker is required to give the bribe, to the extent that its size can be uncovered, back to the giver. Let us, for now, go with this assumption.” See supra, note 5, at 7.

[17]“The theoretical analysis of the game relies heavily on monetary incentives offered to the citizen to come forward and report a bribe. In particular, the prospect of getting her bribe money back when the official is convicted creates the positive incentive to self-report.”) Abbink, Klaus and Dasgupta, Utteeyo and Gangadharan, Lata and Jain, Tarun, Letting the Briber Go Free: An Experiment on Mitigating Harassment Bribes, 4 (September 2013). Indian School of Business WP ISB-WP/104/2012,

[18]Basu admits in the following words, “in the event of bribery being established in a law court, the issue remains about the bribe giver being in possession of an object that is not supposed to be in her possession”; see Basu, supra, note 10, at 5.

[20]The word ‘ordinary’ denotes the absence of resources or skills necessary for gathering evidence, unlike in case of investigative officials. (I am unable to delete the extra line space above)

[21]The bureaucrat may seek retribution against the bribe-giver’s attempt to report by indefinitely stalling the entitlement from being actualized.

[22]In status quo, ‘amnesty’ to the bribe-giver can only be availed in cases where the bribe-giver can establish that the bribe was given unwillingly, or given in order to trap the government officer. Basu argues that proving unwillingness is difficult due to ambiguity in the term. Basu envisages a ‘clearer statement’ that allows an individual to seek redressal even after the bribe has been given, rather than only legalising bribe-giving in case of sting operations where authorities are reached out before the bribe is given. (For a detailed explanation) see R.N Bhaskar, Bribery in India: How to minimise bribe-giving and taking (Jun, 06 2016), Firstpost; see also Basu, supra, note 10, at 6-7.

[23]See David S O Yip, A Critical review of the Opportunity Cost Concept, 9, (Dissertation, ProQuest LLC 2014), (For a commonly accepted definition of opportunity costs); For a bribe-giving litigant, opportunity costs may be measured in terms of time, money and the inability to pursue desired alternatives.

[24]‘In order to establish the bribe, the bribe-giver may get mired in Court proceedings. This may cost the bribe-giver inter alia time and money at that juncture, even if it is recovered later. In the absence of immediate gratification (assuming prosecution takes time), the bribe-giver may not be adequately encouraged to report.

[25]Supra, note 24, at 3; See also Satya Prakash, Bhadra Sinha and Soibam Rocky Singh, Waiting for justice: 27 million cases pending in courts, 4500 benches empty, The Hindustan Times, (November 15, 2016), www.hindustantimes/india-news/waiting-for-justice-27-million-cases-pending-in-courts-4500-benches-empty/story-H0EsAx4gW2eHPRtl1ddzIN.html.

[26]This consideration will get enhanced due to depreciation of the present value of bribes in the long run.

[28]This is only a passing reference to possibilities in repeated interactions; in the rest of the discussion, including the argument about restoration, I am restricting myself cases involving one-time interaction with the bureaucrat) See id., at 9. (same issue, that line just won’t go. I’ve tried deleting and re- writing the whole footnote also)

[29]It has been suggested by Abbink, et. al,, supra, note 32, at 2-11, that the ‘citizen’s intrinsic motivation’ may be a result of a sense of unfairness and immorality of the situation, or to achieve a ‘greater social benefit’. It has been argued that in such cases, the bribe-giver would report even without the incentive of material benefits. He takes the example of, a web portal, which citizens have used to report bribes close to half a billion rupees.

[30]According to Basu, after the act of Bribery has been committed, in cases involving one-time interaction with bureaucrats, interests of the parties will diverge. For a detailed explanation, see supra, note 5, at 3.

[31]PRS Legislative Research, Legislative Brief, The Right of Citizens for Time Bound Delivery of Goods and Services and Redressal of their Grievances Bill, 2011, (Sept., 2012)

[32]§ 3, The Right of Citizens for Time Bound Delivery of Goods and Services and Redressal of their Grievances Bill, 2011, Bill No. 131 of 2011 (India).

[33]K Venkataramanan, While in Session: Analysing the Prevention of Corruption (Amendment) Bill, Hindu, Jun. 15, 2017,

[34] Inayat Anaita Sabhikhi, Understanding the Difference Between Public Service Delivery and Right to Grievance Redress, The Wire (Aug. 2017),; One world Foundation India, Report On National Consultation On Strengthening Delivery and Accountability Frameworks for Public Services, 9, (Supported by the GoI-UNDP Pathways for an Inclusive Indian Administration (PIIA) Project )(Dec, 2011),

[35]Oak argues that exorbitant costs will make appealing against bureaucratic non-approval less attractive, since entrepreneurs will desire pursuing non-compliant projects due to a greater pay-off. Inexpensive appeal allows effective recourse against “bureaucratic monopoly” over approval. (For a detailed explanation) see Oak, supra, note 11, at 30.

[36] Oak, supra, note 11, at 30; See also Lin Hu, The endogenous choice of Bribe Type under Asymmetric Punishment, School of Economics, 32-34, (University of Adelaide, School of Economics), (2016), available at

[37]If projects are investigated to assess compliance by an independent authority, entrepreneurs will be deterred from undertaking non-compliant projects in the first place.

[38]Oak concludes, “The entrepreneur will do a non-compliant project if the payoff from such a project exceeds the payoff from a compliant project, followed by either an appeal or a non-appeal of the non-approval decision, and is positive.”; (For a detailed explanation) SeeOak, supra, note 11, at 27.

[39]Harsher penalties coupled with stronger detection of non-compliance will arguably reduce the overall pay-off below that which is derived from a compliant project, dissuading non-compliance.

[40]See supra note 32, at 17-30 (For a comprehensive analysis on how the cost of appeal being lower than the cost of denial of compliant projects in such cases will make appeal more feasible).

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