Corrupt Political System Darkening Economic Outlook in India

The calls have added urgency with signs of economy heading for trouble.

GDP growth may come in at 7.2 percent in the current fiscal year, a respectable enough number but a sharp fall from 8.5 percent in 2009/10. Industrial output has slowed sharply, consumer confidence is waning and inflation remains near double digits despite 13 interest rate increases.

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"We shouldn't say that because the institutions of democracy are there, we will be paralysed," said Mukesh Ambani, head of Reliance Industries and India's richest man. "And because there is an opposition and a party in power, we would do nothing. That's what worries me. This path from 20th century mindset and institutions to a 21st-century delivery model to meet the expectation of each citizen requires a dramatic shift in terms of our governance. We need to align and move a lot faster."

Farooq Abdullah, the renewable energy minister who bewailed the "tragedy" of India's political system, conceded that the onus was on the country's leaders: "Change will come when we change," he said.

Kiran Bedi, a prominent member of the anti-graft movement, warned of fresh protests if the Lokpal bill setting up a powerful authority to prosecute corrupt bureaucrats and ministers is not passed in the winter session of parliament that opens next week. "The whole country will be back to the streets ... people are fed up," said Bedi, a former police officer who shot to fame in the 1980s after she towed away ex-Prime Minister Indira Gandhi's car for a traffic violation.

Exasperation with India's rampant corruption and its dirty politicians is not confined to the urban middle classes, who put aside political apathy to support the movement led by a self-styled Gandhian and serial hunger striker, Anna Hazare.

Perhaps the most popular session on the first day of the two-day economic conference in Mumbai, attended by the country's most powerful businessmen and captains of industry, was one on corruption - ominously entitled "The Indian Spring".

CLIMATE OF FEAR

India ranked number 87 in Transparency International's index on corruption in 2010, behind rival China.

Corruption is widely blamed for the parlous state of India's infrastructure and its services, and it is a drag on an economy that has grown at around eight percent per annum over the last few years.

"If we are able to fight corruption in this country successfully, I think it will considerably increase foreign investment into India," Adi Godrej, chairman of the consumer goods and real estate Godrej Group, told the forum. "If we are able to reduce corruption very considerably it can add about a percentage point to India's GDP growth."