Corrupt babus make life miserable for SMEs - Bikky Khosla - 25 Jan, 2011
Taking cue from the tremendous response we received from our members on whether rampant corruption has dented the country's global image, we tried to find out whether small and medium enterprises (SMEs) were affected by corruption or not. Startling facts have come to light with most SMEs admitting that at one point or another, they have encountered a corrupt babu asking for bribes to get things done.
Bribery is one of the most worrisome issues for small and medium enterprises (SMEs), who feel powerless in the face of demands for bribes. They (SMEs) feel that bribery to get things done is a part of their business practice. Since SMEs lack the financial and human resources to counter bribery, they have today, become easy targets for corrupt demands and extortion. Moreover, bribery in the circles of SMEs happen in small amounts and usually go unnoticed.
We are all aware that with limited business opportunities, tough competition and having to work under financial constraints, SMEs feel that paying a small sum to get their work done is okay if it means getting the job done. With no active ant-corruption agency or laws, SMEs are unaware as to whom to approach if they face such a situation where they are asked for bribes.
Today in India, corruption has imposed additional burden on SMEs who have to bear an indirect burden when dishonest government officials ask for bribes. Corruption impacts adversely on the pricing strategy of SMEs because the payment of bribes to get odd jobs done increases the cost of doing business and consequently reduces the competitiveness of the product in the global markets.
Corruption in India has thus not only decreased the efficiency of public spending and budget revenues, raising budget deficit and hindering Foreign Direct Investment, but it also has had very harmful effects on the development of Indian SMEs.
Upcoming entrepreneurs many a time are dissuaded from going ahead with their plans due to red tapism, inspector raj, and officials asking for hefty bribes. What is more worrying is the fact that SMEs, in the face of demands for bribes, are often unaware that bribery can be resisted or of the ways of tackling a situation where the propagation of their business lies in the hands of corrupt officials.
In the light of the limited information on the scale of the problem of corruption, SMEs feel that what India needs today is a leadership which can motivate and enrich government officials with an enhanced sense of public service and responsibility. Probably it will be a long wait! Till then we are at the mercy of a handful of corrupt babus.