Deepening global corruption as a pointer for India

The Corruption Perceptions Index 2025 (CPI) published by Transparency International delivers an unmistakable message. Corruption is not receding. It is deepening in ways that erode democratic accountability and hollow out public institutions. For the first time in over a decade, the global average score has dropped to 42 out of 100, with 122 of 182 countries scoring below 50. Only five countries now score above 80, compared with 12 a decade ago. The direction is clear and troubling. Where oversight weakens and civic freedoms narrow, corruption perceptions worsen.

What the data show

India’s position must be assessed within this global decline. With a score of 39 and a rank of 91 out of 182 countries in the 2025 index, India remains in the lower half of the table. Over the past decade, India’s score has fluctuated narrowly between 38 and 41. In 2014, it stood at 38. A decade later, it remains broadly similar. For a country that has emerged as the world’s fourth-largest economy and aspires to achieve developed nation status by 2047, this stagnation is revealing. While the economic scale has expanded dramatically over time, the governance perception has not kept pace.

Global comparisons sharpen the picture. China scores 42. Sri Lanka stands close to India’s level, while Bangladesh and Pakistan score lower. India performs better than some of its neighbours, yet it trails several upper-middle-income democracies and many East Asian and European countries that once operated at comparable development levels. Those countries strengthened institutional independence, transparency frameworks and regulatory predictability over time. Their CPI trajectories reflect sustained reform.

Why does India’s CPI score matter? First, the index measures perceived public sector integrity rather than recorded incidents. It draws on 13 independent data sources that assess public procurement, regulatory enforcement, judicial effectiveness and institutional safeguards. A score of 39 signals persistent weaknesses in transparency, oversight and accountability. Perceptions influence investment decisions, sovereign risk assessments and long-term capital allocation. Governance credibility has now become a competitive economic variable.

Second, corruption carries measurable economic costs. It increases transaction uncertainty, raises compliance expenses and diverts entrepreneurial energy toward navigating rent-seeking systems rather than creating value. These distortions reduce productivity and discourage investment. A widely cited global estimate suggests that corruption costs at least 5% of global GDP annually, equivalent to more than $2.6 trillion in lost output each year. This figure includes bribes, illicit financial flows and inefficiencies in public spending. While precise quantification varies across studies, the scale of the drag is undeniable.

For developing economies such as India, the impact is significant. Research linked to multilateral institutions suggests that corruption may cost India roughly 0.5% of GDP annually in direct terms, with broader estimates placing total losses between 1% and 1.5% of GDP once indirect growth effects are included. At current output levels, this represents tens of billions of dollars each year. These are resources that could finance infrastructure, health, education or industrial upgrading.

Hurdles in compliance architecture

A third structural concern lies in the complexity of India’s compliance architecture. A recent report indicates that entrepreneurs operate under the shadow of 26,134 imprisonment provisions embedded across India’s business regulations. The scale of the burden becomes clearer at the industry level. Even as the Union Budget 2026-27 proposes the Biopharma Strategy for Healthcare Advancement through Knowledge, Technology and Innovation (SHAKTI) initiative with an allocation of ₹10,000 crore over five years, a pharmaceutical start-up with a single manufacturing unit is required to navigate 998 separate compliance obligations before commencing operations, with nearly 49% bearing potential criminal liability. Such extensive criminalisation within regulatory frameworks not only raises the cost of doing business but also expands discretionary power in ways that can inadvertently create conditions for rent seeking.

Encouraging trends

Yet, the picture is not uniformly bleak, as there are also positive counter-currents. India’s digital public infrastructure has reduced leakages in certain welfare schemes through direct benefit transfers linked to bank accounts and digital identity. The Reserve Bank of India’s Digital Payments Index (RBI-DPI), with March 2018 as the base, has been tracking the extent of digitisation of payments across the country since January 1, 2021. The index for September 2025 stands at 516.76 as against 493.22 for March 2025. The Goods and Services Tax network has increased formalisation and traceability in indirect taxation.

E-procurement portals and digital payment systems have reduced opportunities for some forms of rent seeking. These reforms demonstrate that institutional design and the use of technology can reduce discretion. Corruption, therefore, is not merely a moral or legal problem. It is an economic constraint and a strategic vulnerability. It weakens fiscal efficiency, undermines regulatory credibility and reduces social trust. For a country that envisions becoming a $10 trillion- economy within the next decade, governance quality cannot remain static. Rapid economic expansion without parallel institutional strengthening creates an imbalance.

The 2025 Index should be read as a benchmark rather than a verdict. India possesses strong constitutional foundations, competitive elections, a capable judiciary and growing digital capacity. Even modest but sustained improvements in transparency, judicial efficiency, regulatory simplification and institutional independence could materially improve perceptions over time. Countries that climbed the CPI rankings did so through cumulative reform, not episodic crackdowns.

India’s economic ascent has been decisive. Its governance evolution must now match that ambition with equal resolve.

Saumitra Bhaduri is Professor at the Madras School of Economics, researches financial economics and econometrics, development economics and policy analysis, and has published widely in international journals

Published – March 25, 2026 12:08 am IST