Crime, corruption- the biggest threat to business in India

mangaloretoday.com/yahoo

India Risk Survey 2019: Corruption, bribery, and fraud have emerged as the biggest risk for Indian businesses, followed by natural hazards and political instability, revealed a study. The threat to the business activity from corruption and fraud has been divided into four broad categories – bribery and kickbacks, conflict of interest, shell companies, and theft of business identity. But among all four categories, bribery and kickbacks have emerged as the biggest threat, according to India Risk Survey 2019, jointly conducted by industry body Ficci and Pinkerton.

Corruption and bribery have moved to the top position this year as the country witnessed a series of scams that shook the investor’s confidence. The Punjab & Maharashtra Cooperative Bank scam revealed a nexus between the bank and non-banking finance companies like HDIL and DHFL.

While the government has initiated a series of crackdowns on corrupt government officials, shell companies and made regulatory changes, India has not significantly improved its position in the Transparency International Corruption Perceptions Index in the past three years," said India Risk Survey 2019.

Prime Minister Modi’s government has taken a series of steps including cancellation of registration of nearly 2.25 lakh shell companies since demonetisation announced in November 2008. It also barred more than half of the total 33 lakh directors of shell companies as they failed to meet the stringent Know Your Customer (KYC) norms. In one of the biggest crackdowns, the government also seized the bank accounts of these nearly 2.25 lakh shell companies.

"Despite the efforts to make the business environment fair and transparent, this risk persists," said the report while talking about the impact of these measures on business activity in the country.

In addition to bribery and corruption, natural calamities and hazards have emerged as the most significant risks to businesses in the country.

According to the survey, natural disasters have been rated as the second most significant risk to business operations for two successive years.

"In 2019, Floods continued to disrupt business operations and hence remained a potent threat under this risk category. Persistent improvement in early warning systems and preparation to deal with natural hazards would be required," said the survey jointly conducted by Ficci and Pinkerton.

The report has classified the risks to businesses in 12 categories. Other than corruption and natural disasters, crime has emerged as the third biggest threat to business activity, followed by political and governance stability, terrorism and insurgency, that account for the top five threats to business activity.

The threat to cyberinfrastructure of businesses, coupled with the theft of intellectual property rights (IPR) and business espionage are other big risks to the business. These threats are followed by strikes and unrest, fire, accidents, and the threat to women’s safety.