Corruption In Nepal And Strategies To Minimize The Issue

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Question :

BUS 300: Business ethics and sustainability

Corruption is one of the common unethical behaviors in countries across the world. Describe different forms of corruption in you home country and describe the strategies that can be implemented by your government to minimize corruption. 

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Answer :

Corruption in Nepal


The act of gaining unlawful advantage on the grounds of holding a powerful position is the basic definition of corruption. Broadly it can be categorised into political corruption where leaders indulge in violence, voter intimidation, money and muscle power to defeat opposition; administrative corruption where person in higher authorities charge money for getting illegitimate things done and professional corruption where successful professionals misuse their position to give undue benefits to a group of people in return of monetary rewards (Ionescu, 2014).

Corruption is an illegal activity being practised by the political maestros as well as the top government officials for their own vested interests. The officials take bribes from people for unlawful practices (Aghion et al. 2016). Corruption is a serious issue and the people all around the world are have fallen prey to it. In order to address this issue, the report has tried to investigate the patterns of corruption and the strategies that Nepal government has taken to tackle this issue.  

Reasons for increasing corruption in Nepal

Corruption has been increasing in most of the developing nations owing to lack of transparency and income inequalities among people.  Nepal being a hilly and landlocked country suffering unemployment, flurry of illegal activities both in public and private sector, lack of access to healthcare and education have been the rime reasons for sharp rise in corruption across the country. In Nepal, implementation of Prevention of Corruption Act has largely remained ineffective (d’Agostino, Dunne and Pieroni, 2016). The judicial system is quite inefficient as the judges often receive bribes from the companies as well as individuals for doing favours to them. Moreover corruption is common among the lower level officers as they are underpaid. They indulge themselves into unlawful acts to earn some hefty cash. Both the tax and customs officials in Nepal are addicted to corruption (Dzhumashev, 2014).  The tax officials accept bribes from the companies to help them to get engaged in several tax avoidance schemes. The companies bribe the custom officials for obtaining import licence. They often send gifts for enjoying other facilities as well as avoid higher tariff payments.

The entire bureaucratic structure of Nepal is highly corrupted and needs immediate action in order to minimize the higher level of corruption to some extend. 

Strategies to mitigate Corruption in Nepal

Nepal government has come up with some measures to reduce corruption. Discussed below are the strategies which can be implemented to mitigate corruption – 

Introduction of state-funding as an integral part of the election reforms 

In general, election has a huge cost associated with it. Even the candidates largely depend upon money though its source is unknown and quite suspicious. This type of activities gives rise to corruption. The election candidates tend to involve into illegal activities in order to acquire the money for funding their election campaign (Rose-Ackerman and Palifka, 2016.). But the state-funding policy can be implemented to reduce corruption. In this policy, all the elected candidates of the national parties will receive a handsome amount of money from the funds of their home states.. This will minimise the act of corruption to some extend for proper functioning of the system.

Implementation of a progressive tax structure 

Broadening of the tax base helps in increasing the tax revenues as well as reduces excessive cash transactions in the market. Incentivising honest tax-payers will provide the necessary impetus to people and encourage them in paying taxes rather than evade it. Simplification of the tax structure will also make citizens understand the tax structure easily and will be able to file it without external help (Godinez and Liu, 2015). For that reason a transparent and reasonable tax structure is necessary to stop the above unscrupulous activities. Even the people of the society have the right to know the whereabouts of the taxpayer’s money. 

Contemporary and liberal laws that is understandable and respectable 

The legal system needs to be upgraded for better functioning of the system. But still there are some laws which are really ridiculous and outdated. These types of laws are also difficult to understand, which allows the political parties to misuse them and indulge in corruption by misleading the people of the country (Shelley, 2018). This type of act triggers the human tendency of neglecting other laws and finally falls prey to dirty politics. The politicians harass people in the name of law and extract money from them for financing their illegal activities. For that reason the laws need to be liberal and easily understandable. A fair and transparent legal system makes it easier for the government to run the system smoothly, which is free of corruption (Besley and Persson, 2014).

Reduce the interference of the state in the functioning of government offices 

The state regularly tries to interfere into the functioning of the government offices (clerk, police, customs etc.). The ruling party pollutes the entire recruitment system by selecting people who gives them more money instead of merit. This needs to be stooped as soon as possible to reduce corruption. For that reason, the interference level of the state needs to be limited for better results and proper functioning of the system (Karklins, 2016).

Proper autonomy for the government/public sector 

Big PSUs oversees huge cash transactions and the political leader’s looks to hijack a large amount of it for personal use by applying their influence in getting the contracts and misusing the money. To stop this financial auditing of PSUs need to be initiated to examine their expenses and also prevent leaders them from exerting their influence and controlling the operations of the PSUs (Sartor and Beamish, 2018). The political bosses need to be kept out of the regular activities of the PSUs for a corruption free system.

Reduce discretionary powers of bureaucrats and ministers 

The ministers and the political maestros often look for the scope to take advantage of the discretionary powers being invested upon them. They misuse it to earn some extra penny and transfer it to their personal accounts. For example, while buying/selling a government land the leaders and bureaucrats misuse their position of influence to coerce buyers to pay more than market rates in the name of additional costs. For making Nepal corruption free the documents of a deal must be directly put up on the internet and must follow government norms (Jamil, Askvik and Baniamin, 2016).

Higher pay scales for public servants to make them at par with private sector

The salaries of the government officers need to be a bit higher and should be better than the corporate sector employees (Jones et al. 2014). This will largely reduce the necessity of taking bribes and will create a pool of honest officials. For that it is required to introduce a salary system coupled with punishments for better management. For example, if anyone receives bribe or tries to bribe someone, then they must be punished depending upon the level of crime. Tough actions need to be taken for corruption free society.

Broader police reforms coupled with judicial accountability 

Upgraded police reforms need to be implemented for better functioning. The police force must be trained hard and should be capable of handling intense situations. They should be given the authority to decide what to do or not to rather than following the instructions of ministers in power (Nepal and Jamasb, 2015.). Again, the entire police department must be sub divided into two separate wings – investigating officers and officers for law and order maintenance. Giving more power to the investigating officers will improve their efficiency in tackling financial crimes and reduce the grey market largely. 

Blacklisting corrupt businessmen 

Many private businesses tend to bribe government officials for own vested interests and nobody dares to go against them. In order to prevent corruption, it is necessary to blacklist and debar corrupt entrepreneurs for a certain time period along with confiscating of properties leading to financial pressure on the owners.  Moreover hefty fines on fraudulent activities will prevent further mishandling of position and power for corporate. This will largely minimize the levels of corruption ( Adhikari, 2015)

Inspection of the tendering process 

Millions of orders are being misused by the PSUs, government departments every year. The tenders are mainly given on considerations rather than merit. This is the largest source of corruption and it needs to be addressed through focusing more on e-tendering which is much more transparent and bidders know clearly the reasons based on which a project is awarded to a particular organisation. (Baniamin and Jamil, 2018).  For that it is necessary to setup a committee for proper scrutiny of the entire tendering system of public owned assets. A higher level of transparency is also needs to be maintained for ending corruption in our country. 


The report has focused on the ways through which the Nepal government has used their resources in tackling the menace of corruption. Also different aspects, patterns and reasons of corruption has been discussed which will be insightful for further study on corruption in Nepal and its impact in other developing countries. The loopholes that exist in the legal and financial system giving rise to corrupt individuals and corporations going scot free even after manipulating financial deals has been addressed in this report. Misuse of law has been on the rise in the country and it has been observed that inspite of several steps taken by the Nepal authorities, there are several things that are still to be done to address this problem in the long term.