About corruption, Nikhil Kamath Sir is wrong. Here's why

In a recent podcast, Mr. Nikhil Kamath said, “I think corruption isn’t always bad. If corruption speeds up a process and money keeps moving, it’s less harmful than when it hoards and blocks things.”

Now I really admire Nikhil Sir, but this is an extremely dangerous line of thought.

Condoning or “accepting” corruption like this is a very bad idea, especially in the context of India, where everyone knows what a widespread disease it is. And it’s wrong to espouse such views, not just because “corruption hurts” (it obviously does, and nobody is alien to the feeling of getting ripped off by corruption). But because advocating such a view which places “velocity of money” above the perils of brazen exploitation (at India’s scale), creates a second order effect of “bad incentives”. And that basically changes everything.

The secret of the world is that everything runs on incentives and deterrance. What a society incentivizes, people do. What it deters, people don’t.

Why do affluent Indians study hard, learn English and go abroad? Because the incentives of earning in Dollars while also “exploring” the west are neat and unambigious. And why do majority of Indians shamelessly litter everywhere like there’s no tomorrow? Because there is no deterrence on such terrible behaviour.

Incentives for good behaviour, and deterrence on bad. That’s what has shaped every society since time immemorial, and will continue to do so forever.

But what does India incentivizes and deters on a daily basis? Unfortunately, it's corruption, and good work, respectively.

Everyone (without exception) knows that Indian Babus are corrupt beyond imagination. If corruption was a sport, our Babus would be like Lance Armstrong, but without Testicular Cancer. Yet about ONE MILLION kids appear for UPSC each year. Why? Because they know that that exam is an open license to loot the nation (and its poorest) without any consequences. (Recently, a Babu who had written a “manual” on “Ethics, integrity and Aptitude” was found to have taken a bribe of ₹10 Cr).

The incentives (and a sheer lack of deterrance) to "aspire" to be an Indian Babu is so extraordinary, that people spend their entire youth in pursuit of a government job which on paper pays ₹2,50,000/month for a Cabinet Secretary at the highest level, and after 37 years of service. And everyone accepts it as a “struggle”.

But their actions literally kill people.

Recently, over 20 innocent kids died in Rajasthan and MP, all because questionable labs that made DEG contaminated cough syrups were given due approvals despite not following the existing norms and regulations. Now how did those shady labs get approved, especially when Indian pharma had only recently recovered from a case of cough syrups killing kids in Gambia in 2022? You could guess (or ask the guy who wrote that book on ethics).

Now given the context, how would any Indian feel incentivized to do “good, honest work”? He won’t. And most don’t. And that’s a problem.

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Now how does Nikhil Sir’s comment fits in this context? Or when his podcast guest (Mr. Ruchir Sharma) said, “Every emerging economy has had corruption”. How do those statements ring given what the Average Aakash goes through everyday?

First of all, they’re not factually correct.

Interestingly, 20 years ago, China faced a similar crisis where Armillarisin A (a common drug that was used to treat fever, cold etc.) was facing issues of contamination. A vital ingredient of Armillarisin was Glycerine, which was expensive, and thus some manufacturers got the nifty idea of illegally substituting it with Diethylene Glycol, aka DEG (the same contaminant which killed Indian babies just now). How did the Chinese government deal with the situation?

It found out that the Chinese bureaucrat responsible for ensuring drug safety had taken bribes from the manufacturers of that product. In Feb 2007, the corrupt Babu was arrested. By April, his trial had begun. In May, he was sentenced to death for bribery and endangering public health. In June, his appeal for mercy was denied. By July, he was executed. And that was the end of that story.

After that delivery of “justice”, a major drug recertification drive was conducted in China, along with closures of all the bad manufacturing plants.

And how’s all that worked out? Since then, no such case has happened in that country as yet. As mentioned above, it’s been almost 20 years..

(In the meanwhile, India’s cough syrups have killed babies all over the world. And when that stopped, they got to killing babies in India itself. All in three years.)

Incentives and deterrence. That’s what runs the world.

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Let’s take another example. This time of El Salvador. Just five years ago, El Salvador was the world’s most unsafe country. And now it’s the safest country in the western hemisphere. The homicide rate in the country has decreased from 103/100,000 inhabitants in 2015, to 1/100,000 inhabitants in 2025.

But how?

Mr. Bukele said, “When I began with my mission of clamping down on crime, a renowned group of intellectuals told me that such a hard stance on crime is not a good idea. In fact, it will shock the GDP leading to shrinking of about 20%."

"I asked How? They said, while crime is an issue, it also contributes to GDP. A thief steals, but he goes to the showroom to buy a motorcycle in white. In a society like El Salvador, crime is a high contributor to economic activity. If you suddenly put a stop to crime, there’ll be a great shock to the economy, contagion risks of that might be difficult to control.”

As the crowd laughed, Mr. Bukele added, “This is how these intellectuals sound smart. They come up with these theories, jargons and concepts that sound intelligent on paper, but in truth are as dumb as they come.”

“In truth”, said Mr. Bukele, “Incentives drive everything”.

He paused to say, “Let’s say there’s a tomato seller on the street. He’s not doing anything revolutionary, or something big. He’s just getting tomatoes from a Hub and selling them on the street, making about $20 a day. He’s only living a normal life, working hard to just get by.”

“Now what happens if after a hard day at work, this tomato seller gets stopped by a gang member and gets robbed off those $20? He worked hard to get the those tomatoes, sold them on his stand. All for this? How do you think he’ll process this happening? Moreover, how motivated will he be to keep selling tomatoes as an honest man, and not join the gang instead?”.

As the crowd went silent, Mr. Bukele asked, “What do you think happens from then on?”

He continued, “Now consider as this happened, the next day the tomato seller sees that his robber just got caught by the police and sent off to the (now famous) El Salvadorian Jail. What will he be motivated to do now? Will he still join the gang? Na. My guess is that he’ll get back to selling tomatoes like an honest, hard working man”.

“It’s all about incentives. If you let something bad happen without recourse, you’re incentivising people to drop their good work and take the easy way. And in reality, THAT wrecks the entire society”.

He’s so right. And Mr. Ruchir Sharma is SO WRONG.

This kind of intellectualism, which casually “accepts” and even condones extraordinary, life guzzling corruption as “the way the world works”, is firstly not factually rooted in reality. And then, it’s just plain sad and dangerous.

Nikhil Sir often says he cares about his influence in the society, even more than money. And I sincerely believe that India is very lucky to have him (and his elder brother - Nithin Sir) as the representatives of the Indian startup ecosystem. They’re both godsent. But then why would he say something like corruption in India is “just like” lobbying in the USA? Because that’s also not true at all.

Now I’m aware that a statement by Nikhil Sir doesn’t really “change” the incentive and deterrence structure of the great nation of Bharat. But it definitely changes the conversations, right? And that’s no small feat! In fact, it’s a great place to start.

While the strategic answers to the Indian corruption problem (like literally fixing the judiciary, bureaucracy and police) seem frankly impossible, the least we can do is stop accepting and condoning corruption, stop glorifying Babus, and start hurting their prestige. Is that too much to ask?

As Peter Drucker Sir said, “Culture eats strategy for breakfast”.

Let’s make it a part of Indian culture to embarrass Babus. Let’s bring out the truth so clearly, that it becomes socially and culturally “uncool” to be a bureaucrat. Let’s strip Indian Babus of the illusion of nobility that has protected them for decades. Let’s call things just as they deserve to be called, instead of what would be the politically correct was of calling them. Let’s stop romanticizing the righteous bureaucrat archetype that Indian cinema and media have fed us for so long. Let’s support people like Mr. Pravin Ganesan when they take a direct fight with the Babus at Chennai Customs. And finally, let’s STOP accepting corruption as a part of the system. Atleast in the public discourse. At this stage, speaking this truth is not an act of rebellion. It’s an act of hygiene. It’s how we’ll be able to clean a culture that has become too used to its own filth.

And, you know what? All of the above is very much within Nikhil Sir’s circle of influence. He definitely can move the national discourse in this direction. In his very calm, polite, and non confrontational manner, he can move the needle and literally change India, one conversation at a time.

That is, if he takes the tough road. Which I hope he does. I sincerely do..

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