India has a decentralised federal system of government in which state governments possess broad regulatory power. Although corruption is found to be pervasive across all states and public services, several reports indicate important regional variations in the level and impact of corruption.
A World Bank and IFC report from 2004 notes that corruption and excessive regulations are cited as major obstacles to business across all India, but that these figures rise respectively to 62% and 64% in the states of Gujarat and Karnataka. Both the 2005 and 2007 India corruption studies also point to regional variations in corruption patterns.
For example, Himachal Pradesh, Andhra Pradesh and Maharashtra are perceived to experience moderate levels of corruption while states such as Bihar, Jammu and Kashmir and Madhya Pradesh are affected by alarming levels of corruption.
In 2007, the level of corruption was found to be moderate in all services studied in Himachal Pradesh, whereas in Madhya Pradesh and Assam, the level of corruption in all services was high, very high or alarming. There are also regional differences in the sectors and institutions most affected by corruption at the state level, as illustrated by the 2005 study:
• In Gujarat, the judiciary, the police and land administration are ranked as the most corrupt services in the state.
• In Maharashtra, municipal services are perceived as most corrupt.
• In Punjab, the police, the judiciary and municipal services are perceived to be most affected by corruption.
• In Bihar, all public services are ranked among the most corrupt in India;
• According to Freedom House 2008, rebel groups operate extensive extortion networks in the North East of the country, compounding the impact of corruption in the various affected states.