There's a fascinating discussion between Daniel Kaufman and Mushtaq Khan here.http://developmentdrums.org/284
Mushtaq Khan's notion that corruption can unleash the 'transformation potential' of a developing country has an intuitive appeal.
One way of looking at rent-seeking is that it arises out of the Development paradigm as valorizing an abrupt shift to a system of resource allocation that is, by definition, non-indigenous and thus has no legitimacy within sittlichkeit and customary codes regulating social cohesion. In other words, the very notion that Development is a something the Govt. should be doing- facilitates rent-seeking.
Where the ruling elite is supported by a foreign power- i.e. is merely a comprador by another name- Kaufmann's kleptocratic theory works- i.e. corruption is what confiscates what Development would otherwise yield.
However, if rent-seeking both motivates and reduces contestation w.r.t re-allocating resources in productivity boosting or demographic transition facilitating ways, then the 'Tansformation potential' is unleashed as Mushtaq Khan suggests.
Another way to put it, is that such corruption has a trickle down demonstration effect changing consumption preferences and lifestyle choices. Moreover, it makes commitments to change resource allocation more credible. Think of it this way. The Govt. takes away the subsidy on yarn for the handloom sector. Why should the handloom weavers and the Leftist rent-a-mob not contest this decision? After all the decision maker is using Govt. money. What's his incentive to come off looking like a bad guy? Ah! But what if everybody believes he's a degenerate playboy who is putting the money saved directly into his pocket? People may still cry foul. But what if they also believe this degenerate playboy is the nephew of the top Mafia Grandfather? Still worth it? Or not so much?
There's a story Arthur Miller tells in his auto-biography which makes a point quite different to the one he might have intended. It's about a labor organizer who'd made the lives of factory owners (like Miller's dad, an illiterate tailor who rose to millionaire status before going bankrupt in the Great Stock Market Crash) utterly miserable. This gentleman hit upon the idea of organizing the Dock workers. But the Mafia boss, Lucky Luciano, had been co-opted by the Govt. to take control of the Docks so as to ensure that the War effort was not hindered by Commie agitators. So our hero was hounded out of the Union organizing business- he was given an offer he couldn't refuse. How was he to make a living? It so happened that one of the factory owners he'd previously harassed was on the point of bankruptcy because his entire stock had suddenly gone out of style. The former agitator shows up at the business man's office. The guy just laughs and says- 'do your worst, I'm already insolvent. I've had to tell my workers they won't get paid this week.' The agitator says- 'look, I know about your problem. Make me your partner and I'll shift your stock.' The agitator was as good as his word. He was an excellent salesman. Soon he and his partners were millionaires. Instead of destroying jobs, the agitator was creating them. His business savvy was being used to raise productivity- and hence wages- rather than wreck businesses. But the man was unhappy. He felt he'd betrayed the cause of Labor and, to make up for it, made liberal donations to various Liberal fuckwits.
I'm not saying that corruption and criminality, by themselves, produce Development. It would suffice if there were the mere appearance of corruption, with (of course) Mafia muscle to back it up, to positively impact the Govt'. ability to boost productivity, Development, and even good Governance further down the line.
To summarize, on this analysis, not only is Development productive of corruption, contested definitions of Development ensure that only mega-corruption backed up by the criminalization of the Public Space can unleash that Transformation Potential whereby the rents of office turn into returns on good Governance.
Read in this light, the questions raised here- re. corruption in Tamil Nadu- appears less puzzling.