Black money cannot be glibly wished away

by Shobha January 4, 2017 0 Comment

I remember standing for hours in the queue to withdraw my own cash, and then being told that I would not even get a tenth of what I had been promised. I remember coming away with dignity, saying that my sacrifice was for the greater long-term good of the nation.

I did need the money — bills to be paid, provisions to be bought, just some loose cash for emergencies, but I did not complain. I knew money was in short supply, notes were being printed and would soon be available to all.

I was happy that there was news of so many bigwigs getting caught with old and new notes. Many millions of rupees in one stroke were being recovered — and the government had promised to put this into the bank accounts of the poor. It felt good that the fat cats were finally being brought to book. Though how they got so many new notes despite not standing in queues baffled me.

It was obvious there was a leak in the system. Once again the privileged class was given their share at the cost of the common man. After all, every new note they got was a new note denied to the common man. In the villages you were given a Rs 2000 new note as a reward for standing in bank queues for hours — often an entire day’s effort. On the other hand, the taxman was catching thousands of new notes in a single raid — bundles of serially numbered currency.

While I felt happy about the frequency with which that the tax raids were being, I was appalled at the small sums being recovered. A Rs 10 crore here, Rs 104 crore there — all have probably totalled to less than Rs 10,000 since demonetisation began.

The Indian GDP is Rs 10 lakh crore per month. Assuming, conservatively, that black money constitutes 30 per cent of our economy, this means that Rs 3 lakh crore of black money is generated every month. It was surprising that the raids yielded not even five per cent of the black money generated in that period — just the tip of the iceberg.

Is the government playing a “smokes and mirrors” game?

Is it this visible tip that is being raided, while the main iceberg rests in deep waters, undisturbed, adding layer on black layer every day, in new notes taken out of the hands of the common man? It is unfortunate that the Robin Hood has turned into a Robbing Hood and once again wealth has shifted out of the hands of the poor (who still stand in queues for their own money) to the privileged, who continue to amass wealth for future generations. It may be argued that demonetisation has, in fact, redistributed wealth in favour of the rich, at least for the time being.

So how do we get rid of the black economy? That is no secret. Taxation laws and systems in India are as stringent as anywhere else in the world. The glaring loopholes in political funding can be plugged with appropriate legislation. It is sometimes our Indian mindset that is to blame. We not only accept corruption but even go along with it for our private ends, while cursing it in public.

It is well known that any”job” in India has a ”fee” — which is impossible to avoid. If you buy land in the village, the title deed and passbook are issued later from the Mandal Office but only if you give a fee. If you need sanction of a building plan, you need to pay. When one national association was looking for sops for export of their product they were asked to pay a huge sum, and a hat was passed around to the members. When the government changed they threatened to rescind the subsidy unless a fresh payment was made to the new minister.

In contrast, when this writer was negotiating a big and lasting agreement with port authorities in a Scandinavian country he wondered if any underhand payment was expected (as is the norm in India). It was clarified that their government employees are well paid and do not need to take bribes, besides those who do so are looked down upon by society.

Perhaps black money is a function of economic and social development. As India develops, it can be expected that better education, increased transparency, a more meritocratic and just culture, will slowly move our mindset towards a less corrupt society. There should be better implementation of the same tax laws, a sincere effort to bring to book first the large evaders (as there we will find lakhs of crores of unaccounted money rather than just tens of crores), surprise checks at government offices must be carried out daily with sting operations becoming a regular affair until all municipal offices, Mandal offices, etc., live in fear of being caught on a daily basis — with two warnings and then the sack.

So many more measures can be put in place. If one asks honest officers as to how this can be done they will, no doubt, give us innovative ways in which checks and balances can ensure that day-to-day corruption is reduced by 90 per cent, and, in turn, reduce corruption at the higher levels by changing the mindset.

Removing 86 per cent of the cash in the economy and hoping for the best is not going to do the job.

Source: ET

Black money cannot be glibly wished away

Shobha

India Considers Duty Cuts to Avert Tariff War with Trump:

Ambedkar Row: Congress Hits Back at BJP Over Soros Edit

Starbucks in India: Tata Consumer Addresses Closure Speculations

Sensex, Nifty Slide Over 1% as Fed’s Hawkish Stance Weighs,

Black money cannot be glibly wished away

Share This:

Shobha