Monday, February 28, 2011

Corruption, Black Money and Our War

Today was the big day of Indian Union budget presentation for the year 2011-12. Because of recent commotion in the country about corruption and black money created by the efforts of media and political circles some action on the part of government was expected in this budget. Though the finance minister did mention about corruption and black money menace, no concrete steps or proposals to fight it were talked of. Though the fight to get back black money stacked in foreign banks is riddled with many international laws and complications, it is heartening to note that the government has taken up this aspect with several countries. Similarly government has reiterated on many occasions that all those found guilty of corruption will not be spared.So far so good. But why is action being confined only to cases which have come to light through the efforts of opposition and media. Everybody in the country is aware of the massive scale of corruption and bribery and is it not the duty of those in power to put an end to the menace. 
Let us as a nation on the march resolve to cut the very roots of this evil. The job may appear to be colossus in the first instance but we can in reality fight it by declaring a war on it with the cooperation of one and all in the parliament and bureaucracy. The efforts through better tax compliance and rationalisation are a good step forward in good governance. But why the direct action approach to nab such offenders is not being given top most priority. After all this also is an integral  part of good governance. Direct tax code and Goods and services tax measures are riddled with lot of difficulties and require consensus amongst all parties and state governments because of their ideologies and state's financial concerns. Understandably every political party is entitled to have its own policies and ideological differences are bound to be there.But what about CORRUPTION AND BLACK MONEY. For all right minded citizens of this country, this should be the first platform of good governance. There can be no difference of opinion on ways and means to fight it because it can neither clash with the political or economic ideology of any party nor with the interests of any state government. Let all the elected members of this country sit together to formulate procedures to combat corruption, bribery and black money and enact relevant legislation to have a system to keep a check on economic offenders. Such a system should cater for major extra reinforcements to the enforcement staff. A three tier system may be worthwhile to think of with one tier keeping a watch on the other. Similarly large additions to the relevant judiciary be also made so that no such case lingers for more than nine months.

Corruption, Black Money and Government Efforts

The extensive coverage on corruption, black money and various scams has forced the Indian Government and politicians to at least talk about it. About 70 lakh crores in foreign banks and about 10 - 15 lakh crores being generated fresh every year in a country whose GDP is of the order of 70 lakh crores is simply mind boggling to the suffering millions of this country and what can be achieved if it is tackled effectively is equally mind rattling.
Does it mean something to government of the country or for that matter to any politician of the country? After all these figures have not grown to this magnitude overnight but are a result of sheer complacence on the part of government after government during the last 50 years or so.If these people in politics and in power were really serious about this matter they would not only be thinking in terms individual scams. For howsoever big these scams or corruption cases may be, their sum total will be a small fraction of total annual generation of black money through corruption. But those in power and those waiting to be in power keep their activity limited to maligning each other and scoring brownie points only, for they are wise enough not to do something on the real issue of large scale corruption involving and affecting millions of people of this country that can jeopardise their own interests. None of these persons can talk in terms of moral ethics for they subscribe totally to professional ethics as moral ethics have little value for them. What else we can expect from them as a large chunk of them is from legal profession where for the sake of professional ethics moral ethics have to take a back seat. They are trained to do their best to find loopholes both legal and circumstantial which can win the case for their client irrespective of the real facts of the case.

Monday, February 14, 2011

Corruption and Black Money Centres

In the country where corruption is in all spheres of life and all sectors of economic activity, certain areas account for more than 90 % of money generated through corruption which finds its way into black money and its further multiplication.Corrupt practices include bribe giving and receiving, tax avoidance and black money generation. These areas belong to multitude of government departments, professionals and business activities in small and large enterprise. Therefore stringent controls and checks on government machinery and the business activities mentioned in the following paragraphs can result in eradication of the menace of corruption and black money to a large extent.
All corruption and black money emanates from the deeds and actions of politicians and government officials. The  bribery money in these hands is at the most 10% of the total black money generated whereas 90% goes into the businesses involved.This bribery is a very major contributor to the business world black money, and it contributes equally to the further snow balling effect it produces on black money generation. The loss to exchequer resulting because of bribery is of the order of 20% of the annual black money generated. This roughly amounts to about 2 Lakh crores annually.
The main beneficiaries of corruption amongst the government machinery are:

  • Licencing and allotment authorities
  • Public works department including M.E.S
  • Excise and Taxation authorities
  • Income Tax authorities
  • Police authorities
  • Land and property registration authorities
Amongst the general public the main beneficiaries of corruption are:
  • Self employed persons like advocates, doctors, architects and engineering consultants etc.
  • Shopkeepers whether petty, small, medium or big dealing in retail business of provision and general stores, cloth and ready made garments, construction and house building materials, hardware including plumbing and bathroom accessories, electrical cables, fittings and accessories, as also timber, plywood,glass etc..
  • Tutors and teachers indulging in private tuition
  • Property dealers and real estate agents
Amongst the businesses most involved in corrupt practices are:
  • Real estate and construction business is perhaps the biggest absorber and creator of corruption and black money. 
  • Gold and Jewellery  business
  • Businesses related to manufacture of wafers, namkeens, confectionery items, gachhak & chikki and other eating accompaniments.
  • Businesses of small and big eateries, Dhabas, Restaurants, Indian sweet shops (Halwais)
  • Education Business
  • The whole of small scale manufacturing sector which neither accounts for the earnings of the manufacturer nor the retailer.
The real estate, construction, gold & jewelery businesses need a special mention as majority of black money gets absorbed in these sectors and they are the biggest motivators for falling into the trap of corruption.

    Thursday, February 10, 2011

    Corruption & Black Money

    Everyday we hear of huge sums of black money stacked in secret accounts in a number of tax havens and the ongoing efforts on the part of media to expose these account holders and on the part of government to recover some of it. This process of recovery is riddled with international complexities and no time frame can be set for this. Since the amounts involved are mind boggling (Conservative estimate of around 70 Lakh Crores) in comparison to our annual GDP of 60 lakh  crores,  the matter's importance to the nation cannot be undermined. There is yet another angle to black money with equally mind boggling quantum whose solution is in our own hands but it is seldom talked about by  politicians or media. Yes, I am referring to the annual generation of black money which is estimated to be about 20% of our GDP and is almost equal to our annual budget.This money remains within the country and is the result of rampant corruption in all spheres of life.  If  any worthwhile effort is to be made to curtail corruption, the main areas of its generation and how to fight this evil need to be analysed. This certainly does not involve any rocket science. All that is required is to learn from our daily experiences in various spheres of life and have a strong resolve to eradicate it. In plain and simple words plug the avenues of investing money earned through corrupt practices after all entire illgotten money cannot be spent on eating almonds or drinking expensive liquor. This money invariably will be used for purchase of property, gold, silver and high value cars, electronic and household effects and we require some incorruptible leaders, if we still have some left in this country.

    Sunday, February 6, 2011

    Corruption:The Biggest Menace

    " Corruption strikes at the roots of good governance. It dents our international image and demeans us before our own people. It needs to be faced frontally, boldly and quickly." These remarks by our prime minister sound as if it is a new and recent phenomenon in our country. Surprisingly, during a span of 25 years of public life, he never felt the necessity of talking about it. Tackling it is perhaps too much of an expectation from any of the politicians of this country. The only other time I remember of hearing about corruption being talked about was during the days of late Mrs Indira Gandhi and the nation was told that it was a universal phenomenon and therefore cannot be helped. But we are all aware that corruption has taken roots in our blood and nothing happens in this country without money changing hands.
    Controls breed corruption and corruption breeds Black Money is an old saying. Successive governments have made some progress in removing some controls but these reforms have still to go a long way and even then corruption and black money will not vanish as new ways and avenues will keep on emerging in a developing economy.Such passive measures will make generation of black money arising out of tax evasion less attractive but black money generated through corruption and graft can only be tackled through strict and deterrent methods and plugging the investments where this money is utilised.
    Prime Minister has appointed a group of ministers to look into ways and means to tackle corruption. They are likely to come out with passive measures only which according to economic principles are capable of yielding results in the long run. We need something immediately to tackle corruption and black money in totality including deterrent methods. To much is at stake for the nation. We gloat about the progress during the last fifty years but the sad fact is that direct and indirect tax kitty of the union government does not match the GDP growth rate in actual value terms. The only thing that not only matches but exponentially outperforms this growth rate is corruption and creation of black money.
    Dear prime minister, you do not need a team of senior ministers and bureaucrats to look into corruption, for these people in all likelihood will either themselves have an axe to grind or they are far removed from the ground realities as they don't have to face them because of their might and connections. You need advice from some right thinking incorruptible people from amongst general masses who can let you know the centres of corruption, bribery and black money generation. If right steps are taken a GDP growth rate of even 15 % can be a near term reality.

    Friday, February 4, 2011

    Indian Reality

    INDIAN DREAMS Vs REALITY: Indian RealityWe are hearing of a lot of scams like Adarsh scam, 2G scam, CWG scam etc. wherein the powerful and mighty of the nation whether from politics, bureaucracy, armed forces or corporate sector seem to be involved. Such things do happen all over this globe once in a while but the system and authorities in those countries are sensitive to such issues and the guilty seldom go scot free.
    The debates and discussions on TV channels highlight only the lack of concern on the part of ruling as well as the opposition parties.There is a constant effort to score brownie points over each other. There is never any mention of punishing those involved or devising methods for individuals to refrain from doing such disgraceful acts.We all know the greatest healer i.e. time will finally take over and all those in news in these scams will be adorning higher positions in the corridors of power.
    Thus far about the sensitivity of the mighty of this land to these issues.It appears that these people do not belong to Indian society and appear to be coming some Ram Rajya nation where corruption, nepotism, favoritism and graft are unheard of. They very conveniently forget their days before coming to power when for small things either influence or greasing palms had to be resorted to. Perhaps they were lured into politics or bureaucracy for getting bigger share in this shameless loot.
    There is a code of conduct for government officials. I have come across people being banned from getting a job with government. I have seen people losing their pensions after being guilty of not measuring up to the code of conduct. Has anything of this kind ever happened to men in public service. Are there any provisions like this.

    Indian Dreams

    INDIAN DREAMS Vs REALITY: Talk to any Indian. He dreams to see India prosperous, mighty and a comfortable place to live in. This dream can just be realised in a decade if only the drags imposed by the system are taken care of by the government. We have abundance of agricultural resource, mining wealth, human resource, human intellect, finances etc., etc.. All that is needed is to channelize them properly.
    We have seen the growth stories of China, Japan and Singapore, to name only a few. But the leaders and governments of these countries had the will to succeed and they have made best use of the resources rather than coming out with lame excuses and showing indifference to the problems faced by under developed nations. Mao Tse Tung saw two working hands of every new born child rather than the extra mouth to feed. Japanese and Singapore leaders laid priority on the human intellect and moral responsibilities of every citizen towards the nation resulting in innovations in the areas of technology and  manufacturing and strict tax compliance.
    In India we talk only of problems. Problems like huge population, corruption, black money, lack of education, lack of finances etc. and the list goes on to defend our relative non performance in the last fifty years. Believe me whatever changes have occurred are the result of bare minimum measures like a bit of privatization and global necessity of shifting industry to areas of cheap labour. In fact there has been Zero Value Addition to the process of bettering the lot of suffering masses of our country by successive governments. If only these governments had put their might behind better tax collections, conquering the black money demon, concerted efforts towards improving education, infrastructure, healthcare needs of society etc. to name only a few, we would have been standing along with these developed nations by now.