On Black Money Trail

Last night, one of the Hindi channels was reporting from the Interim Report of the SIT on Black Money submitted to the Supreme Court.  The figure quoted, if I remember correctly, was some 527 lakh crores of rupees.  A large proportion of this amount was accumulated in the years 2006 – 2011, the channel said.  The reporter also estimated what could be done with this kind of money.  One of the things said was, again if my memory serves me right, that the whole population of India could be fed with this amount for 24 years.  I have not checked this figure. However, even if it is partially correct, it gives an idea of the scale of deprivation caused to the poor in India by those who stashed the money away.  Does this not amount to causing death by negligence?  Can those responsible, by commission or by omission (those who created the system which allows this loot), ever be excused even if they pay the taxes and penalties?  And where would we be if this money was put to constructive use in India?

And as we debate whether the black money could ever be brought back, it is being generated every second within the country.  Anybody who has anything to do with real estate knows that every transaction has more than fifty percent amount paid in cash.  The government collects taxes only on fifty percent of the amount transacted.  A large portion of the black money generated as a consequence must be lying in bank lockers here and abroad.  The administration knows it, but does nothing about it.  I think that there is rule that if the price of any property stated in the return of Income Tax is much below the market value, the property can be acquired by the Government.  How many properties have been so acquired?  Almost nil. 

Another important source of black money is the retail business.  If you buy something, the shopkeeper is able to persuade you not to demand a receipt because you will have to pay taxes.  Aren’t we all complicit in this fraud on the nation?  Again, the administration knows this state of affairs but does nothing.  Why can it not be made compulsory, by amending the Weights and Measures Act, that the receipt must be issued for every transaction, however small the amount involved, and the receipt must state the kind and amount of taxes paid/to be paid by the parties to the transaction?  The organized retail stores and other businesses issue such receipts routinely.  The radio taxis, for example, have started issuing receipts at the end of your journey stating the taxes paid.  On this one score, at least, I believe that organized businesses should be preferred over the unorganized businesses, particularly retail.   

These two reforms can give a huge body blow to the creation of black money.  Can the government proclaiming “ na khaunga, na khane doonga” bring about these reforms?  Let us hope, wait and see.

Devolution of Power to People

I relate another instance which makes a strong case for the devolution of power to people.  In the area I live, as elsewhere in the country except when you are lucky to have VIPs in your neighbourhood,  there are frequent power breaks.  They are so erratic that sometimes you are caught unawares for hours without essentials like drinking water.  Even the inverters break down when the cuts are beyond an hour or two.  If you inquire, that is if you can get through to the electricity company  at all, they have the common refrain: “maintenance work is going on”.  One wonders if so much maintenance work takes place, why is the supply so erratic?  But there is no answer to this question.  Anyway, we are the ultimate sufferers from the effects of the cuts in power supply.  The electricity companies are not affected.  That makes us the major stakeholders in the electricity supply chain.  Should we then not be kept informed about the schedule of maintenance and other activities of the companies, so that we can plan our own schedules to minimize disturbance?  In this age of information technology, it is quite possible for the consumers to be kept informed.  Telephone companies and banks do it routinely for their customers.  Electricity companies can also do so.  Moreover, why should we be not involved in planning and overseeing the maintenance and development work of the electricity companies in our areas?  The involvement can be through Residents Welfare Associations of the concerned areas.  Skeptics amongst us will say,” How is it possible?  It is the responsibility of the companies and their administrative authorities”.  But it is we who suffer and not the authorities.  So, we must push for the desired oversight role.  It is our democratic right, and duty, to do so.   We would simply ensure that the planned schedule is adhered to and do not seek to interfere in any of the other functions of these companies.  

Our Obsession with Poverty Line


In the debate on Poverty Line the point is often made that the we need Poverty Line as a measure of the progress made by the country over time and across regions.  But the Poverty Line as defined at present does not seem to be a good measure, because it is one-dimensional in that it measures only the nutritional needs of a person or a family to survive.  Much better measures are the Human Development Indices (HDI), because they measure progress on many fronts.  Take, for example, the rate of maternal mortality during childbirth.  It measures progress, or lack of it, not only in the area of nutrition, but in many other areas such as access to healthcare, education, clean drinking water and sanitation.  Similarly, infant mortality rate is an indicator of progress in a range of areas.  These indicators are multi-dimensional and measure the all round progress the nation makes.  A person needs not only adequate nutrition to survive, but also access to healthcare, education, sanitation, clean drinking water, housing, power, roads, etc., to live with a modicum of dignity.  In my view, the debate over Poverty Line simply diverts our attention from the pressing need of the all-round development that the country needs to measure.  I am not an economist, but knowing a little mathematics,  my suggestion would be to divide on the basis of parameters like nutrition and HDI, the whole population periodically (say, every ten years) in four quarters or five quintiles, and consider the people falling in the last quintile as requiring the nation’s focus on improving their condition.  The next time when such a survey is carried out, some would have moved out of the last quintile and some may have fallen from other quintiles into this quintile.  So, this would offer a dynamic ‘poverty line’.  It will also be an inclusive programme, targeting every body who is in the last quintile.  The focus would be on helping people attain a better quality of life. The development of the country would be indicated by HDI, Infrastructure development and other such indices.