1. Will control of black money stop corruption? Here’s what Narendra Modi govt failed to realise

Will control of black money stop corruption? Here’s what Narendra Modi govt failed to realise

Controlling black money is just one step, but the country needs many more big actions if corruption is to be reduced

By: | New Delhi | Published: December 19, 2016 6:14 AM
Government and its agencies are not merely sellers of valuable assets, but buyers domestically and overseas. Government and its agencies are not merely sellers of valuable assets, but buyers domestically and overseas.

The prime minister in his election speeches, and since November 8, is implying the black money has been the cause of nationwide corruption. What the government has failed to realise is that black money has been the outcome of corruption.

Black money does not incur any taxes and does not feature in the national and tax accounts. While it is held as cash, it is also in benami bank accounts, converted into undeclared gold and jewellery, in real estate, and is also moved abroad and held there in bank accounts or as investments. Eliminating it requires rigorous investigation and honest prosecution. Both have been infrequent.

It arises out of bribery and corruption, tax evasion, smuggling and other criminal activities, but probably originated in a big way in the years of license, controls and extortionate direct taxes on fairly low levels of income, introduced during India Gandhi’s regime. As government permissions and controls became more pervasive, the procedures and rules to enforce them turned more complicated. Their interpretation and exercise by bureaucrats gave increasing opportunities for their application to be eased for a fee.

You may also like to watch this

What do we have to do to minimise corruption in India? Our administrative systems must be revamped. Responsibility for actions and decisions must be attributed to individuals and not groups. Penalties for those caught must be made really severe. Positions must be for fixed terms and any shifts in between must be approved by an independent commission like the UPSC.

More important, “ease of doing business” must become a reality. An imperative is the essential need of single window clearances. This must be done on the ground and not merely reflect in words. A single officer must take responsibility for getting all clearances and anyone who does not have ample justification must face consequences for blocking speedy clearance. Making clearances and their progress transparent will help. The amount of regular reporting to the government departments, inspections by different agencies, and other such government interferences must also be reduced.

Allocations, leases, sales of government-owned resources (coal mines, telecom spectrum, etc,) must not be in secret, but in the open. Major government contracts (for example, infrastructure purchases, etc) must be transparent and preferably by auction. Quality of work must be independently assessed and publicly reported on a time schedule.

Government and its agencies are not merely sellers of valuable assets, but buyers domestically and overseas. This has led to large-scale corruption. One urgent step, now, under way is to try and manufacture such large items wholly or partly in India where they can be closely monitored. Another step would be to have each such transaction scrutinised quickly by the CAG before placing an order.

There is also the large problem caused by money earned from corruption, paid abroad and overseas. As far as the first is concerned, government must exercise its agreements with other countries that such deposits in the names of Indians will be disclosed. A web of informers might be created in the principal countries where such moneys are deposited.

Moneys paid in India sent abroad through hawala. There should be a separate agency to track down and close such agents. The money is round-tripped to countries like Mauritius from where it comes back legally to India. These routes have been under this government’s scrutiny. There are decisions to close them in three years.

Much private purchasing and contracting are subject to over and under invoicing. Like the Enforcement Directorate, there must be an agency that watches such transactions to catch wrongdoers.

Multiple ministries for a common subject must go. Some examples are: education be it primary, secondary, higher, professional, research, could all be together with a department for faculty training and development; transport—to ensure coordinated development, road, rail, water, coastal shipping, must be in one ministry; similarly energy must include coal, power, atomic energy, renewable energy, petroleum and chemicals; in this way the number of ministries can be reduced to ensure that there is full coordination.

This brief review must make it abundantly clear that black money and unaccounted money are only outputs of corruption. They can never be eliminated, only considerably reduced. For that to happen, many systemic reforms as indicated above, must take place.

Finally there is also lower level small time corruption-by police, postmen electricity meter readers, telephone mechanics, water supply operators, property valuers for taxes, school admissions, and the many other things for which ordinary citizens have to deal with governments. These will reduce as the high level corrupt are caught and punished. But it will not disappear; nor will the other kind. Corruption will remain but not be all-pervasive. Controlling black money is just one step, but needs many more big actions if corruption is to be reduced.

The author is former director general, NCAER, and was the first chairman of the CERC. Views are personal

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

  1. M
    MJ Pethuru
    Dec 19, 2016 at 4:48 pm
    It seems our former RBI Governor Mr. Raguram Rajan can only solve this demon. crisis. The Govt. may take his advice and give him a free hand so that India can come out of this problem.

    Go to Top