The ‘White Paper’ on ‘Black Money’ tabled by Finance Minister Pranab Mukherjee in the Lok Sabha on Monday has reportedly left readers as much in the dark as before. The government has mentioned the steps it has taken to curb the menace, including the formulation of five laws to fight corruption, but it has admitted it is clueless on how much black money is stashed abroad. According to the Finance Minister, he has asked three separate institutions to make independent assessments of this, but there is no agreement on what methodology to adopt to arrive at a conclusion.
It can be said that the White Paper is the result of the pressure applied by high profile persons like Baba Ramdev and Anna Hazare, and is an attempt by government to salvage its image. The paper does, however, challenge the claims made by the likes of Ramdev that Indians hold the most amount of money abroad and, indeed, informs that the holdings in Swiss Banks have come down significantly since 2006. The implication would be that these have either been shifted to other places, or constitute what is described as ‘hot money’ flowing in as investment into the stock market and elsewhere in India.
Obviously, the government wishes to make the point that the figures quoted so extravagantly and so often, by Ramdev in particular, have been pulled out from a hat and do not find support in any scientific study done by experts. (Indeed, so much of politics in India is done on the basis of fleeting newspaper reports, that facts and fantasy often become indistinguishable.)
The paper does extend greater support to the Anna Hazare approach of attacking the problem at the source, which is why mention has been made of the Lokpal Bill, the Judicial Accountability Bill, the Whistle Blowers Bill, the Grievance Redressal Bill and the Public Procurement Bill. Unfortunately, however, Team Anna would argue – as did the opposition on Monday– that the ‘diluted’ Lokpal Bill leaves it largely toothless and the institution would become merely a paper tiger. In that sense, the sincerity of the UPA Government remains in doubt on the entire issue. The white paper will do little to remove this doubt.
As everybody knows, black money is generated by organised crime, the drug and vice trade, corruption and tax avoidance. Corruption involves all the commissions, bribes, pay-offs, kickbacks, etc., indulged in by those in power, from the politician to the official to the petty babus. Tax-avoidance, however, is indulged in by everybody and is second-nature with almost all Indians. Combating the menace of black money would, therefore, require action on multiple fronts, attacking the roots in all these categories.
The only area where some advances have been made in the past decade has been in reducing tax-avoidance. This has been a fallout of the economic reforms, leading to smarter taxation policies. If these reforms were to be pursued to their logical ends, there would be much greater compliance, thereby increasing the number of ‘uncompromised’ Indians. The greater the number of Indians benefiting from the ‘white’ economy, the stronger will be the political will to crack down on crime, the drug and vice trade, as well as corruption. Indeed, analysts have pointed out that Hazare’s campaign drew enormous support from the very section that owed its existence to economic reforms. It was opposed by those drawing sustenance from crony capitalism and the leakage of government funds. The government is caught between the two and, hence, finds itself paralysed. The only solution is a flank attack by pursuing economic and administrative reform, which would build the constituency for a corruption free society.
