Monday, 07 April 2014 |
There is talk about bringing back Indian funds illegally stashed in foreign banks. But what about the dirty money floating inside the local economy, particularly in sectors such as real estate?
On March 26, the Supreme Court rejected the Union Government’s plea to recall the court’s order to set up a Special Investigation Team, headed by its two former judges, to monitor investigations relating to black money and the flight of unaccounted amounts to foreign banks.
The court also slammed successive Governments at the Centre for “doing nothing to bring back the black money stashed away in tax havens abroad”. Indeed, it was only after six decades of independence, that at least one citizen came forward, in 2011, and complained that the Indian economy was being destroyed due to black money park in tax havens abroad.
The court said: “There will be a body (SIT) because you have failed. Were you not aware where the black money is deposited? You know it very well… Even if you have taken steps, this court being the highest court and the constitutional court can pass such an order”.
The Government has a number of agencies to deal with the problem of black money, like the Directorate General of Economic Enforcement, the Directorate of Revenue Intelligence and the office of the Chief Commissioner of Income Tax and even the Central Bureau of Investigations. But they are all parts of the larger Government machinery, and most of them cannot act on their own.
For instance, the CBI has to take permission from the Union Government before starting an inquiry against officers of the level of Joint Secretary and above. In 2013, the Union Cabinet has passed a resolution extending this shield to retired officials from the above ranks as well.
Politicians often think that the people are fools and the electorate does not see through their empty promises. One example of this is the announcement by the Congress that it will appoint a special envoy to track black money. But the Congress-led Government at the Centre has done little with the information it received regarding people who have stashed black money abroad. This is despite the fact that it has people from the Revenue and Intelligence services posted abroad in important Indian Embassies. Surely, they are doing some work.
Apart from black money hidden in foreign shores, there is also black money floating around inside the country. It is commonly known that almost nothing moves in the Government before the palms of bureaucrats are greased at all levels. This brings us to the question: What is the point of wasting time in requesting other countries to cooperate with India on the black money issue when we will do so little to resolve the issue at home?
Take, for instance, property transactions. Having taken a Government loan of Rs80,000 in 1977 and another of Rs40,000 from an IAS/IPS cooperative society, I built a house in Bangalore. I wanted to sell it before retirement, as I was keen on settling down in either Punjab or Delhi. When I received an offer of Rs1.40 crore, I promptly agreed to the sale. But the buyer said he would pay one crore in cash and only Rs40 lakh by cheque. Without a second thought, I rejected the deal and said that I would take everything by cheque and pay all taxes.
He was surprised and tried to persuade me to change my mind, but I was clear that I would not touch black money and ensure that every tax penny goes into the Government treasury. When he persisted, I shared with him an Urdu proverb: “Kya is umar hum khaak mussalman honge!” (I cannot convert to some other ideology or religion at this age). Eventually, I had to wait for two years before I sold the house to a nationalised bank for Rs73 lakh which was half the market price — and I still had to pay taxes on the transaction. Such stories are the norm in the real estate world.
The Government has to create an atmosphere in the country wherein there is no need to bribe others to get legitimate work done. Passing new laws here is not the solution as they only create new bottlenecks and clog the process of business.
Also, the Government has to be willing to investigate its own bureaucrats, as the latter generate much black money from their corrupt practices. When I joined the Indian Police Service, I used to walk to my police station in Mysore, as even at the level of Assistant Superintendent of Police Probationer, my salary was not enough even to purchase a bicycle.
I had to hire my first cycle for Rs10 per month, and even that was difficult to maintain as my salary was only Rs350 per month. Later, I purchased a cycle for which I had to make a Rs50 down-payment and paid the rest with Rs15 over 10 months. Today, even Class Four employees believe that it is beneath their dignity to walk to work or travel by public transport.
Recently, I asked a businessman why he generates black money and does not pay taxes. He told me that he needs to pay bribes to get his work done, and nobody accepts bribes in cheque! There are several such examples across the country. No wonder, corruption in India has become a major issue that adversely affects the economy.
Another source of corruption in India are the Government’s entitlement programmes and social welfare schemes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme and the National Rural Health Mission. Here too, excessive regulation, complicated taxes and licensing systems, numerous Government departments which function in an opaque manner and enjoy wide discretionary powers, end up in complicating the situation.
Occasionally, after prodding by the apex court, the Government gives the impression that it is tackling the problem.But the matter is forgotten till the next date of hearing. The Government must remember that good governance cannot be imported from outside. It has to take up cudgels on behalf of the people and ensure the effective delivery of services.
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