news details |
|
|
| THE BLACK MONEY MONSTER | | | Karan Sharma | 6/10/2011 8:23:15 PM |
| The black money issue has angered the masses as various groups have put staggering numbers to highlight the extent of the problem.Despite several studies since the early fifties , the exact estimate of the black economy and black money has remained elusive. Not just this, the entrance of a great social activist Shri Anna Hazare and YOG Guru Baba Ramdev in the fray of agitation against black money has also powered the agitation and has made this issue an international one.
Basically, what is black money ? It is the money that is unaccounted for- in other words, money generated by income that has either not been taxed or earned through criminal means, be it by drugs or arms running, ransom to kidnappers , bribes taken by politicians and officers and so on. It is important to understand where different kinds of black money converge and where they diverge.
Before liberalization, it was common for businessmen to siphon their money abroad. Technically, this was illegal but there were reasons why our businessmen hardly suffered from any sense of guilt. Tax rates were unrealistically very high and marginal taxes could go up to as high as 97%.This made legitimate business activity virtually impossible. This inturn did not diminished the demand for speed money or bribes. Bribes were given for clearing export and import licenses and for industrial approvals.This gave birth to unaccounted money to pay off the bribe-seeking officials.
Laws are much more relaxed these days. The tax rates are low. Consequently, more people are paying taxes these days.However, no one likes to pay taxes. So, despite the fall in rates, importers still under invoice their shipments and exporters over invoice it. The reason behind this , under invoicing helps in avoiding tax payments where as over invoicing by exporters get them additional benefits of export promotion schemes. This is virtually impossible in other countries where the penalty for tax evading is very high.
Another factor which gives birth to this monster is the registration of properties at low costs. Properties in Metro Cities which are worth of crores of rupees are registered at a low price i.e, at a cost which is almost half of the price of the proplerty. Often a house costing Rs 1 crore is would be registered for Rs 50 lakh, or sometimes even less. Once black money is reduced in the economy, price levels in the real estate market will naturally seek lower levels, making property much more affordable.
The various studies done on black money by various economists and committees show figures which are not just hard to believe but also show how this monster has been strengthening its power from so long. A study conducted by the National institute of public finance and policy under the chairmanship of Raja J Chelliah in 1980-81 showed that the black economy accounted for 20 % of GDP which would now translate about Rs. 15 lakh crore. A study by SB Gupta in 1992 put the figure at 42% of GDP for 1980-81 and 51 % for 1987-88. Another study by a professor of economics of Jawahar Lal University also states that there were more than 150 scams between the period of 2005 and 2008 and the most contributing sector to the black money is the service sector. Global Financial Integrity Group in its report has stated that from the period of 1948-2008 India lost $213 billion in illicit flows and the present values of these flows would be atleast $462 billion.But the report say that the estimate is under stated because of difficulties of captuting the extent of problem.Neither of the economic models can capture all channels through which illicit capital can be generated nor the ways can be found out through which the capital is transferred.
The battle against the black money is not a one-time fight. Steps must be taken by the govt. to prevent future generation of the black money. Not just the amnesty achemes introduced by the govt. to check tax evasion but also there is a need to introduce some political reforms also. There must be an effective anti-corruption law and a Lokpal that has powers to punish the guilty , who so ever it is. Discretionary powers among politicians and beaureaucrats has to be minimized. Modetrate rates regarding taxes , duties and other related things must be introduced. All laws must be accompanied by a strong enforcement regime that makes clear that no wrong doers will be spared .
SO, the ongoing battle against Black money is a noble battle until and unless it is not allowed to become a witch hunt against the business men. After correcting the consequence of past distortions, INDIA should come forward and must reach the international pacts with those countries where the most of the illegal money is being routed. Moreover in the country there should be proper intelligence to monitor these transations ,tax evasions and other ways which give birth to this MONSTER. |
|
|
|
|
|
|
|
|
|
|
|
|
| |
| |
|
|
|
|
 |
|
|
|
|
STOCK UPDATE |
|
|
 |
| BSE
Sensex |
 |
| NSE
Nifty |
|
|
| |
CRICKET UPDATE |
|
|
|
|
| |
| |
|
|
| |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
