Monday, March 7, 2011
Corruption and Black Money -The Big Guzzlers & Creators
You open any newspaper, you switch on any TV news channel, a day cannot pass without a few headlines about corruption and bribery scams. Such scams will invariably be connected with land, housing and real estate. In fact all activity related to this one particular sector be it allotment, sale and purchase, construction, purchase of material or renting and hiring brings in corruption, black money generation and deployment, tax avoidance and criminal activity. This sector and its progress are said to be the index of economic health of a nation. Imagine the extent of degradation of economic health of a nation when the same sector is under the cloud of corruption and bribery scandals one after the other particularly when only a negligible percentage of such cases catch the eye of media. In fact for every case that comes to limelight thousands of cases go undetected.
Buying and selling of property normally involves 30% of payments through banks and the rest is by cash. It gives huge opportunity of absorbing ill gotten money ( be it from bribery, corruption, tax avoidance or any other illegal activity) to the buyer and simultaneously produces the same amount of black money in the hands of seller.
In the construction business also cheque payments and receipts are kept to a bare minimum. Material purchases worth 10 lakhs are normally made against a bill of may be1.5 to 2.00 lakhs. This is true about all materials starting from bricks, timber, plumbing and hardware accessories, electrical fittings etc. to name only a few. The advantage to buyer and seller both can be understood by anybody for it does not require expertise in rocket science. Similar are the facts when it comes to hiring or renting of property.
Gold is the next big culprit when it comes to absorbing of black money and its creation for gold buying and selling is also mainly in cash. As a general rule all asset classes are equal culprits in this game of black money generation and absorption.