Sunday, December 23, 2012

BLACK MONEY: A CURSE ON INDIAN DEVELOPMENT STORY

In one of the latest reports by a Washington based research and advocacy firm, Global Financial Integrity (GFI), India lost $123 billion in black money in a decade in illicit outflows. "While progress has been made in recent years, India continues to lose a large amount of wealth in illicit financial outflows," said GFI director Raymond Baker.
There has been a lot of hue and cry on the recovering of Indian black money stashed abroad but surprisingly not much has been said about curtailing the ongoing outflows of this money and the creation and supply of this black money within the country. According to some estimates, India's underground economy has grown to a huge figure of about 50% of the Indian GDP. Imagine what could be achieved had this been taken care of by successive governments. And what can be achieved in future by putting this money as investment in various urgent needs of the country like education, infrastructure, healthcare etc. etc.. In fact the principle of compounding holds very well in this case and in about five years time perhaps the category of Below Poverty Line (BPL) families would vanish.
Black money creation is a result of corruption, bribery, kickbacks and tax evasion and affects the GDP growth directly by making available less funds in the exchequer and simultaneously increasing the expenditure on every new implementation and maintenance. Its potential to blunt the Indian march to prosperity through deleterious effects of fiscal and current account deficits, inflation and rupee devaluation is immense and is being felt by the nation as in actual terms the growth rates are quite dismal.
 If somehow or the other Indian government can control corruption, bribery, kickbacks and tax evasion, country's face and the plight of teeming millions could be changed in no time through good governance, good economics and good politics in that order. What ails India and the remedies thereof does address majority of these problems and how to overcome them. It is a well known fact that the Indian government and Indian polity understands all this but for some reason known only to them are dilly dallying on this issue of prime and utmost interest to the future of this country, its citizens and even their respective vote banks.