ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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'Black Money' and the 'Free Market'

Two decades back, the claim was that the “free market” would make black money history.

In a Foreword to the government’s White Paper (WP) on “Black Money” (BM) the Union Finance Minister Pranab Mukherjee writes that “there is much that we could do, both individually and collectively, to strengthen the moral fibre of our society”. Surely few would take seriously such preaching/moralising from one of the leading political representatives of a system that is corrupt to the core, but how would one view – what could reasonably be presumed an intention on the part of the government, since it finds a prominent place in the WP – the proposal of a voluntary disclosure of BM stashed overseas with a view to bringing it back as “white” money? Surely, if the finance minister has any moral fibre, the lump sum income tax dues along with interest and a penalty would have to be paid, but the quid pro quo is immunity from prosecution. The honourable minister surely knows that the monies in question may not be merely part of income accruing from legal activity that had not been declared for tax purposes, but also those from misappropriation of ­assets/properties, insider trading, commissions and kickbacks, etc, as also from illegal activities, like, for instance, drug trafficking. Will such voluntary disclosure and conversion of “black” into “white” contribute to a solution to the problem of black money? Surely Mukherjee knows that not only does such a scheme ­totally disregard the principles of propriety and equity, but it will also contribute to further damaging the “moral fibre of our society” which he, no doubt, wants to strengthen.

Now a WP on BM – if we correctly understand what ought to be the intent of such an exercise – should make a contribution to finding a solution to the problem. It should signify the intent of the government to deal with the problem of BM. Instead, mistakenly, the government takes pride in the fact that during the course of its tenure in office, between 2006 and 2010, total liabilities towards (presumably, resident) Indians in Swiss banks came down from Rs 23,373 crore to Rs 9,295 crore. But surely officials in the Department of Revenue, Central Board of Direct Taxes, know that high net worth individuals and companies appoint portfolio managers to manage their funds parked overseas and that these funds are “invested” in a portfolio of assets, financial and non-financial, of which bank deposits, and such like, is just one type of asset in their diversified portfolios. And, in today’s financial world, deposits in Swiss banks can be moved in a matter of seconds into other assets in other tax havens and offshore financial centres, perhaps even brought back for another round of business in India.

Some sections on the “sectors vulnerable to generation of black money” in the chapter entitled “The Way Forward” – those on real estate, the stock market, precious metals and jewellery, mining and allocation of property rights over natural resources and the spectrum – bring to mind the ways in which savings from black incomes are “invested” and consumed. We are reminded of parts of Marx’s description of the “financial aristocracy” in his Class Struggles in France, 1848-1850, especially “its modes of acquisition as well as its pleasures”. Indeed, Marx says that the “bankers, stock-exchange kings, railway kings, owners of coal and iron mines in forests, a part of the landed proprietors associated with them”, and other such moneybags, whom he designates as the financial aristocracy, are “nothing but the rebirth of the lumpenproletariat on the heights of bourgeois society”.

In the age of finance capital, the distinction between the political and the economic, the “public” and the “private”, is getting increasingly blurred. Politics has also become a form of business, and a very lucrative one at that. Take the two major political parties, the Congress and the Bharatiya Janata Party – their declared sources of funds are not even a fraction of their expenses, that is, if one looks at these over an electoral cycle. Wherever and whenever they are or have been in power, they have helped the financial aristocracy in plundering the nation’s wealth of natural resources, oil, gas, forests and minerals, aided the “big bulls” in engineering the rise of the stock and real estate markets through various means, all to amass private fortunes. Indeed, one is witness to a veritable orgy of corruption and graft, influence peddling, bribery and embezzlement, all following the deregulation and unfurling of “economic freedom” for the moneybags from July 1991 onwards. Buying the votes of parliamentarians, purchasing the appointment of particular individuals as union ministers, shopping for the pens of senior media persons, indeed, paying for “justice”, snapping up the support of some NGOs and social activists, not to forget “laundering” of black money, allocation of mines, forests, land, water, and spectrums at highly subsidised rates, all these are subject to market principles. Yet, Anna Hazare and his followers, and a number of other “honourable” people still believe that the system can be reformed by Lokpals and Lokayuktas, this commission and that legislation. What does one do when the system is rotten to the core? Its managers produce a WP on BM, and the business press and TV debate it. Some may even announce a “fast unto death” if some bill to set up another investigatory authority is not passed or some special investigation team to probe their charges of corruption against ministers, including the prime minister, are not met. But, sadly, things have gone far past such devices to reform the system.

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