Black money and breast beating

The breast beating about the state of Indian Economy is getting louder. The lament now is (even) Pakistan has attracted more money. (see
http://www.financialexpress.com/news/more-fii-money-to-pak-than-to-india/807995/ ).

Not too many months back, all our great leaders and economic think tanks were gung ho about Indian Economy’s great march (e.g. Pranab’s budget 2011-12) towards becoming third largest economy by 20xx, an economic superpower and blah blah.

Then the corruption scandals started hitting head lines. Some of these people were joined by industry leaders to say that all this corruption talk negatively affects India’s image with investors (read FIIs).

It must be truly galling for our great leaders, think tanks, economists, and ‘experts’ in media that Pakistan, which most Indian’s think to be a basket case or that it is not even worthy of being called a state any more, attracts more money than India this year.

What does one make of the FIIs of whom we are so enamoured? Should we conclude that FIIs are not really bothered about corruption or even ‘governance’?

Let us look at what these FIIs are. These FIIs take the first mouse click away with their money the moment there is any talk of doing away with the participatory notes (popularly known as PNs) or there is any talk of renegotiating the tax treaties with Mauritius and other tax havens.

The PNs allow investors abroad (mostly NRIs) to keep their identity secret from the Indian regulators. You and me with our little silly sums have to not only prove our identity but we also have provide a lot of details when we invest in mutual funds, open demat accounts or for now opening the bank accounts.

But the FIIs with billions of dollars of money to invest can keep the identity of investors ho open the account with them completely under wraps. The NRIs operate through FIIs because they can hide their identity. No KYC (know your customer norms for them (you must be getting inane KYC letters and SEBI memos from time to time). Neat.

If you consider that significant amount money has been kept by Indians in swiss banks and other such havens then you can guess why FIIs get nervous whenever there is a talk KYC norms being applied to their customers or when there is proposal to do away with exemptions to tax havens.

Why would anyone like to keep his or her identity cloaked? No, they are not scared of house breaks. It is obvious that they have something to hide.

And why should money coming via Mauritius be taxed differently as compared to money coming directly from say USA or Germany?

FII (NRI) money is (mostly) black money and black money is hot money. That’s why India gets little FDI (direct equity investment in setting up companies) and a lot of FII money. FDI is subjected to lots and lots of checks.

Our politicians use black money to fight elections. Our businessmen use black money to influence the politicians and bureaucrats. A great proportion of our land deals are done using black money. Some part of cross border transactions are funded through havala money flows. There is a whole thriving economy there that runs on black money. And money constantly changes colour. Our laws (e.g. tax havens are legal, granting and taking away exemptions at the stroke of a pen are legal, rich farmers not paying any tax is legal), lack of enforcement, totally opaque land records, glacial justice systems, complete protection from prosecution for bureaucrats and ministers and so many facets of our ‘system’ seem only to be designed to perpetuate the thriving black economy.

Why would anyone who is somebody (that means in India somebody with a lot of money or influence) do anything to disturb this heaven for black money?

There are some who say that a lot of black money has already come in India and that it has already become ‘white’. I agree. One has to investigate trails of major inflows over a sizeable period if one has get at the bottom of corruption and prevent it.

But if you are one those NRIs, fret not. You are in really august company. Nothing will come out all this fasts unless there is a revolution in the way Indians think and behave. But we have no stomach for any revolution, we got our freedom through peaceful ways.

India is not America to punish it’s (mighty) people. India is India.

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The Opposition or lack of it…

Media and the opposition provide the expression of discontent against the government policies and actions (or lack of them). That is theory.

In my previous posts, I described through some examples how the media fail us in expressing the other voices on the issues of corruption, black money, and protests by Anna Hazare and Baba Ramdev. It is true that the media expose corruption scandals and also intentional mishandling of some prominent crime investigation cases like Jessica murder. But the same media join ranks with the government when it comes to any protests against corruption.

It is as if, the monopoly of any major protest movement belongs to the opposition.

Now, I come to what our Opposition is doing. Barring the BJP, all the other ‘national’ opposition parties are confined to one or two states or they are properly state level parties. All these parties have one foot in the Ruling coalition and the other in the opposing coalition. The communists, who usually display lung power and media attention disproportionate to their vote share, are dumb struck now after the massive defeat in West Bengal. That leaves for us the BJP as the only ‘opposition’.

What has the BJP been doing on various issues?
1. 2 G scam: For several years it let the Sonia Manmohan combine to ride roughshod all protests against A. Raja’s playing favourites and plundering. It brought itself some credit for forcing the government to appoint the JPC. But whether it will use the JPC platform well or not remains to be seen. Given it’s track record of lack any systematic fact-gathering and fact-marshalling  one can not hope for much.

2. CWG: The BJP did little while Kalmadi was going berserk within his CWG empire.

3. Terrorism: BJP just plays a game of token protests and does nothing to study and expose the rot, sloth, and incompetence in our intelligence gathering, prevention, and investigation activities. We are seriously and dangerously vulnerable to more terror attacks.

4. National Rural Employment Guarantee  Scheme: This Sonia’s pet project is a colossal waste of money in the name of jobs for the poor when assets of dubious value are ‘created’. It is actually a scheme for ’empowering’ congress workers and oiling the party machine. The BJP has been silent on his too.

5. Other than the above, there many non-headline-gathering but hugely important issues like -our entire developmental model, our broken system of justice (no big criminal fears punishment),  our handouts and sops oriented and absurdly discretionary tax empires and general economic policies, our land laws, land records, and title enforcement (lack of it)  that let politicians, officials, and builders amass illegal wealth, our (non) public transport policies that literally crush pedestrians, cyclists, and the have-nots and that makes living hellish even for those who have (cars e.g.).  BJP has been uninterested in any of these issues that affect everyone badly.

For every policy and for every act of illegal enrichment people are the loosers. If it is not the opposition party, who will fight against this?

The BJP is not interested in this -why? Perhaps it thinks that the ‘work’ required for all this is not worth while. Or is it scared that if it opposes those so called ‘aam admi’ policies, the Congress will successfully paint it as an anti-poor villain?

This how our Main Opposition work. On the other hand, our media would ‘carry’ and ‘story’ only it it ‘sells’ or only if it hurts some powerful persons’ inflated egos. Media are after all owned by the businesses. And businesses are just businesses.

Don’t you also feel gagged?

Heaping scorn (gagged)

In this second ‘gagged’ episode, we have some leading lights to deal with. A leading columnist and a powerful man.

A leading columnist, known for forthrightness, writes forcefully in Sunday edition of a leading newspaper. She heaps scorn on Ramdev baba and Anna Hazare for not knowing economics (and still showing temerity of protesting about corruption) and  even audacity of suggesting solutions.

Now who knows his or her economics? Even the biggest names in Economics have to eat their words often. Does our PM know economics? Many will be shocked that I, who knows no economics, shows similar temerity. Let us see this. If our PM knows economics, why has the inflation been such a big problem? And why has black money (the generation and circulation) been such huge problem? If PM knew the ways and still did not act on his knowledge, was it again the coalition politics compulsions of A Raja variety?

The powerful man is really powerful. He heads lots of committees, he is the chief trouble shooter. He can smooth out things. But even he has put his down when it comes to extra-constitutional anti-corruption forces. “Parliament is supreme” , he declares.

OK, if the supreme parliament does  little about the issues of corruption over decades of it’s supremacy, what does one do? Just sing praises of our democracy?

Baba and Anna have undoubtedly overreached in their anger \enthusism\ arrogance \ miscalculation \ not having an organisation \ not having a blue print etc. But does one fault their taking up these issues? They seemed to have stirred our people -albeit temporarily (I hope not). A big achievement.

And pray, why suddenly there is a flurry of activity of talking other governments about tax havens and about a need better provisions in international treaties for plugging tax loop holes? Why our powerful man now has opened a front for diluting or doing away with banking secrecy prevalent all over the world? Our powerful man has also declared that we have enough laws to unearth black money. Neat.

The ‘men in fancy dress’ ( a leading journalist and an influential editor of an influential newspaper used this graphic to ridicule Baba, Anna and others), ‘a thug’, ‘some fascists’ have been protesting too much -why pay attention and start working overtime? Why not just put them behind bars?

Why all this flurry of activity NOW?

I feel gagged, do you?

All mainstream media are speaking in one voice against against Anna Hazare and Baba Ramdev.

First it was Anna Hazare and now it Ramdev Baba. Everyone in Main stream media is screaming murder. They say a lot of things. Here they are. What appears inside brackets and as slanted text is my comment.

1. This (fasting etc.) is coercive and undemocratic. (Coercive it better be. How else those with vested interests will move their whatever make laws that put them in trouble? Almost everyone who is someone in our country has vested interests in perpetuating the current state of affairs. Undemocratic it is not If you speak against corruption it is very democratic because corruption hurts that majority of poor people.)

2. In a democracy parliament is supreme. It’s role is to make laws. No one else can claim to represent people and insist in drafting laws. (Neat. What did this supreme parliament do about the Lokpal bill for 42 years? Parliament means ruling party and ruling party means one family. In any case no party ever gets a majority of vote share. How is that representative of people? Just because we have first-past-vote winner takes it all system?)

3. There are enough laws to deal with black money. (Why did the ‘people’s sole representatives not use these laws to unearth black money and punish those who made it. The same laws were used to protect those to made merry in the  2G scam. This went on for three years. Same laws are used by Government to say that it is bound by international treaties and can not ask for details of Indians keeping money abroad in tax havens. Who entered into those treaties. And now, how come the government is showing as if it wants to re-negotiate the treaties? If it were not for the coercion would the government have moved even this much? )

4.  PM should not be covered by the Lokpal bill.  (Why not? If the fear is that the Lokpal can also be corrupt and it is not wise to let the Lokpal have such sweeping powers. Well, can’t a PM be corrupt? I am sure a system of checks and balances can be designed to prevent a corrupt Lokpal from running amok. If we can reasonable handle appointment of Supreme Court Judges why not Lokpal?)


5. Baba’s black money figures are all wrong. (Why do want to an exact figure even before any investigation? How can you get an exact figure today? Is this an excuse for not doing anything? There is a big problem of black money of Indians inside and outside country. Several studies have independently come to this conclusion.)


Now even the opposition is refusing to comment on the draft. It says that you did not include us in the process. So why should we? Why should you not -just to soothe your ego? To get even with the Congress? If you are good in politics you will use this opportunity to tear apart Congress’ efforts of stalling everything.

That is main stream media for us. Not surprising because all big and overreaching media entities are owned by business interests. Once upon a time the political parties would influence and brow beat media. Now businesses own them.

One ’eminent’ journalist described those ‘undemocratic’ people as people as ‘people in fancy dress’.


That is main stream media for us. I do not agree with everything that Baba or Anna say or wish for. But where are the other voices?


I feel gagged. Do you?