Denial

Denial

The campaign in the media about the hoarded billions in Swiss banks that allegedly belong to hawala-patronising and black-money generating Indians, is hotting up. But this blithely ignores some vital components of the very structuring of political and commercial life in India.

We keep totting up the sums, estimated to be a mouth-watering Rs. 500 billion per a BJP report ($1.4 trillion), and talk of liberating substantial development funds should these sums be repatriated.

But even as we entertain such fantasies, we must realise that these vast sums stashed abroad are a symptom of the pervasive disease and not just the collective act of deviants from the honest norm.  So, to get at these monies now or in the future would call for a sea-change in the way we run things in India.

Unless, of course, the intent is no more than to deliver some eyewash. If a few diamond merchants are somehow brought to book and their tax-evading monies repatriated, some good will no doubt come of it, but it would certainly not cure the malaise! To sort out this great fiscal anaconda will take much more.

Consider that no electioneering or constituency “management” or indeed the expenses associated with the day-to-day running of political party machineries can take place without enormous sums in cash being employed. Sums of cash much beyond the scope of the official “party fund” charged in miniscule amounts from members. Sums in cash much larger than constituency allowances. Much larger than the sums stated in ridiculously out-of-date guidelines on how much a man or woman may spend in order to get elected in the first place!  

The sums called for run into tens of thousands of crores, much of it extorted from business and industry for the party coffers in cash. These sums are quite legitimately required; both to cater for the inevitable costs of patronage based loyalty amongst cadres and grass-roots political organisers/workers, and the inflated costs of development in the rural areas which compose most constituencies.

Also think of the per diem costs of chartered private planes and helicopters now routinely used by politicians for their constituency visits plus the large fleets of vehicles required to ferry them and their staff around on the ground.

On the other side of the fence, no business development can take place without substantial bribes being paid to a gargantuan officialdom, a circumstance, to be fair, in place from Mughal times, with a suitably hoary, even sophisticated tradition of graft and patronage.

Today, post the British overlays: its monopolies, duties, cesses, taxes, its permissions, warrants, licences, exclusions, inclusions, requisitions, over and above the old Mughal ones; we have tens of millions of  un-sackable officials empowered with myriad levels of sanctioning authority and oversight.

And this bribe money, in small instalments, for the humble, must be traceless.  If however more substantial sums are warranted for the powerful and exalted, they must be routed through labyrinthine benami courses, with a great deal of it being paid in kind in the form of property transferred, bought and paid for.

And for the abundant overflow of liquid funds; to further secure the loot, it must be broken up into many separate transactions and be sent abroad through those ubiquitous unofficial banking channels. This must be done from time-tested and foolproof multiple points of exit to multiple destinations. And there be secreted in dozens of bank accounts in as many benami “front” names. In front, that is, of “secret and anonymous” numbered accounts.  Try unravelling this whole ball of twine in terms of judicial proof and it could keep several generations in employment!

The Swiss have built a nation on this secrecy. They hold tens of billions of dollars in accounts set up not only over the centuries of Europe’s turbulent past but also between the two world wars with no apparent claimants. The money trail has gone cold, that too for many years now. Many were Jews, others were Nazis, Indian princes, deposed dictators and so on.  This unclaimed money makes for a significant chunk of the Swiss economy.

Such is the Swiss success and sophistication at the shadowy and secretive management of no-questions-asked banking that copycat tax havens have been established all over the world, and now are springing up every day to cater to new destinations such as a resurgent Africa. Collectively, they provide much comfort to those in need of their services.

But there is another side to the story. The beleaguered President Hosni Mubarak is said to have stashed over $ 70 billion for the rainy day that seems to be now upon him. But, as in many such cases, he will be allowed to leave with his money for minimising the turmoil and bloodshed, and his nation will be happy to be free of him at last.

Besides, Egypt allows for 20% local participation in all joint ventures with foreign entities and many other Arabian locations insist on 51% local “sponsorship”. So powerful people are legitimate beneficiaries of their enterprise, notwithstanding that it is a concept different from the Western idea, grafted onto India,  that you cannot, or certainly should not, benefit from your position in the Government. But, because of local laws in Arabia, it is not illegitimate either.

India is probably no more corrupt than the next nation, but it is burdened with untenable laws that most of the powers-that-be have seen fit to circumvent. The British were past masters at disguising their plunder: sometimes via the East India Company and often through a procession of princely stooges. They played at Victorian rectitude, much like their putting pantaloons on the legs of their pianos, while entertaining themselves to unbridled licentiousness.

We need perhaps to look again at our outdated laws if we are to tackle the scourge of the black economy. Partly, it exists because the Government and its constituent party machineries cannot do without it. And partly, because neither can business and industry in the present dispensation.

There is also the matter of a profligate and inefficient use of tax revenues with a huge Government living high that makes for a very understandable desire to dodge taxes on the part of a long suffering public.

Barking in general is recognised as a substitute, a harmless one at that, to the bite. But barking up the wrong tree as a deliberate decoy, is perhaps an insult to the intelligence of the Indian people.  

(1,070 words)

7^th February, 2011

 Gautam Mukherjee


Published by The Pioneer as Leader on Edit Page on 10th February 2011 entitled: Disease called black money. Also published online at www.dailypioneer and in the facsimilie edition of the newspaper. The article is archived under Guest Columnists at www.dailypioneer.com