Soon a new industry is going to prop up in India. This would be the most successful subcomponent of Make in India programme and can employe thousands upon thousands of workers for the welfare of the corrupt millions who had been stashing black money in form of 500 and 1000 rupee notes. The industry would be centred upon laundering these notes and giving the ‘valueless’ pieces of paper some legal value.
Decidedly, some of these notes would be kept, if only for posterity to preserve and to collect, but the fact remains that not many Indians have that kind of luxury. Maybe, a lot of Indians don’t even have those notes to worry their heads about and that, is not necessarily a good thing.
The strange dichotomy of our country is that while one set of people are worried about the truckloads of cash that could soon become valueless, the vast majority had never had the access to that kind of cash in their lives. Just imagine, if the poor had been able to earn that black money and had invested it in education, housing, purchasing; we would definitely have been a few notches up in Human Development index, in the per capita rankings, education ranking, health rankings.
True, the sudden ban would wipe out the black wealth of several individuals and it is also true that social equity would increase as a result of the ban, but I wonder what would happen to the black wealth? Black money would remain unused with the over fed rich while the masses starve.
Importantly, we have to realise that those bits of paper, soon going to be valueless, too had some value and were generated via hard work and use of intelligence of those who had them. Even though the means of earning it were not entirely lawful, the purging would decrease the wealth of the nation, the wealth it could never use.
Almost There
It would be instructive to look at the nations which had followed the same sort of trajectory as our country and faltered. Argentina had at the height of it’s demographic boom been billed as the next super power of the world. The problem was that wealth was distributed unequally in the country and the institutions of the country were biased and corrupt, so they never could develop modern industries or invest into education, R&D, health during their growth spurt. Vast export of natural resources allowed it to develop rapidly and in the 1920’s it even matched Britain, but since then, it has been in a consistent decline.
The post colonial Argentina continued having the same type of institutions that the Spanish colonists built there, only now they were manned by Argentinian elite The critical thing missing was sufficient empowerment and plurality. Domingo Pèron, their leader who took power in 1946 destroyed the democratic ethos of the country, placed his own men in the institutions like the Supreme court and achieved unchecked power, to ostensibly reform the country.
His move to gain unbridled power wiped the basic motivation that citizens of a country had to continue investing and growing, for now there was no safety that their wealth would be protected, that their hard work would allow them to become rich or whether they would get justice against the rich and mighty. Critically, the elite who had been happy to grab all that power only remained rich compared to their own impoverished countrymen as all of them sunk together.
The Third Side of The Coin
Even if the black wealth of the corrupt Indians is completely wiped out by the circulation of Pink, blue, yellow Gandhi notes, the core point is that the institutions of our country are not geared towards helping citizens achieve a ‘clean’ growth. The election cycle for example, demands huge amount of freebies, party expenditure etc. which is later fulfilled by the extraction of the same money from the businesses later. This corrupts the investigation agencies, for they cannot persecute their own bosses and allows criminal politicians to come into power and why would criminals reform the judicial system? To get persecuted? No, instead you earn more by remaining in power and not promoting honest officials. This is how a negative cycle is formed and sustained.
Black economy seen through this prism is merely the ‘jugaad’ of the people to circumvent the inefficiencies of the government by pumping in the money. This would continue till certain basic changes are made. From political reforms, Judicial reforms, police reforms to the administrative reforms, we have reports like the ARC report and in depth analysis available about what all needs to be done in all of these sectors, what we need is the will of the leaders to actualise them.
Root Changes
The Hawala networks are still intact, the money earned by illegally selling liquor in prohibition states will go on inspite of all of official crackdowns, the real estate sector would continue to deal in black till the circle rates are fixed and secure property rights backed by satellite date given to the owner. The problem is like that of the Indo-Pak rivalry. Till a concrete political solution is arrived upon, the Pakistanis would continue to send across terrorists and we would continue to reply via surgical strikes.
Prime Minister Modi has definitely shown courage in his surgical strike against black money but the moot question is, whether he’d be able to reform the institutions that led to the problem in the first place. Peace with Pakistan would be a far better option than another surgical strike and weeding out the inefficiencies and corruption would be tackle the generation of black money. This might be a long and arduous process, requiring some real 56 inch chest and a political renaissance.
Whether India fulfils its tryst with destiny or it remains one of the also rans is a question for the posterity to decide. For now, let’s enjoy the crisp pink and green notes that would remain ‘whitish’ for some time at least.
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