India՚s Black Economy, Various Committees on Corruption, Lokpal Bill
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India՚s Black Economy
- In late 2010 and early 2011 there was a huge outcry regarding India՚s black economy as news about secret foreign bank accounts of Indians started pouring in.
- In addition, the Global Financial Integrity Report claimed that independent India had lost $ 462 bn due to illegal financial outflow
- The government was pulled up by the SC to disclose the names of individuals who had funds stacked away in foreign banks
- To deal with the issue, India inked Tax Information Exchange Agreement (TIEA) with five ‘tax-havens’ by March 2011. These are: Bahamas, Isle of Man, British Virgin Islands, Caymen Islands and Bermuda
- Purpose of TIEA is to promote international cooperation in tax matters through exchange of information.
- Wanchoo committee
- 1971
- Estimated the size of black economy
- Reasons for Black money can divide it into pre liberalisation and post liberalisation
- Structure of taxation
- Price control policy
- Quota and license system
- Scarcity of commodities
- General election
- Share market
- Real estate
- International Activities
- Privatisation
- Police force
- Impact of black money
- May remain idle or often gets invested in unproductive activities
- Deprives govt of the tax revenue
- How to curb it
- Special courts should be established to dispose the corruption cases
- Pranab Mukharjee՚sfive pronged approach: joining the global crusade against black money; creating an appropriate legislative framework; setting up institutions for dealing with illicit funds; developing systems for implementation; and imparting skills to the manpower for effective action
Devil՚s advocate
- Some people argue that black economy also generates jobs and production
- A lot of goods are bought in the market using black incomes, and that leads to increase in production and employment
- Black economy generates informal sector employment and helps the poor
- Some argue for bribes as speed money
- There is some truth in these claims but the costs of black economy exceed its benefits.
Counterattack for those who justify black money
- Speed money: In order to extract a bribe, the bureaucracy first slows down work and harasses the public. If work was automatically done, why would anyone pay bribes?
- The administration becomes rundown since rather than devising ways to work efficiently, it is busy thinking of ways to make money by setting up roadblocks to efficient functioning.
- Much of black economy in India is like ‘digging holes and filling them’ . Activity without productivity.
- Because of the growing black economy, policies fail both at the macro-level and the micro-level.
- The flight of capital lowers the employment potential and the level of output in the economy
- The direct and indirect costs are of policy failures, unproductive investments, slower development, higher inequity, environmental destruction and a lower rate of growth of the economy
- At the social level, the cost is a loss of faith in society and its functioning.
Various Committees on Corruption
- 1956: Kaldor Report
- 1964: Santhanam Committee
- 1971: Wanchoo Committee
- 1979: Dagli Committee
- 1985: NIPFP Report
- 2002: Kelkar Committee
Movements Against Corruption
- 1972: Nav Nirman
- 2011: Anna movement
Lokpal Bill vs Jan Lokpal Draft
Major differences between the Lokpal and Jan Lokpal drafts
Jan Lokpal | Lokpal | |
---|---|---|
Selection Panel | Two elected politicians, four serving judges and two independent constitutional authorities | Six elected politicians (five from the ruling establishment) , two serving judges and two officials. |
Search committee this is a body to ensure countrywide search and co-option in a transparent manner of the best talents in the country | 10 members: 5 from former senior judiciary, CAG and CEC, and five to be co-opted from the civil society | No such provision for accommodating the representatives from the civil society |
Investigation | After a preliminary enquiry the accused is associated for questioning or interrogation as per the law – not prior hearings to share his defence or self-incrimination. He produces his defence before the judicial courts as is under the law. | Enquiry - report to Lokpal -hearing of the accused - investigation - one more hearing before the final chargesheet. |