Tuesday, August 23, 2011
Sunday, August 21, 2011
Lokpal movement as of Aug 20, 2011
Why Lokpal movement is a must for youths …
Saturday, August 20, 2011
The bomb is India with all the frustrations packed inside. Lokpal is the detonator. India against corruption movement is igniting the fuse. However, sad to say, the government is dropping water to stop the fire. All efforts of the government are now to delay the decision making process so that people gradually lose their interest in the movement. Suddenly, a new proposition from Aruna Roy's camp for Lokpal bill has emerged. It is a mere hogwash. It is government's move to scuttle Anna's movement by creating confusion among the supporters of Anna.
Read also :-
Why Lokpal movement is a must for youths …
Friday, August 19, 2011
The population that belongs to the working age between 20-65 is more than 65 crore (650 million). Out of this gigantic figure, the number of people who are employed full time and those who can claim themselves to have a respectable job is no more than 3.5 crore which is roughly 5 % of the entire workforce. These jobs include banks, insurance companies, army, public sector enterprises, state level government entities. Rest of the population is engaged in jobs which are categorized as unorganized. The number of people who are earning their livelihood in unorganized sector are those who sell stuff on footpath, sell tea in stall, petty cleaners and all those menial job which goes unnoticed. There is neither any job security nor any respect for these jobs. Some get job for 2 months some get for 4 months. It is shameful to say that agriculture, that engages 70% of the Indian population comes under unorganized sector. After 64 years of independence, the government is unable to provide food to all the people, forget about clothing, shelter, education, health, security, road, electricity and water. The deficit in the performance of government has zoomed so much that it has become inevitable for people to live. In the end, it is the youth of India which is exposed to such a grim situation. With no jobs in place and an entire new generation ready to replace them, the youth is left with nothing but to agitate to the government to take concrete steps.
In the cities the situation is no good either. With students studying for 20-25 years are unable to get jobs in the area they wish to work. Whatever be the qualification, the talent is diverted towards writing software with monthly salaries just sufficient to live and no time for leisure. The students realise that their degree have no real value.
With no concrete plans or schemes for generating employment, the government should be taken to task. The movement against corruption gives the youth power to put pressure on the government. It is the time when the youth should come to front and press hard for addressing their grim situation. An end to corruption will allow the money which is lost in scams to generate hoard of new opportunities.
Corruption and Black Money
Multi-facet consequences of Black Money
Thursday, August 11, 2011
Moral degradation of the society
Black money increases the spending power of an individual. The primary needs such as food, clothing and shelter are already met for people who possess enormous amount of black money. Then these people spend money in purchasing luxurious goods such as fancy cars, jewellery, dresses, expensive trips, costly stay in 5-star hotels, etc. The blatant show off by these people for luxurious consumption creates immense stress in the minds of have-nots who want to have similar life-style. However, the Indian culture has always promoted spending for need and shun spending for desire. But the blatant exposure towards consumption based lifestyle inculcates greediness, and an appetite to earn more money by hook or by crook. The Indian society is gradually transforming to a state where moral values are sidelined whenever black money is concerned.
Black money slowly, but steadily distorts the priorities in our economic decision making process. With growing demand for luxurious commodities, the profit in the sector for these product greatly increases. The rate of return on the industries manufacturing luxurious good (such as air-conditioner, television, high end mobile phones, cars) becomes higher compared to other regular industries which serve the masses (such as agro-based industries). National priorities are subdued to serve a few big industrial houses or families. For example, plans to open shopping mall would get green signal, but plans to install fertiliser manufacturing plant would be given second hand treatment. This effect is already visible as the scarcity of agricultural inputs has increased the prices for raw materials such as seeds, fertiliser, etc. No doubt the rate of farmers suicide is increasing with the same pace as shopping malls are being opened. India which wants to become a developed nation cannot sustain this imbalance and biased decision making process where majority of its population is ignored in the light of few who possess the black money.
Many people after reading this excerpt would be surprised that high rate of inflation for the past 4-5 years is artificial and is mainly due to black money. The enormous amount of black money is used to hoard food items in cold storage. An artificial situation is created where supply of food is curtailed to increase its demand. As a basic rule of economics, whenever the demand is more than the supply for a commodity, it's price increases. The loss incurred by not selling the goods is cushioned by black money. However, the return received after the prices are increased is much more than the loss. The government claims that it does not have any magic wand to control inflation is a big myth. A simple ban on hoarding goods will drastically bring down prices in the market, but hardly any such move is taken by the government.
Angle of national security
This topic is rarely discussed in the media and people hardly understand that black money can actually push back the country seventy years back when India was ruled by Britain. But this time it will be much worse as it will be ruled by Indians but they will be serving any other nation except India. As an example, people who deposit their black money do so via Hawala agents. These agents, carrying out the risky business of money transaction from one country to another, have strong connection with intelligence of different countries. Imagine a situation in which a Hawala operator leaks multi-billion dollar of black money transaction of an Indian politician or bureaucrat to Pakistan's secret agency ISI. Although the person may not be politically dis-aligned to India, but could easily succumb to an external blackmail. In this case, the Pakistanis who were unable to defeat India in a war field could now rule Indians by proxy via the corrupt official who will become a puppet in their hands.
The above ideas are obtained from the lecture by Subhramanian Swamy. Start at 7:00
This article is about the process of interconversion of black money into white and vice versa. White signifies that the money is generated through legal means whereas black signifies otherwise. Great confusion arises between the two because the money is synonymously connected with currency notes. However, it is important to understand that money is a concept which is abstract whereas currency notes are physical entities that are real. To make things comprehensive, the concept of accountability is introduced.
When any economic activity is concerned where money exchanges hand, it is important to keep records from where the money came and where it goes. Accountability refers to all the necessary paperwork involved to keep these records. In this regard, it is very clear that money involved in illegal activities goes unaccounted. Nobody is foolish enough to go to bank with bundles of cash and say that this money is obtained through drug trafficking or prostitution or any other illegal activity. Thus in conclusion, black money is an entity where you cannot explain its origin or its destination where it is going to be spent.
Now comes the question of black money getting converted into white and vice versa. To answer this question we need to know that a trade off has to be maintained between accountability and easy of flow of money. If each penny has to be accounted, it can amount to a lot of overhead in terms of paperwork. It seriously restricts the easy of use of money as it comes at a cost of time to maintain records. In order to avoid a chaotic situation, the laws in the country provide some relaxation in terms of the limit of money which could be transacted in cash without asking for its origin or destination. So how does it work ?
Let me explain a real scenario. Any legally registered organization in India is allowed to do transaction in cash upto Rs 20,000 (Income-Tax Act 1961). Any amount higher than this has to be transacted through check/draft/e-banking. This regulation ensures that large sum of transaction should be clearly accounted while facilitating smaller transaction in cash. Now this limit of Rs 20,000 can be a very big machinery for converting black money into white. For example, you obtain some cash through illegal means which is black and invest in the company in chunks which are less than Rs 20000. In this manner, your black money gets accounted in the company and turns white. An economy which is 7-8 orders higher than this limit does not bother for this petty conversions of black into white.
In is interesting to highlight other scenario where white money gets converted into black. An example is inevitable. Suppose a shopkeeper works very hard and earns a profit of Rs 1000000. According to present income tax laws, he is supposed to pay a tax of Rs156,560 (refer tax calculator) which is about 15.6 % of his income. If the guy pays full tax then he possess white money of Rs 843440. However, by avoiding income tax completely, the guy's entire income becomes black.
Read the next article :- Multi-facet consequences of Black Money
Monday, August 8, 2011
I am highly tempted to write on this topic because not only it is currently a highly debated issue in the Indian media but it is also highly misunderstood topic as well. With this blog I would like to push forward my understanding on corruption and black money. In my subsequent blog I will highlight the quid-pro-quo scenario between them.
This article is written keeping in mind the current laws in India. According to Prevention of Corruption Act, 1988, the corruption is defined as an act committed by a person holding a public office which directly or indirectly benefits him or other person apart from the remuneration received for holding the position (The exact legal statements could be read in the official act). In technical sense, this act sub-optimises the decision making process which ultimately leads to loss in revenues for the country from which it can benefit from. The act where money is not concerned, the decision making process favours nepotism instead of merit. It is important to note that corruption is strictly defined for people holding public office and the misuse of position and powers under the office. A public servant (person holding public office) accepting money (except from the remuneration in form of salary) for performing the regular job, delaying the process or taking biased decisions that undermines the office are the simplest form of corruption. There is huge difference between corruption and cheating. For example, an auto rickshaw driver denying to go unless you pay high price than normal is not corruption. It is cheating. This process does not involve a public office. Similarly, you pay to some agency for constructing a road and the agency constructs a poor road that wither away in the first monsoon. In this case, the agency has committed a financial fraud by siphoning off the money that should be used for constructing quality road.
Presently, the issue of black money is gaining a lot of momentum. In general people ask – what is black or white has to do with money. Money is money in the end. A currency note does not bear any black or white colour. It is true. But the main point is how this money is generated. Money generated through any activity that is considered legal in the country is white and through illegal activities is black. This clause of legality plays the fundamental role in determining the authenticity of money. In this regard, money generated though activities such as smuggling, drug trafficking, prostitution, etc. is regarded as black because they are illegal. This difference is very basic and easy to define. But confusion arises due to the synonymous use of money with currency notes. Money is a concept which is abstract whereas currency notes are physical entity and are real. To create a link between an abstract concept and a real entity, the concept of accountability is introduced.
Accountability means the paperwork involved that defines the way the money was obtained/generated. Naturally, money involved in illegal activities goes unaccounted. The best way to move unaccounted is physical transfer in form of cash. Again, it is important to understand that every unaccounted money is not black . The money transfer that takes place between two parties where both know that it is going to be unaccounted is black.
To know more about black money read the new article :- "Money that changes color".
Sunday, August 7, 2011
|Graph Showing exchange rate of EUR/CHF over past 3 years (Click the graph to see the clear picture).|