Cleaning up governance

ON THE TRAIL OF THE BLACK

Author : Bibek Debroy and Kishore Arun Desai

Publisher : Rupa Publications, Rs 595

This book offers interesting insights into corruption in India and the Government’s treatment of the same, writes GAUTAM MUKHERJEE

This is an energetic collection of 16 essays, written by the staffers of Niti Aayog, and published by Rupa. It deals with the cancer of black money, and the present government’s yeoman efforts to rid the country of this scourge. Most other countries also have a parallel cash economy, and are hard pressed to find ways to permanently check it. This book, published in late 2017, offers some options, and in fact, several of its prescriptions have been adopted by this administration. 

Given the revelations of embezzlement, fraud, forgery and criminality in the corporate and PSU banking sector, elaborated day after day, a book like this has great relevance and topicality at this time. The brazen diamantaire, gold jewellery, disposable pen, and many other scams added to the large infrastructure and real estate development defaults now account for over 10 per cent of the loan books of the banking system. There is over Rs 10 lakh crore in bad debts, incurred mostly during the preceding UPA rule but revealed now because of more stringent declaration rules and the disallowing of defaulting loan roll-overs by the Modi government. Warning of further bad news likely to come in from the SME sector have been issued by some keen observers. 

Exposure of malpractice on this scale has never been undertaken by any previous government. But even though the scams and frauds are now exposed, there are many impediments to recovery and resolution still, despite the new bankruptcy law — such as counter litigation from debtors and defaulters.

The rot of systemic collusion and corruption also runs deep, though here again unprecedented numbers are being booked and sent to jail. But others have run away from the country, including many millionaires who have fled in anticipation of future prosecution. However, with the help of yet another stringent new law,  fugitive defaulter assets are being attached.

Black money generation in the Indian economy has traditionally come partly from the cash guzzling political electioneering process. Demonetisation, bravely undertaken by this government, helped provide shock therapy, and later, anonymous cash donations to political parties have been almost banned. White money political bonds have been created for corporate and other large donations. This interesting area is explored in an essay by Kishore Desai, one of the two editors of this book.

The Real Estate sector can, and does also absorb large tranches of cash. It begins with the land prices, which shoot up when “land-use” norms are changed for the needs of expanding cities. Contiguous agricultural land, valued erstwhile by the acre, is reworked into per square yard or square foot pricing, when zoning norms convert it into commercial, residential, institutional land instead. While some of the rezoned land is used by the government for roads and other infrastructure, private builders and developers also eagerly purchase it to launch profitable projects for retail end-use. Bibek Debroy, the other editor of this book, writes on this aspect. He also writes on the digitization of land records to establish ownership transparently while simultaneously preventing fraud.

Various statistics on the generation of black money cited in different chapters of this book are startling. Misinvoicing, says one chapter for example, “cost the country more than $40 billion in 2008”  So imagine the amount 10 years later, in 2018.

On the plus-side, it is difficult to get away with invoice manipulation since the advent of GST. It is, apart from being efficient, single-point, and state border tax free, a transparent online process for indirect taxation. Evasion of taxes, gaming of systems, bribery, subversion, forgery, fraud, scamming and larceny are  still ongoing, though new systems such as online administration and linkages such as Aadhaar, is making it much more difficult .

The Prevention of Corruption Act 1988, and its amended, tougher version from 2013, is beginning to show results. Likewise the Benami Properties Act with new teeth that allows confiscation of such properties without trial. 

Executive government agencies, such as the Central Vigilance Commission (CVA), the Enforcement Directorate (ED), the Central Bureau of Investigation (FBI), the Central Board of Direct Taxation (CBDT) — even the Intelligence Bureau (IB), the National Investigative Agency (NIA), and the Research and Analysis Win g (RaW), have all been toned up by the National Security Adviser (NSA).

Their functioning  and intelligence sharing has improved considerably. They are now producing unprecedented results, even though professionalism with regard to prosecutions of a kind that stands up in court needs further work. Likewise there is better coordination between the Armed Forces and the para-military such as the Police, the CRPF and the BSF.

The workings of the three arms of government — the executive, the legislature, and the judiciary, are also improving, albeit slowly. The judiciary is extremely over-burdened, and occasionally biddable too. But more and more, it is struggling to deal with the negative perception about its working.

The Indian Constitution, the longest in the world, is sometimes flouted in practice, partly due to its inherent complexity and contradictions. There may be a need to update it in general, and some of its outdated provisions in particular, because the country and the world is much changed since it was written.

Newer attempts at public participation, transparency, accountability and maintaining a watch on governance such as the Lok Pal, the Lok Ayukta, and the Right to Information Act (RTI), are still works in progress.

While it covers a lot of peripheral ground, this book certainly helps raise the pertinent issues about the pervasiveness of the black economy. It is up to the evolution of our education, awareness, institutional effectiveness and accountability of Indian democracy, to lift this country out of the grip of its more feral elements.

The views expressed are the reviewer’s own.