Tuesday December 11, 2018
Home Business Black Money –...

Black Money – “Economics is not a moral subject”

0
//
BLack Money
Photo: http://rashtriyaujala.com
Republish
Reprint

Back in 2008, when the whole world was in a financial ruckus, India was not as affected as rather seems to be the fact. Altogether the country was extraordinarily afloat throughout the whole incident and started recovering just in a year.

And all of that was the blessing of ‘black money’.

Yes, that is what the chief economist of the World Bank and former head adviser to the Indian government, Kaushik Basu claims in his new book, An Economist in the Real world.

What is the deal?

The deal is simply that when all the nations and their banks were busy tackling the overburden of subprime loans (one that is given to people who have a previous record of difficulty in maintaining the repayment schedule) crisis. Indian almost suffered from none.

  • It is evident from the instance of 2005 to 2008, when the economic growth of India was an astounding 9% per annum.
  • But the underlining trick was in the scenery of housing and property pricing boom which had gone up to the rate of 16% between 2002 and 2006; more than the average income of India and even more than that of USA.

All because unlike most parts of the world, in India one will not find the price of the house or that of the property listed in the real estate agent’s office. The amount of the land is fixed by the seller and the person can easily demand the first half in the form of formal payment while the rest in cash. And this latter mode of payment is what constitutes the ‘black money’.

A bit more of the deal –

First up is that the moderate the payment is on the official papers, the less the risk of receiving a hefty capital gains tax bill. While the second one is that, it also benefits the buyer as they have to pay much less of the property tax.

While the UK and the USA did start charging as much as 110% more mortgage at the peak of the property boom, in India the mortgage amount has always been much lower than the actual cost of the property.

That’s why when the prices of the houses and lands fell in India back in 2008 and 2009, the

banks were still comfortably within the range of the property values.

How to solve the problem, according to Mr. Basu?

Some time back, Mr. Basu famously advised the government to criminalize the bribe-takers instead of the givers.

It will be interesting to see if the law is implemented then how the equation will affect the whole dynamics.

Though, he laments that the Indian law has not taken his suggestion into the account. It is likely that if it is ever sanctioned then the bribe-givers, freed from the threat of prosecution will automatically want to resist and be reluctant to take part in the bribe cycle again.

Ultimately, it can be concluded that his whole explanation is sound enough as proved by the fact that India’s economic growth was 7.4% in the third quarter of 2015. Apparently the fastest growth of any major nation in the world.

Kaushik Basu was talking to BBC

Click here for reuse options!
Copyright 2016 NewsGram

Next Story

U.N. Donald Trump’s Impeachment may be Possible: Key Lawmaker

Comey testified to a House panel on Friday about his role in 2016 election-related investigations of Trump's campaign.

0
U.S.A., Trump
House Judiciary Committee ranking member Rep. Jerrold Nadler, D-N.Y., arrives for a House Judiciary hearing on Capitol Hill in Washington, Dec. 7, 2017, on oversight of the Federal Bureau of Investigation. VOA

A key U.S. lawmaker said Sunday that Democrats in the House of Representatives could pursue impeachment hearings against President Donald Trump, saying that the U.S. leader had “surrounded himself with crooks” and was part of a broad “conspiracy against the American people” to win the 2016 election.

Congressman Jerrold Nadler, a New York Democrat set to become chairman of the House Judiciary Committee when Democrats take control of the chamber next month, told CNN that lawmakers have to decide “how important” allegations are against Trump, but should pursue impeachment charges “only for serious offenses.”

U.S.A., Trump
In these 2018 photos, Paul Manafort leaves federal court in Washington, left and attorney Michael Cohen leaves federal court in New York. VOA

Nadler offered his thoughts two days after federal prosecutors accused former Trump lawyer Michael Cohen, “in coordination with and at the direction” of Trump, of orchestrating $280,000 in hush money payments shortly before the 2016 election to two women who alleged they had affairs with Trump so they would stay silent before Election Day.

Nadler said that if proven, the allegations against Trump were “certainly impeachable offenses.” That could lead to his removal from office, if the Senate were to convict him by at least a two-thirds vote, a doubtful proposition with Republican control of the Senate continuing in the Congress that takes office in January.

Nadler said lawmakers will have “to look at all this,” along with weighing what special counsel Robert Mueller concludes about allegations that Trump and his campaign colluded with Russia to help him win and that, as president, Trump obstructed justice by trying to thwart the ongoing 19-month probe.

The U.S. Justice Department has a standing guideline against indicting sitting presidents, although they can be charged after leaving office. Nadler said, however, “There’s nothing in the Constitution that prohibits the president from being indicted. Nobody should be above the law.”

U.S.A., Trump
Stormy Daniels speaks during a ceremony for her in West Hollywood, Calif.. VOA

Trump has dismissed the latest allegations against him in connection with the payments to porn star Stormy Daniels and Playboy model Karen McDougal and allegations of Trump campaign contacts with Russia to help him win the election.

He used Twitter on Monday to repeat his frequent statement of “NO COLLUSION” between his campaign and Russia.

“So now the Dems go to a simple private transaction, wrongly call it a campaign contribution,” Trump said. He went on to say “it was done correctly and there would not even be a fine,” further adding that if there were any problems then Cohen would be the one who was liable.

“Cohen just trying to get his sentence reduced,” Trump said.

Trump has called for the end to the Mueller probe, but a Republican lawmaker, Senator Marco Rubio of Florida, told ABC News, “I’ve always supported the Mueller investigation and continue to do so because I think it’s in the best interest of everyone involved, including, by the way, the president.”

U.S.A., Trump
Seven-page government sentencing document for Michael Cohen, President Trump’s former lawyer. VOA

Aside from Cohen, who is set to be sentenced Wednesday and faces several years of imprisonment, Mueller so far has secured guilty pleas or won convictions of Trump’s first national security adviser, his former campaign manager, his former deputy campaign manager, a foreign policy adviser and other lesser figures.

On Sunday, Trump assailed former Federal Bureau of Investigation director James Comey, whom Trump fired while he was heading the Russia investigation before Mueller was named to lead the probe.

U.S.A. Trump
Former FBI Director James Comey, with his attorney, David Kelley, right, speaks to reporters after a day of testimony before the House Judiciary and Oversight committees, on Capitol Hill in Washington. VOA

Comey testified to a House panel on Friday about his role in 2016 election-related investigations of Trump’s campaign and that of his challenger, Democrat Hillary Clinton, a former U.S. secretary of state.

Also Read: SpaceX Drops Plan To Make its Falcon 9 Even More Reusable

“On 245 occasions, former FBI Director James Comey told House investigators he didn’t know, didn’t recall, or couldn’t remember things when asked,” Trump claimed on Twitter.

“Leakin’ James Comey must have set a record for who lied the most to Congress in one day. His Friday testimony was so untruthful! This whole deal is a Rigged Fraud headed up by dishonest people who would do anything so that I could not become President. They are now exposed!” (VOA)