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Black Money – “Economics is not a moral subject”

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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

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RSS’ call to re-mould Indian Constitution

RSS chief Mohan Bhagwat says that the Army takes six to seven months to train its soldiers, the RSS can get its cadres ready for battle in two to three days

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The Sangh Parivar, better known as the Rashtriya Swayam Sewak Sangh (RSS) celebrated the 125th anniversary of the song in 2002
The Sangh Parivar, better known as the Rashtriya Swayam Sewak Sangh (RSS) celebrated the 125th anniversary of the song in 2002. Wikimedia Commons
  • RSS (Rashtriya Swayamsevak Sangh) is a is an Indian right-wing
  • RSS chief Mohan Bhagwat expressed his views on Indian Army’s preparation in his speech to RSS workers in Muzaffarpur in Bihar
  • Kiren Rijiju said if the Constitution permits, RSS can go ahead with its interference in military matters.

The Rashtriya Swayamsevak Sangh wants to re-mould the Indian State with a military which adheres to Hindutva, the Communist Party of India-Marxist (CPI-M) has said.

This is the message that emerges from RSS chief Mohan Bhagwat’s speech to RSS workers in Muzaffarpur in Bihar that while the Army takes six to seven months to train its soldiers, the RSS can get its cadres ready for battle in two to three days, the CPI-M said.

“This remark has drawn widespread condemnation, with the main criticism being that the RSS chief had insulted the Indian army by claiming that the RSS can do a better job than the Army in training soldiers,” an editorial in the CPI-M journal “People’s Democracy,” said.

Also Read: Story 20 Amazing Facts About Indian Navy That Everyone Should Know

“While this criticism is valid, the intent of these remarks is much more serious,” it said. “The statement has revealed a vital aspect of the RSS outlook about the Army and the militarization of society.”

The editorial said: “What the RSS wants in the re-moulding of the Indian State is armed forces which adhere to Hindutva. For Bhagwat, the soldier in the Indian Army and the Swayamsevak of the RSS are on the same footing.

RSS support Hindus
RSS world’s largest organisation promote Hindutva.

“Under the present Indian Constitution, such an integration of the Army and the RSS is not possible.

Also Read: All you want to know about the ranks of Indian Army

That is why, both the RSS clarification and the defence put out by (Minister of State for home) Kiren Rijiju makes this qualification that if the Constitution permits, the RSS can go ahead with its interference in military matters.

“The implication is ominous: a re-worked Constitution should enable this to happen.”