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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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Diesel Exhaust Converted Into Ink by Indian Innovators To Battle Air Pollution

Supervised by young engineers, workers at the start-up company Chakr Innovation in New Delhi cut and weld sheets of metal to make devices that will capture black plumes of smoke from diesel generators and convert it into ink.

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representational image. VOA

Supervised by young engineers, workers at the start-up company Chakr Innovation in New Delhi cut and weld sheets of metal to make devices that will capture black plumes of smoke from diesel generators and convert it into ink.

In a cabin, young engineers pore over drawings and hunch over computers as they explore more applications of the technology that they hope will aid progress in cleaning up the Indian capital’s toxic air – among the world’s dirtiest.

While the millions of cars that ply Delhi’s streets are usually blamed for the city’s deadly air pollution, another big culprit is the massive diesel generators used by industries and buildings to light up homes and offices during outages when power from the grid switches off – a frequent occurrence in summer. Installed in backyards and basements, they stay away from the public eye.

“Although vehicular emissions are the show stoppers, they are the ones which get the media attention, the silent polluters are the diesel generators,” says Arpit Dhupar, one of the three engineers who co-founded the start up.

The idea that this polluting smoke needs attention struck Dhupar three years ago as he sipped a glass of sugarcane juice at a roadside vendor and saw a wall blackened with the fumes of a diesel generator he was using.

It jolted him into joining with two others who co-founded the start-up to find a solution. Dhupar had experienced first hand the deadly impact of this pollution as he developed respiratory problems growing up in Delhi.

An Indian girls holds a banner during a protest against air pollution in New Delhi, India, Nov. 6, 2016.
An Indian girls holds a banner during a protest against air pollution in New Delhi, India, Nov. 6, 2016.

A new business

As the city’s dirty air becomes a serious health hazard for many citizens, it has turned into both a calling and a business opportunity for entrepreneurs looking at ways to improve air quality.

According to estimates, vehicles contribute 22 percent of the deadly PM 2.5 emissions in Delhi, while the share of diesel generators is about 15 percent. These emissions settle deep into the lungs, causing a host of respiratory problems.

After over two years of research and development, Chakr has begun selling devices to tap the diesel exhaust. They have been installed in 50 places, include public sector and private companies.

The technology involves cooling the exhaust in a “heat exchanger” where the tiny soot particles come together. These are then funneled into another chamber that captures 70 to 90 percent of the particulate matter. The carbon is isolated and converted into ink.

Among their first clients was one of the city’s top law firms, Jyoti Sagar Associates, which is housed in a building in Delhi’s business hub Gurgaon.

Making a contribution to minimizing the carbon footprint is a subject that is close to Sagar’s heart – his 32-year-old daughter has long suffered from the harmful effects of Delhi’s toxic air.

Motorists drive surrounded by smog, in New Delhi, India, Nov. 8, 2017.
Motorists drive surrounded by smog, in New Delhi, India, Nov. 8, 2017.

“This appealed to us straightaway, the technology is very impactful but is beautifully simple,” says Sagar. Since it could be retrofitted, it did not disrupt the day-to-day activities at the buzzing office. “Let’s be responsible. Let’s at least not leave behind a larger footprint of carbon. And if we can afford to control it, why not, it’s good for all,” he says.

At Chakr Innovation, cups, diaries and paper bags printed with the ink made from the exhaust serve as constant reminders of the amount of carbon emissions that would have escaped into the atmosphere.

There has been a lot of focus on improving Delhi’s air by reducing vehicular pollution and making more stringent norms for manufacturers, but the same has not happened for diesel generators. Although there are efforts to penalize businesses that dirty the atmosphere, this often prompts them to find ways to get around the norms.

Also Read: Exposure to Traffic-Related Pollution Poses Threat of Asthma in Kids

Tushar Mathur who joined the start up after working for ten years in the corporate sector feels converting smoke into ink is a viable solution. “Here is a technology which is completely sustainable, a win-win between businesses and environment,” says Mathur. (VOA)