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India’s Black Economy: Causes, Implications and Remedies

Arun Kumar

CESP, SSS, JNU, N Delhi 110067.

 

For the Volume Ed. by Prof Vivekanandan: INDIA TODAY: ISSUES BEFORE THE NATION.

I. Introduction

            India’s black economy is roughly estimated to be 50% of GDP - generating at current prices in 2012-13, about Rs.50 lakh crore or $1 trillion. It is so extensive because it is generated in every sector and economic activity and all the elite sections of society are involved in it. It is in both the public and the private sectors and involves everyone down the line from the Prime Ministers, Chief Ministers, top industrialists, army men, judges, bureaucrats, lawyers, teachers and so on. Taxes not collected at current rates of taxes amount to about Rs.20 lakh crore in 2012-13. Thus, the Union budget instead of showing a Fiscal Deficit could have shown a surplus of Rs.14.5 lakh crore. If this amount could be collected, there would be enough money for employment generation, education, health and infrastructure, like, roads and power.

            An indication of the growing black economy is the rapid unearthing of more and more and bigger scams. The speed with which scams are being revealed makes the public forget the scams they were exercised about just a few months back. Today, with IPL in the news and the imbroglio around the JPC on 2G and the expose of the attempt of the Law Minister to influence the CBI, the Westland Helicopter deal has receded to the background. The wrong doing in the Tatra truck deal and the Army Chief’s complaint that he was sought to be bribed are forgotten. Similarly, the Adarsh Society scam, ISRO-Dewas deal, Commonwealth Games scam, and the Hasan Ali case are hardly talked of. Bigger scams have taken hold.

            While the biggest scam prior to 1990 was the Bofors scam at Rs.64 crore, in the 1990s there were many scams that were above Rs.1,000 crore (Kumar, 1999). The largest was the Harshad Mehta led Stock Market Scam of 1991-92, estimated by the Janakiraman Committee Report at Rs.3,128 crore (RBI, 1993). The Telgi scam regarding forged stamp papers was also initially estimated to be in thousands of crore but no firm figure emerged. In the first decade of this century, there has been a flood of revelations of major scams – almost one a week - not counting the smaller cases of corruption involving a few crore or less (Kumar, 2013). Now the scams run into tens of thousands of crores and at times in lakhs of crores. In the allotment of natural resources, like, mines and spectrum, huge scams have been unearthed.

            If we cut back to end 2006 what was the situation? MPs had been caught accepting money for asking questions in Parliament. This is nothing new. During the debate on the nuclear issue, MPs produced wads of notes in Parliament which they said were for buying their vote in favour of the government. The government cleverly deflected the issue but this is also nothing new. In the 1990s the JMM MPs were caught with cash in their bank accounts which had been given to them for helping the government survive.

Around that time, Mayawati, Badal and Jogi were in the news on the same day for violating some law or the other. They are in the distinguished company of Laloo Yadav and Jayalalita who already had cases against them. Daler Mehndi, Bharat Shah, 4 members of the elite Presidents guards, doctors in private clinics, manufacturers of spurious drugs, judges of high courts, VCs of Universities, bureaucrats and police officers, journalists, film producers, etc., all hit headlines for having committed some illegality or the other in the mid-2000s. These are the elite sections of our society so that the implication of such widespread illegality are serious. It is gnawing at the innards of our society with influential sections of society increasingly in the grip of illegality to generate extra incomes; above what they make legally.

The list is unending, in the 1990s and 2000s, illegality in petrol pump allotments, admissions to professional courses, procurement of defense materials, allotment of licenses, disinvestment of shares of public sector, etc., have come to light. Yet, there have been few prosecutions in cases of graft and the public impression is that the system is very corrupt. The quick action against the MPs caught asking for money for questions is an exception and not the rule. People in their day to day dealings (police, telephone, electricity, petrol pumps, medical clinics, etc.) face constant harassment, whether in the public or the private sector.

For the public, illegality and corruption are a constant and they feel helpless to do anything about it. They are exercised at the time a scam is revealed and then they go back to their routine. They re-elect the corrupt time and again thus signaling to the political class that they can ride out the storm and return later without reforming themselves.

The public has little choice since almost all the political parities have been caught indulging in corruption. Thus, a change in the ruling party means that another corrupt set up comes to power. The net result is that the people vote for their own corrupt who would help them. Hence the dalits would vote for their own and the backward castes would vote for their brethren and the muslims vote for their community and so do the upper castes. That is why today it is said that corruption is no more an issue. The politicians have decided that they only need to wait patiently in the wings for their turn. The clever thing to do is to collect enough while in power and when out of it not unduly ruffle the feathers of the ruling group - behave like a `responsible’ opposition. This is the weakness of our democracy that people have little choice – that between Tweedledee and Tweedldum (Kumar, 1999). Be that as it may, what are the implications of a large and growing black economy in India?

 

II. Implications of the Black Economy for the Nation

II.1      Spread of illegality and weakening of democracy

Illegal activities at the top echelons (political, bureaucratic and business) in the country have serious implications. National Security is being seriously compromised. Even cabinet decisions are often not a secret as Wikileaks revelations suggest. Foreign agencies and business interests may get the most sensitive information for a price (or via blackmail because they may have information on the illegality of the top people in administration). The recent attack on the top leadership of the Congress (I) in Chattisgarh or the earlier attack on Mr. Naidu’s motorcade are indications of serious security lapses. There is not only leakage of information on movements of leaders but also laxity in policing since there is huge corruption in the police set up everywhere. Police is busy collecting hafta from illegal activities rather than in controlling illegality in its jurisdiction (Kumar, 1999). Contraband (arms, drugs and so on) and suspects slip in and out of airports and ports and across borders.

 There is growing criminalization in society since almost the entire official machinery is involved in committing illegality – there are always the exceptions that prove the rule. The businessmen and politicians use the police and the bureaucracy to commit illegality. When the latter gets the license to commit illegality, they also do it for their own ends for making money from those committing illegality. The result is that the force for maintaining law and order – the police – is often a party to the illegality.

Posts of lucrative thanas are apparently auctioned for a price. The price paid (and above that for ones own use) has to be recovered by collecting hafta from the jurisdiction of the thana. Illegal activities like, theft, pick pocketing and encroachment are encouraged to enable hafta to be collected. Traffic police turns a blind eye to violation of traffic rules or over charging by transporters since it collects a monthly payment from commercial operations. If a theft occurs in an influential person’s house, the stolen items are recovered since the police knows who the thieves are in that area. If the police is in league with criminal elements in society is it any surprise that criminalization is increasing by leaps and bounds.

Illegality is committed in the thanas themselves with the police violating the rules. This is justified on grounds of extracting information from the criminals. However, it is mostly the honest who are harassed to extract money whereas the criminals with their nexus escape to continue their activities in collusion with the police. No wonder, an alternate system of justice has emerged where the public takes the law in its own hand or goes to the corrupt and the powerful to get justice. It has affected our politics which is now increasingly criminalized with those having a criminal background entering the legislatures in increasing numbers. What can be expected when in the biggest state of the country, a minister with a criminal record was recently appointed as the jail minister? There is a vicious cycle in which respect for justice is eroded, social functioning is impeded and democracy weakened.

 

II.2      Economic aspects

All the key economic problems can be linked to the impact of the growing black economy. In an economy where billions of dollars are spirited out of the economy, where black transactions abound in the stock markets and the real estate markets, where getting admission for children requires bribes, is it surprising that the impact of the black economy is all pervasive? What is being revealed by official agencies or in the media with relentless regularity is only the tip of the iceberg.

Due to the black economy, policy fails and society is unable to achieve its goals, like, literacy and health and a vast majority live in rather uncivilized conditions which are prevalent in very few countries of the world. As the Finance Minister in his budget speech said in 2007, `expenditures do not mean outcomes’. Rajiv Gandhi said in 1987, out of every rupee sent to the field, only 15 paise reaches the ground. He did not mean that all of it was lost due to corruption but also due to the bureaucratic costs. Now the courts feel only 5 paise reaches the ground.

The black economy has destroyed the work ethic of a vast section of society so that we do not achieve (with few exceptions) world standards whether in sports or in technology. There is waste of resources and alienation of the citizen from society making collective effort almost impossible. An economy that has the potential of growing at 10% per annum is growing at an average of 5.4 % per annum since the 1980s (Kumar, 2005). In brief, the black economy has affected the social, political, economic and cultural life. It is in our own enlightened self interest to curb it.

 

II.2.1   Increasing inefficiency

Many aspects of the black economy are like `digging holes and filling them’ (Kumar, 1999). If during the day a person is set to work digging a hole and at night another person is asked to fill it up, next morning there is zero output but two people have earned incomes for the work they have done. Thus, there is activity without productivity. Assets are not created commensurate with the expenditures. So, for instance, in road construction, sub-standard material is used so that it gets potholed when the rains come and has to be repaired. Thus the road budget is spent on repairs rather than building new roads for say, rural connectivity.

In schools, the teachers teach poorly so that the students do not learn or enjoy classes. They get put off from learning and divert their attention to other things. When they go home they are forced to take tuition so as to do well. Teachers have a vested interest in not teaching well so that they can get tuitions to make extra money. The implication for learning is that the children find it difficult and mug up the material rather than understanding it. They stop questioning and lose curiosity about various things in life. Their time is wasted first in the class and then in tuition. The time that could have been used for other activities and for learning is lost. Further, the tuition syndrome leads to leakage of question papers and other malpractices so that the tutees can do well in the exams and justify the tuition.

Because of poor teaching and learning, students attend coaching classes to pass competitive exams. Their intermediate training is not good enough to help them do well in the competitive exams. This results in massive waste of resources for the nation since the outcome with regard to learning is poor. Further, most of the students in higher education are of indifferent quality. So, in spite of the large numbers of students in higher education, we produce very few who are internationally competitive.

Such examples of waste are all around us. In the bureaucracy where work is not done and people run around in circles or in the judiciary where cases go on for years even though they are supposed to be solved in months. There are crowds milling around the offices and courts but little gets accomplished. The police do not register cases and harass the public. Cases are poorly investigated and in the end they are thrown out by the courts so that justice is not done in spite of the efforts of many people.

Another aspect of the black economy is that it makes the `usual the unusual and the unusual the usual’ (Kumar, 1999). That which should happen does not and that which should not happen does. So the citizen should get 220 volts electricity but often they get 170 or 270 volts and expensive equipment burns out. One needs additional circuits and voltage stabilizer for equipment and capital costs rise. Cost of servicing equipment rises as the breakdown rate increases. The fluctuating voltage and variable cycles of supply of electricity also leads to poor quality production since machines can malfunction. In continuous flow production like in case of chemicals, such malfunction can lead to clogged lines and so on.

One should get clean drinking water in the taps but often it is polluted. This is because the pipelines may not be properly laid and sewage seeps in. Thus, one has to incur additional expenditure in boiling water or using purifiers of various description. Further, one buys bottled water at thousand times the cost, etc. Even then, a little carelessness leads to water borne diseases and additional health costs which are unnecessary. Parents remain tense about what the children will drink in school and so on.

One does not get the service one should get from the bureaucracy so one has to approach touts and pay them extra. This is true for tax assessment, getting passport or driving license made, admission to schools, admission to professional courses, getting railway reservations and so on. Either one fights everywhere or gives in and pays the extra cost (bribe included) and in turn generates extra income where ever one gets a chance. How many places can an individual fight?

The result is that people have got alienated from the system. They have lost faith that things can work and they automatically assume that they need to pay extra. Even in a medical emergency it is often the case that one first calls up some friend/relation for advice as to where to go rather than going straight to the nearest hospital emergency room. It is often a miracle that one survives a medical emergency since so many things can go wrong. In a road accident few stop to help take the victim to hospital. In the hospital the doctors may wait for the legal formalities. They may do a slip shod job of treatment and the drip or the medicines may be spurious or sub standard and may not have the desired effect and so on. Since all this is so much a part of life, people stop resisting corruption and extortion and that helps it grow further. People lose faith in the collective and try for individual solutions. This weakens democracy.

These various aspects of the functioning of the black economy result in growing inefficiencies of the system and wasteful use of capital and resources. It has been estimated that due to such inefficiencies, India has been losing 5% rate of growth for the last three decades (Kumar, 2005). Thus, its rate of growth could have been 8.5% in the seventies and 12% now, if the black economy had not existed. The per capita income could have been about $10,000 and it would have been the second largest economy in the world. Thus, though the black economy generates output and employment far more is lost than gained. In other words, development is set back

 

II.2.2   Impact on Inequality

            The black economy is concentrated in the hands of at most 3% of the population (Kumar, 1999). Yes, there is petty corruption but this is insignificant compared to the huge earnings of the few. According to a calculation, in 1995, the ratio of incomes between the top 3% and the bottom 40% was 12:1 in the white economy but it became 57:1 including the black economy. By now, the disparities have become much worse. Thus, in a vast and poor population of 1.25 billion, there are 35 million well off, the size of a European nation, that can afford all the luxuries. This explains the existence of vast poverty in the midst of glitzy markets and ostentatious consumerism of the well off.

The result of this skewedness of income is that the savings propensity of the economy is higher than recorded in the white economy (Kumar, 2005). This is simply the result of the rich saving more than the poor. Due to wastage of capital and unproductive investments, the investment rate in the economy is lower than it could have been. The result of both these trends is that the level of output is lower than it can potentially be - missed development.

 

II.2.3   Black Economy and Illicit Financial Flows

            A recent report estimates that since independence, more than $460 billion has been lost to the nation due to flight of capital (GFI, 2010). This is much larger than India’s foreign debt or the Aid it received. A capital short country has been exporting capital on a large scale. In a sense, the drain of wealth during the colonial rule has continued in a different form after independence. Those resorting to flight of capital include the businessmen, corrupt politicians, bureaucrats, professionals and so on. These are the people whose interest in the country has weakened as their wealth abroad has increased and they often push the interest of foreign powers. They are also open to black mail by the foreign agencies who track the flow of illicit funds from and back into India.

This figure of illicit financial flows (flight of capital is part of this) does not take into account loss of capital due to illegal activities like havala, narcotics drugs trafficking, smuggling and so on (Kumar, 2012). If all this could be taken into account, the opportunity cost should run into a few trillions of dollars. If this amount had been invested in the country, say, in rural areas that are woefully short of basic infrastructure, like, water, sanitation or electricity, conditions of life could have been far better. Alternatively, if this capital had been invested in industry, industrialization, technology and productivity could have been far greater/higher than at present. Thus, flight of capital associated with the black economy results in slower development than India can achieve.

            Of late, there is a return flow of capital called `round tripping’. From the late 1990s the software industry became the conduit for bringing back capital without paying taxes. Later the Mauritius route was also added to facilitate this `round tripping’.

The flight of capital associated with the black economy is the main cause of the BOP problems that have plagued the Indian economy for much of the time since independence. It takes place through under and over invoicing of foreign trade, transfer pricing and havala (parallel banking). Much of this is managed through shell companies set up in tax havens (over 70 at current count) to launder the money siphoned out of the country.

 

II.2.4   Black economy and policy failure

            Black economy leads to policy failure. Policies on paper and as they are implemented are vastly different. Whether it is environmental regulation or industrial location or urban zoning or traffic lights, all laws are routinely violated. No wonder at a low level of per capita income, India has some of the worst air and water pollution in the world. Due to insanitary conditions and water pollution, most people suffer from poor health resulting in low labour productivity. Literacy is low because money sent for constructing schools is often siphoned off and teachers are not appointed. Children even in the fifth grade are found to have acquired few skills (ASER reports) so for the rest of their life they are condemned to work at low levels of productivity and remain poor.

            The black economy results in loss of revenue of about 20% of GDP, at current rates of taxes. In comparison, the fiscal deficit is currently around 6% of GDP for the Centre. If the black economy had instead been white, there would have been a surplus in the budget and there would have been much greater investments in infrastructure and poverty removal. Also with less corruption, expenditures would have been more effective. The revenue deficit which underlies the fiscal deficit and rising debt in the budget would have been wiped out so that the fiscal health of the government would have been better.

           

II.3      Growing Size of the Black Economy since 1991

The size of the black economy is given relative to that of the white economy - as a per cent of the declared GDP.  The size of the black economy was estimated to be 4% of GDP in 1955 (GOI, 1956), 7% in 1970 (GOI, 1971), 18% in 1980-81 (NIPFP, 1985) and 40% in 1995-96 (Kumar, 1999). The last estimate includes 8% contributed by illegal activities like, drugs, mafia and smuggling. 32% comes from the legal activities like, manufacturing, finance, trade and construction. It is growing in spite of the reduction in tax rates and whittling down of the degree of controls and regulation in the economy over the last two decades. This is not surprising since these are not the causes of generation of the black incomes.

Since generation of black incomes involves illegality, the above figures suggest that illegality in the country has been growing. More and more scams are surfacing and the sums that are involved in them are increasing exponentially. If currently illegality is associated with 50% of the economic activity, it has to be `systematic and systemic’. Systems are set up to bribe politicians and bureaucrats, for adulteration of food, for producing spurious medicines, for not declaring the full output produced so that profits are generated off the balance sheet and so on. It is not that one day one generates black income and not the next day; it is a 24x7 activity.

Some with faith in the market mechanism believed that the black economy would shrink with the implementation of the New Economic Policies (NEP) in 1991. The package consisted of the lowering of taxes and reduction of controls like, MRTP, FERA, reservations, licensing and so on. However, the black economy grew even faster as the restraint on businesses declined (Kumar, 1999). For instance, they could take their money out more easily as exchange controls were relaxed. So, they started taking out more of their capital. They could play around more easily in the financial markets and so could generate more of black incomes. The increase in the collection of direct taxes as a per cent of the GDP since 1999 is not due to a reduction of the black economy but due to the dramatic rise in the income of the corporate sector (Kumar, 2007) and the black economy has continued to grow.

Gold inflow is an example of the above argument. When its import was banned till 1992, the smuggling of gold into the country was to the extent of 160 tons (Sarma, 1992). After 1992, when gold was allowed to be imported, the amount of gold inflow increased to 900 tons by 1999 and half of it was smuggled. Thus, the legal part of imports of course increased but the illegal inflow also increased. The loss of savings to the country increased by a factor of 5.5 times. For a poor country this is criminal since it aggravates poverty. Of late, this has become an important reason for the high current account deficit and the BOP crisis.

 

III.       The Underlying Cause: The Growing Triad

            To effectively tackle the black economy there is a need to identify the causes underlying its existence and growth. For illegality to be involved in 50% of the economic activity, it is only possible if those in-charge of implementation of rules are a party to black income generation. They connive in the persistence of illegality and share the extra profits generated. A Triad exists between the corrupt businessmen, corrupt politicians and the corrupt executive (Kumar, 1999). The last consists of the police, the bureaucracy and the judiciary. Since the 1980s the criminal has entered the Triad. So, either the businessman or the politician has a criminal record and this has led to growing criminalization in society as discussed earlier. This nexus is so powerful that a financially honest PM voluntarily tolerates the corruption all around to survive and he also provides credibility for a corrupt system – a mascot.

            The Triad is mutually convenient to all. The businessmen are able to influence policy and protect their ill gotten profits. The other two in the Triad need the businessman to invest their funds and launder them. Most politicians have at least one businessman close to them who provides such services. The media is increasingly a party to some of these illegalities.

            The reduction in tax rates and removal of controls like MRTP, FERA, licensing and easing of reservations for small scale after 1991 has not led to a reduction of the size of the black economy. It is because the Triad has grown stronger and forms of making black incomes have changed.

           

IV.       Remedies

The cause of the black economy is not just technical (high tax rates or controls) and that is why it continues to grow in spite of the hundreds of steps taken to tackle it in the last 50 years. There have been more than 40 committees that have gone into the different aspects of the black economy and they have suggested thousands of measures. So we are not short of suggestions or of measures to tackle it, like, demonetization, voluntary disclosure, payment by cheque, anti-defection law and citizens’ charter. Some of these steps have not only not helped curb the menace but have often fuelled it because they have added to the complexity of the laws or turned people into habitual law breakers (Kumar, 1999). The cause of the growing illegality lies in the political economy of conflict in our society with the elite forming the Triad and making incomes over and above what they can make legally.

To tackle the black economy, the Triad has to be dismantled. It functions in secrecy. Hence the most important step is the `Right to Information’. This would make the politician and the executive accountable and their functioning transparent so that unlike at present, they cannot subvert the law deliberately. The present dispensation on Right to Information is entirely inadequate since it is far too complex for the common man to use. The mind set of the politicians and the bureaucracy needs to change. Unfortunately, those heading the Right to Information bureaucracy have mostly been bureaucrats.

Howsoever good bureaucrats may be, their training has been to not give information and to not push the system to reveal it. Someone from outside the system was required to head it – who would be willing to put the politicians and the bureaucrats in the dock. It is argued that a Sheshan or a Kiran Bedi have done much good to the system even though they are from the executive. However, in any absolute sense, they have done little and even that stands out compared to others. They have played the system and done well because they have made compromises with it rather than challenging it. They are used by the system to legitimze its choices so that it can continue to more or less function as it is. We need people who would challenge the system every step of the way otherwise the Right to Information will also get discredited over time.

            A major reform required is that political parties function democratically. Many of today’s leaders come up without serving the people and take over parties. Parties and constituencies are often passed on to relatives like property from one to the other. Such leaders are often contemptuous of people and represent the interest of society’s upper crust.

            Electoral reform is required so that genuine representatives of the people enter the legislature (not purchasable by vested interests). State funding of elections will not help since it only gives additionality of funds to the corrupt. Election expenses are 10 times the allowed limit and a bulk of the expenditures are on illegal activities and raised from illegal sources (Kumar, 1999). For these purposes, state funding will not help/cannot be used. Citizens’ groups which can present an independent record of the performance of the candidates before elections will help make the voters better informed (For a more detailed discussion on this, see Kumar, 1999).

            Audit of accounts of parties, Lok Pal, etc., will hardly help. Accounts are easily manipulated. Who will prevent the Lok Pal from getting corrupted? Philippines has functioned with an Ombudsman who is unable to check corruption in high places. If Justice Ramaswamy could be in the dock and the Chief Justice of the Punjab High court had to take steps against other judges, what is the chance that the highest will not be corrupted/silenced? After initial euphoria, what have the CVC and Chief Election Commissioners achieved? Mere formalism will not work. Vote should not merely mean the duty to go to the polling booth on election day. A politically alert public which votes consciously in national self interest and not on sectarian lines - caste and communal - is needed.

            Reform of Judiciary is required. Cases have to be speeded up and procedures simplified. With 30 million cases pending in courts the powerful manipulate it for their own ends and faith in justice is eroded which undermines any notion of a civilized society. Ther is neither a shortage of judges nor of courts. The problem is that the judiciary does not act and is unaccountable to the public. Cases that should be wound up in 6 months take more than 6 years thus clogging courts and wasting everyone’s time. The age of retirement of the executive should be raised to 70 years and after that they should not be allowed to serve in the private sector. Those taking early retirement should be disqualified from work for others for 10 years – not even consultancies for the private sector.

Businesses have to be made accountable and transparent. Independent directors on the Board of the Companies are needed as public watchdogs. Such directors should be chosen from outside the Triad (who are easily corruptible in different ways). The members of the Triad belong to the same class and have sympathy with the manipulations indulged in by businesses since they are also somewhere associated with such actions (What happened in the case of Satyam). Directors should be made to pay for the wrong actions of the companies they are supposed to be associated with. Chartered Accountants have to be made accountable through fines on them if accounts are found to have been falsified.

Direct taxes need to be simplified by elimination of concessions and deductions. Taxation of business income should be based on gross profit and not net profit. Internal indirect taxes should be levied only on final luxury products. Estate duty, Gift Tax, property and wealth taxes should be revived to unearth black incomes (Kumar, 1994).

The common man is hit more by the indirect taxes (which are still 60% of all taxes collected) than the direct taxes. Even though some direct tax is paid by the workers in the organized sector, most of it is paid by businessmen and managers. Low direct taxes help these rich people. High indirect taxes hurt the common man since they through their consumption are forced to pay a substantial part of their incomes as taxes. Raising direct taxes on wealth and profit would enable the state to lower the indirect taxes and this will help check the growth of the black economy (Kumar, 1999).

 

V.        Conclusion

            In brief, the black economy underlies the major macroeconomic problems faced by India - fiscal crisis, inflation and BOP problems. The micro and the sectoral problems of the economy, like, education, health and infrastructure also relate to the black economy. It weakens democracy. If not checked, India’s growth story can become a thing of the past. It is argued above that NEP have not been able to check the growing black economy as the pro market thinkers hoped for. Instead, as restraint on businesses has decreased, the black economy has grown further since 1991.

No law is worth the paper it is written on if it not implemented. Political will is required to take the tough steps and that means strengthening democracy. The politicians know/have the intelligence about the corruption of those in the Triad but who will bell the cat since when out of power they can also be caught as has happened to Badal and Amrinder Singh or to Jaylalitha and Karunanidhi. Thus, mostly there is a conspiracy of silence amongst the members of the elite.

If matters are to be resolved, the public has to act against the entire political class via alternative movements on a host of issues which will throw up an alternative leadership. In recent times, new political parties and social organizations have come up to take up the issues of the common people of India. However, the task is not easy but has the task of nation building ever been easy?

 

VI.       References:

  1. GFI. 2010. The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008. http://india.gfip.org.
  2. GOI, 1956. Direct Tax Reform: Report of a Survey. (Chairperson: Kaldor).
  3. GOI, 1971. Direct Taxes Enquiry Report. (Chairperson: Wanchoo).
  4. Kumar, A. 1994. Proposals for a Citizens Union Budget for the Nation for 1994‑95. An Alternative to the Fund‑Bank Dictated Union Budget for 1994‑95. Presented to the Citizens' Committee on February 12, 1994 at Gandhi Peace Foundation, New Delhi. Prepared for the Preparatory Committee for Alternative Economic Policies.
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  9. ------------. 2013. Indian Economy since Independence: Persisting Colonial Disruption. N Delhi: Vision Books.
  10. NIPFP.1985. Aspects of Black Economy in India. New Delhi: National Institute of Public Finance and Policy.
  11. RBI. 1993. Report on Securities Transactions. Final. (Chairman: Janakiraman).
  12. Sarma A., A. Vasudevan, K. Kanagasabapathy, M. Naryan and M. Roy. 1992. Gold Mobilisation as an Instrument of External Adjustment: A Discussion Paper. Development Research Group. Department of Economic Analysis and Policy, Reserve Bank of India. Mumbai.
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