This White Paper On Black Money is Blank

Q. Recently Published Government’s white paper on black money is black. Comment

A White Paper on a subject is issued by the government presumably to give a definitive view on it and inform the public of an important issue. The White Paper on black money does nothing of the sort. The Opposition had made a demand for it given the large number of scams that have been in the news. But the paper hardly deals with any of them. The Finance Minister in his preface admits that he is presenting “… this document now in response to an assurance given to the Parliament.” The implication is that he is not giving anything definitive. He also says that he would have been happier if he “… could have included the conclusions of reports of three premier institutions that have

been tasked to quantify the magnitude of black money.” It is surprising that these three institutions are only looking at the magnitude rather than the gamut of issues surrounding the black economy. Thus, even after these reports are presented, we may not have a better understanding of the problem. After all, knowing the quantum of black money in the country is not the same thing as analysing how to deal with the problem. The White Paper consists of five chapters and several appendices spread over about 100 pages. This seems like a lot. It lifts many arguments from this author’s book on the subject and from these columns in the last year and a quarter. But it flatters to deceive. The title itself is incorrect. What is estimated is the annual generation of black incomes in an economy and not how much black money there is in the economy. The various estimates mentioned are of black income and not black money. The definition of “black money” given is itself erroneous, with money confused for assets. Even an elementary economics or commerce textbook suggests that money is only one part of the portfolio of assets that an economic agent may own. Hence referring to the whole by a part is not appropriate. The definitional confusion is made worse when it is stated that “the term black money would also include income that is concealed from public authorities.” Even then, the report does not give an estimate but simply quotes estimates from reports that were written more than 25 years ago, ignoring later literature that has also brought about greater clarity in the matter. The first chapter ends with the title, “Need for more research.” Why state the obvious? The earlier reports that this Paper relies upon had pointed to how big the problem already was. So why has the government not studied it  since then? It quotes the Global Financial Integrity (GFI) report of 2010 on how much illicit flow has taken place from India since independence. That report mentions that its figure is a gross underestimate. It is convenient to quote from the GFI report because it gives a low figure but why has the government not made the effort in the last year-and-a-half to remove deficiencies in the GFI methodology and use the data collected by its intelligence agencies and other departments to arrive at a better estimate?

One service the Paper does is to list themany agencies involved in dealing with the problem. So far so good, but why have these agencies failed in the task they should have been performing, namely, checking the growth of the black economy? What are the problems they have faced? Why does prosecution fail most of the time whether it relates to the income tax department, or the police or the Central Bureau of Investigation (CBI)? Is that the reason why the powerful have treated the law with contempt, and for the increase in the number of people resorting to illegality resulting in the growth of the black economy?

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