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- Anna Hazare's fast seeking the acceptance of the Jan Lokpal Bill
- Two factors have come together — the fight for the Jan Lokpal Bill and the violation of the citizen's civil right to protest.
- Obviously, the public are fed up with the day-to-day harassment they face. To put this in perspective, it is important to understand the benefits to society of tackling the huge black economy in India.
- Some people argue that the black economy also generates jobs and production. For instance, they argue that a lot of goods are bought in the market using black incomes, and that leads to increase in production and employment.
- Some go to the extent of arguing that India escaped the worst effects of the global recession in 2008, and the economy only slowed down, because a large amount of black money was floating around — which generated additional demand.
- Some justify bribes as “speed money” that enables work to be done faster.
- Yet, it can be shown that the ill-effects of the black economy far outweigh its beneficial effects.
- If work was automatically done, why would anyone pay bribes?
- The corrupt need the middleman to insulate themselves from direct public contact lest someone reports them.
- Much of the black economy in India is like “digging holes and filling them.” That is, one digs a hole during the day and then another fills it up at night; the next day there is zero output but two salaries are paid
- This is “activity without productivity.” An example is of poorly made roads that get washed away or become pot-holed with every rain and need repeated repairs.
- Teachers may not teach properly in class so that students have to go for tuitions.
- Because of the growing black economy, policies fail both at the macro-level and the micro-level.
- Targets for education, health, drinking water and so on are not achieved because “expenditures do not mean outcomes.”
- Much investment goes into wasteful and unproductive channels, like holding gold or real estate abroad.
- A country that is considered capital-short has been exporting capital.
- India could have been growing faster, by about 5 per cent, since the 1970s if it did not have the black economy. Consequently, India could have been a $8-trillion economy, the second largest in the world. Per capita income could have been seven times larger; India would then have been a middle-income country and not one of the poorest.
- The black economy also leads to “the usual becoming the unusual and the unusual the usual.”
- We should be getting 220 volts electricity but mostly get 170 volts or 270 volts. Equipment burns out, so all expensive gadgets need voltage stabilizers. This results in higher capital costs; maintenance costs rise.
- Water in taps should be potable, but it is of uneven quality because the pipes are not properly laid and sewage seeps in. Thus, people carry water bottles, use water-purifiers and boil water at great extra cost. Even then, people fall ill. Some 70 per cent of all disease in India is related to water, so we spend extra on hospitalisation and treatment.
- The result of all this is that costs everywhere are higher than they need to be — raising the rate of inflation.
- At the social level, the cost is a loss of faith in society and its functioning. Hence many now seek individual solutions and discount societal processes
- At the political level there is fragmentation, with States demanding their own packages because the belief that the nation as a whole can deliver has been dented. The demand for smaller States is a corollary because the bigger States neglect the less vocal regions.
- Each caste, community and region now wants to have its own party to represent its narrow interest, leading to the proliferation of smaller parties.
- New movements for a strong Lokpal, the right to education, food and information, are likely to recreate a common national ethos that is so necessary, and which may generate the political will to tackle the hugely expensive black economy
- The fight for one is the fight for the other also.
