BLACK MONEY, FINANCIAL POLICY AND DEVELOPMENT

We have made tremendous progress since August 15, 1947 and are being taken seriously in the economic world not for the holier than thou political posturing we used to adopt but for our successful, relatively less stressful and democratic efforts to increase prosperity of our people and distribute wealth more equitably. In our earlier phase we concentrated on distributive justice without increasing the size of the pie. As a result we achieved limited result. But today there is growing recognition that if we unshackle our entrepreneurial spirit with a fair and transparent regulation , we could achieve growth with equity and this could be spread rapidly as can be seen in the field of telephony. We need large sums of money to fund our massive thrust on infrastructure. If we can successfully bring the large portions of the black economy [ estimated at anywhere between 30 % and 80 % of official GDP] into the mainstream we would not need the kind of foreign investment we are talking about.

If one were to analyse our efforts of the first forty years of our independence. while the goals were laudable, we created entities which prospered by manipulation and not by genuine value addition . All our cerebral talent was dissipated in designing complex rules and getting around them. As a result, we have the most complex rules and systems where the non- value adders in the chain of economic activity such as the politician. the lawyer, the bureaucrat and the judge are the decision makers whereas the technologist, the manufacturer and the marketeer who are the genuine value adders are held accountable without having the authority. Globalization, visual communication and other changes sweeping the world , and the success of our scientists, technologists, and managers in countries such as the United States have resulted in a change in the mood of the country and there is growing acceptance that those who have the responsibility must have the authority. There is an awareness that making it simple would immensely benefit the public at large.

If we were to look at our financial policy against this back drop, we are gradually learning to loosen up and make it easier for people to pay taxes and be honest. Moderate taxes and intelligent application of incentives have resulted in impressive growth with prudent fiscal management, However there are two clear features which have to be significantly reduced if not outright eliminated. These are arbitrage and interpretation. Let me explain- if we were to remove opportunities of arbitrage in the taxation system and do not leave room for interpretation,the scope to abuse the system by the tax payer and the tax collector could be drastically reduced. This could also reduce litigation , release the judiciary of some of its burden. This could also release some of our best brains of lawyers, charterd accountants to do something more creative.

I have outlined some critical steps which, if implemented in toto, would go a long way in simplifying procedures, increase collection and achieve considerable equity.These are:

1. Each and every citizen should be provided with a biometric identity card with eye and fingerprint identification.This system should be institutionalised and every child should be provided with such identity by the time he/she is twelve years old. Onus should be on the parent/guardian to ensure this is achieved. This card should form the basis for all critical documents such as voter identity card, passport, ration card and driving licence.
   
   
2. All bank accounts- individual, joint, and corporate of all categories should be cross identified with biometric identity. Six months time should be given to all account holders to comply with cross identification. A further six months should be given to the account holder of an unidentified account during which period the account would be frozen. Unidentified accounts at the end of the second six month period should be confiscated.
   
   
3. All transactions in excess of say 50 000 rupees should have to be processed through the banking system with biometric identification of the payer and the receiver.
   
   
4. A policy on currency along the following lines should be made the law and publicly announced.The design of currency notes of larger denomination- 1000, 500, 100 and perhaps even 50, would be changed once in 5 years. At the end of the 5 years the older design would be worthless unless they were lodged into the concerned bank account. The process of change should be widely publicised for a year prior to the actual date of change to enable people to exchange through the bank accounts. If such deposits into the bank accounts are made before the expiry of 5 years and are found to be the unaccounted category, the concerned account should be credited with an amount equal to the sum deposited less twice the amount of tax payable at the highest marginal rate of tax. If a 5 year frequency is considered unsuitable a seven year frequency could be used.
   
   
5. There should be no difference in rates of taxation applicable to individuals, partnerships, private limited, public limited companies and sole proprietary concerns. Ideally there should be no difference between income tax rates of depreciation and accounting rates of depreciation.
   
   
6. Taxation rates should have only three categories - no tax upto 400 000, 10 % between 400 001 and 1 000 000 and 20 % beyond. All incomes should be brought under the tax net including agricultural incomes. Exemption to the extent of actual rent paid should be given to each assessee for one house. Exemption should be given for transport at actuals subject to a reasonable ceiling. Loans for housing and the interest thereon should be treated as at present. All savings such as contributions to Pension and Life insurance should be deductible from taxable income subject to a ceiling. Contribution to health insurance should be completely deductible from taxable income. There should be no age limit for health insurance and no restriction on who can contribute on whose behalf. Ceiling on contribution should be liberal. Money spent on education of children should be tax deductible subject to a ceiling. Contributions to Government Bonds floated for for augmenting resources for infrastructure growth- water, transportation, energy , health care and education should be deductible from taxable income and the interest on such income should be deductible from tax. Appropriate ceilings should be specified in each case.
   
   
7. Registration charges on transfer of ownership of immovable properties should be uniform across the country and not exceed 5 % of the market value. as determined by the government. Permanent powers of attorney used for transfer of ownership of immovable property should be taxed on the same basis.Each transaction should be completed with biometric cards of the buyer and seller. Registration costs should be remitted into Government Accounts with banks designated for the purpose without the use of stamp papers
   
   
8. All bullion, gold and precious metal jewellery should be provided with one time certificate of possession without question and linked to biometric identity. Subsequent transactions should be through the card linked process.
   
   
9. An asset register of all movable and immovable assets in excess of 500 000 rupees should be developed over a five year frame and aligned to biometric cards. Even properties not for sale would have to be registered in this fashion without any cost of registration. Unregistered property should run the real risk of confiscation.
   
   
10. All goods and services should be classified into three categories using the international harmonization code as the basis. The categories should be
    
    1. Bare essentials eg water, rice, electricity, basic health care
    2. Needs eg coffee, tea, telecommunication and
    3. Others eg motor car, television set
    
    These categories - definitions and inclusions should be approved by parliament. While downward movement could be by Government decision, upward movement such as from bare essentials to needs would need parliamentary approval.
    
    
11. There should be no tax of any sort on bare essentials. There should be no restriction on their production, transportation or movement. Needs should be taxed at 10 % and others at 20 %. VAT for all goods and services should be introduced.
    
    
12. Data should be collected on possible revenue loss to the state governments because of these measures ans the centre should compensate the states fully in this regard.
    
    
13. Food, fuel and fertilizer subsides and price and movement control should be removed. Food, fertilizer and fuel stamps should be issued to actual users based on biometric identity cards.These should be exchangeable for material anywhere.
    
    
14. There should be an automatic price adjustment mechanism for infrastructure services such as electricity and water where Independent Regulatory bodies should continuously monitor to ensure usurious pricing and supply constraints are not engineered and genuine escalations in costs are recovered through price adjustments consistent with internationally accepted norms.
    

The purpose of this piece is to initiate public debate and refine and improve upon this list so that an equitable and transparent system is developed which recognises and respects honesty and does not give scope for manipulation.

Illegal Immigration

**Disclaimer**
This post is talking about what has come across to me as the general ideological/political stance of the entities involved. I am well aware that there exist other stances with huge followings, and many individuals who fight these very stances I discuss.

Living in New York, and having travelled through the country that is essentially the border-town between Africa and Europe, illegal immigration is an inescapable subject of conversation, writing, and news coverage. I try and not involve myself as a rule, because after all we cats like to walk by ourselves, but sometimes it's hard to avoid. I like to think that I come from a family and a social background characterised by its tolerance, of other people, their ideas, their opinions, their idiosyncrasies or whatever. So, when I find a very good friend, whom I love and respect, making casual and callous remarks about gypsies, it makes me cringe. But I also feel it is that person's right to comment about a community in that country, with the experience of that life. After all, I make Sardar jokes [well I don't anymore, but I used to] and I'm sure that often I say things that make outsiders cringe. I like to think that I refrain from making a lasting judgement of a person I have recently met, and that I'm open to changing my mind about them all the time I might know them. And I do my best not to engage in argument with people who voice opinions very firmly, especially if I have just met them, and they are not peers.

Now, in the course of the travels in Spain I had a lot of arguments about a lot of things, not the least garish tank tops with images of Indian gods on them, and George Harrison and co's appropriation of hare rama and the like. While staying with people in a small town in Spain, I found it very very difficult to behave. The family is extremely religious, which many Spaniards are, but I hadn't encountered any before, since my friend's family isn't very devout. This meant that they were also fairly traditional, or conservative if you prefer, especially since they live in this little town on the coast. In the course of my conversations with the wife, I was stunned into silence many times over by the kind of views she expressed. You see, in India, people who are educated, especially in medicine and the sciences [she's a nurse] pride themselves on being rational about certain things like religion or birth control. So the problem I face in Christian countries is that educated people express views that are, to me, exceedingly backward and ignorant. In the midst of the statements about homosexuality and birth control, the lady made a face and muttered about "los moros".

The moors in Spain are a problematic subject, because after all, it was the expulsion of the Moors that gave birth to the idea of the Spanish nation, with Ferdinand and Isabel la Catolica's wars. But having lived there for over 700 years, many of them were, for all practical purposes, and if we go by today's evaluation of the non-immigrant population of the USA, natives by that time. But, having been built up as the bad guys*, anyone African or Muslim becomes tainted. The vast numbers of Algerians who migrate up and down from France, the Moroccans who have settled in Spain, any number of Pakistani and Central Asian people who have moved there to hold menial jobs - all are faintly vilified for being there. "It starts with one and then everyone comes and then *hushed tones of horror* they live SIX PEOPLE IN ONE HOUSE!"

The term "los moros" now refers to muslims or Africans, and god help you if you are both. Both the gentleman and his wife were resentful of the illegal-immigrant presence in their country, indicating that they would be willing to tolerate a few, but not people in such numbers, because they were taking their jobs. This argument I saw as ridiculous, since not one of the Pakistanis I met was in either of their professions! But the question that occurred to me, and I didn't ask, was: And what about the hordes of illegal immigrants Europeans in India and Africa and America in the 15th, 16th and 17th centuries? [And well beyond]

Just because it wasn't articulated in that manner doesn't mean it wasn't illegal immigration. After all, it was the uninvited entry into the territory of another nation, usually in possession of resources that you didn't have, to better your life and that of the people of your kingdom, and motivated by extreme circumstances, whether the desperate need for a market, resources or land. The significant differences are that they decimated populations, totally exploited the native people of the land, stole all their resources, and convinced of their own superiority, subjugated everyone they could and killed everyone they couldn't [well ok, that's an exaggeration, but not by a lot] and most of all, they sold other human beings into slavery. Now today's immigrant, legal or otherwise, is convinced of his/her own inferiority, and does his/her best to better the interests of the country s/he has emigrated to, and in the process to improve the life of immediate family.

The point I'm making is that I see this point-blank refusal to be open to a two-way exchange that is equal in content, manner and extent, for both sides. Equality for the West [as we so love to call it here, I'm going to use it till I can come up with a better term than First World] is only allowed on their terms, and equality means that they are kind enough to permit everyone else to feel equal, but don't ever forget by whose grace you are at this point, because I'll take it away any time I want, whether with a War on Terror, or economic sanctions, or a cloak-and-dagger execution. Its great to have hordes of Indians working to keep your customer service bill down, but only as long as it doesn't make you worry about your own job-security. Agreed the Asian work ethic is voluntary slave ethic in comparison to that of the West, but the West loves slave-ethics, they did invent the industry.

The bottom line is that it takes tremendous courage to up and relocate to a country with a foreign language and a strange and often antagonistic religion; it must rise from extreme circumstances in your homeland; and it demands extreme hardship to even GET there. I'm not talking, in this post, about people like me, who have something to come back to, or even people form the middle-class, who put every damn thing they've got and fight tooth and nail to get to that IT job in the US; I'm talking of the poor people, whose lives are unbearable, often as a result of actions by the developed world or their own government, of the droves of Pakistani immigrants in Europe, of the Salvadorians and Haitians and all the other people who stumble their way into the USA. It took as much courage if not more, to do it in 1492, and we valourise that courage. So why do we vilify it today?

It is also true that mass immigration plays havoc with cultural hierarchies; when your Gujarati family manages to successfully run a motel chain in Arkansas, it really destroys the pretty picture of camels and exotic sari-clad women that Folklore has allotted them, and demands both agency and relevance to the modern world for these rural people. Islam's response to the West's denial of agency has been terrorism, though I am suspicious of so convenient an explanation.

It still remains that we, of the "Third World", are doing EXACTLY what they did 500 years ago, in that Arabic, Egyptian and Vedic knowledge, and colonial resources, both natural and human, brought today's "First World" where they are today, just as learning their languages and equipping ourselves with the skills needed to occupy the interstices and gaps in their society brings us where we are today. [Education is a whole other post.]

*to the extent that the patron saint of Spain Santiago is called Santiago Matamoros [St James the Moor-Killer] and almost always depicted as a shining white man on a shining white horse that is rearing up to strike dead one of several Moors lying on the ground, as its master kills more with his shining sword.

'Wither' Indian Cricket

It is indeed ironic that the finest sportsman India has produced – finest not only in terms of ability and achievement but also in terms of on field and off field behaviour – has to face a Board of Enquiry conducted by men who have manipulation in their bloodstream to justify his action. Has anyone wondered how Tendulkar and Ganguly, who were considered role models for the youth of this country by John Wright, have become the villains over 22 months – that too on the say so of a man who made his brother bowl underarm to prevent the opponents from winning ?

How is it the wise men of the BCCI and Rajan Bala and his ilk do not think the coach did not breach any contract when he passed on confidential information on selection and continuously gave them juicy bits of insinuations couched as baring the truth about people who had no chance of defending themselves? Has anyone in the august body called BCCI or our media ever thought of raising this issue? Is it because they wanted their moments of glory even if it meant bordering on character assassination? The crafty Aussie was a past master in the art of 'suppressio veri and suggestio falsi to cover up his shortcomings and our "investigative journalists" could not help falling for it. Oh God, Why did Ganguly not listen to Steve Waugh before recommending Chappell?

Is it not characteristic of us that we are only capping endorsements like the licence raj of socialist days when we thought we could control markets by fiat. If the players do no do well the endorsements will automatically vanish without any need for Pawar and his band of merry men having to shove their oar in. The other important recommendation of our wise men was to limit the number of international playing days. Should we not do that first to save our crown jewels from being prematurely destroyed? Is too much cricket also not a reason for the Caribbean fiasco?

What did the wild Aussie achieve in 22 months – he gave you a "fantastic plan" for the future [shades of Yojana Bhavan?] and successfully destroyed the confidence of treasures such as Irfan Pathan, Harbhajan Singh and Virender Sehwag. Ganguly with a stronger mind was bloodied but unbowed.

It is pathetic to see our TV Channels sucking up to the Rameez Rajas, Richard Hadlees, Ian Chappells and Brett Lees delivering homilies on our icons. For God's sake leave them alone if you cannot support them in this hour of need. Please be an atypical Indian for a change – reach out to those who are down and out and help them get up.

Post-op

Perhaps its the things I read as part of coursework, perhaps its because its a year since I realised I needed help and sought it, or perhaps its just the way the whole chaotic synchronicity of the universe just works sometimes, but one of the themes asserting itself in my life right now is that of recovery.

On a thematic level it’s the week I read Lawrence Weschler’s masterpiece on Brazil and Uruguay [see sidebar]. The theme: recovering from torture, as a newly-formed nation state, as a person released from fourteen years of solitary confinement, as people who kept their heads down and looked the other way, as the man who runs into the man he intricately tortured several times, as the citizens who fled their homeland when it mutated.

The book is part of the course I’m doing on International Human Rights in Latin America, taught by a rather film-star-like nauseatingly Disney professor who brings out the most cynical and abrasive side to me. His question: is the glass half full or half empty? My answer: half-empty and evaporating fast. The man, whom I think of as Bambi in my head, often makes me want to scream in frustration and SHAKE him, if only to burst that bubble of “love…..and tolerance…..and compassion” that he lives in and therefore believes we all have hidden away inside our mean little souls. But this week I was forced to agree with him.

Compiled from three articles in the New Yorker, the book is excellently written, engaging the reader and, much like the eye in Peter Jackson’s Lord of the Rings, in refusing to actually give shape and form to the deep horror that lies at its heart, i.e. the torture and disappearing* of innocent civilians by repressive authoritarian regimes, does not permit you to pin it down and move past it, but leaves the details up to the mind of the reader, making it your very own little hell that you then have to think about getting over.

But, I digress. It’s hard not to, it isn’t very often that work with these kinds of impulses can affect me so much.

Anyway, the point of the book, and of many of the texts [including clips from documentaries] that we’ve dealt with so far in this course is the dilemma that is recovery from these things. The main conclusion arrived at across several countries and ideologies is that the only course of action that will grant peace to the people who remain while ensuring the stability of the political situation is a truth commission, that will investigate what happened, and publicly acknowledge the horrors so that people can attain closure, both collectively and individually.**

And thence to the next thought, that of victimhood. The importance of rehabilitation on an individual level is its ability to empower people to elevate themselves from the status of agency-less victim to survivor and agent. Ugh, bad sentence. I mean that the most insidious aspect of torture or abuse is that it takes away your agency. It makes you believe that you have no voice, and even if you were spouting the Truth*** no one would believe you, so why bother? In the act of seeking validation, seeking a figure in/of authority to hear you, to acknowledge that you have a voice, you are empowered, and are no longer a victim, but become a survivor.

It is the same process that underlies therapy. To stand up and say all the terrifying thoughts out loud, to have them heard and acknowledged, is the single most rehabilitating thing about therapy. Some people go through their own personal little hells; maybe because a boy told you you’re unattractive, maybe because your parents are divorced, maybe because you were systematically lied to as a child, maybe because someone molested you, maybe because you were forced to grow up too fast. The acknowledgement of the issue is the hardest step, acknowledging it to yourself first and then, in the act of seeking help, acting to obtain affirmation. It doesn’t matter if there was a reason, if things were done in error, if the people who did them are sorry; the biggest relief comes from the fact that you can yell, IT HAPPENED.

I suppose my point, when I began writing this, was that acknowledgement is the cornerstone of recovery, even if it is only acknowledgement of the damage done, of the existence of the injury, whether you’re talking about the blood of a civilization, or the fears of a child.

*The verb is used in a special way in the context of Latin America, coming from the Spanish desaparecido or disappeared, which referred to the way people were made to disappear by the government, and would vanish without a trace. Any trace. Ever.

“¿A dónde van los desaparecidos?
Busca en el agua y en los matorrales
¿Y por qué es que se desaparecen?
Porque no todos somos iguales
¿Y cuándo vuelve el desaparecido?
Cada vez que lo trae el pensamiento
¿Cómo se le habla al desaparecido?
Con la emoción apretando por dentro”

Where do the disappeared go?
Seek them in the water and the pyres.
And why is it that they disappear?
Because we are not all equal.
And when does the disappeared return?
Every time memory brings him.
How does one speak of the disappeared?
With emotion tightening you inside.
- Maná "Desaparecidos"

**In Uruguay, the government granted a blanket amnesty to everyone – both those imprisioned for their “crimes” againt the repressive military government, and the military themselves, for the atrocities they committed. This was out of fear of the still powerful military, whose strength threatened the very fragile new democracy.

In Brazil, a Presbyterian minster and the Catholic Archbishop of Sao Paulo organized a team of people to photocopy the records of abuse and violation that the military had, and then privately published a book Brasil: Nunca Mais. The book was named after Argentina’s own revelation from its dirty war – Argentina: Nunca Más.

Greg Grandin, history professor at NYU wrote a book called The Blood of Guatemala about the 200,000 people killed in the US sponsored and supported civil war.

In the Republic of South Africa, they came up with the most successful rehabilitation attempt, the Truth and Reconciliation Commission. People who wanted amnesty would have to apply, their cases would be reviewed to see if they really did act under duress themselves, if they were contrite, and if they could aid the commission in finding other people implicated in worse ways – the Generals who organized the troops, the ministers who ordered the Generals, etc. They did not always get amnesty for their crimes, but the victims got closure.

In December 1981, the US Army trained Atlacatl regiment of the Salvadoran army proceeded to systematically and brutally massacre about 900 people across several hamlets in the guerilla-controlled Morazán district. El Mozote has only 2 survivors. Groups of people were herded off and shot in the back of the head, or decapitated; for days later the corpses just lay there mummifying in the sun. [The Massacre at El Mozote by Mark Danner, if you’re interested. Stay away from food.] Nobody has ever been held accountable.

I’d go on, but it’s a whole post one day, country by country, the bloodshed in Latin America.

***for a given value of Truth of course