This appeared first on LinkedIn.
I understand the difference between black money and the black economy, and while it is true that the “black” part is the ACTIVITY and not the actual MONEY, there must be an amount of real money in circulation at any given point in the “black” economy. This money must be making it into the “white” system just as frequently as it is being replaced by more flow from “white” to “black”. That means that there is indeed actual wealth in terms of currency in bank accounts abroad, in mattresses, in gold and land bought from “black” activities (which, of course, still leaves the question of where the money paid for these went, even if in the hands of the seller of such property), and illegal businesses such as extortion, bootlegging, smuggling, bribery, and plain old stealing.
My question now is thus: Is there any real, confirmed, expert, and authentic calculation/account of what the quantum of this might be and where it might be squirrelled away?
I ask because I have come to start believing that the whole “trillions of dollars worth of black money stolen from the government by the fat rich” narrative was fed to me from childhood (and to those who fed it to me, it was fed to them in their impressionable years, and so on) and I have just swallowed the entire story without any scepticism. I believe so has every Indian, including the honourable PM, and this could be one of those rare occasions when he wasn’t lying or promising impossible things when he claimed that he’d bring this money back. I think he even tried (quite clumsily, as is now evident), but he was tilting at windmills. And, like the “God works in mysterious ways” explanation of the non-efficacy of prayer, we Indians have not abandoned our faith in black money’s existence. Isn’t it time to take a relook at it without resorting to pointing fingers or politicising the issue?
Here is my own explanation: A friend of mine, Amit da, recently read a 2012 book called Why Nations Fail (recommended by none other than Mark Zuckerberg, Mohan Guruswamy, and I think Bill Gates too, if I remember correctly) by the noted economists, Daron Acemoglu and James A. Robinson. In it, the authors put forward an interesting (and to me, quite convincing) theory, that colonising nations like the UK, France, Belgium, and Germany put in place an extractive framework of social structuring (which included taxes, laws, currency, trade, education, the works) in the colonised nations, which are inherited by these nations post-freedom. The interesting part is that while most founding fathers’ intentions are honourable when they take over from the colonisers, the discovery that the extractive system benefits them (now that they are in power) is too tempting to ignore and continue on the path of change. Those that (even through this) continue to attempt to change (themselves and the system) are met with a wall of resistance from the previous occupiers of posts that were carried forward (the administrative services, industrialists, uniformed services, judiciary, media etc) who do not wish to change to their loss. This perpetuates the extractive system first put together for the coloniser’s benefit and any changes are only incremental and small, thereby causing no great change or revolution in the lives of the ordinary citizen. Even when these citizens rise through the ranks to occupy posts of power, they are simply assimilated by the system and become part of it rather than the harbingers of change.
I think Jared Diamond too follows on such lines in his excellent (though completely discounting India) book Guns, Germs, and Steel.
The point I am trying to make is that perhaps the extractive systems put in place by the British have been (and continue to be) the cause of suffering for the common citizen, and the only explanation they can find is that somewhere, somehow, there must be a really large, really vast cache of wealth stashed away by the rich and powerful, that if only they could get their hands on, everything would be all right, but perhaps there isn’t any such stash (of the values that people believe it to be) and whatever small amounts are hidden are not as substantial as to change the destiny of the nation. Maybe the quantum of this wealth is so small as to make no significant dent in our growth or prosperity as a society, and is also perhaps an “acceptable leakage” in any economy of this scale and size.
Maybe we should stop worrying about it and focus on the bigger issues of better data, leading to better decisions on tax, leading to better collections, leading to a better chance of utilisation of such tax collected for the betterment of the nation from here onwards rather than look back when we should be peering forward.
But then, the same can be said of every part of the “New Indian” society. Let’s look forward, plan forward, and walk forward. It does not mean we forget, ignore, or disregard the past, but it does mean more focus and concentration on where we want to go rather than where we were so many years ago. Can we have a balance about this? Is it even possible for a civilisation as old as ours?
