White Vs Black Economy & Ills of black economyPosted: May 25, 2012
White Vs Black Economy & Ills of black economy:
Bring; black money; into white economy; strong laws to eradicate corruption & black-money-economy.
The list may be long; don’t get scared; an attempt is made to explain all aspects in lay man’s language in less than 1400 words.
Jul 10, 2012 Swiss HSBC account holders offered India amnesty, says official.
India loses Rs 14 lakh crore ($250 billion) from tax evasion every year, depriving it of funds for investment in roads, ports and power, Arun Kumar, author of “The Black Economy in India,” said in Based on those estimates, a successful crackdown could more than double the nation’s tax revenue, which collected about Rs 9.3 lakh crore for the year ended March 31, according to the most recent budget proposal.
India has offered amnesty to more than 100 wealthy citizens who evaded taxes by hiding funds in accounts at HSBC Holdings Plc (HSBA)’s Swiss unit, according to a government official with knowledge of the matter.
The amnesty offer inIndiais being made to some people who were on a list of 700 citizens with HSBC accounts in Geneva that was given to the South Asian nation’s government by French authorities last year. http://business-standard.com/india/news/swiss-hsbc-account-holders-offered-india-amnesty-says-official/479977/
A basic knowledge is necessary for a vibrant democracy; to participate; build prosperous; safe India by winning; war against corruption and black-money (Encourage your friends to have an understanding of Democracy & corruption free economy)
Don’t you think; that black economy has grown more than 16 times stronger than white economy during UPA period (8 years)? War against corruption; black-money; uncontrollable inflation; depreciation of Rupee against dollar; etc.., are the effects; in a scenario of increasing GDP growth?
Our political leaders need; introspection to save democracy; economy and make our nation safe for us & them?
ACCOUNTABILITY AT ALL LEVELS MAKES A NATION SAFE AND PROSPEROUS?
Democracies evolved as people started understanding these aspects; & started; using them to build prosperous & peaceful; families; communities; villages; towns; cities; states, nations; continents & world.
We should make an attempt to understand; what:
1) Economics are?
2) Why do we need them?
3) What money is?
4) Why do we need it?
5) Influence of money on individuals; their social life & ethics (legal/moral)
6) Impact of economics on socioeconomic life of individuals & societies?
7) What is white money-economy; its effects on states & welfare of people?
8) What are organized sectors; & individual entities?
9) What is black-money-economy & its ill effects?
10) How black-money-economy tries to exploit white-money-economy resulting in:
a) Disparity between rich and poor?
b) Creation of mid rank (middleclass) to enrich the rich; for exploiting the poor? And many more aspects before we have can understand; the difference between white & black economies (money); safe nations?
11) How black economy grows & why governments fail to regulate; by known economies by known economic principles?
We should understand them in order of their importance & implications?
(1) Economics are transactions of goods/services; for a consideration of goods/money? Determination of exchange value; depends on demand & supply; environment?
(2) We all need different goods & skills (services) for survival/comfortable living? It is convenient to have money to exchange goods/services you have with goods/services of others or to have a mix of goods & services you need?
(3) Money (currency printed paper/coins) is a promise of a state to return back the face value on demand? & it will be valid only when the sates issuing them are capable of doing so? The exchange value of currencies between countries depends on the perception of abilities of the countries to fulfill their promises? As an example we can say depreciating rupee value means; eroding confidence in Indian government to fulfill its promises?
(4) Money is a convenient medium to save exchange value for differed/future use? Gives us freedom of exchange from place & time? It enables us to save perishable (time dependent) value of services for future use with the help of money (non perishable medium)?
(5) Dependence of exchange value on supply & demand position; non perishable nature of money; makes greedy; to manipulate the conditions to value their good/services disproportionately to enrich them selves/acquire social status (may be legal but unethical; as it involves exploitation/corruption & erodes moral fabric as; it encourages other to exploit you when they get an opportunity)
(6) Fair play of economics; improves employment opportunities; free exchange of goods/services; will contribute to welfare & prosperity of the nation?
Manipulation of economics by greedy/corrupt; will result in UNBALANCED growth of individuals/organizations resulting in inflation; erosion of money value; disparities in living conditions; some (very rich) having all the comforts at their command & others (poor) struggle for daily existence? This translates to unsafe societies where in we have to spend; huge (disproportionate) amounts on security measures (security guards; military) for very rich; or who came to power through democratic process or coups?
Greed & Corruption; LIKE DRUGS; GIVES A KINK IN THE BEGINNING; an addiction & forces one to steel/loot to keep the habit going?
Read : Salable Skills: Skills that can’t be sold are having no money value. http://righteducation.org/id30.htm
ACCOUNTABILITY AT ALL LEVELS MAKES A NATION PROSPEROUS & SAFE?
1st Moral of the story is “fair play of economics results in prosperous; safe societies/nations & manipulated economic result in unsafe societies/nations irrespective of their prosperity? Prosperity + safety alone can be an indicator of healthy & contended societies?
(7) It makes no-sense when the economy is strong & growing against other economies; yet your currency value depreciates? It only means that government (white economy is weak) & is loosing control over economy due to strong black-economy; controlled by individuals or group of individuals?
(8) Organized sectors are group of individuals working for common benefit; with in the frame work of agreed rules & regulations? When the set rules & regulations; have legal sanctions they become corporate bodies?
Individual entities or the activities controlled by an individual; individually or with the help of a group of people for personal benefit?
Their activities; can be beneficial or harmful to the society depending on their commercial activities; fair/unfair; irrespective of the wealth they generate?
(9) We should know; what is black-money-economy & its ill effects?
Black money is the money a) earned by using public amenities & infrastructure; with out contributing to them (avoiding payment of taxes duties & levies fall into this category)? b) Looting money; from public; public exchequer (corruption/scams); steeling natural resources (robbery) fall in this category?
Black-money-economy; are the transactions carried out with black-money; for personal gains/profits & these gains/profits add (compounded) to the black-economy and grow geometrically (2, 4, 8, 16, 32 etc; on year by year basis); and make them very rich; in a relatively short span of time? That is how the saying “behind excessive wealth there will be a story of crime” came into existence?
White-economy; surplus funds (funds generated – expenses like salaries; transportation etc. spent on public servants) are used for development of infrastructure & amenities for public use? This results in a very slow arithmetical progress (GDP + a small % of GDP growth; well below 10% of GDP, on year by year basis)?
How black economy is growing & why governments fail to regulate; by known economic principles?
(10) Don’t you think; the white paper on black money; (by Govt ofIndia) talks about a figure of 30% – 35% (on an average during last 8 years) of GDP getting into black-money-economy?
Considering; cascading (year by year amounts getting added up) & compounding (earnings on reinvestments getting ploughed back) effects; black-money-economy getting; doubled; every 2 years? It amounts to an astonishing; 16 times & with in next two years; going to be 32 times of white economy GDP with in next two years?
All developed economies; are thought to be sound; because of their GDP growth; before they collapsed? India taking shelter under their; poor economic health; under the misnomer of globalization; for all its economical ills is not justified & will plunge us into economic doom like developed countries sooner or later? The indications are already on the horizon in the form of our failing economy?
3rd Moral of the story “If you fail to control corrupt practices/black economy with a firm; iron hand; doom is inevitable & recovery painful?
With; white economy of such a small percentage of GDP (in single digit); will make economy non-responsive to traditional monitory controls by RBI/govt ; when black-economy becomes very strong?
We are having a reasonable explanation why Government is helpless; not able to control inflation & falling rupee; value; against dollar continuously?
Falling rupee is a clear indication of flow of black-money; out of India (governments un-willingness to track the people who are buying these dollars & why); is the cause of current economic mess?
Conventional methods are not; sufficient; any longer; to control inflation; black-economy & falling rupee? It is like trying to control a rouge elephant with a hand stick?
Moral of the story “In case you lack; a strong will to control & eventually (to a negligible % of white economy) with an Iron hand; unrest in the nation & economic doom are inevitable”?
Strong laws (lokpal & associated laws; with the sprit of Jan lokpal) and fast implementation (deterrent punishments; say with in 6 months) of them to punish the guilty are the need of the hour?
Yes we can build corruption free societies. Read: https://sofjustice.wordpress.com/2012/05/21/corruption-free-world-village-that-puts-metros-to-shame/
M A Y 2 0 1 2 – WHITE PAPER- BLACK MONEY http://pib.nic.in/archieve/others/2012/may/d2012052101.pdf
Also read: Law enforcement agencies- boon or bane? https://sofjustice.wordpress.com/2012/07/12/law-enforcement-agencies-boon-or-bane/
And; Expected achievements by implementing 73rd & 74th amendments. Panchayati Raj Institutions; can compete with metros! https://sofjustice.wordpress.com/2012/05/22/expected-achievements-by-implementing-73rd-74th-amendments/