Sreenivasan Jain: Red herrings & the black money whale
The conversation no political party wants to have
Sreenivasan Jain November 17, 2014 Last Updated at 21:48 IST
And so the red herring of foreign black money has swum far afield, washing up this week on the shores of Australia where Prime Minister Narendra Modi declared that the “repatriation of black money kept abroad is a key priority” for India. It is fair to assume that this assertion was directed as much to the gathering of global worthies at Brisbane as to a restive support base back home, a section of which has found this government guilty of lapsing into United Progressive Alliance (UPA)-like excuses to avoid naming dodgy Swiss bank account holders. If the government’s explanations of the legal obstacles to full disclosure are being met with cynicism, it has only its own reckless election-time bombast to blame — for instance, Modi’s campaign assurance to provide each impoverished Indian a share of Rs 15 lakh from the overseas bounty. The same Modi, as prime minister, admitted in a recent radio broadcast that no one really knows the precise amount of foreign black money. If this is indeed the case (it is), then it begs the question why is it the foreignness of illicit funds that gets everyone so agitated, given the much greater magnitude of the problem closer home.
According to the journalist M K Venu, a government-commissioned report on domestic black money by the National Institute of Public Finance and Policy (NIPFP) estimates that our parallel economy is 70 per cent of gross domestic product, approximately $1.4 trillion. The report has sector-wise estimates of the generation of undeclared funds; more than one Chief Election Commissioner has, separately, made it clear which “sector” they believe is the biggest source of black money (hint: Indian elections). Which is perhaps why the NIPFP report, parked in cold storage by the UPA for almost a year, continues to remain unreleased. Which is also why the humbug over Swiss accounts is the perfect distraction from the real conversation on undeclared wealth, which no political party – ruling or otherwise – would like us to have.
If we did, those conversations would be entirely different, along the lines of those I had with politicians from the four main parties during the recent Maharashtra elections on candidate spending (a sort of straw poll I attempt in every election I cover). Everyone I spoke to – in the Congress, Bharatiya Janata Party (BJP), Shiv Sena and Nationalist Congress Party – broadly agreed that candidates were spending between Rs 2-4 crore per seat. If that seems like a conservative estimate especially in cash-rich Maharashtra, it probably is. When it comes to spilling the dirt even informally on off-the-books spending, it is safe to assume that politicians will automatically downgrade the actual amount by about 50 per cent. But even going by the average of Rs 3 crore per seat, that still works out to approximately Rs 3,500 crore spent by the four parties, more than 10 times higher than the Election Commission (EC) stipulated ceiling. The Rs 3,500-crore figure, incidentally, is just spending by (or on) candidates; it does not include the party’s expenses – the cost incurred for the travel and rallies of central leaders/party supremos, ad campaigns and so on – an expense which, as we know, has no ceiling under Indian election laws. In other words, at around the time we were treated to the nightly hokum of spokespersons sparring over which party is more or less serious about repatriating illicit foreign funds, the same political establishment was secretly mobilising and remitting about Rs 4,000 crore of black money into a single Indian state in the course of just two weeks.
To expect political parties to even begin dismantling the dubious, in some cases outright criminal networks that provide this efficient service during and between elections is unrealistic, given their cussed reluctance to agree to even a modicum of financial transparency. There is no better indicator of this than the EC’s website, which details the EC’s ineffectual attempts to build consensus on a basic set of guidelines, for instance that political parties must submit to it audited accounts; maintain a record of contributions below Rs 20,000; make expenditures above Rs 20,000 by cheque; and so on. The Congress has objected to most of these suggestions, the BJP has chosen to not reply at all. At the risk of mangling metaphors, it’s time we stop chasing red herrings and divert public outrage towards the sources and methods of political financing — the whale in the room of illicit fund flows.
According to the journalist M K Venu, a government-commissioned report on domestic black money by the National Institute of Public Finance and Policy (NIPFP) estimates that our parallel economy is 70 per cent of gross domestic product, approximately $1.4 trillion. The report has sector-wise estimates of the generation of undeclared funds; more than one Chief Election Commissioner has, separately, made it clear which “sector” they believe is the biggest source of black money (hint: Indian elections). Which is perhaps why the NIPFP report, parked in cold storage by the UPA for almost a year, continues to remain unreleased. Which is also why the humbug over Swiss accounts is the perfect distraction from the real conversation on undeclared wealth, which no political party – ruling or otherwise – would like us to have.
If we did, those conversations would be entirely different, along the lines of those I had with politicians from the four main parties during the recent Maharashtra elections on candidate spending (a sort of straw poll I attempt in every election I cover). Everyone I spoke to – in the Congress, Bharatiya Janata Party (BJP), Shiv Sena and Nationalist Congress Party – broadly agreed that candidates were spending between Rs 2-4 crore per seat. If that seems like a conservative estimate especially in cash-rich Maharashtra, it probably is. When it comes to spilling the dirt even informally on off-the-books spending, it is safe to assume that politicians will automatically downgrade the actual amount by about 50 per cent. But even going by the average of Rs 3 crore per seat, that still works out to approximately Rs 3,500 crore spent by the four parties, more than 10 times higher than the Election Commission (EC) stipulated ceiling. The Rs 3,500-crore figure, incidentally, is just spending by (or on) candidates; it does not include the party’s expenses – the cost incurred for the travel and rallies of central leaders/party supremos, ad campaigns and so on – an expense which, as we know, has no ceiling under Indian election laws. In other words, at around the time we were treated to the nightly hokum of spokespersons sparring over which party is more or less serious about repatriating illicit foreign funds, the same political establishment was secretly mobilising and remitting about Rs 4,000 crore of black money into a single Indian state in the course of just two weeks.
To expect political parties to even begin dismantling the dubious, in some cases outright criminal networks that provide this efficient service during and between elections is unrealistic, given their cussed reluctance to agree to even a modicum of financial transparency. There is no better indicator of this than the EC’s website, which details the EC’s ineffectual attempts to build consensus on a basic set of guidelines, for instance that political parties must submit to it audited accounts; maintain a record of contributions below Rs 20,000; make expenditures above Rs 20,000 by cheque; and so on. The Congress has objected to most of these suggestions, the BJP has chosen to not reply at all. At the risk of mangling metaphors, it’s time we stop chasing red herrings and divert public outrage towards the sources and methods of political financing — the whale in the room of illicit fund flows.
The writer anchors the ground reportage show Truth vs Hype on NDTV 24X7
http://www.business-standard.com/article/opinion/sreenivasan-jain-red-herrings-the-black-money-whale-114111701671_1.html