Black money is essentially a popular name for black economy. By now it has ‘evolved’ into a grey, that is an indistinguishable mixture of black (i.e., illegal-immoral) and white (i.e., legitimate-moral), political economy. Also, it continues to be among the major factors holding back inclusive development of India. Evidently, such a pattern of growth in the midst of a booming grey system would be highly volatile, non-sustainable and entail heavy and unjust socio-economic and environmental costs. Along with the above, growing integration of the Indian economy in global financialised markets foreclose the prospects of effectiveness of the recent fairly noisy anti-black money measures.

However, given the long-run disruptive and anti-social, mafia-infested role of the black component of the grey system, anti-black measures are a practical imperative, both for unearthing the old hordes as also for seriously limiting, if not preventing, the genesis of this ubiquitous phenomenon except as a marginal deviant episodic phenomenon. After all, experience shows that the exponential, all-encompassing growth of the grey phenomenon has coincided both with the neoliberal, globalisation and state policies of further disequalising growth and bestowing discretionary state largess on the existing super corporate oligopolies which rule out fair and impersonal competition. Little surprise, global scale cronyism is flourishing and democracy has been turned into a virtual plutocracy. The most glaring negativity of it all is state protection against failure (by long-term legal system of limited liability, irrespective of corporate shenanigans and anti-liberalists bailing out policies under the pretext that such units are too big to be allowed to go under. It means propping up of a system of private appropriation of profits with social or state absorption of losses. This is a ‘normal’ part of capitalist crisis management, as can be seen lately in the popularity of the policy of negative interest rates. Actually as the crises intensifies the logic of markets and private capital accumulation is often made to stand on its head. As we see below this is among the factors that make neoliberal growth a contribution to adverse inclusion of the general public. What follows therefore is that the root cause of the grey system has been left untouched, nay have been given additional elixir of discretionary favours conducive to growth fetishism and private super high speed amassing of massive fortunes by the corporates and the political bosses.

Hence the phenomenon that needs to be unravelled in order to see the possibilities and limits of curbing the grey political economy is why and how this scourge of our socio-economic existence got better of the hitherto applied economic, legal and administrative remedies (both during pre-1990 and post-1990 periods) and their implications for the current endeavours. Ignoring such social-scientific reasoning, one sees how frequently publicised quantitative guesstimates of the growing size of the black economy as a proportion of the GDP (presumably in nominal terms which render overtime comparisons of its size meaningless) amount to sensation-mongering and obfuscation. What has to be understood is how and why the grey political economy as both a cause and consequence of the mixed economy statist growth model and its regulatory capture by the intensified power and reach of corporate oligopolies jointly with the political classes and the international mentors of both the hegemonic groups continue to fail the masses. It means those who sabotaged state-led growth as also state-facilitated corporates–led growth get rewarded by grabbing the privileged leadership of the economy.

What cements the crony anti-people distortion as reflected in the processes of “phishing for phools” (a colourful term for black transactions coined by two Nobel laureate economists) are the processes of volatile cyclical growth spawned by the animal spirits. The dominance in India of financialisation and organised speculative activities in the midst of declining farm sector surrounded by the vast sea of unorganised businesses led by penny capitalists under the rule and with the connivance of various political classes who have made politics a thriving lucrative business are the essential elements for understanding the sham and a shallow character of the recent anti-black economy policies. The short point is we need a detailed and no-nonsense control and social accountability of both the corporate form of organising business and practically unregulated political parties to run our democratic polity. Except mobilisation of the common people for a real democratic polity and economy there are hardly any routes for genuine people-centric development cleansed of the scourge of bad money-bad politics. We still do not seem to have learned the lesson from the aborted late 1940s Income Tax Investigation Commission which could have to an extent nipped in the bud the seeds of our perverted politics and economic management. If it is not going to be understood as crying over spilled milk one may suggest how a lot of positive energisation of democratic polity and development could have emerged  by means of enthronement of a genuine people’s agenda of post-independence rebuilding of India of our dreams. In the absence of such factors, our system of democratic planning for development was bound to meet its Waterloo at the hands of the black economy and the narrow-base increasingly top-heavy high command oriented even dynastic politics with close ties with the top corporate groups and blessings of the former colonial masters. As a result, the minimum basic needs of the people were made a distant dream by the grand illusion of trickle-down growth. Populism as grand democratic development deceit became the public face of the actual processes of gushing up of the gains of growth. Inevitably in course of time rampant corruption infested grey political economy threatened to become the undoing of even the corporate and statist agenda by undermining its own viability and sustainability. All these top level churnings were happening at the increasing cost of the left-outs of economic growth. It is by now well known how we failed to have faster and cleaner growth capable of providing the basic necessities of every Indian – a dream which keeps moving away as we approach the promised date. This is well known recent history, narrated, among others, by so many official enquiries as well, including the stories of shenanigans and scams indulged in by the corporate and political classes. Hence until a regime of social controls and accountability is instituted for the political parties and the corporate sector, the other steps, howsoever essential and even effective in their narrow range, would ultimately boomerang.

This is inherent in the policy of falling back on private Indian and foreign corporates-led markets-guided intensely disequalising economic growth as a good in itself. The grey political economy flourished distorting both democracy and development by excessively narrow base control over the goodies flowing from such growth. What got sacrificed was the social imperative to get over long standing adverse outcomes regarding lack of fair and adequate livelihood for the labour force, social and environmental security, sustainability and public investments for capability building for joint attainment of their civic and other rights. From a macro-social national perspective for fair participation with dignity in the processes of globalisation to become a self-financing nation with an enduring viability in global markets adopting a people- and environment-friendly product-mix and technologies continued to remain elusive. On the contrary, the economy, BOP and public finance of India became increasingly exposed to the depredations of the illegal and underhand external outflows of the black wealth in numerous tax havens by means of shell companies by both the corporate giants and the crony-corrupt political classes along with page-three celebrities. Hence it is time we moved towards genuine efforts to dethrone the duopoly of bad money married to bad politics.

Kabra is Malcolm S Adiseshiah chair professor, economics of development and decentralized planning, Institute of Social Sciences, New Delhi, since 2010. Earlier he was professor of economics at the IIPA and taught at Ramjas College, Delhi.