All that matters is growth, even if it's fueled by black money
Prasanna Mohanty | October 11, 2011
Our union law minister Salman Khurshid made some breathtaking observations that reflect how this government is fixated on growth at any cost.
First, his take. Speaking to the Indian Express on Sunday, he said: “What will affect the functioning of the government is if other institutions do not understand the kind of political economy we are faced with today: what is needed to encourage growth and investment? If you lock up top businessmen, will investment come? What optimal structure should be put in place for investment to come?”
He then clarified that he was referring to the judiciary and added that though the judiciary was making positive interventions in various fields, including in the fight against corruption, “it also has to understand the political economy”.
The comment comes in the wake of recent judicial intervention in the 2G scam that has led to the imprisonment of some leading businessmen. They have been accused of graft, dubious financial claims and deals and profiting from the spectrum allocation.
What then Khurshid is suggesting is this: Even if the top businessmen indulge in corruption and financial malpractices, don’t punish them. If you punish them, economic growth and investment will slow down.
Is this the law of the land? Or is this the law that our law minister wants?
There are ample evidences to suggest that our economy is generating a huge amount of black money that involves corporate entities. Global Financial Integrity, a Washington-based think tank, in its report of November 2010 had pointed out that the corrupt have drained India of $462 billion since 1948. Governance Now had pointed out in January this year (in the cover story titled 'Clasp of the Corporates') how tax concessions to corporate houses range from Rs 2.5 lakh to Rs 3 lakh crore. Veteran journalist P Sainath wrote in March this year how about Rs 240 crore of corporate income tax is being written off every single day (revenue foregone under the corporate income tax being Rs 88,263 crore for the financial year of 2010-11), adding that “the same amount leaves India each day in illicit fund flows to foreign banks”.
Khurshid’s observations would mean that black money is good money if it is reinvested in economy and turned white.
Khurshid’s comments also come at a time when Anna Hazare is taking his fight against corruption to another level by canvassing against political parties not supporting the Lokpal bill in the Hisar by-election.
Interestingly, caught in a bind, the government intends to toughen law to check corruption in corporate sector. The union home ministry is reported to be contemplating changes in the Indian Penal Code to deal with private sector contracts. Minister of state for DoPT, V Narayansamy, has been quoted as saying that the government intends to criminalise private sector bribery, realizing that private sector to private sector bribery was undermining fair and reasonable competition leading to unaffordable pricing.
But the law minister seems oblivious and unmindful. That is cause of worry.
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