ISBF Distinguished Public Lecture Series
Missing Dimension of Macro Policy-Making in India: The Black Economy.
Speaker: Dr. Arun Kumar
On 26th August 2019, Dr. Arun Singh, the Malcolm S Adiseshiah Chair Professor at the Institute of Social Sciences, entertained our distinguished faculty members and students across batches about the Black Economy, whilst simultaneously nudging our spirits by lightening the mood and providing real-world examples of bureaucracy and corruption, that gave possibly the best segue into the conclusion of his lecture. He sincerely tackled our queries and apprehensions and blessed our environment with what I would say is a masterstroke in public speaking.
He compared the current economy to an iceberg, having a deceptive reflection when taken at face value. With his uncompromising fact-by-fact research, almost reminding me of the same spirit Shashi Tharoor had at Oxford Union, he made me ask myself a vital question I had forgotten since Demonetisation happened – “did it work?”
He explained to us how 62% of India’s GDP forms the black economy and scoffed at the sheer negligence of our government, our judicial system and even our central bank, which refuses to account black money into our GDP.
In an era where most people only read bite-sized news, snippets and controversial headlines, you would weigh bureaucracy, and public sector corruption, as the biggest flagbearers of our country’s collective failure. He busted these myths in Indian economic history in a flash.
Most Indians believe that cash in itself is black and Demonetisation forced people who stuffed money into mattresses, to confront the system. But did you know, India’s tax structure doesn’t come into play till an income of 5 lakh rupees, and there are 94% Indians who earn below that. An income that doesn’t have to bear the tax, doesn’t count as black income.
“The clever find ways to hide money.”
Layering, a form of money laundering, is a method by which a citizen can illicitly siphon off money, leaving absolutely no trace back to him/her. Currency changes enough countries, hands and companies to become as good as invisible.
Black money or income generation is actually done by hiding actual revenues and costs, by under-invoicing revenues and overstating costs. Such large scale overstating of costs shoots up inflation and dismantles our balance of payments.
Dr. Arun gave us a brutal ‘joke that hurt’ as he said, the economy was booking costs of wages without any production or actual employment to back them up in what he called as ‘activity without productivity’.
Concluding his detailed and well-planned lecture, he said that the only way to tackle black money was accountability. We need sustained mass movements that shake the pillars of our relaxed government into giving us the absolute Right to Information, to safeguard our whistleblowers and still maintain a sizeable difference between the thief and the good samaritan.