Rent-seeking.

Rent-seeking is described as obtaining wealth without creating any wealth. This can be illegal as in refusing to perform a service without payment of bribes which is what the civil service in India does everyday. Or it can be giving away natural resources without conditions to friends or relatives who then sell them for windfall profits. This occurred in the granting of 2G licenses in telecom and giving away coal mines to people with absolutely no experience of mining, for example gutka makers and media persons. This behavior leads to some people becoming extremely wealthy without creating any wealth for the country and leads to waste and inflation. But the most common, perhaps the oldest and insidious form of rent-seeking is perfectly legal and is practiced in every country in the world. It is of course seeking rent for land or a dwelling. Human beings need shelter from the elements and to protect our possessions from thieves. Everyone therefore needs to live in a dwelling with a roof, 4 walls and doors which can be locked. However, with land prices reaching astronomical levels it is not possible for most people to buy their own dwellings. People are therefore forced to rent some form of shelter depending on their earning power. In the west residences are bought and sold in a transparent manner so that the actual price paid is on record. That is because stamp duty is very low, generally 1%, and there is no capital gains tax on selling an apartment or house which is the main residence of the seller. In India stamp duty ranges from 6-12% depending on which state you live in and capital gains tax varies from 10-20% depending on how long you have used your residence. Long term capital gains maybe saved if you invest all the money in another property within 3 years. With property prices in tens of millions tax incurred can be very heavy so people pay half of any price in cash, also called black money, so that they pay tax only on the amount paid by cheque. Property brokers charge 2% from both buyers and sellers which is always paid in cash. The entire earnings of property dealers are in black and the only avenue of investing so much cash is in property. Because most people have no access to black money the property market is driven mainly by speculators, money launderers, politicians and civil servants. The prices therefore keep rocketing upwards beyond the reach of 90% of people. These are forced to live in rented accommodation. There is no law as to what facilities the landlord has to provide and how much he can charge. Anyone lucky to own a property rents out a portion for the highest rent possible and increases this by 10% every year. If half of your salary goes in paying rent it is impossible to save enough to buy your own home. This is therefore the primary cause for poverty. So why don't the politicians bring down taxes and drive down property prices? Then where will they invest their black money? Rent-seeking is why they entered politics in the first place.