Wednesday, December 07, 2016

Be fair, morality will surely follow.

The Revenue Secretary announced yesterday that the government expects all banned notes to return back into the system. On 8 November, in a surprise announcement, the Prime Minister converted all 1,000 and 500 rupee notes into trash. The total amount of money in high denomination notes was Rs 15.4 trillion, of which about 30%, or Rs 4.5 trillion, was expected to be black. Since those holding large amounts of black money would not be able to deposit them in banks they would necessarily destroy the old notes. Since the Reserve Bank guarantees the value of every note it will be able to write off the money destroyed and pay that as dividend to the government. Rubbing his hands in pleasure, at the expected bonanza, the Prime Minister grandly announced a handout of Rs 10,000 to every zero-deposit, or Jan Dhan, account, nicely timed to be just before the UP and Punjab assembly elections. Even Ms Jayalalithaa, God rest her soul, who knew how to win elections with freebies, would nod in appreciation. As we had expected, an exercise in bad faith results in bad outcome. The government is expected to gain around Rs 800 billion while losing Rs 2 trillion. Of our money. Biju Dominic writes that some problems are normal, while others are wicked. Corruption is an example of a wicked problem. "There is probably no institution in India that can claim to be beyond the grip of corruption. Hardly any individual citizen in this country can say that he has not been affected by corruption," he writes. So, how to reduce corruption? "It is not the quantum of fines collected or, the large-ticket tax declarations, but the emotion of fear of the long arm of the law that will drive behaviour change," he suggests. Will it? In 2008, there was a huge scandal in China when melamine was discovered in baby milk. In China criminals are routinely executed with a bullet to the back of the head and then organs are harvested for transplant. That has not stopped corruption in China. Russians used to smuggle western music into Soviet Union by recording them on X Ray plates. This when Joseph Stalin was in power. Perhaps it is because human beings have a strong sense of fairness. Scientists have demonstrated such sense in Capuchin monkeys. When the Prime Minister is happy with selecting criminals to be candidates for the BJP then he is not qualified to lecture us about not paying taxes. At present he has the support of the poor because he has tapped into jealousy of the rich but when the poor learn that there was no black money they will question why they had to suffer so much. India will become a moral country when we see politicians going to prison for the crimes they commit. Not before. No matter what the torture.

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