OPERATION OF CORRUPTION &

BLACK money IN INDIAN POLITICS

AND BUREAUCRACY

by ARPAN KUMAR ADHIKARI

CONTENTWHAT IS CORRUPTION ?NATURE OF CORRUPTIONSIMPORTANT CAUSES OF CORRUPTION IN INDIACONSEQUENCE OF CORRUPTIONWHAT IS BLACK MONEY ?SOURCE OF BLACK MONEYEFFECTS OF BLACK MONEYREMEDIES TO MINIMIZE BLACK MONEY AND CORRUPTIONWHAT IS BUREAUCRACYSource of Black MoneyCORRUPTION IN INDIASOME MAJOR SCAMS IN INDIA REFERENCE

WHAT IS CORRUPTION ?

The word corruption means destruction, ruining or spoiling a society or nation. A corrupt society is characterized by immorality and lack of fear or respect for the law. When it stops valuing integrity, virtue or moral principles it starts decaying.

Definition of corruption is given by the world bank - “abuse of public power for private benefit” .

NATURE OF CORRUPTIONS

Administrative Corruption: Corruption that alters the implementation of policies, such as getting a license even if you don’t qualify for it.

Political Corruption: Corruption that influences the formulation of laws, regulations, and policies, such as revoking all licenses, and gaining the sole right to operate some public utility with monopoly.

Corruption is caused as well as increased because of the change in the value system and ethical qualities of men who administer

Tolerance of people towards corruption and the absence of a strong public forum to oppose corruption allow corruption to reign our people.

Vast size of population coupled with widespread illiteracy and the poor economic infrastructure lead to endemic corruption in public life.

Complex laws and procedures deter common people from seeking help from the government.

IMPORTANT CAUSES OF CORRUPTION IN INDIA

Emergence of a political elite which believes in interest oriented rather than nation oriented programmes and policies.

Artificial scarcity created by people with malevolent intention wrecks the fabrics of the economy.

In a highly inflationary economy, low salaries of government officials compel them to resort to corruption. Graduates from Indian institutes of management with no experience draw a far handsome salary than what government secretaries draw.

Big industrialists fund politicians to meet high cost of election and ultimately to seek personal favour. Bribery to politicians buys influences and bribery by politicians buys votes. In order to get elected, politicians bribe poor, illiterate people.

CONTINUE…………

Lack of quality in services

Lack of proper justice

Disregard for officials

Lack of respect for rulers

Decrease in foreign investment

Lack of faith and trust on the person & governments

Lack of development

CONSEQUENCE OF CORRUPTION

The term black money usually refer to any income on which the taxes imposed by government or public authorities have not been paid.

Black money can also be defined as assets or resources that have neither been reported to the public authorities at the time of their generation nor disclosed at any point of time during their possession.

WHAT IS BLACK MONEY ?

(a) Income-tax evasion(b) Corporation tax evasion(c) Excise duty evasion(d) Customs duty evasion(e) Black income from exports(f) Evasion of state taxes.(g) Bribes, illegal commissions.(h) Goods supply to black market(i) Unaccounted stock-market profit(j) Interest earned from unorganised credit markets.

SOURCE OF BLACK MONEY

False Information about the Economy

Impact on Fiscal System

Create Inequalities

Misguiding on Resource Allocation

Implications for Monetary Policy

EFFECTS OF BLACK MONEY

To cancel the currency notes of 500 and 1000 and creates hard and fast rules

It is necessary to inform, that after purchasing of gold and immovable property and while transfer ring such property whether income tax is paid or otherwise.

It has been made compulsory to declare and give information regarding corruption made while dig ging, natural property and mines.

It is made compulsory, to impose income tax and pay it on the income earned from the foreign coun tries.

It is necessary to revise tax procedure and where there are loopholes from laws should be blocked.

REMEDIES TO MINIMIZE BLACK MONEY AND CORRUPTION

Specific fixed deposit plan of 1981 should be again started, and block money should be brought under the production purposes.

The Government should expand and propagate the banking business and all transaction should be made through bank only.

In order to protect the social and moral values of the people and all should help for all round develop ment of the country.

The information of double tax plan contract should be given to the people and the black money which is in the foreign countries should try to bring back and the countries with whom contract has been made by exchanging the information should try for stoppage of black money.

There should be raid through the income tax department all these who are from high income group and who are doubtful tax evaders.

CONTINUE…………

A system of government in which most of the important decisions are taken by state officials rather than by elected representatives.

Bureaucratic administration means fundamentally domination through knowledge

— Max Weber

WHAT IS BUREAUCRACY

Corruption is widespread in India. India has been ranked 94th out of 176 countries in Transparency International's 2012 corruption perception index (CPI). Corruption has taken the role of a pervasive aspect of Indian Politics and Bureaucracy.

In Indian civilization, corruption have caused maximum suffering to the humankind. In ancient Indian history the great Indian philosopher Kautilya says “just as it is not possible, not to taste honey or poison put on the surface of the tongue, so it is not possible for the government servant dealing with money not to taste it in however small a quantity.”

On the difficulties of corruption detection Kautilya says “just as a fish moving under water cannot possibly be found out either as drinking or not drinking water, so government servant employed in the government works cannot be found out taking money.”

CORRUPTION IN INDIA

1. Mega Black Money Laundering Scam :-

Cost Rs.: 70,000 Crores Face of the Scam: Hassan Ali Khan, Suersh KalmadiThis scam of ultra high

magnitude came into lime light when Indian businessman was arrested on money laundering charges which was to the tune of Rs. 39,120 crores.

SOME MAJOR SCAMS IN INDIA

2. CWG Scam: Cost Rs.: 70,000 crores Face of the Scam: Suresh Kalmadi.

Allegations of corruption over the 2010 Commonwealth games in Delhi are being investigated by several bodies including the CBI and a special committee set up by the Prime Minister. Allegations of corruption spanned a broad spectrum including issuing of contracts and purchase of equipment – from treadmills to toilet rolls.

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3. 2G Spectrum Scam

Cost: Rs 176,000 crore Face of the Scam: A. Raja & M. K. KanimozhiTelecoms Minister

Andimuthu Raja was sacked after a report by India's state auditor said his ministry sold licenses and spectrum below market prices, depriving the government of up to USD 39 billion in revenues.

4. Adarsh Housing Scam Cost: Rs 18,978 crores Face of the Scam: Ashok Chavan and Politicians

Ashok Chavan

5. Scorpene Submarine Scam Cost: Rs 18,978 crores Face of the Scam: Ravi Shankaran

6. Madhu Koda Scam Cost: Rs. 4,000 crores Face of the Scam: Madhu Koda

7. Stamp Paper Scam:Cost: Rs 20,000 crores Face of the Scam: Abdul Karim Telgi

8. Bofors Scam:Cost: Rs. 400 million Face of the Scam: Ottavio Quattrocchi

9. Fodder Scam Cost: Rs. 950 crores Face of the Scam: Lalu Prasad Yadav

10. Hawala Scam :Cost: Rs. 80 crores Face of the Scam: L.K Advani / P V Narsimha Rao

11. Satyam Scam :Cost: Rs. 14,000 crores Face of the Scam: B. Ramalinga Raju

12. Stock Market Scam:Cost: Rs. 3,500 crores Face of the Scam: Harshad Mehta (“Big Bull”)

Johann Graf Lambsdorff – “Consequences and Causes of Corruption – What do We Know from a Cross-Section of Countries?”Dr.Jaywant & S.Bhoyar – “Black Money and Corruption; Causes and Remedies”Smriti Chand Money – “Black Money in India: Different Sources and Effect of Black Money”Jeevan Singh Rajak – “Corruption in India: Nature, Causes, Consequences and Cure”Report of Transparency International 2012Ministry of finance department of revenue central board of direct taxes New Delhi.-“WHITE PAPER ON BLACK MONEY” – May 2012

R E F E R E N C E

THANK YOU