Friday, November 18, 2016

Cleaning up the Indian Economy

It's now been a week since the Prime Minister demonetized the Rs 500 and Rs 1000 notes and it's time to reassess the situation. I for one have been very impressed by his ability to pull off a pretty dramatic move but lots of my friends have completely different opinions. Some of them think that instead of inconveniencing the ordinary man he should have gone after the high profile politicians and businessmen who are known to have lots of black money stashed away. Others believe that these stunts are designed to please the masses. By positioning himself as a brave, larger than life Robin Hood who is out to snatch the ill-gotten gains of the rich, he is improving his chances of being re-elected as PM.  Their belief is that if he was really serious about ridding the country of corruption, he would strike at the underlying cause of black money generation , which is the excessively high rate of taxation the government levies. They feel that if the government reduced the tax rate, most citizens would be willing to pay more , as it wouldn't be worth the hassle to hide their income.

Many feel that he is bitten off more than he can chew. He got poor advice, and didn't have time to get a thoughtful second opinion . It's only now that he's realizing some of the unintended consequences of his action, but it's too late to fix these.  They believe that because of all the unnecessary hardships which ordinary people are being made to face, they will boot him out of power.

I guess it's always possible to point out flaws in any action - it's easy to be wise after the event. And it's true that some of the challenges were misjudged, and that things could have been done in a better way. 

However, being an armchair critic is hardly fair - at least he had the courage to act, which is far more than we can say of the vast majority of our political leaders .

Also, I feel it's not fair to look at this one single step in isolation. I think it's the first step towards his journey of cleaning up the system. It's an important first step , because it shows that you are serious about causing pain to the powerful corrupt people who've shamelessly hoarded black money over the years.

Another criticism is that all the black money is not stashed away as cash - a lot of it is in the form of benami properties , gold and Swiss bank accounts.  Yes, this is true,
but just because people have stashed away money in Swiss accounts doesn't mean that you shouldn't go after the black money which they've stored in cash.

Some people feel sorry for the average housewife who's stashed away money under the mattress, but the fact still remains that this was unaccounted for money , on which tax wasn't paid. Not paying tax is hardly something which an honorable citizen should be doing.

The trouble is that we've all got used to cheating the government . It's become a bad habit which has become a part of our culture, simply because we've been able to get away with this kind of cheating for so many years . In fact, we look down upon the simpletons who pay all their taxes, and think of them as being stupid and clueless. We admire and envy the rich, because of the clever unscrupulous ways in which they have  been able to dodge taxes and acquire tons of wealth without fear of being caught or punished. 

However, it's high time we started adoption a zero tolerance policy towards corruption. After all, we weren't born corrupt . Most of our freedom fighters were honest. It's only after independence that the cancer of corruption has spread so virulently. There are lots of countries where everyone is honest , and we can learn from them.

In India, the problem is that corruption has become so prevalent, that we have started taking it as much for granted as the air we breathe.  Power, corruption and money have gone hand in hand, and this has become a negative vicious cycle.

It's high time we started changing , and this is a  great starting point. Cutting off the air supply is going to cause pain, and some people will suffocate, but hopefully this will allow us to kill this cancer . Our next generation will now no longer have to look upto crooked rich people as their role models ! How this is going to play out is going to be an interesting story , and I'm keeping my fingers crossed.

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