Saturday, June 21, 2008

In white and black

One of the myths that we usually encounter is that corruption is domain of the political and bureaucratic class. Nothing else can be farther from the truth. All of "us" ("us" as in the indefinable "common man") are corrupt because we are the ones who pay bribes.

We are faced with corruption every day. To get a driving license, we pay bribe. To get the housing plan approved, we pay bribe. And, in the shining new private aviation industry, a year ago, an official of a private airline (now bought over by its competitor) demanded bribe to ensure extra luggage can be checked in. 

It is quite cumbersome to not pay a bribe and yet get things done. I flunked my learning license test twice and the driving license test once. I ran around the Jaynagar RTO buying up all sorts of forms to fill in - it was cumbersome, it was painful, but I got the license. On the other hand, as an uninvolved third-party, I've witnessed a real-estate negotiation where the broker said "why pay tax to the Government ?" !!!

Though talked widely about, I hadn't understood the meaning of "black money" and how it gets created. And, found out that we, the citizens create it ... Let us say I pay a part of my completely accounted for (and taxed) salary as a bribe to someone for some extra "service", whether he is a Government or Private employee. And, of course, this isn't declared or taxed, and hence becomes "black". Because the PAN number is needed for all most all transactions these days, it is very difficult to invest it anywhere. This unaccounted money can't be deposited in a bank or in stocks. Most ways of "enjoyment" of this wealth are thus ruled out out, narrowing the avenues to a very small band - real estate, bribing somebody else or buying jewels or valuable items. And that often isn't enough.

We need to pity the otherwise decent people who get into blackmoney business. Can't use, can't keep, can't spend. What to do with it ? How to "whiten" it ?

That is why I get pissed off when people crib that our infrastructure is so bad, our politicians are corrupt, and then, they try to join a signature-campaign to reduce corruption !! After all, aren't we the ones who evade taxes by claiming HRA for our own house, Vehicle allowance for our own vehicles and not disclosing the complete amount paid in real-estate transactions ...

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At Monday, 28 July, 2008 at 5:11:00 PM IST, Anonymous Sanjay Kumar Thakur said...

Hi Sridhar,
I am glad to read your blog on the concept of "balck money" and practice of "corruption".Your tirade against the corruption on common man level is ,in fact, correct. However,I feel add my view as following:
The word you used "corruption" is nothing but by product of an activity called "economic arbitrage". If there is more than one way to get something done,then one will,generally, follow easiest/cheapest and shortest way to achieve it- This is very simple fact about the behaviour of human race not only for us- indians.So, If one can get a 2 wheeler DL without even visiting the RTO or without appearing for the test and by just paying 250/- rather than running around the RTO officials for a week or even for month, you know, as a management professional that, the opportunity cost will force one to follow the first option, even if it not ethicalan in fact, is illigal. There may be someone more smart guy.Suppose, paying Rs. 50/- to traffic mamu's once in 6 month is an estimated probability,one will not prefer tohave DL only by paying even the meagre sum of Rs. 250/- forget about running around the RTO for a week.
See another example, you might have seem traffic mamu's sitting/actually hiding- away from the traffic signal-, just to catch you once you break the traffic rules.In factthey wait for breaking of the rules rather than preventing by at least being visible at the rightplace assigned in traffic signal post as, that will reduce the probability of the breaking rules and, therefore,reduce their income as well. You might be aware that every traffic incharge,officially, has a monthly target of collection of such penal fees.
So is true with train ticket checkers.You might have heard that there is an association(illegal and unethical although) which charges 50/- a month for travelling in the mumbai local train.They issue an id card and, if the member of that association get caught by the ticket checker, then he/she has to show that id card and the ticket checker receives the fine/payment by the association, citing that id no. I was agahsted to know this but then i found it a logical insurance business proposition.

This all happens because the interest of law makers and interest of the law implementors diverges and varies widely.
And, this economic arbitarge produce bacak money for the user and facilitator and deficit in the account of government which may lead to lack of installation of proper infrastructure.
Franckly,We all (Law maker,law implementor and law abider) consciously or unconsciously go by cost/oppurtity cost concept and any avenue to get work done economically is parcticed by the masses.


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