Surgical strike on Black Money, eh? Is it dead yet? Or has it changed colour and turned white, pale, cream or some other colour of your preference? Good move, may be, but what’s in it for any of those who are going bonkers over it? For the most of us, it’s yet another inconvenience in our already inconvenient lives.
To re-explain the basics, just so we are on the same page, Black Money is the same colour as any other money, and gathers its melanic properties from being undeclared, which is not necessarily the same thing as ‘unearned’ or ‘undeserved’ or ‘looted’ or ‘begotten by unlawful means’; it simply means that the applicable taxes on this money have not been paid, which apparently dims its complexion. People don’t pay taxes because the fact is that nobody wants to hand over his or her hard earned money to the government in taxes, but most of us can do little about it because we get our salaries TDS deducted. Then there are businessmen, who manage their own taxes and have a good deal of control over it. So, they do what most of us cannot — evade tax. Bad thing, yes. But they earn more, evade taxes and get to splurge freely making us turn to coal with jealousy. Disgusted, we call the tax-unpaid money ‘black’. But that’s — for all practical purposes — money saved; you might also call it ‘money stolen from the government’. Yes, bad, very bad, evil, dishonest, loathsome and all that, yes, but it’s still extra money and a lot of it, which makes a good deal of it readily disposable.
Spurred by greed, they send the black money to work and make more money. It changes hands and remains in circulation outside the books. It’s human to be generous when you have lots of disposable wealth at hand. So, the ones with black money are willing to spend a lot more freely than, say, someone who has worked hard to earn his grub and has paid the government its dues, after which he is left with barely enough for his family. So, the black-money-rich spend with a free hand, and the working class and small businesses earn more without having to break their backs for it. If there is any trickle-down effect, it is through such uncareful spending.
And then there is this guilty conscience of the nouveau-riche, who, having been brought up in the traditional middle class values, feel guilty about having so much when so many of their fellow human beings are struggling to eat. The Jagraatas, the langars, the bhandaras and the Maa Ki Chaukis are roped in to assuage the shrill little voice of the conscience. That’s more like bribing the gods to look the other way, but, intent regardless, the rickshaw-pullers, the beggars and the poor get to eat better food; the aspiring singers and musicians get to show their talent and make money to live and train, and the workers of the tent house also get employment because the tent house gets work apart from marriages. So, the rich feel good and the poor get fed. And the government gets the indirect taxes on the material used for cooking the food and other things.
Black money is also the money that is freely lent for high-risk, low security or no security, businesses on high interest rates to those people who can’t obtain loan from conventional financial institutions. The amount thus loaned out becomes seed capital for many small businesses, which aid the mainstream economy in their own small ways.
What happens when the people with large amounts of disposable wealth suddenly have no money? They would still have enough money to live well. They would still have maids and servants; fewer, may be. Where they had four drivers for three cars with one driver in spare, they would now have two drivers for three cars, which is still good enough, but not quite as extravagant as four for three. Who loses? The drivers. You can talk of the maids and the servants and the gardeners and so on the same way. The rich would still live with much the same luxury. But they would have less to spend freely for some time. There was a good reason why the ‘bold decisions’ of demonetization are not taken every other day.
While the government’s decision might be good, I don’t understand what’s it that the poor, the lower middle class and middle middle class are celebrating so gaily? Hidden money is not getting out in the open; it is getting burnt. And a lot of money that was about to be spent in your shop, Mishra ji, and your restaurant, Saxena Sahab, and your food joint, Arora ji, and your salon, Kallan Miyan, is not coming to you anymore; it’s going down the drains, quite literally.
The Black Money some people promised to bring back was the one that’s stacked away overseas. It could be enriching for us, as it is our money lying elsewhere well beyond our reach. As of now, we are just burning old paper at home. The government might gain in taxes, but your small businesses and your services are going to be spent less lavishly upon. Making the rich poor does not necessarily make the poor rich.
I am not an economist, and am still awaiting the pronouncement from the experts on this, but the euphoria around baffles me nevertheless. What exactly are the people so, so happy about? That the rich would no longer be quite as rich as before? So, is it the sadistic laugh of the jealous? For the common people it’s nothing but long hours in queues in front of the banks without any black money happiness in the past, present or future.
And soon enough you might hear chants about the government having delivered on its Black Money promise. But that’s not the same Black Money, buddy. Sorry.