Page 363 - DECO502_INDIAN_ECONOMIC_POLICY_ENGLISH

Unit 28: Parallel Economy

seller of say an imported car has to register with the STC and a buyer can only purchase it Notes
through the STC. Since the Corporation will be able to know the capital gains accruing from
these transactions, it will provide an opportunity to the state to tax these capital gains
appropriately. This will act as a double-edged weapon against black money. On the one hand,
it will slow down the transactions in urban property thus breaking the back of the speculative
boom and on the other, it will bring more revenue to the state.
Dr. K.N. Kabra examining Bhaduri’s proposal mentions : “The political pre-conditions for making
such a move are not vastly different from those involved in nationalisation of such properties.
The feasibility of the proposed remedy on political grounds does not seem to be meaningfully
different from that associated with ceilings etc. Kabra, therefore, presents a modified proposal.
Since most of the urban property created with the help of black incomes is registered at
understated values, Kabra recommends that the state should acquire the right to compulsorily
purchase properties at their understated purchase price or construction costs. To enhance the
effectivity of the measure, Kabra considers it essential that the right to transfer use of property
by means of granting power of attorney be restricted. This will limit benami sales or real estate.
The basic idea underlying both die proposals is to limit the use of black money in real estate
and enable the State to appropriate the gains arising there from.
The ultimate aim of both the proposals is to seriously limit investment of black incomes in real
estate. Kabra goes to the extent of saying that an all-India ceiling on total value of urban estates
should also be enforced to improve the effectivity of the remedy. If that were so, it only implies
that whereas the fundamentalist proposition is rejected by Kabra, he imperceptibly and implicitly
moves nearer to fundamentalist position. The proposals of appropriating the gains of investment
of black income in real estate should be given a fair and honest trial. One more comment which
seems pertinent must be made in this context. It would not be advisable to reject Bhaduri’s
proposal on the basis of administrative feasibility as Kabra does. If this position is taken, the
same criticism becomes equally applicable to Kabra’s proposal. To consider the economic system
a slave of the present administrative set-up will prevent us from taking up any task of gigantic
dimensions. To tame parallel economy is a gigantic task and if a meaningful dent has to be
made in it, then the administrative set-up must be geared to meet the challenge.
(iv) Establishment of the institution of Ombudsman : The institution of Ombudsman, on the pattern
of Sweden, has been discussed for a long time in India. On the basis of the recommendations of
the Administrative Reforms Commission (1966), a Lok Pal Bill was introduced for the first time
in 1968-69. The Bill was passed by the Lok Sabha, but could not be passed in Rajya Sabha as the
Lok Sabha was dissolved. The Lok Pal Bill was introduced in the Lok Sabha for the eighth time
on the 14 August 2001. However, it has not been passed so far to become a law. A bone of
th
contention was whether the office of the Prime Minister should be brought within the ambit of
the Lok Pal. The NDA government agreed that the office of the Prime Minister shall also be
within the jurisdiction of Lok Pal. The Bill, however, excludes from its purview, the President
and Vice-President of India, the Speaker of the Lok Sabha, the Chief Justice of India or any
other judges of the Supreme Court, the Comptroller and Auditor General of India, the Chief
Election Commissioner and Election Commissioners, and the Chairman and other members of
the Union Public Services Commission. It may be noted that eight unsuccessful attempts have
been made so far to pass legislation in the Parliament to make it mandatory for ministers and
legislators to ensure annual declaration of their assets and liabilities. This only underlines the
hard reality that while political leaders talk of maintaining integrity and honesty, but when it
comes to brass tacks, they create hurdles on one pretext or another to pass legislation binding
them to social norms.
Lok Ayukta, the ombudsman at the State level has been set up in Andhra Pradesh, Bihar, Gujarat,
Himachal Pradesh, Karnataka, Madhya Pradesh, Rajasthan and Uttar Pradesh. However, a review of

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