Calcutta Notebook


Black money is back as previously. Large amounts of money were sent abroad by government servants and politicians in the months following demonetisation. At that time they did not want to buy gold because the bank lockers could be seized by the government at any time. It was difficult to invest black money in property because of the government's efforts to track benami properties. It was unsafe to keep cash because it could be demonetised again and also because it was difficult to keep it out of the reach of the government. Therefore, they sent large amounts of monies abroad through hawala. Now the government's harangue against benami property has become less therefore some money is coming back into the property market.

To clarify, hawala consists of barter of currencies. Say, a person named 'A' wants to send black money of Rs 66,000 from India to the United States. He deposits this amount with the hawala dealer in India. A Non-Resident Indian named 'B' working in the United States wanting to send white money of US Dollars 1000 from the United States to India. He has two options. He could send the money through the banks which would give him an exchange rate of say, Rs 63 to a dollar. The hawala dealer in New York, however, will give him a rate of Rs 64. Thus he sends the money through the hawala dealer. The India-branch of the hawala dealer uses the Rs 66,000 deposited by 'A' in India to pay Rs 64,000 to the recipient of 'B'. The US-branch of the dealer uses the Dollars 1000 deposited by 'B' to pay to the recipient of 'A'. The government cannot track these transactions because no transfer of money takes place across the borders. However, India loses the white money of US Dollars 1,000 that would have been received by the country if the money has been remitted by 'B' through the banking system. Government servants and politicians have sent out large amounts of money through the hawala after demonetisation. The decline in growth rate in India since demonetisation is because of wealth of the country going abroad through these transactions.

The government servants are recruited to "serve" the people. But ask any jeweler in any part of the country and they will tell you that most gold is purchased by government servants. One jeweler told this writer they were coming with old currency notes earlier, now they are coming with new currency notes. His business thrives as previously. Those who have been employed to serve the people have become their exploiters. Moreover they claim their fundamental rights. High Courts are flooded with litigations by government servants regarding salary fixation, transfers, perks and promotions. The courts are duty bound to adjudicate these matters. Thus the government servants have the best of the both worlds. They claim benefits of security etcetera as applicable to the special category of government servants; simultaneously they claim benefits of fundamental rights as an ordinary citizen.

The situation is different with respect to the army. Article 33 of the Constitution allows the Union Government to make a law to deprive the defense personnel of their fundamental rights. This has been done by the Army Act. Thus, defense personnel cannot approach the High Courts for issues such as promotions. The need is to amend the Constitution to bring all government servants and PSU employees under Article 33. They must give up their fundamental rights if they want the Security of government employment.

The Constitution provides for a balance between the Legislative, Executive and Judicial branches of the government. Thus, depriving the government servants of their fundamental rights would amount to removing the check of the executive on the legislative. The way out is to keep the higher executive, say the secretaries and members of All India Services beyond the purview of Article 33. It is only, they, if at all, who keep checks on the legislative.

It can be argued that depriving the government servants of their fundamental rights will lead to tyranny of the politicians since government servants will then be bound to do their calling whether right or wrong. And politicians may face a difficult choice here. At present the politicians and government servants are both bleeding the people. The government servants are supposedly accountable to the politicians who, in turn, are accountable to the people. But the politicians and government servants have created an unholy alliance to jointly bleed the people. The accountability of the government servants to the politicians is a sham. It is better to have a tyrannical politician who is accountable after 5 years rather than tyrannical government servants who are never accountable.

The economy is slowing down because government servants and politicians are sending large amounts of black money abroad through hawala. One reason the government servants are able to indulge in corruption without hesitation because they have the protection of their fundamental rights. The same applies to PSU employees.

Vol. 50, No.29, Jan 21 - 27, 2017