Cheni, Nov 13: A multi-pronged strategy of crimilising possession of Rs 10 lakh or more in cash and cutting down discretiory powers of government officials are some of the steps the government should take to tackle corruption, says IIM- Bangalore don R. Vaidyathan.
“Demonetisation is the only step. The government should also make it a crime to hold liquid cash of Rs 10 lakh and above. Today, it is not a crime. Why should an individual hold huge cash?” he said. Lowering the tax rate to expand the taxpayers’ base and tax revenue and moving towards smaller denomition notes are some other steps to curb corruption, says Vaidyathan, who teaches fince at the Indian Institute of Magement - Bangalore.
According to estimates, five per cent of the Indian Gross Domestic Product (GDP) every year is black economy. Around Rs 600,000 crore of parallel economy is not small.
Vaidyathan said he had been advocating demonetisation of Rs 500 and Rs 1,000 value currency notes, which the government did on November 8 night.
The tion incurs additiol expenditure on printing new notes to meet the demand as individuals hoard the ill-gotten cash, the fincial expert said. He said government regulations have become an instrument of extortion and hence the discretiory powers vested in bureaucrats/ministers should be abolished and governce should be strictly rule-based. “The judicial process should also be swift and fast to instil fear of rule in the minds of people,” Vaidyathan added.
According to him, there should be less of governce by the government but more of self-governce through self-regulation, coupled with severe punishment for violations. He said the government should confiscate the assets of corrupt government employees. “There are business tycoons earning Rs 300/400 crore as dividend income. Such dividend income is not taxed. This system should also change,” he said.
He said in order to fight fake currency vended by automatic teller machines (ATMs), banks and/or ATM operators should be held responsible for cash dispensed by their respective ATMs. Vaidyathan advocated that India should follow the US ratio of 1:10 in respect of currency note denomition. “The US has the policy of 1:10. That is, the highest note value is 10 times that of the lowest note value. Similarly, India should also move towards having more of Rs 100 notes than notes of higher denomitions,” he said.
About bringing back cash stashed abroad and not meeting expectations on black money recovery, Vaidyathan said: “Such efforts need proper planning. Bringing back black money is not like cooking two-minute noodles.” (IANS)