Yet, the government sat duck on the files of those long stalled core sector projects, worth over Rs. 4,00,000 crore at 2009-10 prices, failed to push the pending 11th Plan housing and infrastructure sector investments to reap their benefits from the very first year of the 12th Plan and did nothing to arrest the massive expansion of the parallel ‘black’ economy.

There exists no reliable statistics of the growth before the planning commission’s central statistical organization (CSO) of India’s unaccounted parallel economy — run on cash, illegal person- to-person (P2P) local money transfers and hawala. However, the size of India’s parallel economy, according to many academicians and researchers, is even bigger than the one recorded in CSO’s data bank and is believed to be growing annually at over five per cent. That makes India’s real GDP growth rate always under-reported.

Unless these three immediate impediments to sound economic growth are tackled on a war footing, higher GDP numbers will be difficult to reach. They can be done only through positive political initiatives and dialogues between state governments and the centre. Unfortunately, the country’s economic growth and well being of its people are getting sacrificed due to the political brinkmanship between the Congress Party and its opposition. Industry lobbies, often known for holding conflicting interests and individual business rivalry, are running the government and ruining the economy. A state of political paralysis, leading to the collapse of the collective decision making apparatus in the union cabinet, is permeating the country’s economic environment. Those extremely high-value core sector projects in the fields steel, coal, power, aluminium, mining, port, road and highway construction stricken for years due to political, legal, local, environmental, administrative and corruption-linked controversies are needed to be rescued fast to set the economic growth engine in motion.

The government must raise itself above regional and sectarian conflicts and make strong efforts to settle the disputes over coal block allocation, bauxite and iron ore mining urgently. Goa and Karnataka iron ore mines must be allowed to operate normally. Let the law offenders be adequately fined or even jailed and land losers be reasonably compensated. But, the projects must not be stalled. Coal and lignite mines must feed the power plants, iron ore and dolomite mines the steel plants and exports, bauxite mines the alumina plants and methane or shell-rock beds the gas plants. Let highways, ports and power plants, cross-country power transmission and gas pipelines not allowed to be stopped by politically-propped agitations. If they are, there will be no development, no growth. It’s simple.

With genuine political will on the part of the government, such a massive seemingly difficult project rescue act is not impossible to achieve. New Delhi must make an honest attempt to take state governments on board, irrespective of their political leanings, and strike a consensus. The land acquisition row has to be de-politicized and solved once for all within the provision of the Article 31 of the Indian constitution. Indian citizens are not allowed absolute property right under the statute. The ‘right to property’, under Article 31 – read with sections A, B and C – is subject to reasonable restrictions in the public interest and given the social nature of the property. The ministries such as environment, land development and tribal welfare need to be brought under a common platform and administrative command to avoid unnecessary inter-departmental feuds stalling projects of national importance.

Lastly, the government must try seriously to stop the expansion of the parallel ‘black’ economy. Millions of highly well-to-do and rich individuals and professionals such as doctors, lawyers, chartered accountants, private operators of hospitals, nursing homes and clinics, lawyers, builders, land developers, architects, estate agents, shopkeepers, suppliers and contractors, transport operators, owners of small and medium enterprises (SMEs), dishonest government and municipal employees, police, taxmen, private coaching and teaching establishments — all enjoying grand lifestyle — are habitually concealing their income, robbing the national and state exchequers of revenues to the tune of lakhs of crores of rupees, annually. An unholy nexus between politicians and bureaucrats on one side and those individual tax evaders on the other has perpetuated an unabated growth of the black economy.

“At least $70-80 billion goes out every year. The cost of India’s black economy is 5 percent of GDP growth sacrificed every year since the mid-70s. But for this, the size India’s economy would have been US$ 9 trillion,” says Prof. Arun Kumar, professor of economics at Delhi’s Jawaharlal Nehru University and author of the book ‘Black Money in India’. Thanks to P2P money transfer and hawala transactions, a big portion of national wealth is also being drained out of the country. An increasing number of representatives of wealthy members of the parallel economy are leaving the country every year in the garb of students, foreign job hunters and business entrepreneurs to soon become non-resident Indians (NRIs) further enlarging the hawala business. Hawala is basically an underground banking system based on trust whereby money can be made available internationally without actually moving it physically or on paper, leaving no record of transaction.

The parallel economy is a threat to even national security since terrorists – domestic and international — make maximum use of hawala to procure arms and ammunitions. The size of the global parallel economy is estimated at over US$ 12 trillion. A sure way the government can prevent the growth of the parallel economy in India is by regularly conducting property census, launch disproportionate asset (DA) cases against holders of unaccounted, undervalued property and confiscate them in case owners of such assets are untraceable. Over 50 per cent of black money is invested in real estates. Once again, it will require a strong political will to act ruthlessly against those perpetrators of India’s parallel economy. Until then, the vast growth of the unaccounted money and wealth will make the CSO’s strenuous effort of computing India’s GDP less meaningful and, most certainly, a big understatement. (IPA Service)