The Hindu Business Line : <I>Should colour of money matter? </I>

Policy-makers of India should study the Chinese model to see whether it could bring a substantial part of the unaccounted money into productive channels.

"It doesn't matter if a cat is black or white, so long as it catches mice."

— Deng Xiaoping.

India is face-to-face with a grave crisis. Want of infrastructure capable of bolstering and speeding up the process of development, and the poor shape of whatever there is on the ground is having a strangulating effect on India's economy.

This is what tends to constrict prospects of greater inflow of investible resources into the country, and hamstringing the functioning of existing enterprises as well.

It is the same story in State after State; the BIMARU (Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh) States are certainly the worst in every respect: Condition of roads, generation and distribution of electricity, transportation facilities, water supply, solid waste and sewage disposal, civic services and the like.

It is not as if other States qualify to be far ahead. Cities such as Bangalore, Chennai, Hyderabad and even the capital Delhi are barely able to cope with demands for minimum essential infrastructural support to keep the various sectors going.

No-holds-barred approach

Going farther afield, there is immediate need for improving the standard of operation, maintenance, expansion and modernisation of ports, airports, inter-State highways, railways, communications and other sinews of the economy.

Expert bodies have estimated that strengthening the infrastructural front alone — by way of both pepping up the performance of what is available and adding to the facilities where needed — can by itself notch up the GDP by four to five percentiles. Actually, as the President, Mr A. P. J. Abdul Kalam, has been emphasising, taking into account the requirements of the surging population, the growth to be aimed at should be at least 15 per cent, instead of the modest 8-10 per cent planned for.

That means going all out, without any hang-ups or inhibitions, to muster enough resources to plug the infrastructural deficit.

It was precisely such a no-holds barred approach China, under Deng Xiaoping's leadership, adopted with spectacular results. Just at the time the Communists took over, and during the subsequent period, a number of wealthy Chinese had stashed away their money in banks or with relatives in South-East Asian countries and elsewhere (the guesstimate goes as high as 1 trillion dollars!).

The Government made this enormous amount flow back to China by proclaiming its readiness to regularise the transactions without asking any questions.

It was this iron-clad assurance that helped unearth and plough back into the Chinese economy a sizable portion of the so-called `black' money between 1978 and 1992.

Treasure trove

India too is sitting on a treasure trove of `black' money, guesstimates of which range between 20 and 50 per cent of GDP (or between Rs 400,000 crore and Rs 1800,000 crore, translating in dollar terms to between $80 billion and $350 billion).

This could ensure availability of a good part of the Rs 400,000 crore or $80 billion annually needed for infrastructure. Infrastructure bonds in the conventional mould do not seem to have been a success in terms of the resources brought in.

Considering the leeway to be made, policy-makers of the Finance Ministry should exercise maximum ingenuity to devise some innovative means of tapping this treasure-trove.

For instance, they should study the Chinese model to see whether, in the Indian context, it could bring a substantial part of the unaccounted money into productive channels.

Whatever it is, there is need to do out-of-the-box thinking to sanitise the parallel economy, instead of regarding it as sinful and putting it in a moral quarantine, or getting into a punitive mode, driving it further underground.

B. S. RAGHAVAN

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