Tuesday, December 20, 2005

Black money boom too

India today, this time has a big story on the black money boom. Nothing much can be found on their website without a subscription, but the fact is that the black money market seems to be growing from strength to strength.

Theres a property boom, theres a stock market boom (78390 crores entered India by way of Participatory notes, says the article and much of it is suspected to be money stashed abroad by Indians) and the former more than the latter has a propensity to create ever greater sums of black money. Try buying a property and you will be told, 50% (or whatever) cash. So, what does a salaried full tax paying individual do? Go withdraw all his white money and convert it to cash? If that is not possible, how else? (Aha, there are markets for everything. Channels that convert black money to white, oops, vice versa.) The IT department should simply buy houses at the registered value for some second sales. That will set the cat among the pigeons.

Two banks and a depository service were recently censured by SEBI over benami accounts. I am pretty sure this the tip of the black money iceberg. VDIS not withstanding, hawala, black money are all growing with the boom in India and sucking the air out of our real boom.

Solutions? none that I can think of. But lest the point be missed, make no mistake, greater than the real, white, boom in India is a bigger, blacker boom. The boom of black money.

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