India is now considered as the country with the most positive economy. In 2015, their economy has grown by 7.4% in the third quarter. That growth has made them the country with the fastest growth.
What could be India's secret? Believe it or not, it's 'Black Money' or petty corruption.
Chief economist of the World Bank Kaushik Basu says that India has a tradition of practicing petty corruption. Basu, who is also the former chief economic adviser to the Indian government, believes that this tradition has contributed a lot in India's growth. In fact, the practice has helped the country "avoid the worst of the banking crisis that has crippled most other large economies in the last few years."
Basu believes that the use of the so-called 'Black Money" or illegal cash, which is not reflected in transaction records and hidden from the tax authorities, has proven to produce a positive result in the country's banking sector.
In his new book, An Economist in the Real World, Basu claimed that "economics is not a moral subject." He also claims that "there were some shrewd precautionary moves by India's central bank."
Dirty money. What is it exactly? A report from BBC News best illustrates it:
Let's say you like the look of a house that is for sale. You judge it is worth - for argument's sake - 100 rupees.
The chances are the seller will tell you he will only take, say, 50 rupees as a formal payment and demand the rest in cash.
That cash payment is what Indians refer to as "black money".
In other words, the seller can get away from huge taxes while buyers can declare a lowered property value and hence a lower property tax. As a result to this "dirty money" strategy, Indians also tend to have "smaller mortgages compared to the real value of their properties than elsewhere in the world."
Looking at the bigger picture, this meant that when the prices fall, the loans would still be equal to the value of the property. No loss. A win-win situation for everybody: the government and its people.
© 2017 Jobs & Hire All rights reserved. Do not reproduce without permission.
