Let there be white

But our honourable ambassador is not alone. In my search for a house, I have met many sellers who have been PSU chiefs and government servants in very high places. Most of them demanded black money, either directly or through their agents and accountants. The former chairman and managing director of a public sector telecommunications company, for instance, who wanted more than half the sum in cash for his apartment. He wanted the cash to buy another house, where cash was needed; the high commissioner needed it to avoid paying capital gains tax.

I asked both these 8220;respectable8221; people 8212; and there are many more I8217;ve met during the course of my house-hunting adventures 8212; what they needed the cash for. I also wondered, often openly, what they will do with so much cash, where they will keep it. They gave benign smiles that suggested, 8220;how naive8221;. Naive, because as a buyer of a house completely with white and accounted for money, I was plain stupid as I would end up paying a higher stamp duty. With sincerity in their eyes, they advised me otherwise.

So brazen is this black culture that when you call a broker who has advertised a house for sale, he tells you how much is 8220;demanded8221; in black and how much in white. You tell him 8220;all cheque8221;, he delivers a sigh of regret and says, that won8217;t be possible,kuchh to kijiyedo something, thoda bahut some cash at least. They also talk about converting the fixtures and furnishings part of the loan from the bank into cash.

But I must not paint the entire landscape in black. I have met a senior executive from an oil PSU who was willing to take a smaller sum if the deal was in white. And even a partner with an accounting firm, who 8220;preferred8221; dealing in white 8212; 8220;where will I keep the cash?8221; he asked, his naivete matching mine. Or even this retired foreign service officer, who was so relieved to see a buyer in white.

Up there, right at the top, one of the objectives of our finance minister is to get unaccounted black money into the mainstream and plug tax leakages. With the number of property transactions rising like the Sensex, I wonder how he and his department are unable to see that apartments selling for Rs 50 lakh are being shown as being sold for Rs 15 lakh 8212; an extreme, but real-life situation 8212; how a system where 40-50 per cent of the transacted value is unaccounted for continues to thrive. Right in the capital. The income tax department is looking to collect hundreds and thousands when there are lakhs and crores circulating unabatedly, unabashedly, unchecked.

Here8217;s a scheme 8212; far simpler than Chidambaram8217;s 1997 VDIS Voluntary Disclosure Income Scheme 8212; to unearth this income. Take the real estate classified 8220;for sale8221; pages of leading newspapers and put them up on a board. Get five children to throw darts on that paper. Put a team of three IT sleuths and get them to pretend they are buyers of those properties. When the person asks for cash, pay cash. Catch them red-handed and then let the law take its course. Do this in four metros and all state capitals regularly, diligently, sincerely.

Publicise the effort and the outcomes people caught. Most important, if these sting operations hurt the high and mighty, so be it. Given that black money estimates in the economy range from 20-50 per cent of GDP, I suspect property would account for a substantial-enough sum to fill the coffers of the state as well as central governments through increased stamp duties and capital gains tax.

Tailpiece: Looks like The Indian Express is not alone in worrying about churning among distributors of mutual funds. According to Deloitte8217;s Global Asset Management Industry Outlook, among the top 10 issues facing the industry is transparency in distribution. Says the report: 8220;The new environment for distribution will entail far more disclosure than in the past.8221; Here are three disclosures for distributors I believe will help Indian investors: one, commissions being made on every sale; two, reasons why an investor is being asked

to sell a fund and buy another; and three, a performance audit trail that tracks not merely total returns but the returns if churning had not happened.