The Government policies have helped to develop a toxic nexus of corrupt politicians, bureaucrats and corporates. Corruption has resulted in the loot of lakhs of crores of rupees from public exchequer. The neoliberal agenda of reforms of the last two decades has not only widened the gap between the rich and the poor, it has also increased manifold the loot of public resources. Contrary to the claims of those who support such reforms, evidence shows that the “black economy” – the direct product of corruption – has now grown to almost 50% of the GDP of the country (GFI Report 2010).
One of the consequences of this rapid growth of the black economy is that it seeks to transfer huge amounts abroad. That is why the growth of illegal flows to tax havens and off-shore accounts have grown rapidly: the post reform annual flows are five times the pre-reform flows.
The total accumulated capital and assets held today by Indians abroad is estimated to be in the range of half a trillion dollars (Rs. 25 lakh crore) to 1.4 trillion dollars (Rs. 70 lakh crore). Money which belongs to the Indian people is being stashed away in Swiss and other foreign banks by tax thieves and black money holders but Government has not made any efforts to bring this money back nor has it taken any action against the criminals. On the contrary, it is not even willing to make public the names it has received from foreign governments and banking institutions of the Indian account holders who have illegally parked their money abroad.
It is the various scams that have taken place in the so-called reform period that has contributed in a large measure to the growing black economy. Neoliberal ideologues have been arguing that it is state regulation that favours corruption. What emerges is that under deregulation, the earlier small scams have now become mega scams and are occurring even more frequently. The Bofors scam was worth only Rs. 64 crore; any of the current scams are many orders of magnitude higher.
CAG has estimated that the 2G telecom was worth Rs. 1.76 lakh crore while the coal scam cost the exchequer around Rs. 1.86 lakh crore. The KG basin gas scandalous deal and concessions to Reliance for increased gas price have led to a loss of around Rs. 100,000 crores. The commonwealth game scam was worth around Rs. 60,000 crore.
In the 2G scam, A Raja gave away 122 licenses to a bunch of favourites that included Unitech, the real estate company and Reliance, at 1/10th the market value of these licenses. The Supreme Court finally struck down these awards asking them to be auctioned again. The UPA government is now trying to sabotage the auction in various ways to justify the original scam.
In the KG Basin-Reliance case, there are two scams that have taken place. In one, the price of gas from KG Basin was increased arbitrarily from $2.34 to $4.2 per MMBTU leading to a loss of at least Rs. 50,000 crore to the public exchequer. In the second, the government agreed to hike up the capital cost of Reliance by 4 times – from $2.2 billion to $8 billion – for only doubling the production capacity. It might be noted that subsequently, instead of an increase of production, production has actually declined. The attempt now is to arm-twist the government and raise the price of gas even further.
In the coalgate scam, the report of the Comptroller and Auditor General (CAG) revealed how large chunks of the coal resources of the country have been handed over to private companies resulting in a gain of Rs. 1.86 lakh crores. The coal scam was transferring country’s huge coal reserves to domestic capital at zero cost. And it was not only about friends and relations in the government – the list also contains Reliance, Tata, Hindalco (Birla), Vedanta, Essar – virtually a list of all the top industrial houses in the country. Just to give an indication of the magnitude of the loot – the government transferred about 44 billion metric tonnes of coal to private capital gratis – about 6 times the total annual production of the world!
Apart from the major mega scams, there have been huge land scams involving various state governments. The Adarsh scam in Mumbai involving the then Chief Minister Ashok Chavan and other officials, the various land scams in Haryana involving DLF, Robert Vadra, the Haryana Chief Minister Hooda, have all been widely reported. Clearly, real estate has emerged as a major instrument of public loot in the country.
The BJP has not been far behind. The Karnataka mining scam was worth anything between Rs. 50,000 crore to Rs. 70,000 crore. An entire illegal port – the Belikiri port – was set up and was illegally exporting iron ore under Yeddyurappa.
The Modi government in Gujarat gave away 10% shares in a KG basin block holding trillions of dollars to a Six Day old company formed with $64 equity capital incorporated in Barbados. The state owned GSPC had secured this block through bidding. Subsequently, this contract was cancelled under public pressure.
Apart from these scams, there has also been the defence deals One such deal is the one on Barak missiles. Here both the NDA government and the UPA government have both struck huge deals for Israeli missiles after bypassing all norms. Though the UPA government itself has lodged cases against the then Defence Minister George Fernandes and other officials, it not only did not black-list the Israeli companies concerned – Israel Aircraft Industries and Rafael – but went ahead to award them an even bigger 2 billion dollar (Rs. 10,000 crore) contract.
While earlier the source of corruption at high levels stemmed from big business giving bribes to seek favours for licences or bypassing certain regulations, today it is deciding the country's policies. The policy itself is up for sale. Policies can be changed overnight whether in the telecom industry, the oil and petroleum sector, the nuclear sector, defence and so on for the benefit of select corporations. This is private loot of public resources on a massive scale.
Various tax heavens, particularly Mauritius, are used to do what is called round-tripping. Black money is transferred through various hawala routes and illegal over/under invoicing to these tax heavens. They then enter the country under the guise of foreign investments to continue in a continuous merry-go-round.
Even though corruption is today rampant in the country, the Government has refused to enact a strong Lok Pal Bill. The sarkari bill violates the agreement reached in the Standing Committee and is designed to ensure that the Government retains control of Lok Pal, particularly its investigations. This is against the interests of the people of India.
CPI(M) calls for a broad based movement against corruption in the country movement, demands that the guilty be punished and an institutional framework with a strong Lok Pal be set in place. The CPI(M) also demands that various tax loopholes that permit such siphoning off of black money should be plugged immediately.