Finance and Planning Minister M. Saifur Rahman in a pre-budget consultation meeting held on May 18 categorically said that the government would no longer allow whitening black money since it is contradictory to the existing Anti-Money Laundering Act. "The government will lack in moral courage if it extends such unethical provisions like keeping of the provision in force to turn black money into white," he added. But the finance minister had to capitulate to the forces of black money.

The provision of whitening black money was first introduced in the national budget for the fiscal year 1975-76 to bring some Tk 70,000 crore of black money into the formal economy, though Tk 7 crore was actually whitened.

The facility was again offered for three consecutive fiscal years from 1987-88 to 1989-90, and Tk 200 crore, Tk. 250 crore, and Tk. 400 crore, respectively, were whitened during the period. The government again revived the facility in 2000-01 and Tk 1,000 crore was whitened.

The BNP-led coalition government introduced the provision for whitening black money in the budgetary policy initially for two years, beginning from 2003-04, with a view to bring the bulk of black money into the formal economy. Black money amounting to a total of Tk 1,775 crore, came into the economy through the process. Some 1,000 people legalized the untaxed money they had in their possession during the period. Tk 800 crore has been whitened during the nine months of the on-going fiscal year.

The estimates of how much black money is there vary widely. According to some economists, the country's black money rose to Tk 70,000 crore in the year 2004 from Tk 60,000 crore of the previous year, while other economists dealing with the issue guesstimated it to be equivalent to 40 to 50 percent of the formal economy.

But most estimates suggest that it is as large as the formal economy or very close to it. Due to deliberate apathy by the government to the growing problems of corruption and all sorts of financial malpractices, the scale of black money has become enormous over the years.

A Daily Star report on April 18 said that an increasing number of people including doctors, lawyers, bankers, and government officials, are now whitening their future black money by paying only 7.5 percent taxes and taking advantage of legal loopholes. Many of the newly formed company directors and new members of Dhaka Stock Exchange (DSE) have also used the opportunity to whiten their black money.

According to the report, 35 people were given membership of the DSE, most of them relatives or friends of ministers or ruling alliance leaders. Each membership was sold for Tk 80 lakh, and it was made compulsory that a member must form a company and get it registered as a joint stock company. Besides, the companies must have a paid up capital of at least Tk 1 crore each.

Corruption breeds black money, which has already assumed an alarming proportion in the economic field of the country. A survey report of the Transparency International Bangladesh (TIB) revealed that the people of this country pay an estimated amount of Tk 6,796 crore a year in bribes to the officials and employees of 25 service sector institutions. The amount accounts for roughly 2 percent of our gross domestic product (GDP). Every person in the country pay Tk 485 in bribes on an average to these sectors. Black money is an inherent component of all economics around the globe. The government of India also announced tax concessions through a voluntary disclosure scheme for people having black money to make declaration of their unaccounted money some years back. But the strict policy now being pursued by the government of India has checked the evil of black money spreading in the country to a great extent. Raids were conducted by the income tax people on big business houses and private individuals. Several crores of black money was brought to light in this way. Bangladesh may also consider similar action for bringing black money to light without providing more scope for whitening black money.

Black money has manifested itself in many bizarre forms and dimension in our country. Obviously, the economic affairs of the black money holders, including criminalization of politics, are now proceeding with a well-orchestrated plan ,which is adequately supported by the persons in the corridor of power. One may see that a parallel economy run by the black money holders will be strong enough to challenge the formal economy in near future as it now estimated to be very close to the national economy. Black money responsible for running a parallel economy has been causing havoc not only in the economic field but also in every sphere of our lives.

The black money whitening facility is not the solution to the problem that has created a culture of plunder in the country. The sources of black money are well known to the people in power. So, it is imperative for the government to strike at the sources of black money to check its unabated growth. For a country that has ranked as the most corrupt country in the world for the fifth successive year has no other option but to make the Anti-Corruption Commission really a functional one to check the unabated growth of black money. Accumulation of black money must be brought under control, knowing well that it can not be eliminated totally.

Certainly there is no denying the fact that black money has become a part of politics and has been plaguing the process of democracy in the country. The scope for whitening black money indeed raises ethical questions and encourages the operation of black money, not only in the economic field, but also in other fields of life, including politics. The Anti-Corruption Commission, eminent economists, and business leaders severely criticized the finance minister for continuing the provision of whitening the black money in the on-going budget. According to them, it was a "moral defeat" on the part of the finance minister in establishing credibility of his own policy and an indulgence to legitimize corruption.

The initiative of the Nagorik Committee 2006 to put pressure on the political parties to nominate competent candidates in the next general election is no doubt a welcome move. Creating public awareness about competent candidates is imperative to resist the black money holders, who are otherwise political criminals, to enter parliament in order to bring a meaningful change to the country's politics.

It is now for the government as well as for the opposition leaders to comprehend the reality, which is that the nexus between the politics and black money is the prime factor in criminalization of the society. The situation calls for a determined drive to provide substantial relief to the common people from the tyranny of black money.

ANM Nurul Haque is a columnist of The Daily Star.