The provision for whitening black money has ever remained a tricky issue. This issue emerges as a highly contentious subject every time the authorities approach the national budget. Independent economists and the civil society express their opposition to any scope for legalising ill-gotten money. But policymakers argue that if there is no scope for whitening undisclosed money, capital flight is inevitable. Also not all undisclosed money can be considered black because of a lack of familiarity with the formalities involved. One such instance is the cases of remittance. Expatriates may send home money without filing declarations and consequently the money becomes undeclared income. Then inherited assets can also turn into undisclosed wealth if not reported properly. If such wealth has to be legalised, people have to pay higher penal taxes in addition to regular taxes. 

Now that the new government is in the process of preparing the national budget, it is contemplating a review of the interim government's policy of no provision for whitening black money or undisclosed money or assets. The argument is, however, not in favour of a wholesale or random legalising of such income. Contrarily, the authorities would rather call this a concession for investment in the moribund housing sector. It would be used to stop capital flight on the one hand and on the other, serve as a rescue act for the real estate business. No other sector would be allowed to enjoy this indulgence. Not even its use as venture capital would be allowed. 

The housing sector's appetite for big money in the form of hedge funds and smart money without comparable institutional finance has been its weakness. After all, it should be admitted that investment in it is unlike those in the industrial or other productive sectors. Money invested in the sector does not roll. But it is better to invest the black money that has no use other than its flight abroad. Another tricky issue is the massive gap between the government-fixed rates of land and other immovable property and the market rates. This systemic flaw compels both the housing companies and their customers to show much lower rates than the actual prices. This has to be addressed in order to plug the holes through which unaccounted capitals are formed. If there is no gap between the rates of housing property fixed by the government and the going rate in the market, not only will the anomaly disappear but also the exchequer will receive higher revenues. 

Ideally, housing or any other business needs to be reasonably transparent. The concession made to possessors of black money does not help the cause. If investment in this sector is allowed without any question about the source of the money, things certainly becomes murky. How long will this provision be effective? It should not be continued eternally. It should be once and for all. No doubt, the provision sends a wrong message for people who are involved in accumulating black money. Better it is to stand guard against any illegal practices generating such money. Murky business deals should be discouraged in order to eliminate generation of black money. To that end all institutions should be streamlined for execution of business transparently.