Secularism – Its Meaning, Models and Issues Secularism – Its Meaning, Models and Issues by INSIGHTS Introduction The discrimination of one community or its members by another community or its members on account of their religious identity are the instances of religious persecution and they reflect inter- religious domination. For example- 4000 Sikhs were massacred in Delhi and other parts in 1984 in anti-Sikh movements. Thousands of Kashmiri Pandits have been forced to leave their homes in Kashmir valley since 1990s. They have been not able to return to their homes till now. And like this many people from various communities like Muslims, Hindus, Buddhists, and Sikhs, etc. become the victims of communal violence's. Secularism is the first and foremost doctrine that opposes all such forms of inter- religious domination. Separation, loss and sufferings are endemic to the human condition, while large part of our suffering is man-made and hence eliminable, at least some of our suffering is not man made. Religion, art and philosophy are responses to such sufferings. Secularism too accepts this and therefore it is not anti-religious. Religion has its own share of some deep-rooted problems. In religions such as Hinduism, some sections have been persistently discriminated. For example- Dalits have been barred from entering Hindu temples. In some part Hindu women cannot enter temples. When religion is organised, it is frequently taken over by its most conservative faction, which does not tolerate any dissent. Religious fundamentalism in parts of US has become a big problem and endangers peace both within country and outside. Many religions are fragmented into sects, which leads to frequent sectarian violence and persecution of dissenting minorities. This religious domination is known as inter- religious domination. As Secularism is opposed to all forms of institutionalised religious domination, it challenges not merely inter-religious domination but intra-religious dominations. It (Secularism) promotes freedom within religions and promotes equality between, as well as within religions. What kind of state is necessary to realise these goals? Here we will see how a state committed to the ideal of secularism should relate to religion and religious communities. Mutual help and sharing can help or contribute towards reducing prejudices & suspicion between communities. One way of reducing religious discrimination is to work together for "mutual enlightenment". Education is the only way of helping change the mind set of people. But only education & goodness of some persons will not completely eliminate religious discrimination. Modern day's societies, states have enormous public power. How state should prevent such domination by any religious group? State should be non-theocratic:- A state must not be run by the heads of any particular religion. A state governed directly by a priestly order is called theocratic. For example- Papal States of Europe in Medieval period, Taliban controlled states in recent times. So, here states lacking separation between religious and political institutions are known for their hierarchies and oppressions and reluctance to allow freedom of religion to members of other religious groups. For this, states should have a separation from religion at the primary level, but this is not sufficient. States should have no formal, legal alliance with any religion:- Many non-theocratic states have close alliance with a particular religion. For example- England in 17th century was not run by a priestly class but clearly favoured the Anglican Church and its members. England had an established Anglican religion, which was the official religion of the states. Today Pakistan has an official state religion, namely Islam. Such regimes may leave little scope for internal dissent on religious equality. A secular state must be committed to principles and goals which are at least partly derived from non- religious sources.(i.e. means). These ends should include peace, religious freedom, and freedom from religiously grounded oppressions, discriminations and exclusions as also inter-religious and intra-religious equality. To promote these ends the state must be separated from the organised religion and its institutions for the sake of some of these values. There is no defined pattern or form to suggest this separation. Further, we will consider two models:- Western model, best represented by America Indian model of Secularism The western model of Secularism All secular states have one thing in common, they are neither theocratic nor do they establish a religion. Features of Western concept of secularism:- State and religion has a separate sphere of its own, with independent jurisdiction i.e. Mutual exclusion of state and religion, principled distance of state from religion and no illegitimate intrusion of religion in the state. The state cannot aid any religious institutions. State cannot hinder the activities of religious communities as long as they are within the broad limits setup by the law of the land. For example – if religious women forbids a woman from becoming a priest, then the states cannot do anything. Like this, if a particular religion forbids the entry of some of its members in the sanctum of its temple, then the states has no option but to let the matter rest exactly where it is. So here the religion is private matter, not a matter of state policy or law. This model interprets freedom and equality in an individualist manner. Liberty is the liberty of individual. Equality is the equality between individuals. There is little scope for community based rights or minority rights. On the other hand drawbacks of this model can be seen as, such states focus on intra-religious domination by strict separation of state from church to realise among other things individual freedoms, issues of inter-religious (and therefore minority rights) equality are often neglected. This model leaves no scope for the idea of the state supported religious reforms. Kemal Ataturk's Secularism It is not about the principled distance from organised religion, instead it involved active intervention in and suppression of religion. This version of secularism was propounded and practised by Mustafa Kamal Ataturk., who came to power after First World War in Turkey, after the defeat of Ottoman Empire. He was determined to put an end to the institution of Khalifa in public life of Turkey. He set out in an aggressive manner to modernise and secularise Turkey. He changed his own name from Mustafa Kemal Pasha to Kemal Ataturk (Ataturk means Father of Turks). TheFez, a traditional cap worn by Muslims was banned by the Hat law. Western clothing was encouraged for men and women. The western (Gregorian) calendar replaced the traditional Turkish calendar. Indian model of Secularism Nehru's view was - "Equal protection by the state to all religion". He wanted a secular state to be one that "protects all religions but does not favour one at the expense of others and does not itself adopt any religion as the state religion." Indian secularism is fundamentally different from western secularism. It does not focus only on Church- State separation and the idea of inter-religious equality is crucial to the Indian conception. What makes Indian secularism Distinctive? There was already a culture of inter-religious 'tolerance' in India. Tolerance is compatible with religious domination. It may allow some space to everyone but such freedom is usually limited. The advent of western modernity, brought to the notice, neglected and marginalised notions of equality in Indian thought. It sharpened these ideas and helped us to focus on equality within the community. It also ushered ideas of inter-community equality to replace the notion of hierarchy. Its operation is done through three factors- Scientific and rational education, Legislation, social reforms, Urbanization and industrialisation. So, Indian secularism took on a distinct from as a result of an interaction between what already existed in a society that had religious diversity and the ideas that came from the west. It resulted in equal focus on intra-religious and inter-religious domination. Differences in Indian secularism Indian Secularism equally opposed oppression of dalits and women within Hinduism. It also opposes the discrimination against women within Indian Islam or Christianity and the possible threats that a majority community might pose to the rights of the minority religious communities. Indian Secularism deals not only with religious freedom of individuals but also with religious freedom of minority communities i.e. individual has the right to profess religion of his /her choice. Likewise, religious minority also have a right to exist and to maintain their own culture and educational institutions. Indian Secularism has made room for and is compatible with the idea of state- supported religious reform. For example- Indian constitution bans untouchability under Article 17. There is also abolition of child marriage and lifting the taboo on inter-caste marriage sanctioned by Hinduism. The Indian state may engage with religion negatively to oppose religious tyranny. It may also choose a positive mode of engagement. Thus, the Indian constitution grants all religious minorities, the rights to establish and maintain their own educational institutions, which may receive assistance from the state. Secularism as philosophy of the constitution The preamble of the Indian constitution reflects the philosophy of the constitution, starts "WE THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN, SOCIALIST, SECULAR DEMOCRATIC REPUBLIC and to secure all its citizen………………………… " Though the term 'secular' was not initially mentioned in original constitution, but the Indian constitution has always been secular. As, we have already discussed how Indian secularism differs from western concept. So, in India, it is not mutual exclusion, rather it is principled distance, a complex idea that allows state to be distant from all religions so that it can intervene or abstain from interference, depending upon which of these two would better promote Liberty, equality and social justice. Constitution reinforces and reinvents forms of liberal individualism through Article- 26, 28, 19, etc. Constitution upholds the principle of social justice without compromising on individual liberties. The constitutional commitment to caste based affirmative action program, shows how much ahead India was compared to the other nations (as in US it began after 1964 civil rights movements) Against the background of inter-communal strife, the constitution upholds its commitment to group rights (the right to the expression of cultural particularity). So, our forefathers/ framers of the constitution were more than willing to face the challenges of what has to be known as multiculturalism. The question of secularism is not one of sentiments, but one of laws. The secular objective of the state was expressed by inserting the word 'Secular' in the preamble by the 42ndconstitutional amendment act, 1976. Secularism is basic structure of the constitution. Fundamental rights (Article 12 to 35) guarantees and promotes secularism. Right to equality, right to freedom, right against exploitation, right to freedom of religion, cultural and educational rights, and right to constitutional remedies are such six fundamental rights. Secular attitude or attitude of impartiality towards all religion is secured by the constitution under several provisions. (Article 25 to 28). Firstly, there shall be no 'state religion' in India. The state will neither establish a religion nor confer any special patronage upon any particular religion. It follows from this, that- The state will not compel any citizen to pay taxes for the promotion or maintenance of any particular religion or religious institution, mentioned under Article-27 of the Fundamental rights. It should be noted that government of India provides Hajj Subsidy for pilgrimage and this issue was contested in supreme court for alleged violation of article 14 (equality), Article 15 (non-discrimination), Article 27. But SC upheld constitutionality of hajj subsidy saying that Article 27 would be violated if a substantial part of the entire income tax collected in India, or a substantial part of the entire central excise or the customs duties or sales tax or a substantial part of any other tax collected in India, were to be utilized for promotion or maintenance of any particular religion or religious denomination. In other words, suppose 25 per cent of the entire income tax collected in India was utilized for promoting or maintaining any particular religion or religious denomination that would be violative of Article 27 of the Constitution. No religious instruction shall be provided in any educational institution wholly provided by state funds. Even though religious instruction is totally banned in state-owned educational institutions, in other denominational institutions(as recognised by or receiving aid from the state) it is not fully prohibited but it must not be imposed upon people of other religions without their consent (Article 28) Secondly, every person is guaranteed the freedom of conscience and the freedom to profess, practise and propagated his own religion, subject only- To restrictions imposed by the state in the interests of public order, morality and health. So, that the freedom of religion may not be abused to commit crimes or anti-social acts. For example- to commit the practise of infanticide, etc. To regulations or restrictions made by the state relating to any economic, financial, political or other secular activity which may be associated with religious practise, but do not really concerned to the freedom of conscience. To measure for social reform and for throwing open of Hindu religious institutions of a public character to all classes and sections of Hindus. Subject to above limitations, a person in India shall have the right not only to entertain any religious but also to practise the observances dedicated by such belief and to preach his views to others (Article 25). Thirdly, not only is there the freedom of the individual to profess practise and propagate his religion, there is also the right guaranteed to every religious group or domination – To establish and maintain institution for religious and charitable purposes; To manage its own affairs in matters of religion; To own and acquire movable and immoveable property; and To administer such property in accordance with the law (Article 26) It is to be noted that this guarantee is available not only to the citizens of India but to all persons including aliens. Views of our founding fathers of our constitution Gandhi ji's views- "Religion is a personal matter which should have no place in politics"- in 1942 "Religion is the personal affair of each individual. It must not be mixed up with politics or national affairs" – in 1947 "I do not except of any dreams to develop one religion i.e. to be wholly Hindu or wholly Christian or wholly Mussalman, but I want it to be wholly tolerant, with its religions working side by side with one another" Dr. B.R Ambedkar's view- His main concern was to bring heterogeneous communities under one roof, in a nation divided on caste lines. Conclusion In various wars, the strength of Indian secularism has been tested. Over the years Kashmir has become a symbol as well as test of Indian secularism. Secular responses were given to Punjab terrorism (due to communal politics) in 1966. Nehru, at that time adopted few basics rules for dealing with militant agitations and their demands. First, no negotiation or political transactions with the leaders of a movement or acceptance of the demands, if they had secessionist tendencies, if they took recourse to violence or based their movement or demands on religion or communalism. Second, Nehru remained sensitive to the feelings of the minorities and dealt firmly with both Hindu and Sikh Communalism. India is facing challenges to keep secularism alive in the form of Communalism (communal violence), politicization of caste and religion, the rise of fundamentalism and obscurantism, etc. Sometimes, Indian secularism is also criticized for being Anti-religious, but that is actually not true, as it is against institutionalised religious domination. It is also said that it promotes Minoritism, but it only advocates minority rights as long as those rights protect their fundamental interests. It is also criticized for being Interventionist, which means that secularism is coercive and it interferes excessively with the religious freedom of communities. But again, this is misread because Indian secularism permits state-supported religious reforms. Personal laws can be reformed in such a way that they continue to exemplify both minority's rights and equality between men and women. But such reform should neither be brought about by state or group coercion nor should the state adopt a policy of total distance from it. The state must act as a facilitator by supporting liberal and democratic voices within every religion It was also criticized as an Impossible project by other nations, but India claimed this false. In fact, migration is increasing due to globalisation and it is creating situation where Indian model is very much desired. Europe, America, and some parts of Middle East are beginning to resemble India in the diversity of cultures and religions which are present in their societies. These societies are watching the future of the Indian experiment with keen interest as a solution for their society. Secularism in other countries like Bangladesh is very unique, which has Islam as a state religion and also secularism as one of the basic tenets of the Constitution. In case of China, the Communist Part of China follows Atheism, but there are five religions recognized by the state: Buddhism, Taoism, Islam, Catholic Christianity, and Protestant Christianity. The state even promotes "normal" religious activity (e.g., not using temples as a platform to preach violence or rhetoric against the state) as a force for the stability of China. Moreover, the religious practises in China are state controlled. Some other terms discussed usually with Secularism Secularisation, is a process of social change through which the influence of religion declines in public affairs. Sanskritization, is a change in secular and ritual hierarchy of the society. Pluralism, is the idea that all religions are equally valid. Though Secularism arose in the society where only one religion was valid, so it's different; but Indian Secularism is not different than pluralism. As Indian Secularism promotes that the state must be kept away from any one religion because all religions are valid. India believes in"Sarva Dhrama Sama Bhava" feeling, which reflects its plural society with secular state which is totally different than the secular concept of western society. India has a deep rooted tradition of pluralism and secularism is needed for maintain pluralism.  Unlike secularism, which arose in an inter-sectarian context, pluralism arose in an inter-religious context. The inter-religious context is going to become increasingly important as the world continues to globalise, rendering the concept of pluralism more relevant to contemporary life. Both secularism and pluralism wish to prevent any one religion from dominating the public sphere through that religion becoming associated with the state, and hence both support the separation of religion (or church) and state. Both would like to safeguard the public space from it being dominated by a majority of religion by disallowing any connection between church and state.

Understanding Issues Related to Black Money     Tax Heavens     Offshore Financial Centers     Money Laundering     Hawala System     Round Tripping     1.    Participatory Notes     2.    Raising Capital by Global Depository Receipts     3.    Money coming in NGOs and Charitable Institutions     4.    Transfer Pricing     Effects of Black Money on economy: Steps taken by Government  Rationalizing Income tax rates  Introduction of Tax Deduction at Source (TDS) Voluntary Compliance Schemes/ Amnesty Schemes    Prevention of Money Laundering Act,2002 General Anti Avoidance Rules (GAAR) Improving Currency note Some Institutions for combating black money   India joined – ' Global crusade against black money'   Special Investigation Team  Introduction India's black economy is humungous and complex. It has been a major issue since independence and recently is on boil due to civil society activism and interventions by Supreme Court. It is hard to precisely define black money, let alone reliable estimation of its quantum. But time and again there have been attempt to quantify it with estimates ranging from 10 % to 100 % of GDP. Black money menace is though more in developing countries, but developed countries too have their shadow/black economies. Recent financial crisis in west has forced huge number of laid off employees to be freelance workers and to not to report their incomes. An estimate suggests that US has $ 2 Trillion of shadow economy, which constitutes of narcotics, gambling, prostitution etc. and loss to US exchequer is $500 billion. For Europe unreported income is put at Euro 1 trillion. However, for developing countries problem is more serious and magnificent as they have limited resources and uphill task of bringing social development. They have weak institutions such as banking system, enforcement mechanism etc. which are opaque and to some extent, corrupt and this is exploited to fullest by evaders and criminals alike. Generally speaking, black money is one in which ownership is fully or partially illegal. This illegality is primarily because it went concealed from government violating laws of the country. There can be two circumstances, one is where source activity of that money is also illicit and other where source activity was legitimate but income was concealed from taxation authorities. In former case activities can be smuggling of arms, drugs etc., or human trafficking, counterfeit notes, gambling or any activity which is prohibited by law. Incomes from such activities are concealed with great effort as avoiding tax is not main interest but safeguard of that activity is. On the other hand, 2nd type of activity is legitimate, its income is taxable and it is concealed only to avoid tax (or any civil law of land). Government claims that its 2nd type of income which is dominant and its treatment of two types is obviously different. In 1st type there has to be zero toleration, but in other it attempts to persuade, pressurize and at last coerce evaders to pay taxes. It should be noted that not all the unaccounted money is black. It is only that money which was legally required to be disclosed, but was not disclosed. Income tax provisions permits income below certain threshold without disclosure. Majority population of our country earns below this threshold and doesn't report its income. For e.g. tea shops, small snacks bar, agricultural income etc. doesn't need disclosure. It may be called shadow economy and its very near Impossible to distinguish it from black economy. Much of the shadow economy doesn't even get calculated for calculation of GDP, national Income etc. Tax evasion problem has been there from colonial times and till 1960's it was not this rampant as income tax rates were around 30%. In 1970's due to repeated draughts, heavy investments in agriculture and after effects of wars government increased maximum income tax rates to the levels of 85% with surcharge of 15 %. This resulted in backlash from businesses who found it compelling to conceal income and this was the time when capital flight from India to low tax countries, more particularly to tax heavens picked up. This was also the time when strong underground networks such as hawala developed. After LPG reforms tax rates were brought down to around 30%, but by this time strong networks has already been developed. People were aware of weaknesses of the government which historically failed to bring evaders to the books. Post LPG era witnessed expansion of the black economy and also escalation of offshore black money flow. Main reason of this was globalization as it reduced costs and regulation over transfer of funds abroad. After this there was increasing flow of transnational investments MNCs started mushrooming, stock markets became robust and attracted FIIs. This all resulted in increased Round Tripping of investment. So main sources of black money are Crime, corruption, counterfeit/fake notes and tax evasion. Tax Heavens Generally, tax havens are countries with small jurisdiction which deliberately pursue policy of no or very low taxation. They allow great deal of secrecy to companies and investors operating in their jurisdiction. Overtime, these countries become hubs of Money both black and white. Based in these areas companies operate their operations in other countries and try to shift incidence of tax incidence in these areas. Offshore Financial Centers Some of the old tax havens have adopted the more benign designation of 'offshore financial center' (OFC) and tend to describe themselves as financial centers specializing in non-residential financial transactions. But they are just extension of old tax heavens. Thus, many OFCs have the following characteristics: Jurisdictions that have 'financial institutions' engaged primarily in 'business with non-residents' Financial systems with 'external assets and liabilities' out of proportion to 'domestic financial intermediation' designed to finance domestic economic; and Centers which provide some or all of the following opportunities: low or zero taxation; moderate or light financial regulation; banking secrecy and anonymity. E.g. Cayman Islands, British Virgin Islands, Mauritius Vodafone hutch deal can be taken as example - Indian operation of Hong Kong based Hutchison was owned by its company registered in Cayman Islands. To transfer Indian operations to Vodafone it simply transferred shares of this company in name of Vodafone. So Vodafone became owner of Indian operations, while transaction took place in Cayman Islands. In this Hutchison gained huge profits out of Indian operations but escaped taxation. When Indian authorities asked this Cayman Company for books of accounts, answer was – as per laws of Cayman Islands they don't need to maintain books of accounts! Money Laundering Once black money is generated it is under continuous threat of being discovered by investigation/ Tax agencies. It will attract penalty and can unearth some lucrative scandals, illegal ventures, scams, crimes etc. Further, one who holds this money can't freely invest it in any legal venture which requires disclosure of source of income. To get rid of these risks and problems he'll attempt to convert this money in legitimate money. This is done by exploiting loopholes in laws, undergoing series of transactions or investing money in some physical asset like gold or land. After these efforts it is hard for authorities to trace money trail and original source. Some techniques adopted are – Investment in land, flats etc. – majority of black money in India remains invested in immovable property. In fact this is primary reason behind recent real estate boom. Suppose Mr. A has Rs. 1 crore black money and Mr. B wants to sell his land for Rs. 1.2 crore (which is market value). Then in reality land will be sold at price of Rs 1.2 crore and Rs 20 Lakhs will be paid (formally) by Cheque/Bank. While balance Rs 1 crore will be paid in Cash. Now Mr. A has become owner land worth Rs. 1.2 crores and he can retain this land or latter resell it at formal amount that he needs legally. Government will get Stamp duty on Rs 20 Lakh while transaction was at 1.2 crore. Further, income accruing to Mr. B will be meagre as in books he sold this land for Rs. 20 lakhs and he'll escape income tax on Rs 1 crore. In our country state governments Issues 'Circle Rates' of immovable property. These are minimum rates on which a transaction in land can take place, but it is generally far below market prices which leaves ample scope to launder money.  One can invest illegal money in gold and claim that it was Inherited or gifted. Involvement of banks – couple of years back employees of a reputed international bank were caught on camera agreeing to handle black money, allotting them lockers and transferring this money abroad. It is alleged that they violated 'know your customer' norms of RBI, used multiple accounts to launder money of the client. Laundering by corporates – while issuing shares, debenture, bonds etc. to the public promoters can use their own black money to subscribe securities of their own company and turn it into usable white money. A reputed Indian company recently issued 'optionally fully convertible debentures' (debentures) to public and collected money to the tune of Rs 14000 crore. SEBI found irregularities and ordered company to file details of investors. Reluctant company finally filed details which are found by SEBI to be fictitious. It widely perceived that company promoter used its own money to subscribe to debentures. Each application was below Rs 20000 (payment below 20000 can be legally done through cash and bank account is not required) and there was truckload of applications, without any address, repeated names, same handwriting and pen used. So as per allegations promoter attempted to convert black money into white money. This money once reached company as debenture could have been disposed of legally. Hawala System Hawala System has its origin in South India, more particularly in India. This now extends to middle east, Asean countries, Far East and even Latin America. This is an underground, cheap and instant medium to transfer huge amount of money. It is cheaper and less cumbersome than formal remittance channels such as banks, Western Union or Money Gram. There's suppose Mr. HA, hawaladar based in India and his counterpart Mr. HB in Dubai. Client in India comes to Mr. HA with cash to be remitted to recipient In Dubai. After taking cash a code will be given to client in India which will be communicated by him to recipient in Dubai. Recipient in Dubai will communicate this code to Mr. HB and will get money. Note that there is no actual movement of cash. Mr. HA and HB are maintaining account among themselves and such transactions will be bi-directional. They will settle their account on someday in future. In all this hawaladar will get commission of 0.25-1.5 % of the funds transferred. Obviously no paperwork or disclosure is required and money will be transferred under complete anonymity. Hawala system is used by Criminals, Businessmen, and Nonresidents to remit money. This system is back bone of underworld, drugs/arms mafias, terrorists and smugglers. Businessmen use it transfer money to evade tax. Suppose someone India buys machine costing Rs 1 crore from Italy and custom duty is 16.67 %. To avoid custom duty he might get import invoiced at Rs 50 lakh, which will be paid through legitimate banking channel and custom duty will be paid on Rs 50 Lakhs. Balance 50 Lakhs will be sent by Hawala. Politicians and Bureaucrats are alleged to have cooperated with this system as they use this to stash corruption money abroad. India has one of the weakest laws in this regard especially after repeal of Prevention of terrorism Act. Foreign Exchange Management Act (FEMA) treats hawala operations as Civil Offence (not criminal) and penalty is 3 times the funds involved. This is despite of the fact that our political establishment is aware that this is backbone of organized crime in India. But under Prevention of Money Laundering Act, hawala operations are criminal offence if their involvement in money laundering is established. Jain Hawala scandal broke out in mid-1990 in which many politicians were implicated and more recently Pune businessman Hasan Ali who had lot of political connections was arrested on charges laundering money through hawala. Few years back Global Financial Integrity (GFI) report revealed that from 1948 to 2008 about $213 billion of black money was sent out of India and total money pegged abroad including interest on this money was $ 462 billion. We Indians from beginning are obsessed with Swiss banks holding most of this money. After crash in global economy in 2008, resentment against tax havens and non-cooperating counties such as Switzerland was there in all the victim countries. In G-20 meetings which followed crisis, this was central issue of negotiation and non-cooperating countries were threatened by G-20 countries of sanctions if they doesn't cooperate. This remarkably changed stance of many countries and they agreed to share information. Under this information revealed by Switzerland claims amount of Indians in its banking system to be merely around $ 2 Billion. Now there is strong possibility that either possessors of this money diversified its destination or money has been brought back to India through Round Tripping. Round Tripping This is also a method of Money laundering in which black money is send abroad, it moves from one country to another so that money trial becomes complex and original source is never discovered. Once this money gains legitimacy, it is then brought back to India. Some methods that facilitate round tripping are:- Participatory Notes – Participatory notes are the derivative instruments issued by registered FIIs to persons in foreign countries who invest in India but don't want to go through procedures mandated by SBI. Money moves from – Investor (participatory note holder) to FIIs and then to Indian Stock Markets. As they remain outside preview of SEBI there are apprehensions that these are used for round tripping. (Foreign Institutional Investors are investors in financial markets and they need to get registered with SEBI). Investment through participatory notes is allowed only if investor is registered with authorities of home country. So there is ample scope of verifying source of such investments if other countries cooperate. But any attempt toward this transparency results in significant outflow of FIIs and crash in stock market. Participatory mode constitutes significant proportion of FII investment at about 25%. Raising Capital by Global Depository Receipts – Indian companies are allowed to raise capital from abroad by issuing GDRs. These might be subscribed by persons who hold Indian black money. This will result in round tripping. Money coming in NGOs and Charitable Institutions – these institutions are treated a bit liberally in almost all countries. In India they need to file annual return with home ministry in which they need to disclose name and address of foreign donors. Now case may be that donor is XYZ ltd Company in which shares are held by some other PQR ltd. This effectively conceals real source of money. Transfer Pricing – This happens between related companies/firms in different countries. For e.g. Mr. A is in India having Rs 1 crore. His accomplice Mr. B is in Singapore. Mr. A can buy some goods, machinery etc. for Rs 5 crore also using Rs. 1 crore (1 crore paid in cash and 4 crore in Cheque). Then he transfers these machinery/goods to Mr. B at Rs 4 crore. Hence money value of that Rs 1 crore is moved from his Indian office to Singapore Office. Similarly, these transactions can be undertaken to bring back money in India. Income tax act has some provisions to treat these transactions at 'Arm length Price', but it Transfer Pricing is still a reality. In all these cases, money will move back to India and will be treated as legitimate while its source may be illegal. Effects of Black Money on economy:- Government losses tax revenue as tax on this money is not paid. It is hard for RBI to frame effective monetary policy. Black money floating in economy is impossible to estimate and remains out of preview of government. RBI increases interest rates, CRR, SLR etc. to regulate money supply but more there is black money, more is ineffectiveness of these measures. Corruption – Black money is both cause and effect of corruption. To handle this money at macro level political support is essential and it is widely perceived that politicians are biggest beneficiary of this system. This we can realize if we see money spend in Indian elections and its opaqueness. National Security – as we have already seen that black money provides finance to criminals and anti-state actors. Black money can be used to support wide range of illegal activities. Black money in itself is curse for economy and anti-state actors can attempt to destabilize economy by pumping counterfeit currency in economy. Time and again it has been revealed that terrorist groups are actively involved in this activity. Overpriced real estate prices – as immovable property is perceived as safest avenue for black money, most of the black money moves in to this. This resulted in unrealistic real estate prices which deprive genuine and needful buyers. Lack of innovation and research – When black economy is dominant there is less incentive for R&D for industry. Most of their effort is toward getting favorable treatment in allocation national resources. In India vast majority of billionaires have their interest in those areas where active support or patronage of government is needed. These sectors and Iron and steel, mining, telecoms etc. in contrast billionaires in US generally are normal people who invented some useful thing and seized opportunity.  Capital Flight – in order to escape domestic rules and regulation scarce capital in India moves out to Tax heavens. It stalls process of capital formation in the economy. Any black money brought back to India shall be in foreign currency and will supplement Indian FOREX reserves.  Steps taken by Government – Rationalizing Income tax rates – After LPG reforms Income tax rates were brought down to around 30 % so that more people will disclose their incomes. It is generally believed that good tax structure is one whose base is large (covers number of people) and tax rates are lower. Introduction of Tax Deduction at Source (TDS) – Under TDS system when payment is made to someone then there is onus on payer to deduct tax from the payment and deposit it with government. In Vodafone case, Income tax department demanded Tax money from Vodafone while profit on transaction accrued to Hutchison. Hutchison sold its Indian operation at huge profit to Vodafone. Profits were taxable in hands of Hutchison. Vodafone was supposed to deduct TDS while making payment and deposit it with Income Tax department. Voluntary Compliance Schemes/ Amnesty Schemes These schemes give chance to holders of black money to declare their money without getting penalized. This method is criticized because it provides incentive for Tax evasion and is unfair for honest tax payers. Honest ones will think - why to pay tax if tax at all if evasion is not penalized? Prevention of Money Laundering Act,2002 – It is aimed at combating money laundering in India with three main objectives – to prevent and control money laundering, to confiscate and seize the property obtained from laundered money, and to deal with any other issue connected with money laundering in India. Currently many 2G scam accused are facing trials under the act. General Anti Avoidance Rules (GAAR) It was to be introduced wef. 1st April, 2014 to check aggressive tax planning and flouting of income tax laws. It gives more power to Income Tax officials on how treat a suspicious entry in books of accounts. Onus to prove that entry is bonafied is on assesse. But, budget 2014 didn't mention anything about GAAR, after budget, MoS for finance replied in parliament, "GAAR will be applicable from 1st April 2015." Improving Currency note – RBI continuously improves currency so that it will be difficult to be duplicated. Currency has inbuilt feature which can distinguish genuine from fake notes. RBI has plans to introduce 'plastic notes' which are even harder to counterfeit.  Some Institutions for combating black money Central Board of Direct Taxes (CBDT) – Under Department of Revenue, Ministry of Finance - It oversees direct tax administration in India and is primarily responsible for combating black money. A new post Director General of Income Tax (Investigation) was created for investigation of cases of evasion. DGIT heads investigation wing of the Board. Similarly, for indirect taxes 'Central Board of Excise and Customs' is in place and it has Directorate General of Central Excise Intelligence (DGCEI) Enforcement Directorate - The ED has currently been entrusted with the investigation and prosecution of money-laundering offences and attachment/confiscation of the proceeds of crime under the Prevention of Money Laundering Act. It also enforces provisions of Foreign Exchange Management Act. Financial Intelligence Unit - It was established in 2004 for coordinating and strengthening efforts for 'national and international intelligence' by investigation and enforcement agencies in 'combating money laundering and terrorist financing'. FIU is the national agency responsible for receiving, processing, analyzing, and disseminating information relating to suspect financial transactions.  It is an independent body reporting to the Economic Intelligence Council headed by the Finance Minister. For administrative purposes, the FIU-IND is under the control of the Department of Revenue, Ministry of Finance. Its functions are defined under Prevention of money Laundering Act. Apart from these there are other institutions which have bearing on corruption and black money such Serious Fraud Investigation Office SFIO, Central Bureau of Investigation (CBI), National Investigation agency, State Intelligence Agencies. Further attempts are underway for building 'National Intelligence Grid' which will integrate investigation and work of all the intelligence agencies in India. India joined – ' Global crusade against black money' G-20 countries – This group was formed in aftermath of global financial crisis. This group had more representation of developing countries as their economies were better as compared to countries in recession/slowdown. India played a major role in developing international consensus for taking action against tax havens and as a result G-20 decided that sanctions will be imposed on non-cooperating countries (as already explained). Many countries were insisting on conclusion of 'Double taxation Avoidance Agreements' in which tax sharing mechanism for income which is taxable in jurisdiction of two countries is negotiated. DTAAs take long time to come to force. India insisted that instead of waiting for DTAAs, Tax Information Exchange Agreement (TIEA) be signed immediately. Under this a country can't refuse to disclose information when demanded by any other country in relation to latter's citizens or their related financial information. Consequently many countries agreed to share information. Further, now negotiations for 'Automatic exchange of Information' is going on under which relevant information will be exchanged without demand. DTAA/ TIEAs has clause that information shared can only be used for tax purposed and confidentiality needs to be maintained. Information can only be shared in judicial proceedings or when investigation is over, guilt has been established and persons are under prosecution. This was the reason that recently at first government disclosed names of only those persons against whom prosecution was underway. On Supreme Court orders it handed over complete list to SC. Multilateral convention of Mutual Administrative Assistance in tax Matters - . In response to the call by the G20 for a global instrument to fight international tax evasion and avoidance, the Convention has been brought up to the internationally agreed standard on information exchange for tax purposes, in particular by requiring the exchange of bank information on request. A unique feature of this convention is the facility for serving of notices issued by one tax administration through another tax administration. It is also hoped that the convention will facilitate tax examination abroad, which is being included in all TIEAs Financial Action Task force –It mandates and enforces following of FATF norms of KYC and customer due diligence, illegal transfer of funds and their recovery, and international cooperation. India was given fulltime membership in 2010. Other groups India is member of are - Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG), and the Asia Pacific Group on Money Laundering (APG) Apart from this India ratified many conventions including United Nations Convention against Corruption, United Nations Convention against Transnational Organized Crime, International Convention for the Suppression of the Financing of Terrorism Special Investigation Team Recently Indian Government constituted a Special Investigation Team for Black money on directions by Supreme Court. It is headed by Retired Chief Justice of India and is being assisted by the revenue secretary, directors of CBI, IB, RAW and ED, the CBDT chairman and an RBI deputy governor. The SIT has been charged with the responsibility and duties of investigation, initiation of proceedings and prosecution in cases of Hasan Ali and other matters involving unaccounted money. This body would report to the SC directly and no other agency will be involved in this. With all this it appears that a lot has been done for black money. But, to no avail, black money problem is has not yet got a solution. There is yet no landmark success that could convince Indian people that this problem will soon be arrested. Main reason behind this pessimism is political environment of India. It is popular perception (and acceptance) that Elections are being fought on support of black money. Further, on this issue public opinion doesn't seem to be as cautious as it should. Some corners of the society believe that black money is not such a big menace as most of the jobs are in unorganized sector and it is helps the poor. They also believe that corruption is just speed money to get work done fast which might be good. But this belief is pure ignorance. Costs of black money are significant as we have seen. Administration, if corrupt, will deliberately attempt to create artificial bottlenecks which could be opened only by bribe and this is breeding ground for crony capitalism. Much talked about Inspector raj, License raj are results of this mentality. This results in favor and patronage, over distribution of public goods and services, which deprives poor. India's huge social spending and subsidized products gets leaked into black market. For eg. It is estimated that for every 1 kg of food grains delivered by PDS in India, Food Corporation of India releases 2.5 kg. Kerosene, LPG, fertilizers, subsidized medicines are no exceptions. To bring lasting change, public perception and acceptance of this system needs to be changed. This can be done by efficient administration, easy laws which facilitates life of people, this will increase faith of people in government and over the time, they will feel more responsibility to pay their taxes.

As I have mentioned, the Mitakshara is a commentary only on the Yajnavalkya Smriti. The question therefore which arises is as to why Vijnaneshwara chose only the Yajnavalkya Smriti for his commentary. There was Manu Smriti which was held in even greater respect than Yajnavalkya Smriti, but Vijnaneshwara preferred to write his commentary on the Yajnavalkya Smriti rather than on Manu Smriti.

We can get the answer to this question if we compare Manu Smriti with Yajnavalkya Smriti. Manu Smriti is not a systematic treatise. It does not have a clear-cut division between religion and law, as in Yajnavalkya Smriti. If we read the Manu Smriti, we will find that there is one shloka on religion, the next shloka on law, third on morality, etc. Everything is jumbled up. On the other hand the Yajnavalkya Smriti is divided into three chapters. The first chapter is called Achara which deals with religion, the second chapter is called Vyavahara which deals with law, and the third chapter is called Prayaschit which deals with penance. Thus, there is a clear demarcation between law and religion in Yajnavalkya Smriti, which is not to be found in the Manu Smriti. This demarcation between law and religion itself is a great advance over the Manu Smriti. Thus, the Yajnavalkya Smriti marks a tremendous advance in law over the Manu Smriti. Law is now clearly separated from religion. This is analogous to the Roman law or to the positivist jurisprudence in the 19th century of Bentham and Austin.

Also, the Yajnavalkya Smriti is shorter and more liberal, particularly towards women than the Manu Smriti. It was perhaps for this reason that Vijnaneshwara preferred the Yajnavalkya Smriti to the Manu Smriti for writing his commentary.

"If that were so, other purposes of opulence and gratification, which are to be effected by means of wealth, must remain unaccomplished and if that be the case, there is an inconsistency in the following passages of Yajnavalkya, Gautama and Manu, 'Neglect not religious duty, wealth or pleasure in the proper season.' "

As stated above, Vijnaneshwara relies on no Smriti authority in support of his contention that the word "sapinda" has a secular and not religious connotation. Instead, Vijnaneshwara displayed his creative brilliance by relying for this purpose on Jaimini's Lipsa Sutras as he calls the 3rd Adhikarana of Chapter I Book IV of Jaimini's Sutras.

As is well known, the Mitakshara was written by Vijnaneshwara during the reign of Vikramarka, a Chalukya ruler of the 11th century A.D. Although, the Mitakshara was written by a South Indian, its remarkable feature is that its authority spread all over India except Bengal and Assam (where too it has great respect) and it was accepted as the authoritative text on Hindu law even in North India.

Mitakshara was certainly not a law made by Parliament. In fact, in those days there was no Parliament and the law consisted of treatises of learned jurists. The Mitakshara was accepted as an authoritative text on Hindu law not due to promulgation by any sovereign authority such as the King or Parliament, but due to its tremendous scholarship, logical analysis and the sheer force of intellect of its author.

The importance of the Mitakshara therefore is that it teaches us to have respect for intellect and learning wherever it may come from. As the Rig Veda says,

"Let noble thoughts come to us from every side."

or as it is said:

 "A king is worshipped only in his own country, but a learned man is worshipped everywhere."

This is the lesson which the Mitakshara teaches us in the 21st century. If India has to rise as a nation we must not be sectarian or chauvinists but all must feel like Indians living like a united family and must respect each other, whether we come from North or South, East or West.

The second importance of Vijnaneshwara's Mitakshara in India in the 21st century is the great progress it made in traditional Hindu law by making it secular. In this connection it may be mentioned that in ancient India there was not only great development in Philosophy, Mathematics and Science, but there was also great advancement in the field of law.

Until the Mitakshara of Vijnaneshwara came into existence, Smritis and commentaries were largely religious and not secular. It was the Mitakshara which was the first to make the laws of property and inheritance secular.

The bifurcation of the Mitakshara and Dayabhaga was due to two different interpretations given to a single word "sapinda". Manu has written that when a man dies, his property goes to his nearest "sapinda". The question is therefore what is the meaning of the word "sapinda". That depends upon the meaning of the word "pinda". According to Dayabhaga, "pinda" means the rice balls which are offered in the Shraddha ceremony to one's deceased ancestors. On the other hand, according to the Mitakshara the word "pinda" does not mean the rice balls offered at the Shraddha ceremony at all but it means the particles of the body of the deceased.

The term "sapinda" as used in the Smritis and by the commentators before Vijnaneshwara meant only those connected with the funeral obligations. Vijnaneshwara's definition of "sapinda" as one connected by the particles of the same body was apparently unknown to any previous commentator. He cites no Smriti in support of his view, but only the Vedic texts on the theory of heredity which do not mention "pinda" or "sapinda" at all. As Nilakantha says in "Samskara Mayukha":

"Vijnaneshwara abandoned the theory of connection through the rice-ball offering and accepted the theory of transmission of constituent particles."

In this connection the Mitakshara may be contrasted to the Dayabhaga system. In the chapter which deals with the subject of succession, Dayabhaga appeals to the doctrine of religious efficacy at every step, testing the claims of rival heirs by their numbers and nature of their respective offerings. On the other hand, the Mitakshara never once alludes to such a test, as noted by the Privy Council in Balasubrahmanya Pandya Thalaivar v. M. Subbayya Tevar, IA at p. 102. The claims of rival heirs are determined primarily by the test of degrees of propinquity and not religious efficacy. Even persons who confer no religious benefits to the deceased are admitted as heirs for the reason of affinity. Vijnaneshwara states emphatically that "sapinda" relationship does not depend upon the relationship of the deceased through the offering of the "pindas" and his getting it or not, but it depends upon having the same particles of one's body. Vijnaneshwara's new definition was therefore revolutionary. It divested the word "sapinda" of its religious meaning, and was in keeping with the new orientation which he gave to the Vyavahara or civil law by treating property and inheritance as purely secular matters, like the Roman lawyers. He rested the rules of law on purely practical and rational considerations. Combating the view that the wealth of a regenerate man is designed for religious uses exclusively, Vijnaneshwara says:

According to Vijnaneshwara, the origin of property is popular recognition, and hence the basis of inheritance and succession is relationship by blood. While Jimutavahana makes the text of Manu on the subject the foundation of his principle of inheritance (because Manu emphasises the spiritual aspect), Vijnaneshwara mainly relies on the text of Yajnavalkya, because the latter prefers the matter of factual aspect. Vijnaneshwara utilises the Mimansa Adhikarana as interpreted by Prabhakara who is reputed to be an heterodox propounder of the Mimansa Sutras, while the orthodox interpretation of the Adhikarana as given by Savaraswami and Kumarila Bhatta gives no support to Vijnaneshwara's views.

Thus, we see that Vijnaneshwara utilises the Mimansa principles, particularly, the Prabhakara school, for striking out a new, secular path in the field of law.

This new, revolutionary change in the law which Vijnaneshwara effected by his new definition of the word "sapinda" had remarkable practical effects. For instance, Jimutavahana who wrote the Dayabhaga, did not permit inheritance to a son at birth. This is because Dayabhaga followed the traditional rule that only the person who can perform Shraddha for his ancestor can inherit the property.

An emperor in the 11th century touched the feet of this man to salute him. The inscriptions on a stone plaque, dated 1124 AD, found at the Kalingeshwara Temple in Martur village, 18 kilometres from Gulbarga, reveal: “Ariraya Mukuta Tadhita Charanan-enalu Negabdi Vikramankana Ratnokara Nichita Mukuta Tadhita,” meaning “When Emperor Vikramaditya bent down to salute Vijnaneshwara, the Emperor's jewelled crown touched the feet of Vijnaneshwara”. Such was the respect Vijnaneshwara commanded during his time. The inscriptions state that Vijnaneshwara lived in the court of Emperor Vikramaditya (1076-1126 AD).


He wrote Mitakshara, a law treatise explaining the Yagnvalkya Smruthi, propounded by philosopher Yagnvalkya. Except for minor changes, the laws in India relating to Hindu Joint Family, distribution of property, property rights, stree dhana (women property), and succession are still governed by Mitakshara. Though written 10 centuries ago, the relevance of Mitakshara is greatly felt, especially in the courts all over the country.