Capital gains accruing from these transactions, it will provide an opportunity to the state to tax these capital gains

appropriately. This will act as a double-edged weapon against black money. On the one hand, it will slow down the transactions in urban property thus breaking the back of the speculative boom and on the other, it will bring more revenue to the state. Dr. K.N. Kabra examining Bhaduri's proposal mentions : "The political preconditions for making such a move are not vastly different from those involved in nationalisation of such properties. The feasibility of the proposed remedy on political grounds does not seem to be meaningfully different from that associated with ceilings etc." Kabra, therefore, presents a modified proposal. Since most of the urban property created with the help of black incomes is registered at understated values, Kabra recommends that the state should acquire the right to compulsorily purchase properties at their understated purchase price or construction costs. For this purpose, he also suggests the setting up of a public sector Real Estate Corporation or a number of such corporations with adequate resources and endowed with the task of mandatory purchase of undervalued properties. To enhance the effectivity of the measure, Kabra considers it essential that the right to transfer use of property by means of granting power of attorney be restricted. This will limit benami sales or real estate. Kabra further mentions : "To increase the effectiveness of the measure, a ceiling on an all-India basis on the total value of urban estates can also be enforced."36 The basic idea underlying both the proposals is to limit the use of black money in real estate and enable the State to appropriate the gains arising therefrom. Both Kabra and Amit Bhaduri recommend the setting up of Public Sector Corporations to purchase properties at the values understated or otherwise by the sellers of such properties. The ultimate aim of both the proposals is to seriously limit investment of black incomes in real estate. Kabra goes to the extent of saying that an all- India ceiling on total value of urban estates should also be enforced to improve the effectivity of the remedy. If that were so, it only implies that whereas the fundamentalist proposition is rejected by Kabra, he imperceptibly and implicitly moves nearer to

fundamentalist position. The proposals of appropriating the gains of investment of black income in real estate should be given a fair and honest trial. One more comment which seems pertinent must be made in this context. It would not be advisable to reject Bhaduri's proposal on the basis of administrative feasibility as Kabra does. If this position is taken, the same criticism becomes equally applicable to Kabra's proposal. To consider the economic system a slave of the present administrative set-up will prevent us from taking up any task of gigantic dimensions. To tame parallel economy is a gigantic task and if a meaningful dent has to be made in it, then the administrative set-up must be geared to meet the challenge.
(iv) Donations to political parties and electoral reformsWith growing political instability and galloping inflation, election expenses of political parties have been mounting. To meet these expenses, political parties accept donations from traders, businessmen, industrialists, transport operators. The ban on company donations to political parties introduced in 1968 opened the backdoor of black money coffers funding the process. All political parties are, in theory at least, opposed to this dependence but have so far not created an alternative. In March 1974, the Congress Parliamentary Party proposed to establish a state fund to meet electoral expenses. In 1976, the Government announced its intention to repeal the ban on company donations but did not formally bring forth a bill to this effect. Even during the Janata Party regime a detailed proposal for a state fund of the order of Rs. 60 crores to finance the electoral expenses of recognised political parties was initiated by Mr. Morarji Desai, but before a shape to this proposal was given, the Janata Government itself collapsed. But since donations to political parties weaken the Government resolve to take action against black money operators, the sooner the symbiotic relationship between black money and political power is broken, the better shall it be for the country.

Expansion and improving the efficiency of the public sector as a countervailing powerSome economists have recommended the expansion of public sector as a countervailing power to control the adverse impact of black money. Kabra, for instance, mentions, "What still must be emphasised is that compared to
(iv)

the expansion of the black sector associated with the expansion of the private sector, there is considerably lesser scope for the expansion of the black sector in association with the growth of the public sector.. .A bigger role for the public sector reduces the correlation between the growth of the economy and the growth of black incomes because this may lead to a decline in the relative size of private sector whose quest for higher than legally permissible rates of returns is the bedrock on which the black economy rests."" As a part of the strategy of planning, the public sector has been expanded in heavy and basic industries and the provision of infrastructure. However, since controls and regulations are introduced to mitigate the effect of shortages, it would be desirable to extend the public