Latest: Corruption and Money Laundering.
In a startling and sudden move, Indian Prime Minister Narendra Modi announced Tuesday last week that the country's largest currency bills worth 500 and 1,000 rupees ($7.5 and $15) would be invalid starting at midnight on the same day to demonstrate that he is truly up for a fiercer fight against black money and corruption.
Modi means well and his decision was made based on the reality in India, since most illegal business in the underground economy is cash-only, and 500 and 1,000 rupee notes constitute over 80 percent of all cash circulation in India. Nevertheless, we can hardly count on the new rule to fully root out corruption.
Modi says corruption and money laundering are "diseases" and "obstacles" to Indian economic success. India Today once published an editorial noting that "One word dominated the national vocabulary: corruption."
Since Modi assumed office, he has carried out a number of measures to crack down on black money, corruption and tax evasion. However, many of them are believed to be without teeth and can't begin to scratch the surface of the problems he faces. The new policy to scrap India's two largest denomination rupee notes is considered a risky, but a bold and decisive step. And yet, delivering a corruption-free country requires more than banning currency notes. The key should be reforming systems. In this regard, New Delhi might need to look for ideas from Beijing.
Since the 18th National Congress of the Communist Party of China, Beijing's anti-corruption campaigns have focused on investigation and the establishment of a legal system against corruption. Over the years, China promoted anti-corruption laws, improved the supervision system, deepened judicial system reforms and adopted measures to make sure the system is transparent. For instance, China's foreign ministry has lately published information about the families of 12 senior officials on its website in an effort to fight against corruption through familial networks by improving transparency. These steps are taken to ensure that achievements made in the struggle against corruption can be consolidated by laws and systems.
China is still on its way toward building a comprehensive anti-corruption system. But compared with India, Beijing's method has already shown its efficiency.
More time is needed to see whether Modi's new policy will turn into a huge blow against corruption in India. The hard truth is that the corrupt and fraudulent won't just conduct shady deals by using cash, but with gold, real estate and overseas assets. Corruption can be bred in a variety of ways. Blocking the circulation of large currency bills is without question far from enough.
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