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One analyst calls "black money" or illicit money . He's not off the mark - I have been hearing of and reading about this scourge ever since I was in junior school. Several decades later, the problem has only worsened. The government reckons there are no reliable estimates of "black money" inside and outside the country - a "study" by the main opposition BJP in 2009 put it at anything between $500bn to $1.4 trillion. A recent conservative estimate by the US-based group Global Financial Integrity Index pegs illicit capital flows between 1948, a year after Independence, and 2008, at $462bn - an amount that is twice India's external debt. India's underground economy today is estimated to account for half of the country's GDP.

Thanks to opposition and public ire over a series of corruption scandals, "black money" is back in the spotlight. The Supreme Court has been chiding the beleaguered government for not doing enough to unearth illicit money. "Is there no basis to figure out black money?" the court wondered on Thursday. "What is the source of black money, which has been stashed away in foreign banks? Is it from arms dealing, drug peddling or smuggling?"

Strong words indeed. But they may not be enough to uncover India's biggest and longest-running scandal. This week, Finance Minister Pranab Mukherjee unveiled what critics said was a to check the "menace of black money". This includes joining a "global crusade" against it, creating appropriate legislation and institutions to deal with such funds and imparting skills to officers tasked with detecting such funds. In effect, what the government is saying is that after 63 years of independence, India has no institutions or trained people available to curb a brazen and thriving underground economy which rewards tax evaders, humiliates tax payers and widens inequity.

There is enough evidence to show that there is little political or administrative will to curb "black money". India has double taxation treaties with 79 countries. But 74 of these treaties need to be tweaked significantly to include exchange of banking information between the countries. (Letters have been issued to 65 of these countries to initiate negotiation, says the minister.) India has apparently chosen 22 countries and tax havens for negotiating and signing exchanging tax information. Last year, a law to prevent money laundering was given more teeth - but laws are often flouted with impunity in the world's largest democracy. The government says it plans to hone direct tax laws further to begin taxing deposits in foreign banks and interests in foreign trusts.

It also talks about a new amnesty scheme for "black money", which is really a slap in the face of the honest tax payer. Since Independence, the government has offered the "voluntary disclosure scheme" six times, most recently in 1997. Less than $1bn was declared, which most experts believe was a fraction of the black money in the market at that time. India's autonomous federal auditors once remarked that the disclosure schemes encourage people to become "habitual tax offenders", knowing full well that they can hoard money without paying income taxes.

Independent economists believe that despite the government's recent noises, "black money" will continue to blight India and its economy. For one, it is a systemic problem. Those who don't pay taxes or stash away illicit money overseas comprise the political and professional creme de la creme - politicians, bureaucrats, businessmen, doctors, lawyers, chartered accountants, judges. That the government is not keen upon cracking down on illicit capital flows was evident, analysts say, when, in 2008, it refused to accept a compact disc from Germany containing names of account holders in a Liechtenstein bank. Last year, under opposition pressure, the government accepted the CD, but the 26 names of Indian account holders in it. Many believe that a year is enough for the account holders to move their money out of the bank. "Unless there is political will to dig out black money, nothing will happen," says Arun Kumar of Delhi's Jawaharlal Nehru University, who has investigated India's underground economy in detail. And the humiliation of the honest citizen will continue.

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Delhi's literary salons are abuzz over a bitter row between a British writer and an editor on an Indian magazine. Some believe the spat between and magazine's political editor Hartosh Singh Bal will cloud Asia's best-known which Dalrymple co-directs with Indian writer . I suspect, like most controversies, this will actually end up helping Dalrymple, Bal, Open magazine and the festival, not necessarily in that order.

In a rather dishevelled and provocative on why Indians writing in English crave "British approval", Bal took a swipe at Dalrymple describing him as a "pompous arbiter of literary merit in India". He skewered the Jaipur festival - which opened today - for its obsession with British writers: "If Jaipur matters as a festival, it is because of the writers from Britain it attracts." The festival, he wrote, "works not because it is a literary enterprise, but because it ties us to the British literary establishment". And if Dalrymple appears central to our literary culture, signed off Bal, it says "something more damaging about us than about him".

Dalrymple hit back with an using strong language. He described Bal's piece as "blatantly racist", saying it "felt little more than the literary equivalent of pouring shit through an immigrant's letterbox".

He tore into Bal's argument that the Jaipur festival was a British jamboree - British writers "brown, black and white" make up a "minority within the minority" of foreigners, he wrote, adding that two thirds of the writers invited were Desis (South Asians).

On the face of it, it is difficult to contest this defence - the festival's two key international speakers are Turkish () and South African (), there are sessions on literature from India's neglected north-east, from Palestinians, Israelis and Pakistanis. Minority and Dalit (Untouchable) writing features too. Dalrymple also accused Bal of "double standards and reverse racism".

Bal denying the racism barb and said that Dalrymple did not know "what it means to suffer the indignity he so easily cites in his defence". He added: "I have had to stand in a London tube as drunk football falls pouring out of a match called into question the race and origins of people such as me."

The dust-up has predictably raised the hackles of commentators both in India and Britain - The Telegraph in London called Bal's piece a ; respondents in Open magazine worried about Dalrymple's literary influence in India and accused him of writing shallow .

But for the personal attacks on both sides, this appears to be a stale debate. Indian writers have benefited from British approval for nearly a century now. WB Yeats introduced Rabindranath Tagore's Gitanjali () to the world in 1912. It became his best known work in the world and won him the Nobel Prize. The doyen of Indian writing in English, , was introduced to the world by Graham Greene who recommended his debut novel to a publisher, leading to its publication in 1935. won the Booker for Midnight's Children a good half a century later.

The debate about whether Indians writing in English look for approval from abroad - or to foreign publishers and awards - also has a sense of deja vu about it. One of India's award-winning writers has argued that Indian writing in English smacks of post-colonialism. She has said that such writers "do not know any Indian language well enough" and that "the outsider's assessment still remains the privileged one". Writer Meenakshi Mukherjee has dwelt upon Indians writing in English being gripped by an "anxiety of Indian-ness" - "Indian-ness" being a quality their books needed to travel abroad.

One leading Indian writer I spoke to said that he never understands this grouse. "England and America are bigger markets. It's natural to care. Having a home market is good, but it is still small. The good thing is that it is growing." Many writers agree that it is odd that literary festivals in India should be run by foreigners. But why moan about it, they say. If we feel strongly about this, should we not mount alternative events instead? So is this all, as a writer friend wonders, just a storm in a teacup?

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Is India sliding into a pseudo monarchy of sorts? In his splendid new book, India: A Portrait, historian dredges up some startling data on the stranglehold of family and lineage on Indian politics.

The finds that though less than a third of India's parliamentarians had a hereditary connection, things get worse with the younger MPs. Consider this:

• Every MP in the Lok Sabha or the lower house of the Indian parliament under the age of 30 had inherited a seat.

• More than two thirds of the 66 MPs aged 40 or under are hereditary MPs.

• Every Congress MP under the age of 35 was a hereditary MP.

• Nearly 40% of the 66 were hereditary members.

• Nearly 70% of the women MPs have family connections.

Interestingly, for MPs over 50, the proportion with a father or relative in politics was a rather modest 17.9%. But when you looked at those aged 50 or under, this increased by more than two and a half times to nearly half, or 47.2%.

Also most of the younger hereditary MPs - and ministers - have not made a mark and sometimes have been shockingly conservative in their actions. A young MP from feudal Haryana, for example, was seen to be cosying up to extra-constitutional village councils in the state which were punishing couples for marrying outside their caste and clan.

"If the trend continued," concludes French, "it was possible that most members of the Indian Parliament would be there by heredity alone, and the nation would be back to where it had started before the freedom struggle, with rule by a hereditary monarch and assorted Indian princelings." He also worries the next Lok Sabha will be a "house of dynasts".

Most agree that growing nepotistic and lineage-based power in the world's largest democracy is a matter of concern. "The idea of India," political scientist Mahesh Rangarajan told me, "is rent apart by these two contradictory impulses."

But nepotism is a part of India life; and politics mirrors society. Power, wealth, land and status have hinged to a large extent on who your parents were, what they owned and where they stood in society. Most Indian businesses continue to be owned and run by families though the new economy is throwing up more first generation entrepreneurs. Bollywood, India's thriving film industry, is dominated by sons and daughters of famous actors and producers. Three members of one family - Nehru-Gandhi - have held the post of prime minister. If the wins the next elections and PM Manmohan Singh steps down, there is a likelihood of the dynast Rahul Gandhi becoming India's next prime minister. (It is no surprise that 37% of the MPs - 78 of 208 - in Congress are hereditary compared to only 19% hereditary MPs - 22 of the 116 - in the main opposition BJP.)

Despite French's troubling data, all may not be lost. "Please remember," Dr Rangarajan told me, "the MPs have lineage as a huge plus, but the posts are not hereditary." In other words, if they fail to deliver, they will be voted out of power. Merit triumphed over dynasty in the recent elections in dirt-poor Bihar. So though lineage remains a key factor in politics, remind analysts, it can only give a headstart, and nothing more. Thank democracy for that.

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