Keep election promise
In another 10 days, the nation will come to know how far the Modi government has fulfilled its promise of unearthing black money in domestic economy.
In another 10 days, the nation will come to know how far the Modi government has fulfilled its promise of unearthing black money in domestic economy. The last date for Income Declaration Scheme (IDS) ends on September 30. Promises to go after black money, provide jobs, ensure growth and good governance catapulted the NDA to power. Modi even promised that up to Rs 15 lakh could be deposited in bank account of every Indian if black money is fully unearthed.
However, one is already aghast at the poor response to the much-publicised amnesty scheme for unaccounted wealth abroad – it yielded only about Rs 4,000 crore last year. IDS says anybody can declare unaccounted wealth by paying tax, surcharge and penalty amounting to 45 per cent. No questions will be put. Even names will be kept confidential. Soon we will come to know the effect of such allurements besides PM’s warning to go after black money holders in a big way after the IDS expires.
Bodies like World Bank estimate black money in India at about one-fifth of GDP. It is a huge amount given that ours is a two-trillion dollar economy registering over 7 per cent growth. Country's tax to GDP ratio is around 16.6 per cent and is said to be nearly 5 percentage points less than that in other OECD countries of comparable size. Black money debilitates a nation’s capacity to uplift weaker sections, distorts economic planning and constrains public investments in health, education, infrastructure etc.
It is not that the government did nothing. The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 and the New Benami Transactions (prohibition) Act have stringent provisions and penalties. But these alone won’t suffice. The government should adopt the SC-appointed SIT recommendation of ban on cash transactions above Rs 3 lakh and cash holding beyond Rs 15 lakh. RBI too must agree to share banking data with government agencies to curb outflow of illicit money.
If properly executed, GST, too, will reduce black money incidence to some extent. Largely, loopholes in taxation make way for black money. Taxman should look at pooling data from all available sources viz., credit cards, and financial markets. What are essentially needed, though, are effective electoral reforms to curb black money changing hands among corporates, criminals and politicians. Legitimising poll funding can largely curb off-the-book payments to parties, and companies would feel much less compelled to hold black money. Political parties should be made to fully disclose their funding periodically to the EC.
Leave alone politicos, the Modi government is yet to look at other sources of black money like real estate and education. Same slackness is evident in either disclosing names of black money holders abroad or making headway in Panama Papers Leak probe. Once in power, parties tend to slacken on their promises. BJP chief Amit Shah maintains that the deposit of Rs 15 lakh in every Indian’s account is a Jumla (gimmick). Opposition is already castigating it on the other unfulfilled promises. The BJP that saw an eruption of popularity in 2014 cannot hope to bank on any more Jumlas in 2019, if it comes across as two-faced.