None of the steps the Narendra Modi government has taken so far to check black money are convincing enough unless the rock bed of black money generation is destroyed — opaque political funding. This is what helps the idea of illicit money to take birth and flourish. Political parties need money to operate and netas need it to make their family fortunes.
For ages, tax cheats have been feeding politicians part of their ill-gotten wealth in return of the promise that rest of their loot will be untouched by the state machinery. This unholy nexus operates at all levels — from the local politicians to the high power corridors of Indraprastha. Till the time the menace of opaque political funding is cleared and the unholy political-corporate nexus is broken, there isn’t an escape from future black money generation.
But that is exactly what is happening now. According to report released by the Association of Democratic Reforms (ADR) on Wednesday, in 2015-16, the BJP raised 80.7 percent of its total income from unknown sources. The Congress party got 71.1 percent of its total income from such sources during the comparable period. To put it in actual numbers, the BJP's total declared income was Rs 570.86 crore and Congress's Rs 261.56 crore. Out of its total income, the BJP collected Rs 460.78 crore from unknown sources and the Congress Rs 186.04 crore, according to the ADR data.
The ADR defines such unknown sources as sources that contribute money through cash donations received through 'sale of coupons', 'relief fund', 'miscellaneous income', 'voluntary contributions', 'contribution from meetings/morchas' etc. The details of donors of such voluntary contributions are not available in the public domain."
As such, Modi’s demonetisation hasn’t proved much useful for the economy, so far, in unearthing the black money (according to economist Jagdish Bhagwati, that’s about an estimated Rs 5 lakh crore of Rs 15 lakh crore demonetised notes). About 99 percent of money came back now, it is up to the tax man to find out where is the Rs 5 lakh crore hiding in the bank accounts. Certainly, Bhagwati’s estimated Rs 5 lakh crore black money would have certainly reached the formal banking system. Only about Rs 15,000 crore to Rs 17,000 crore is what the government has so far managed to bring out, according to official data.
Nevertheless, post the demonetisation, the Modi government seems to have embarked upon the second leg of crackdown against black money — fight against benamis and shell companies. As part of the process, it has blacklisted 300,000 directors of shell companies to check financial irregularities. It has also said that directors of deregistered companies attempting to siphon off money from the firms' bank accounts will face up to 10 years imprisonment. Besides, if these people haven’t filed their returns for three or more years can forget holding similar positions in other companies (read here and here).
Such attempts to curtail the parallel economy are laudable, but if the intention is serious it needs to act first where it is necessary. That is where the action is lacking beyond rhetoric. Right now, the situation is that common man faces maximum harassment in the black money battle. He is at the receiving end of all steps — from demonetisation-induced cash crunch to tax scrutiny of bank deposits and monitoring of all transactions above a certain threshold. Political parties, meanwhile, command anonymity in their opaque cash dealings. In other words, it is the aam aadmi who is supposed to bare it all, answer endless questions, face harassment even if his money is legit but the politician enjoys a God-given immunity for all his wrongdoings reminding one about the old dark feudal era. No questions asked, no answers given.
The logical outcome is obvious. Political parties will happily use this opportunity to put their black money (money for which there is no real source or income that is not taxed) sourced from tax cheats and would simply say that they got it all from small donors (cash donations less than Rs 20,000 does not need any source). There is no surprise in the golden silence of any of the political leaders from the ruling party and the opposition on political black money, except some general comment. That silence is not difficult to understand because all of them drink from the same pot and it tastes sweet. The Modi government should shake the foundation of black money generation if it is serious in its mission against tax cheats.
Published Date: Sep 07, 2017 12:47 pm | Updated Date: Sep 07, 2017 12:47 pm