While demonetisation is a laudable step, Modi should be cautious with the follow-up measures, as vested interests are deep-rooted
After the November 8 demonetisation move, which has shaken the hoarders and black marketers, not to mention corrupt politicians, what nextIJ Prime Minister Narendra Modi informed the BJP parliamentary board that his fight against black money will continue, as this was not the end but the beginning. “ Next year will be a naya saal, naya Bharat”, he assured.
Modi asserted that many more financial surgical strikes would follow observing that “some people think that after December 30, this all will end. I want to declare this once again that after the end of this scheme, there is no guarantee that something else will not be introduced to get rid of such people”. This has poured cold water on those who were looking forward to ‘business as usual’ after the year-end.
The next logical and corollary move to curb black money could be to bring back the money stashed away abroad, This is work in progress.
Yet another strong measure could be to tackle the black money mostly parked in jewellery andbenami properties. The Prime Minister told at a public meeting in Goa recently, “We will take action against benami property. This is a major step to eradicate corruption and black money.”Benami properties are registered in the name of third parties by anonymous owners to hide wealth. The authorities might use the amendedBenami Transactions (Prohibition) Amendment Act to step up the campaign.
Demonetisation will not be beneficial unless it is followed up with the required tax and financial reforms. There are speculations that income tax may be scrapped and replaced by a banking transaction Act, which could bring many more people into a different kind of informal tax net. There is yet another suggestion to introduce expenditure tax.
last but not least, the campaign against the black money will not be complete without addressing the much-needed electoral reforms. Modi has been talking of holding simultaneous Assembly and lok Sabha polls to cut down the expenditure and combat corruption. Elections generate a lot of black money as voters are lured with money, liquor and gifts. Statistics show that out of a total of Rs52.02 crore cash seized during the 2012 Assembly poll, Uttar Pradesh accounted for Rs37.46 crore in cash seizures, Punjab Rs12.13 crore, Uttarakhand Rs1.36 crore, Goa Rs60 lakh and Manipur Rs47 lakh. The funding of parties should be made transparent. Political parties should be brought under the purview of the RTI Act and also asked to submit their accounts to the income tax authorities. The ultimate aim should be to move towards state funding of elections.The Indrajit Gupta committee had endorsed partial state funding but only for national and State parties.The Second Administrative Reforms Commission in 2008 also recommended partial funding of elections. The law Commission’s 2015 report supported providing subsidies in kind and even amending the Act.
But before all that, the present confusion and chaos that has followed demonetisation, should be addressed. It is understandable that prior notice could not have been given in view of the secrecy of the move. But the Reserve Bank of India (RBI) did not visualise the magnitude of the requirement of new notes and the banks were equally unprepared. Can the RBI print the new notes to replace the old and also distribute them within the 50-day time frame sought by ModiIJ Experts say that it may take longer to ensure a smooth money supply. Unless this is ensured, the Government will face public fury. The Government may have to walk an extra mile to mollify people willing to put up with the inconvenience for a few days in the hope that it will be sorted out soon.
A teary-eyed Modi had said in a speech in Goa recently, “Cooperate with me and help me for 50 days, and I will give you the India you desire.” But the Opposition is on the warpath. Rival parties have intensified their struggle inside and outside Parliament as they are making use of the inconvenience suffered by the common man. The only way to resolve this crisis is for the Government to speed up its delivery of currency notes to the banks and the ATMs.
The moral of the story is that, while the demonetisation decision is a laudable step Prime Minister Modi should be cautious while taking up the follow-up measures in fighting corruption, as vested interests of various sections are deep-rooted.
(The writer is a political commentator and a syndicated columnist)