Biz@Blaise Black money Red Herring

Since his swearing in ceremony, PM Modi has impressed with his out of the box thinking. Was disappointed when in his latest Radio address, he has promised the country he will bring back poor people's money stashed away in foreign bank accounts.

First of all, whatever money is in politicians or bureaucrats secret and illegal accounts, it is surely poor people's money and belongs to all Indians. Money of rich businessmen in these accounts is partly due to us Indians, ie tax portion. My argument is with the end being attacked. Why are we focusing on bringing back money stashed abroad, why are we begging some countries to share information which is outdated at best, so much noise over the bank lists and then it is said they pertain to 2006.

We must focus on activities at home that generate this black money, a fraction of which then finds its way to a foreign bank. Ofcourse from these foreign banks the money is rerouted into India through channels in say the Cayman islands or other tax havens where no questions are asked. They thus legitimately enter back into India as FDI, PN or real estate. Some of it has even come back as RDX and that is why every right thinking Indian has to guard against black money. It may look like it is just another parallel economic activity to avoid paying tax on hard earned money, but it also opens doors for many antisocial and anti national activities.

If one has to target black money creation at home, one will seriously have to look at 1) Corruption : The principal generator of black money is corruption, it is the root of all evil. The new initiative to focus on MAKE IN INDIA and simplify paperwork will have an impact on reducing avenues for corrupt officials to make money. However reducing avenues for our politicians to make money is more difficult. Look at how every political party has opposed the EC guidelines to bring transparency into the system of political contributions.

2) Real estate business: by its very nature is most prone to dealing in black money. So much so that even salaried people have to convert white into black to be able to do a transaction. In Goa, we could have reduced the avenue for corruption in land conversions by adopting the regional plan but as you will notice it is not happening. Do not blame only the politicians as this flux situation surely benefits some vested interests who are not politicians.

3) Front companies are a bane, Just before the radio talk the PM asked banks to spearhead the search for money hidden behind a veil of subsidiaries and trusts. The new Companies Act has plugged many loop holes which were exploited in routing black money back into the system though a maze of subsidiaries. In the Jaylathia case the Judge referred to her numerous accounts to facilitate the movement of cash. This two pronged attack is a step in the right direction.

4) Tax Structures: The high incidence of tax makes people try and avoid paying. On the other had the penalty for not paying tax appears to be a slap on the wrist. So it makes evading tax lucrative and high return. Then there are issues like no tax on farm income, the only beneficiaries as farmers are genuinely poor are politicians who show huge as farm income. In Goa we use trawlers, you will notice that the fish find only politicians nets as rest of the fishermen do not make as much money selling fish. If the trawler owning fisherman looses the election his fortunes with fish also seem to change, fishy world.

These issues need a change in attitude in order to be addressed. The change in attitude is what Goa CM Parrikar has in mind but unable to practice. ZERO TOLERANCE to corruption. The reality is even if he catches someone corrupt he will prefer to transfer the person as proceeding is very tedious and time consuming. The famous Jayatiltha case went on for close to two decades and seems to be a first, while we all know there should be many more CM's in the same position. Zero Tolerance should include a harsh jail sentence, confiscation of property and speedy completion of trials as is being envisaged in rape cases. Not some silly penalty, a few days in jail and rest of your life to enjoy the spoils.

Zero tolerance would then mean that each individual feels it is his or her responsibility to curb black money/ corruption as it is anti national. They would compare the list with the facts on the ground and report assets held in benami names or which are not disclosed. No question of harassment, as once pointed out it can be quickly concluded by checking financial history if it actually belongs to the person or not. If yes, what is the source of income? If legitimate no issue, if not big problem. So simple.

In short if PM Modi is serious about money stolen from poor Indians, he should focus on the areas where the money is stolen, and stop or make stealing difficult and not where a small part of it is stored. This is India's biggest problem which he seems willing to address. If he does manage, it will make him one of India's greatest Prime Ministers.