1st published in Heraldo
The demonitisation policy was touted as the biggest move in India’s history to break the back of the black economy and as a bonus the counterfeit currency would take a hit. A master stroke which would kill a minimum of two birds with one stroke. The counterfeit industry would have surely taken a hit and it will take some time to generate new genuine looking counterfeit notes, ofcourse good photocopies are already available.
The many unscrupulous bankers colluded with the cash hoarders and the demonitisation policy failed miserably with just about 3% of the old notes staying out of circulation, this means that the effort to hit the black economy failed miserably. It succeeded in creating hardships for the common man and the common man’s sacrifice has come to nought as the objective was not met. Infact the cost of this operation will be even higher than the 3% which was shut out.
The Government is not very happy with the situation, so to try and pull back some of the illegal cash that has slipped thru the dragnet, the IT department has gone into overdrive to seek out the black money. They have received lacs of responses which they have to go thru and that would be akin to searching for a needle in a haystack.
However, one wonders why the Government is looking at such methods, there are simpler ways to get to a major portion of the black money generation and owners, the politicians. It is an open secret that this strata of society is responsible for generation i.e. fees under the table for permissions have to be paid in cash so that they can use their discretionary powers and any and every contract usually has a kickback component. Thus they also accumulate this cash all the time and appetite is insatiable. Yet there is not a single action that would attempt to get at some if not all of the black money from this class. The 80:20 rule is pretty much applicable, 80% of the black money will be with just 20% of our ruling class.
The recent elections saw all the aspiring candidates file their affidavits of assets and liabilities and rather than shift through lacs of explanations of why “X” deposited “Y” amount of cash which will take forever, the IT Department should check out these affidavits especially of those standing for re-election as they can easily have a compare affidavits and see where there is evasion.
Let’s take an example of Mr X. He has stood for elections in Goa in 2007, 2012, 2014 and 2017. He lost in 2012. His net worth increased 80% in 5 years.ie an average of 16% /year, during the period he was an MLA. However, post his election loss his net worth increased by an average of just 1%/year. Surely his salary as an MLA could not have been the contributing factor to the phenomenal growth of his net worth when he was an MLA. In 2014, MP election his income as a non MLA dropped to 62 lacs against 1.6 crores he showed in his IT return for 2010-11. In 2017 his income in the IT return drops to a mere 27 lacs?
Lets take another example Mr B, a sitting MLA. In 2007 he was a small time businessman with almost nothing to his name, even his qualifications he subsequently watered down. In 2017, he realised he had brought an apartment in 1993. Do these affidavits have any sanctity? By the end of his first term he had tripled his assets, and multiplied these assets an astounding 6 times in the last five years. Just bank deposits went from a measly 5 lacs to 1.5 crores. His income increased 50 times from 1 lac to 50 lacs. He even managed home loans from LIC and the Goa Legislative assembly while the affidavit dose not reflect any such home. Does the Legislative assembly not keep proper track why the loan is sanctioned? The market value of an asset goes up seven times with three years when for all practical purposes real estate has been flat, was the acquisition undervalued? We could go on.
There seems to be a direct corelation between income before and after becoming and MLA. The IT department is always looking for sudden spurts in income or assets and that is why they have raised questions on the cash deposits. So should they not be studying the affidavits of MP’s/MLA’s to start with and then move on to MLC’s and Panchayat members?
There are some gaps in the information asked for in the affidavits, for eg: Only income declared in the last IT return is mentioned, they should provide details of income for each year if a person was previously elected. The investment in insurance is a grey area, why not ask how much was invested in insurance every year? While the cost of acquisition is mentioned, what is not mentioned is the market value at the time of acquisition.
While most businesses had a hard time maintaining their bottom lines in recent times but for our MLA’s that is a small matter, they turn into King Midas once they become MLA’s and better if they are Ministers. Maybe a few are good businessmen, but to believe everyone of then is honestly earning the huge increase in income and assets is to be surely naive. So in keeping with PM Modi’s intolerance towards “kala Dhan” the focus should shift to screening elected representatives and ensuring that the black economy is tackled from the top and not starting with the common man. A good IT officer will do a much better analysis and unearth much more if allowed.
Acknowledgement: The data it readily available on the website of Association for Democratic Reforms. www.adrindia.org
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