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In a bold, revolutionary and historic step, Prime Minister Narendra Modi has not only dealt a death blow to black money hoarders and corrupt people by demonetising Rs 1,000 and Rs 500 notes, but also struck a sledgehammer at Pakistan’s nefarious designs to fund terrorism and disrupt the Indian economy with counterfeit currency. The announcement by the PM might have caught the common man off guard, but it was a well-thought out and considered decision and was taken after weighing all the pros and cons. This game-changing move is aimed at cleansing public life, particularly political life.
The bold move has been hailed as a masterstroke by one and all. Except the filthy rich, the rest of the Indians — particularly the middle classes and the common man — have welcomed it. Various steps taken by the NDA government in the last two-and-half years have brought nearly Rs 1.25 lakh crore in black money into the open. Besides, the PM had forewarned and prepared the country that the government would be coming down hard on people hoarding undisclosed money.
Under the Income Declaration Scheme implemented earlier this year, citizens were allowed to declare their undisclosed income and pay tax, surcharge and penalty amounting to 45 per cent of the total undisclosed income. Here, the income declared would be taxed at 30 per cent plus a Krishi Kalyan Cess of 25 per cent on the taxes payable and a penalty at the rate of 25 per cent of the taxes payable, amounting to 45 per cent of the income declared. This would be used for the welfare of farmers. Following the announcement of the Income Declaration Scheme, the PM made it clear that this would be the last chance for people to declare their undisclosed income by paying a stiff penalty and that strong action would be taken against black money hoarders and tax evaders.
As stated by the PM, the NDA government began its battle against corruption and black money soon after it assumed office. The very first cabinet meeting held in May 2014 approved the constitution of a Special Investigating Team (SIT) headed by a retired Supreme Court judge to implement the decision of the apex court to bring large amounts of money stashed abroad by evading taxes or generated through unlawful activities. Subsequently, the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, came into force on July 1, 2015 for disclosure of foreign black money within three months by paying 60 per cent tax. For the investigation of the Panama Paper leaks, the government constituted a Multi-Agency Group (MAG) comprising officers of the Central Board of Direct Taxes, Reserve Bank of India, Enforcement Directorate and Financial Intelligence Unit.
The Lok Sabha, on July 20, passed the Benami Transaction Bill, 2015 which was predominantly an anti-black money measure with the purpose to seize unknown property and prosecute those indulging in such activities. India also reached agreements with many countries, including the US, to add new provisions for sharing banking information. Double Taxation Avoidance Agreements (DTAAs) were inked with several countries, including tax havens like Mauritius and Cyprus.
India also joined global efforts to combat tax evasion and black money by joining the Multilateral Competent Authority Agreement in respect of Automatic Exchange of Information (AEOI). An Automatic Exchange of Information Agreement was also negotiated with Switzerland to get information on accounts held by Indians.
At the same time, the PM, in tune with the government’s motto of “sab ka saath sab ka vikas” and in order to empower the poor, has launched several schemes, beginning with the flagship Pradhan Mantri Jan DhanYojana. With 25.45 crore people opening accounts, the problem of financial exclusion has been effectively tackled.
From day one, the PM was determined to cleanse the system by eliminating corruption and black money. The ultimate aim is to ensure cashless transactions by eliminating corruption, middlemen and prevent leakages in government schemes. That’s why the Jan Dhan Aadhar and Mobile (JAM) scheme was launched to ensure that 100 per cent of every benefit/aid was directly transferred to the intended beneficiary without any middleman or leakage of revenue — be it scholarship, subsidy, compensation or insurance.
The other pro-poor and pro-farmer schemes launched include the Jan Suraksha Yojana, the Pradhan Mantri Mudra Yojana for small enterprises, the Stand-up India Programme for Dalits, Adivasis and women, the Pradhan Mantri Ujjwala Scheme for LPG connections, the Pradhan Mantri Fasal Beema Yojana, the Pradhan Mantri Krishi Sinchai Yojana and the Soil Health Card Scheme. In the past, lakhs of crores was looted during the auctioning of natural resources like coal, 2G spectrum, mines and minerals. But the NDA government introduced total transparency in auctioning of natural resources.
With corruption and black money eating into the vitals of the Indian economy and virtually creating a parallel economy to fund criminal and other nefarious activities, the prime minister, by demonetising Rs 1,000 and Rs 500 notes, has proved that he “walks the talk” and is a man of action. In contrast, the previous government had only payed lip service to the poor while protecting the interests of the rich and greedy. Now, the undisclosed money under the mattress becomes mere waste paper. Apart from curbing corruption, this revolutionary step will bring down inflation, diminish the parallel economy while giving a fillip to the formal economy. The real estate sector will see some corrections as land prices are expected to come down and home-buyers will get housing at affordable prices. Ultimately, the common man will stand to benefit.
Of course, the biggest setback would be for arms dealers and smugglers, who have been acting as a conduit for terrorist activities. With Pakistan relentlessly spreading counterfeit currency and promoting hawala transactions, it will face the biggest disappointment. As someone commented in a lighter vein, Pakistan now has surplus energy to spare as the printing presses (for fake currency) have come to a grinding halt. Soon after the announcement by the PM on Tuesday night, a majority of citizens in the country went to sleep happily. Only the black money hoarders had a sleepless night and they will continue to face similar sleepless nights for some time. They can neither sleep nor weep openly. Such people don’t deserve any sympathy.
The decision to demonetise Rs 1,000 and Rs 500 notes was particularly well-timed as India has become the bright spot in the global economy. Internally as well, the Jan Dhan Yojana has ensured that nobody is adversely affected because of financial inclusion.
I am sure political parties in general would be happy with the move as there is no need to seek help from big businesses for funding elections, which are turning costlier with every poll. The influence of money power in elections is weakening democracy and this challenge could also be met now to a large extent. It should be noted that the quantum of cash in circulation is linked to the level of corruption. The free flow of cash led to an artificial increase in costs of goods and services, land, education and healthcare.
I am sure the citizens are overwhelmingly supporting this move, except a few vested interests. A spokesperson of one of the parties went to the extent of unjustly criticising the PM and comparing him with Muhamad Bin Tughlaq. Does it mean that such parties have a problem with this landmark measure? I appeal to all to welcome and support this measure, irrespective of political affiliations.
When the financial system is cleansed, the government’s revenue would naturally increase and the wealth of the nation would be spent to uplift the poor. Law-abiding citizens would be the greatest beneficiaries.
There might be some inconvenience to some people for few days but in the long-term the benefits for Indian economy far outweigh it. Every citizen will have to bear this in mind in the larger interest of the country. This historic step will open up new opportunities for the poor and the middle class.
This is a mahayagna and let us all join to celebrate this festival of integrity and credibility. The entire country has been agitated over corruption and black money for a long time. Let us all join hands in making this demonetisation a big success.