Five white lies of Modi's black money promise
1. Earlier, the BJP leadership and Narendra Modi, who was their prime-ministerial candidate, had often said that "we need action not Acts." Today, Modi's government has taken little action on the black money issue. Instead, it has given us the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill 2015 (also known as the black money law), which has been introduced in Parliament and shall be taken up for consideration and passage as an Act!
The current home minister, Rajnath Singh, in his avatar as an opposition member, had promised to bring back black money within 100 days of assuming power. Some in the BJP promised that Rs 15 lakh would be deposited in each bank account after this black money is brought back to India. BJP President Amit Shah has already clarified that this was nothing but a campaign jumla (slogan)!
2. While there are many conflicting figures and estimates when it comes to the size of such unaccounted funds, the Modi government is still silent on it! The finance ministry under the UPA government has, upon the recommendation of the standing committee, tasked three government think tanks, including the National Institute of Public Finance and Policy (NIPFP), to set a value on the unaccounted incomes in India and abroad, and to report the causes that lead to the generation of black money. The reports, submitted over a year ago, have still not been placed before the Parliament! One wonders why the Modi government is keeping the country in the dark about this crucial issue.
Given its enchantment with babas, does it consider Baba Ramdev's guesstimate of Rs 400 lakh crore to be its guiding figure? The BJP's task force, on the other hand, had pegged the figure between 11 lakh crore to 22.5 lakh crore! One year on, Modi's government does not even know how much black money there is, leave alone tackling it and bringing to book the guilty.
3. The proposed law offers a one-time amnesty scheme that will hardly make a dent in the black money stashed away. Since 1951, there have been more than 12 such schemes and they have failed in bringing back black money to the tune of even 1 per cent of the Gross Domestic Product (GDP) whereas estimates peg black money to run into upwards of 30 per cent of the GDP. Despite many such schemes, the parallel economy of unaccounted money continues to thrive. It creates a moral dilemma where tax evaders are given relief and honest tax payers are disincentivised!
In fact, in 2011, the BJP's former finance minister Yashwant Sinha himself had expressed opposition to the idea of an amnesty scheme to unearth black money. If only his son Jayant Sinha, who serves as the Minister of State in the Finance Ministry that has piloted this legislation, had kept in mind the words of his father!
Arun Jaitley, the finance minister himself, in a written reply to Lok sabha in December 2014, categorically stated that there was "no proposal to bring general amnesty scheme for declaring undeclared income." But as has been the trend with its pre-poll electoral promises, the BJP government believes in dishing out jumlas in the Parliament too! Perhaps, this could be a case for a privilege motion against Jaitley for misleading the Parliament!
4. The success of the black money law would depend on how seriously it clamps down on the new black money in the system. This law, unfortunately, does nothing whatsoever in that direction. For example, the real estate sector is one of the biggest contributors to black money. In 2012, 30 per cent of all property transactions were made in black according to a study done by a real estate consultancy! Given that real estate is about a tenth of the economy, it is clearly a massive problem.
But Modi's government has done precious little to tackle the fresh black money, especially in the real estate sector! Much of the black money generated is being used to fund political parties and their campaigns. Modi ran a campaign in which thousands of crores of black money were supposedly spent, according to the Congress party. Will there ever be an appetite to clamp down on a system that one benefits from? Your guess is as good as mine!
Many of the provisions in this new law have been around for a long time and even tightened, but this has hardly deterred tax evaders. Some of the changes being brought in will only increase the maximum punishment from seven to ten years and could have been brought about by a mere amendment of the IT Act! Bringing in a new black money law is yet another attempt to grab headlines, but it offers nothing substantial! It provides no new teeth to the enforcement agencies either!
5. Not just critics like me but even friends and former ministers of BJP - right from Ram Jethmalani to Arun Shourie - are questioning the Modi government's intentions and actions. On the issue of black money, only recently, Ram Jethmalani shot 12 stinging questions to Arun Jaitley in the form of an advertisement in a leading national daily, which was published on 28th April! The same questions were posed by the reputed lawyer to Jaitley on Twitter (@RamJethmalani5), but they are yet to be answered! This is not the first time Jethmalani has expressed his displeasure in public.
In October 2014, he had accused Arun Jaitley of misleading the Supreme Court on the issue of black money and in February 2015, after meeting Anna Hazare, he lamented that the "Modi government had no intentions of bringing back black money!" Anna Hazare too, for good measure, added sarcastically: "Leave alone Rs 15 lakh, Indians have not received even Rs 15 in the last nine months of the Modi government."
The BJP would be well advised to stop its white lies about black money and live up to the promises that it made on the issue.