Following the historic announcement by Modi on November 8, 2016 on demonetization of 500/1000 rupee notes, under the 50 days window given to holders to part with them, an ex-official of Indian Forest Service [IFS], Odisha deposited Rs 1.48 crores. The bank transmitted this information to the income tax department who on juxtaposing with his I-T return for previous years found that this could not be supported by his disclosed source of income.
The information was uploaded on department’s website. Concurrently, a discreet e-mail was sent to the official requesting him to visit the site and provide a suitable explanation if any, for the discrepancy. But, the official did not even bother to visit the site. This led I-T officials swoop at his residence to conduct further search which yielded much higher level of deposit Rs 1.95 crores.
The operation was carried out in coordination with Enforcement Directorate [ED] and Central Bureau of Investigation [CBI]. In the follow through, a case was registered by CBI to book him under the Prevention of Money Laundering Act [PMLA]. Under this Act, the authorities can attach assets of the accused.
The official is one among tens of thousands of corrupt bureaucrats [top executives of central public sector undertakings (CPSUs) and state PSUs included] and politicians – in the center, states and union territories [UTs] – who had deposited tons of cash representing bribe money collected in lieu of granting favor to private persons or siphoned off from kitty meant for distribution to the poor under welfare schemes run by the government.
The investigative agencies viz. I-T/ED/CBI have clear instructions from the prime minister’s office [PMO] to pursue all such cases to their logical conclusion. This is part and parcel of a concerted drive launched by Modi – government to act against all corrupt civil servants, heads of CPSUs/SPSUs who have amassed wealth through corrupt practices indulged in their respective spheres.
The drive will also target other partners in the indomitable nexus between ‘politician-bureaucrat-businessman’ that has been the fountainhead of corruption for several decades. Thus, the agencies will chase viz. middlemen, commission agents, intermediaries, businessmen etc. Without doubt, deposits made by them too will be under scrutiny.
Analysis of data on deposits – made post-demonetization – reveals an astronomical Rs 730,000 crores contributed by 6 million persons who have put in more than Rs 200,000 each, the threshold beyond which the government has put the account under surveillance. Of these, there are 1800,000 persons who have deposited more than Rs 500,000 each aggregating to about Rs 400,000 crores.
These are persons to whom department had sent e-mails. On successful consummation of investigations, the government should be able to appropriate a major portion of Rs 400,000 crores. The exact amount will depend on number of persons who avail of PMGKY [Pradhan Mantri Garib Kalyan Yojna] scheme under which a depositor can pay 50% tax and give 25% towards interest-free deposit for 4 years.
In the next phase, the authorities will work on all those who have deposited in Rs 200,000 to 500,000 range. This exercise too when taken to its logical end, would yield substantial revenue.
As on November 8, 2016, a total of Rs 1530,000 crores cash embedded in 1000/500 rupee notes was held by public. A certain amount out of this did not come to banks [the precise number would be known only after RBI releases the figures]. To that extent, liability of apex bank will go down which will accrue to government being its owner. Even on a conservative basis, this gain would be Rs 100,000 crores.
All put together, the government will have at least about Rs 500,000 crores extra in its kitty. This is the money that prime minister is committed to use for building infrastructure viz. roads, rails, ports, airports, waterways, power plants and other development activities besides spending on schools, colleges, hospitals, homes, toilets etc aimed at improving the welfare of majority of the poor.
This is precisely what Modi means when he repeatedly asserts that an overarching objective of demonetization is to get back the resources that were plundered by a select few [primarily politicians, bureaucrats and middlemen] over the last several decades and give back to those viz. majority of the poor for whom these were meant.
This is a strong rebuff to the opposition parties and all other vested interests who have been castigating the prime minister for what they describe as being a monumental blunder [to use the phrase used by ex-prime minister, Dr Manmohan Singh] and has only hit the common man besides causing disruption in economic activity.
True, there was a set-back to the economy – inevitable in a scenario of sudden sucking out of entire liquidity and its replacement which can only be steady. But, that was transient limited to third quarter [or fourth Qr at the outer limit] of current fiscal. From next year 2017-18, the GDP growth is projected to be 7.2% even as per assessment by the International Monetary Fund [IMF].
Critics argue the government could have employed other means to nab hoarders of black money instead of demonetization that affected the common man. They need to introspect that so called ‘other means’ rarely work as those involve chasing every individual even for getting information [a nearly impossible task!], whereas under the route Modi chose [read demonetization], hoarders on their own volition were forced to surrender before the authorities.
Getting resources back from those who accumulated wealth through corrupt means is only a part of the gain. The other big one is by way of sending a strong message to all key players in the ‘politician-bureaucrat-businessman’ nexus to refrain from corrupt practices in future. True, this by itself may not be a deterrent unless accompanied by other reform steps. Team Modi is already acting in all crucial areas.
Apart from GST [goods and services tax] likely by July, 2017, he has announced credible steps to reform ‘political funding’. Besides, he is sustaining the tempo of reforms in governance at the centre and all BJP ruled states. The underlying theme in these reforms is making decisions ‘policy driven’ and ‘transparent’ and holding bureaucrats and even ministers accountable for their actions.
All non-BJP ruled states need to emulate Modi – government at the center and reform their governance set-ups as that will yield huge dividend by way of ‘cleaner’ and ‘corruption free’ delivery systems.