In a first ever, we have a prime minister, who on taking charge declared himself as ‘Pradhan Sewak’ and has been working relentlessly [he works 18-20 hours] in the service of 125 crore people. Yet, Modi’s critics hell bent on showing him in poor light interpret the statement trivially to argue ‘so what, almost every leader who occupies this coveted position works that long and there is nothing special about him’. They are making a grave mistake.
Juxtaposing deliverable [as they see] versus promises, their blast is on 4 counts: (i) where is Rs 15 lakh that Modi had promised to be deposited in the account of every Indian; (ii) demonetization was a disastrous policy decision that brought miseries to the common man even as black money mongers went scot free; (iii) where are the 1 crore jobs every year that he promised and (iv) GST [Goods and Services Tax] has been poorly implemented.
The charges are mere rhetoric and lack substance. These are pre-meditated attempts to malign the ruling dispensation by hook or crook. The critics simply refuse to look at the efforts being put in by the government to redeem the promises. Worse still, they have no alternative narrative.
(i): the assertion Rs 15 lakh a la, this was made to demonstrate a point in a language that a common person understands. The intent was to show that mountain of cash was transferred by hoarders of black money in foreign jurisdictions and if this were to be brought back, it would be equivalent to putting mentioned sum in the bank account of every Indian. It would be naïve to see this as actually making him/her richer by this much. The important thing to look at is actions of this government in the follow through?
It set up the Special Investigation Team [SIT] – as directed by Supreme Court in 2011 – immediately on taking charge [in sharp contrast to erstwhile UPA which dilly dallied on this for 3 years]; signed agreements with foreign countries for automatic exchange of information [AEOI]; enacted the Black Money Law; re-negotiated treaties with tax haven jurisdictions/countries; tightened norms for investment via ‘participatory notes’ [most preferred route for ‘round tripping’ of black money]; launched prosecution in hundreds of cases based on available information etc. It ensured that in future, no one ever dares moving black cash out of India.
(ii): the criticism is based on some inconvenience suffered by common man who stood in the queue [for exchanging old/demonetized for new currency] and dislocation of businesses which were hitherto driven mostly by cash. These inconveniences/dislocations were felt for a couple of months and petered out when the currency replacement process was complete. However, the critics got ammunition – though completely misplaced – from a different source.
The Reserve Bank of India [RBI] informed that only Rs 16,000 crores worth of junk currency did not come back to the banking system. In this backdrop and almost all of the black cash having come to the banks, this led them to infer that demonetization had failed. Their underlying assumption was that with mere entry in banks, the money had automatically become white. This is fallacious.
The money remains black if it cannot be explained by the income filed in the past returns of the depositor. According to prime minister, the amount of such deposits post-demonetization was a gargantuan about Rs 300,000 crores. This will attract tax plus penalties which will even exceed this amount. These persons will be perpetually taxed on their future income streams too. The government has also identified 300,000 shell companies [made possible by data mining], cancelled their registrations and froze bank accounts.
Furthermore, it has directed all district authorities not to allow any purchase/sale of property owned by their directors or authorized signatories. The collectors have been made personally liable for ensuring compliance. This will sound the death knell of wheeling dealing in benami property which is already under the gaze of benami law – resurrected by Modi 3 decades after it was enacted.
The real big gain from demonetization is ‘formalization’ of a huge segment of the economy which hitherto was informal and predominantly cash driven. This will mean a geometric increase in transactions done through banking channels, increased capacity of banks to lend, buoyancy in tax revenue and big push to capital spending specially on building infrastructure – both physical and social.
(iii): the government has gone full throttle removing all bottlenecks in the way of job creation viz. doing away with bureaucratic red tape, simplifying procedures, expediting project approvals and improving ease of doing business [in the World Bank index for 2016-17, India’s ranking has zoomed by 30]. Above all, it has undertaken implementation of projects viz. highways, rails, ports, waterways etc on an unprecedented scale at a time when investment in private sector is sluggish. As a result, jobs will get a big boost.
Meanwhile, Modi’s focus has been on helping people in the ‘informal’ sector to stand on their own feet. Under Micro Units Development and Refinance Agency [MUDRA] Yojna – launched in 2015 – loans are given to persons such as vegetable vendors, small shop-keepers, beauty parlors & boutiques, mechanics, electricians, plumbers etc. The banks have so far disbursed loans worth Rs 320,000 crores to about 75 million persons. This means work for 150 million – assuming a minimum of one person to assist a borrower/entrepreneur.
(iv): admittedly, there are pitfalls in implementation of GST. But, in a revolutionary reform such as this, these are unavoidable. The Council is addressing them promptly. As regards flaws in architecture, the critics ought to know that in a scenario where all states have to be taken on board while arriving at decisions, these too could not be avoided. Nonetheless, union government is not averse to moving towards an ideal dispensation in due course.
In a nut-shell, all charges against Modi are frivolous. The government is well on course to redeem its promises. It needs continued trust of the 1.25 billion people for its efforts to succeed.