Black Money and Courrption – Two Evils India Faces- is Demoenitsaton Alone Enough ?

Anil Kumar

BACKGROUND

Demonetisation is simultaneously a threat, a challenge and an opportunity. This bold step must yield target dividends unless further supported by many more revolutionary reforms Government must take may be in a phased manner but with more preparedness, integrity and strong political will power.

Undoubtedly irresponsive opposition political parties largely responsible for culture of rampant tax evasion in India through back door backing of black money hoarders misled the public by making avoidable noise made under the shadow of the inconvenience caused to masses in queuing up to banks and ATMs for cash withdrawal / conversion deserves to be condemned only.

Nevertheless, We cannot afford to ignore the immense adverse effect on certain sectors like Rural economy, small traders, and daily wage earners having no connectivity with banking network.

Whereas. The woes of luxury sectors like watches. liquors. casino. cars. lavish tourism. big fat wedding and other such items which are normal consumption feed for the rich who account for not even 1 % of our total population and have chopped more than 50% of India’s wealth needs not much or no attention.

The corruption and black money are the two biggest hurdles blocking the inclusive growth of India and destroying social fabric. cultural heritage and value system of our country at a much faster rate our civil society can handle.

India is the most unequal society in the world surprisingly, India dominates the world’s poorest 10 per cent, while China dominates the global middle class and the United States the world’s rich. The world’s super-rich – the top 1 per cent – is overwhelmingly American. Indians make up just 0.5 per cent of the world’s super-rich.

53 billionaires in India- sounds like the gala of developing India. Claiming the 4th rank in the world in the number of billionaires after the US, Russia and Germany and being ahead of China, UK, Japan and France shows.

Some more statistical data would further vouch for the fact how wide is the spread of extreme poverty and miserably painful wide is the gap between HAVES AND HAVE-NOTS in India which is a broadly a socialist economy.

SWOT ANYLSIS OF DEMOENTISATION

Any welfare government like ours must accord first priority in its agenda to deal with this challenge firmly. So Demonetisation is a WELCOME attempt to discourage cash hoarding which is eventually an unproductive asset component of national wealth.

This long over due and much-needed action to reverse the ugly trend of rapidly increasing corruption and black money must be viewed through the prism of long-term economic virtue.

Some more preparedness would have compromised the confidentially of this move is a valid argument given by government and must be accepted in good faith. Certainly pro action like calibration of ATMS, Printing of new currency, logistics of currency distribution and mechanism of implementation should have lessened the troubles of a common man to some extent.

Indian can benefit from this massive exercise experimented with its 1.3 billion people –

STRENGTHS – BENEFITS

• IT BRINGS DEAD CASH ASSET TO THE TUNE OF SEVERAL LAKH CRORES ( even 25% of total cash currency of higher demonization come to Rs.4 lakh crore) INTO BANKING SYSTEM FOR PRODUCTIVE PURPOSES.
• IT DISCOURAGES CASH HOARDING IN FUTURE.
• IT ENCOURAGES HIGHER NON-CASH TRANSACTIONS- LESS CASH ECONOMY IS LARGELY HAVE AN AUDIT TRAIL THUS FORCES FOR THE DOER OF A TRANSACTION TO ACCOUNT FOR IT TAX PURPOSES ALSO.
• IT PUSHES HIGHER TAX COMPLIANCE LEADING MORE TAX REVENUE.AVAILABLE FOR HIGHER PUBLIC SPENDING FOR INFRASTRUCTURE, WELFARE AND OTHER DEVELOPMENTAL PROJECTS.
• IT RESULTS INTO HIGHER PUBLIC SPENDING ENHANCES PER CAPITA INCOME.
• THE WHEEL OF ECONOMIC GROWTH CYCLE GETS ACCELERATED FOR MEETING INCREASING DEMAND OF GOODS AND SERVICES THUS IN TURN EVENTUALLY, ACHIVES HIGHER GDP IN THE LONG RUN.
• IT HELPS IN REDUCING ECONOMIC DISAPRITES.
• IT FORCES ACCELERATION OF DIGITAL LITERACY, BROADBAND NETWORK, STRONG COMMUNICATION SYSTEM. INTEGRATION OF SOFTWARES PAN INDIA
• REDUCTION IN COURRPTION LEADING TO LOWER CRIME RATE AND TERRORISM.
• IT DESTROYS COUNTERFEIT CURRENCY.

WEAKNESESSES – No policy change of such a magnitude in a vast and diverse country like India where can be implemented with no inherent pitfalls.

• SHORT TERM DISRUPTION THUS SLOWING ECONOMIC ACTIVITY MIGHT REDUCE GDP MAXIMUM BY 1% IN NEXT TWO QUARTERS ONLY.IT IS JUST A WILD GUESS SINCE NO CALCULATION TO SUBSTANTIATE THIS CLAIM IS AVAILABLE.
• HUGE CASH SHORTAGE – LACK OF ADEQUATE PREPAREDLESNESS WOULD CAUSE MORE TROUBLES MAINLY IN RURAL AREAS OF INDIA FOR LONGER PERIOD.
• COURRPT PEOPLE RUNNING THEIR RUMOURS MILLS 24 X7 TO INSTILL CONFUSION. FEARS AND UNCERTAINTY IN THE PEOPLE.

OPPORTUNITIES – Government in power having clear mandate with charismatic leader like Modi Ji also enjoying emotional support of masses must spring into action by taking radical measures to reap sizeable benefits of his drive to curb generation of black money

Some of the suggested measures which MUST be on the agenda of government are –

• BRING ALL OTHER NON-CASH ASSETS IN THE TAX BRACKET BY MANDATORY DECLARATION OF ALL ASSETS IN THE NEXT INCOME TAX RETURN. AS PER ESTIMATES IN CIRCULATION CASH IS ONLY 2% TO 6% OF THE TOTAL BLACK MONEY IN THE SYSTEM. THE URGENT NEED IS TO CATCH REMAINING LARGE CHUNK OF BLACK MONEY ALSO.
• DO FISCAL REFORMS LIKE -LOWER INCOME TAX RATES WHICH SHOULD NOT EXCEED 25%. VERY LIBERAL TAX SLABS – MINIMUM EXEMPTION LIMIT SHOULD BE RAISED TO RS. 5 LAKHS PER ANNUM. DOING AWAY WITH MOST OF THE EXPEMTIONS AND DEDUCTION IN INCOME TAX ACT. ACTUAL SIMPLIFICATION OF TAX ASSESSMENT. NO OR SELF-ASSESSMENT FOR SALARIED EMPLOYEES HAVING INCOME LESS THAN RS 25 LAKHS PER ANNUM. REMOVAL OF DDT AND MAT. NEGLIGIBLE DISCRETION TO TAX ASSESSING OFFICERS. LOWER STAMP DUTY RATES BY HALF AND MANY MORE SUCH SUGGESTIONS GOVT.OF INDIA HAS BEEN GIVEN BY VARIOUS COMMITTEES. INSTITUTION AND BODIES.
• MANAGING OPPOSITION POLITICAL PARTIES TO GET GST PASSED AND IMPLEMENTED WITH EFFECT FROM 1^ST APRIL,2017.
• HIGHEST GST RATE SHOULD NOT BE MORE THAN 15% EXCEPT FOR LUXURY, LIQUOR AND TABACCO AND SUCH PRODUCTS.

• SWIFT AND HARSH PUNISHMENT FOR TAX EVADERS AND ALL OTHER MIDDLE MEN HELPING TAX EVASION.

• MAKE POLITICAL FUNDING ABSOLUTELY TRANSPARENT. DETAILS OF DONOR FOR EVERY RUPEE OF DONATION MUST BE MADE MANDATORY. INCOME OF POLITICAL PARTY ABOVE PARTICULAR AMOUNT SHOULD BE SUBJECT TO INCOME TAX. REDEFINING POLITICAL PARTIES WHO CAN ACCEPT DONATION IS THE NEED OF THE HOUR. THERE ARE MORE THAN 1900 POLITICAL PARTIES REGISTERED WITH ELECTION COMMISSION.

CURRENT PERMANENT AMNESTY TO POLITICAL PARTIES IS THE HEIGHT OF GROSS ABUSE OF DEMOCRACY BY THE POLITICAL PARTIES WHO ASSUME POSITION OF POWER TO BRING GOVERNANCE IN THE COUNTRY.

“POLITICAL FUNDING IS THE MOTHER OF ALL COURRPTION IN THE COUNTRY.”

“CHARITY MUST BEGIN AT HOME.”

• SPREAD STRONGEST TELECOM /INTERNET INFRASTRUCTURE ACROSS WHOLE OF THE INDIA FOR ENABLING LESS CASH ECONOMY.
• REWARD, HONOUR, ADDITIONAL PRIVILEGES TO HONEST TAX PAYERS.
• DO JUDICIAL REFORMS –

THREATS – THE ACTIONS NECESSARY FOR ACHIEVING THE END RESULT IF NOT TAKEN OR DELAYED OR NOT HANDLED RIGHTLY WOULD POSE THREAT FOR –

• POLITICAL INSTABILITY IN THE COUNTRY.
• WASTE OF A LIFE TIME OPPORTUNITY OF A WELL-INTENTIONED MOVE TO CORRECT EVILS OF BLACK ECONOMY.
• SERIOUS LAW AND ORDER PROBLEM.
• IT SHOULD NOT BE A POLITICAL GIMMICK TO WIN FEW ELECTIONS.

CONCLUSION-

The demonetisation without a dispute is one of the very bold steps India needs to bring a revolutionary change the way wealth India generates. accounts for and finally distributes to it’s citizens. The subsequent follow up actions would only help us to reap it’s rich dividends. It puts a check on greed manifestation. The corrupt practices has become accepted norm in our most of the economic life.It must be checked to reward merit. honesty and integrity.

A cultural shift for keeping more faith in accounted money would not only spur higher economic growth but would do justice in the equitable distribution of wealth.

“POLITICAL FREEDOM IS MEANINGLESS WITHOUT ECONOMIC INDEPENDENCE.”