Right from September 2013, when Narendra Modi, then CM of Gujarat was projected as PM candidate; he had made his intentions very clear that he would go all out against the black money and corruption if he was elected as the Prime Minister of India. Staying true to his words the very first decision which his cabinet took on 26th May, 2014, the day on which his government was sworn in, was to set up a Special Investigation Team under the supervision of the Supreme Court to probe the foreign bank accounts of Indian individuals and entities. Previous UPA government was dragging its feet to constitute such a SIT even though the SC had been asking it to do so repeatedly.
This action was taken to send out a very clear message to those who thought that his announcements on black money and corruption were just electoral rhetoric. After this decision, NDA government under the stewardship of PM Modi launched a multidimensional war on black money and corruption.
Many of the measures which Modi government has taken to curb black money and corruption are discussed in this article.
Jan Dhan Accounts and Direct Benefit Transfer-
On 15th August 2014, Prime Minister Narendra Modi in the course of his maiden Independence Day speech had announced the launching of Pradhan Mantri Jan Dhan Yojana (PMJDY) for financial inclusion to ensure access to financial services such as Banking savings & deposits accounts, credit, pension, remittances. The scheme was launched on 28th August 2014 and 15 million bank accounts were opened under this scheme on that day itself. In the last three years, more than 30 crore Jan Dhan accounts have been opened under PMJDY.
After opening Jan Dhan accounts in a mission mode, the next step that Modi government took was to link Aadhar cards with Jan Dhan accounts and then transfer subsidies on various government schemes to beneficiaries’ Jan Dhan accounts through Direct Benefit Transfer mechanism. This one move only has helped the government to identify and eliminate fake beneficiaries saving Rs. 52,000 crores of tax payers’ money going into the pockets of middlemen.
Since 2013-14 the number of government schemes linked to DBT scheme and the total amount of subsidy transferred is shown in the following charts:
Note : For the year 2017-18, upto 30/08/2017, 314 schemes are covered under DBT)
Income Declaration Schemes
- The Modi government gave three opportunities to the black money hoarders to come clean and declare their ill gotten wealth by way of income disclosure schemes viz.Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015
This scheme was one-time compliance opportunity to those who had undisclosed assets situated overseas. Under this scheme, the eligible persons/entities had to pay total 60% of the amount declared towards tax and penalty on their undisclosed foreign income and assets.
2. Income Declaration Scheme, 2016
This scheme provided an opportunity to all persons who had not declared income correctly in the earlier years to come forward and declare such undisclosed incomes. Under this scheme the eligible persons had to pay 45% as tax, cess and penalty on their concealed income.
3. Pradhan Mantri Garib Kalyan Yojana (PMGKY), 2016
The government offered a last window to people with unaccounted wealth to come clean or face stringent penalties. Those who had not declared their cash or deposits in banks could come clean by paying a total of 50% of their undeclared income towards, tax, cess and penalty. Additionally, 25% of the income declared was to be invested in non-interest bearing Pradhan Mantri Garib Kalyan Deposit Scheme for a lock-in period of 4 years.
Total undisclosed income declared cumulatively under the above three schemes was Rs. 76,152 crores and total tax, cess and penalty recovered was Rs. 35,084 crores.
To deal a severe blow to black money hoarders, on November 8, 2016, Prime Minister Narendra Modi announced demonetisation of Rs. 500 & Rs. 1,000 currency notes.
The objectives of Demonetisation were:
- To flush out black money;
- To eliminate fake currency notes;
- To strike at the root of financing terrorism & naxalism;
- To increase the tax base and
- To give a boost for digital payments in order to achieve less cash economy.
As expected the opposition and anti-government intellectuals strongly opposed this decision of demonetisation. Delhi Chief Minister Arvind Kejriwal even threatened of mass rebellion if demonetisation was not rolled back. However common citizens’ in spite of suffering a lot of hardships gave whole hearted support to this move of Modi government and there was not a single untoward incidence of violence reported.
Benefits derived from Demonetisation are:
- India’s financial system was cleansed;
- India’s highest ever unearthing of black money;
- Black money worth Rs. 16,000 crores did not return into the system.
- Undisclosed income worth Rs. 29,213 crores detected and admitted;
- Rs.3.89 lakh crores in 23.22 lakh bank accounts under suspicion;
- More than 4.7 Lakh additional suspicious transactions reported by Banks and Financial Institutions;
- 21% reduction in currency in circulation;
- 24 lakh shell companies were de-registered. Around 450 companies delisted from the stock exchanges and 800 untraceable companies to be further delisted;
- Local self government bodies, various government departments, banks, utility services etc. recovered decades old receivables worth more than Rs.13,000 crores;
- A big blow was struck to human trafficking industry;
- Decisive blow to terrorism and left wing extremism. Stone pelting incidences in Kashmir went down by 75% and Incidences of left wing extremism decreased by more than 20%.
- Counterfeit currency notes went out of circulation in one single stroke.
Not just the above mentioned benefits, many other slew of benefits derived are:
- Deposits in the banking system increased around Rs. 3 lakh crores;
- High Denomination Notes in the circulation has been brought down by Rs. 6 lakh crores;
- Additional liquidity helped reduce interest rates by 100 basis points;
- Digital payments received a tremendous boost. They increased from Rs. 0.1 million worth transactions in October 2016 to Rs. 76.96 million worth transactions in October 2017;
- More than 1 crore workers were added to EPF and ESIC system post demonetisation;
- Bank accounts were opened for about 50 lakh workers to get their wages credited directly in their accounts and
- Unprecedented increase in tax compliance.
Benami Transactions (Prohibition) Amendment Act, 2016 -
The Modi government has enacted the Benami Transactions (Prohibition) Amendment Act which came into force from 1st November 2016.
This Act provides rigorous imprisonment of up to seven years and a significant fine to people caught with benami properties. In addition to fine & imprisonment, the properties shall also be confiscated.
Until now, benami assets worth Rs. 1,626 crores have been seized and/or attached. This includes Rs.165 crores worth benami property of RJD supremo, Lalu Prasad Yadav and his family.
Corruption Free Governance
- No corruption allegations have been made against Modi government;
- Policy implemented for transparent auctions of scarce resources like coal, spectrum etc.;
- Interviews for selection of class 3 and class 4 government jobs have been eliminated. Selection of candidates is now done only on merits;
- More than 400 IAS, IPS officers and bureaucrats have been dismissed on corruption charges and
- Law enforcing agencies are allowed to probe corruption charges against various politicians viz. Chidambaram and his son Karti Chidamabaram.Arvind Kejriwal, Mayawati, Dr. Farooq Abdullah Sudip Bandopadhyay, Harish Rawat, Bhupinder Singh Hooda, Sachin Pilot, Ashok Gehlot, Lalu Prasad Yadav and his family.
According to a survey by ‘CMS India Corruption Study 2017’, there has been a massive decline in corruption in public services under PM Modi led NDA government vis-à-vis UPA government.
The efforts of Modi government in bringing down corruption have been acknowledged by Transparency International which has continuously improved India’s ranking in its Perception Index every year since Modi government came into power.
From all the measures undertaken in fight against black money and corruption as discussed above, we can conclude that PM Modi’s message is loud and clear that he will not budge down till he achieves his goal of eradicating the scourge of black money and corruption from the system. Those who continue to indulge in black money and corruption will do so at their own peril and should be prepared for further shock and awe treatment from the government led by PM Modi.
Jayesh Mehta @JMehta65 and Haritha Varanasi @csharitha
Authors: Jayesh Mehta is Editor Bharat Samvad. Haritha Varanasi is a Practising Company Secretary in an Organisation of Repute.
Views presented here are of the Authors.