Demonetisation: Battling the Black Demons of Corruption

"Corruption is Authority Plus Monopoly Minus Transparency"

             On 8th Nov at the stroke of 8.00 p.m. PM Narendra Modi announced to the nation his Govt's decision to withdraw Rs. 500 and Rs. 1,000 currency notes. The news came like a bolt from the blue and has affected 1.25 billion people, directly or indirectly, since then. The biggest crackdown on black money in India's history resulted in sudden withdrawal of 86% of currency value in circulation amounting to nearly Rs 15 lakh crore ($190 billion).

            According to Indian Institute of Public Finance and Policy (IIPFP), evasion of personal income tax (48%), under-reporting of production (28%) and under-registration of immovable property (18%) account for 94% of illegal income generated domestically and India's black money is estimated by some experts to be around 20% of India's GDP in 2016 ($ 2.3 trillion) which works out to a colossal Rs 30 lakh crore ($ 460 billion). Further, according to some estimates major chunk of black money (75%) has been invested in undisclosed foreign holdings, real estate, precious metals like gold, diamond, undervalued stocks, benami financial investments and barely 25% is stashed in cash.

            PM's audacious move, in the initial days, seemed to have choked the supply of black money into hawala operations, real estate transactions, financing of cross-border terrorists, insurgents in North East & Maoists, stone pelting in J&K and election funding besides abolishing counterfeit currency. However, those sitting on huge piles of unaccounted or ill-gotten wealth soon started getting restless and sprung into action of converting their black money into legal tender. Raids by agencies like Income Tax, CBI, ED, DRI and others have unearthed massive laundering of unaccounted black money and confiscated nearly Rs 4,000 crores in the form of new currency notes, gold, diamonds etc from these culprits. Media must be complimented for their invaluable sting operations and investigative reporting on the underhand exploits of the unscrupulous practitioners of  JUGAAD (ingenuity) to subvert and undo demonetization  with the connivance of corrupt bankers, bureaucrats and politicians. The services of poor and jobless were suitably utilized for depositing money in Jan Dhan accounts, for standing in long queues for exchange of invalid old notes in small lots, proving the maxim that in critical moments even the very powerful and rich have the need of weakest and poor.

            Govt's decision came in for scathing criticism by many opposition parties and they didn't let Parliament function during most of its winter session. It is an open secret that some politicians have personal reasons to raise their banners against this bold step as they stand to lose their assiduously hoarded unaccounted black money. However, this historic step was praised by some opposition Chief Ministers like Nitish Kumar, Naveen Patnaik, Chandrababu Naidu to name a few creating dissension. Besides, PM Modi chose to take his fight against corruption in the people's court through his aggressive speeches and 'Man ki Baat'. He appealed to their collective goodness and honesty promising more attacks on the citadel of corruption in coming months. His political instinct in reaching out to common man seems to have worked so far as no riots or serious law & order crisis happened in most of the country as imagined by some politicians. The corrupt may wail, critic may whimper, cynic may whine but protagonist of  a better, clean and developed India are not unhappy. This bold and ambitious step is likely to boost Govt revenue, encourage bank lending, bring down interest rates and promote cashless shopping. In a big and diversified country like India it may be impossible to have a cashless economy but with focus on digitization some proportion of cash can be decreased gradually. Less cash plausible, cashless economy difficult.

            PM Modi can take heart from the ground reality that an overwhelming majority of Indians have backed his resolve to fight corruption in spite of tremendous inconvenience suffered by them in the last 50 days. Their love and respect for him will increase further if his Govt takes speedy action to nab big sharks and whales flourishing for decades in the murky waters of corruption and black money. The man on the street will have a vicarious pleasure if a special fast track court is set up soon to prosecute all demonetisation-related criminals - be they bankers, bureaucrats, politicians or businessmen - within a stipulated time-limit of 90 days. Their names should be in public domain to deter the potential crooks. Other high-profile pending corruption cases like 2G Spectrum, Coalgate. Railgate, CWG, NHRM etc need to be expedited and guilty punished. PM may also consider mandatory digitisation of land and property records linked to Aadhaar & PAN numbers, simplification of tax structure and other reforms suggested by various experts and committees to curb regeneration of black money. The pragmatic advice of great thinker Chanakya (370 - 283 BC) in the matter of tax collection is still relevant "A taxman should be like a honey bee which sucks just the right amount of honey from the flower so that both can survive." Also, the quantum of punishment for big ticket financial fraud cases should be enhanced to at least 25 years in prison without parole. It is pertinent to recall that in June, 2009 a US court sentenced fraudster and operator of a Ponzi scheme, Bernard Madoff to 150 years in prison and penalty of $170 billion for his ponzi scheme. Can we expect such exemplary punishment for similar crimes committed in Saradha, Pearl and Rose valley ponzi schemes in India? In the last 70 years the experience of honest tax-payers has been that strong and powerful criminals manage to escape the clutches of law. This perception should change and Modi Govt can do it. But the biggest blow to black money will come if Govt brings the funding of political parties under the purview of RTI & Income Tax authorities. Transparency in polity will have a domino effect on improving the quality of bureaucracy and judiciary.

            It is not clear as to how long cash crunch will last and so far it had been a 'Winter of discomfort' for the silent majority. But if Govt can restore even 70% of normalcy in the availability of reasonable cash through banks/ATMs, by mid-Jan, 2017 the honest and hardworking populace of the land may be willing to forget their misery and soldier on with same fortitude as they have done since Nov 8, 2016. hoping for better future echoing Shelly's uplifting words "If winter comes can spring be far behind". After 50 gruelling days it's advantage Modi.

Transforming India Modi "Ishtyle" - First 2 years

"If hard work is your weapon

Success will be your slave"

Narendra Modi Govt completed its 2 years in office 3 days back. Two gone, three more years to go. It had been a tumultuous year all over the world and India was no exception. Much has already been said or written elsewhere about Govt's performance or non-performance during last 2 years. There will be divergence of views on the efficacy of Govt's functioning but Modi as its leader comes out with flying colours for his sustained work and sheer tenacity to achieve his dream of a better India. Not a speck of doubt on that.

Reforms: His vision encompasses both plausible initiatives like JAN DHAN and difficult ones like SWACHH BHARAT. But the centre of his governance is the ubiquitous common man  and towards this end, his Govt has passed many important bills in the Parliament like Real Estate regulation, Insolvency and Bankruptcy, Aadhar and carried out several impactful economic reforms including decontrol of diesel prices, liberalizing FDI rules, forming Bank Boards Bureau and improving ease of doing business   For statistics  aficionado - 21.81 crores new bank accounts with Rs. 37,616 crores deposit under Jan Dhan, 3.39 crore self-employed granted loans amounting to 1.41 lakh crore under Mudra Yojna, Ujjwala scheme of free LPG for poor likely to benefit 5 crore families by 2019 and introduction of DBT( Direct Benefit Transfer) plugging the leakages and saving nearly Rs. 15,000 crore and with potential to save Rs. 70,000 crore per year.  Newly launched schemes like Crop insurance, NAM (National Agriculture Market) and Soil Health Card aim at welfare and financial security of farmers and development of Agriculture in India. Modi Govt also fulfilled its promise of granting OROP (One Rank One Pension) to retired defence personnel which had been hanging fire since 1973. This will benefit 32 lakh ex-servicemen and widows. In short, Modi has planted these fruit-bearing economic trees to transform the lives of millions of poor, needy and vulnerable sections of society. When time comes, these may well transform into vote-yielding trees. However, all the excellent work pertaining to development and economic growth will be negated if there is no check on population growth. Our demographic dividend may become demographic disaster.

Domestic politics: From Oct, 2015 onward there was never a dull moment on domestic political front. Be it Intolerance debate, Award wapsi episode, disturbances in Hyderabad and JNU campuses, the main opposition and leftist parties kept the pot boiling for several months and some media channels chose to play ball with them. Party's own loudmouths did their best to discomfit the Govt by their inane, insensitive and provocative utterances. Modi Govt had to work hard to restore normalcy. Manufactured or not, these salvos were certainly well-calibrated and one of the causes of BJP's defeat in Bihar. By scoring a historic victory in Assam and improving its votes share in Kerala, BJP has shown that it may have learnt its lesson from Bihar and Delhi debacles. Party President Amit Shah gets a much-needed shot in the arm ahead of 2017 elections in UP but much remains to be done by Modi Govt in coming months.

Corruption: During last 2 years high level corruption has almost disappeared and there have been no big-ticket scams or cases of crony-capitalism. Progress on Black money is steady but slow and it is a depressing situation where country's middle class is struggling to pay their taxes and ' wilful defaulters' like Mallya are having a ball at the taxpayers cost. People may forget the promised Rs. 15 lakh to every Indian if culprits are brought to book and black money is recovered from them. Modi Govt also has to curb corruption in the lower echelons of bureaucracy. This may not be possible without active support from the state Govts but BJP-ruled states can be tasked to make their own states corruption-free in the next 2 years. Corruption in India ranking a high 76 among 168 most corrupt nations will always be relevant for winning or losing elections.        

Diplomacy: Modi has made official visits to 36 countries since becoming Prime Minister and developed personal rapport with many of world's top leaders, pursued vigorously India's economic and strategic interests and raised India's global profile. His unconventional approach to diplomacy has been, more or less, effective. Foreign ministry continues to be one of the top ministries in terms of performance. After his successful visit to UAE in Aug, 2015 his recent visits to Saudi Arabia (April) and Iran (May) were both symbolic and substantive. The trilateral agreement with Afghanistan and Iran on Chabahar port is the real takeaway, as it provides a gateway into Afghanistan which will enable us to contribute to its economic development and deepen our energy relationship with Central Asia, besides outflanking China-Pakistan Gwadar project. Despite Modi Govt's best efforts our relations with both China and Pakistan remain tense and complicated. China have an invaluable asset in Pakistan and they continue to needle us on cantankerous issues like its ambitious US $46 billion economic corridor through POK, Azhar Masood UN ban or NSG. China hopes to replace USA as No. 1 power in future and keeps us bogged down with problematic Pakistan. Our difficulties with China can be opportunities for both India and US and Modi's forthcoming visit to the US assumes significance in this backdrop. Perhaps, time is ripe to come a little closer to US and take our relationship to a new high in matters relating to technology-access, nuclear, defence and security. In 2008 Georg Bush (Jr) got us unique 'waiver' in 45-member NSG in the face of stiff opposition from China. Eight years later let us see if Obama can go all out like Bush and get us NSG's membership.

Challenges: There are several areas where this Govt is facing serious challenges, primarily low rate of job creation, high prices of essential food items like pulses, fruits and vegetables affecting a majority of population. It must find a legal way to eliminate the middlemen to benefit both the farmers and consumers. Hoarders and Black marketeers are as pernicious as any other hardcore criminal and deserve no mercy. Groundwater level in India has been going down steadily and water shortage has assumed alarming proportions and its conservation needs to be tackled on a war-footing. There is great hope that Modi Govt would find a sustainable solution to this crisis just as it's trying to clean Ganga and other rivers.

Narendra Modi is an energetic leader with a grand vision and rare ability to turn this vision into realty. He is a human dynamo and working 16 hours a day without a holiday in 2 years. More importantly, he is a good listener and even a better communicator and must be getting crucial feedback from millions of Indians through innovative 'Mann Ki Baat' and ' mygovt.in'. As for his team, some Ministers have done better than expected, many have done reasonably good while others have been pedestrian doing precious little and need to be eased out. 2 years is a long period to assess the performance and time for reshuffle is now.

Finally, in the backdrop of 7.5% growth of GDP, all-time high foreign exchange reserves of US$ 360 billion, over 11% increase in power generation, a bumper Monsoon and GST can be real mood changers.

Read: One Year In Hot Pursuit Of Acche Din