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Black Money:The Elephant in the Room
Category: Excerpts
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Modi as Hugo Chavez
In his radio address to the country yesterday, Modi’s speech was full of Us (Have Nots) Vs Them (Haves) rhetoric:
Some excerpts:
But vices are so widespread and deep-rooted that even today there are people whose vicious habits refuse to die. Even now, some people think that they can re-introduce into the system, money from corruption, black money, unaccounted wealth and Benami money (money in unknown person’s name), using some route or the other. They seek illegal means to save their ill-gotten wealth.
The saddest part is that, for this too, they have chosen to misuse the poor, the underprivileged people. By misguiding the poor, enticing them through the vices of avarice and temptation, wrongfully pumping money into their bank accounts, or getting them to undertake some wrong activities, some people are trying to save their black money.
I want to tell such people today – whether you reform or not is up to you, whether you respect and follow the law or do otherwise is again up to you; of course, the law will take its own course to decide on the requisite action; but, for God’s sake, please do not play with the lives of poor people. Do not do anything that may bring the names of the poor on record for wrong reasons and land my dear poor people into trouble during the investigation later on account of your foul deeds.
And the law regarding Benami property that has been enacted and is being implemented is very stringent and it is going to be extremely tough on wrong doers. The government does not wish that our countrymen should face undue hardships.
On the basis of reports received from about 45-50 cities, I gathered that demonetisation had encouraged people there to pay their arrears accumulated due to non-payment of dues earlier; many people were in the habit of not making tax payments such as water tax, electricity bills, etc., they just did not pay.
Now all of us know very well that the poor people always like to clear their dues 2-3 days in advance. It is the well-off people, who do not pay their taxes and bills as they have higher connections and know that nobody is going to ask or do anything against them
Err…do we now have a new Hugo Chavez in town?
His socialist rhetoric makes me think that Long Term Cap Gains Taxes are on its way for Equity Markets.
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Cash Shortage for another 4-5 months?
The Bank Employees Federation of India (BEFI) has said currency note shortage will continue for another four to five months even if the country’s all four currency press facilities work at optimum capacity.
According to them, the cash scarcity spilling over to next week will make people more impatient when receiving and withdrawing salary will become difficult.
“Cash shortage will continue even if the four currency note printing presses run at their optimum capacity. It will take four to five months to restore normalcy in cash supply,” bank employees’ union BEFI general secretary P K Biswas said in Kolkata.
Biswas alleged that some customers have vandalised bank property in some of branches of public sector banks and halted banking operations due to cash shortage post-demonetisation.
As on March this year, there were 15,707 million pieces of old Rs 500 notes and 6,326 million pieces of Rs 1,000 notes in circulation, the union said.
The situation “can turn worse” in a week or so if the customers face difficulties in withdrawing their salaries from banks and ATMs, BEFI said.
It said printing ink and dice for new denomination notes have reached the Salboni printing facility in West Bengal, but when the actual printing will start is yet to be known.-from Business World
The startling disclosure of Rs 10,000 crore of undeclared income under the Centre’s Income Disclosure Scheme (IDS) made by an unidentified individual in Hyderabad has turned out to be fake. He did not have even Rs 1 crore, I-T department officials said.
This finding deals an embarrassing blow to the Centre’s claim of unearthing about Rs 65,000 crore of undeclared income through the voluntary IDS. It also calls into question the authenticity of other disclosures made under the scheme.
I-T department sources were not ready to disclose the details of the applicant, except for saying that it was a fake disclosure and the same had been conveyed to headquarters.
According to income-tax department sources, the individual runs a small business. His IDS application for Rs 10,000 crore was said to be the single largest amount declared under the scheme nationwide. When I-T officers checked the veracity of the disclosure, they found that the trader made the startling declaration just to attract attention and did not have even Rs 1 crore.
Questions are now being asked whether the IDS was a ruse to convert black money to white. There are fears that those holding black money could approach IDS applicants to convert their stash into white by paying the 45 per cent penalty.
In pre-election speeches in Goa and Karnataka, Modi said that demonetisation was not the last bow in his quiver. “I have more projects in mind to make India corruption-free. …We will take action against ‘benami’ property. This is major step to eradicate corruption and black money”
With the passing of the Benami Transactions (Prohibition) Amendment Act, 2016, Modi now has the statutory powers to go after property crooks, most of whom are either politicians or realtors connected to politicians. The law is draconian and it can be used to confiscate benami properties. Demonetised money can be laundered sometimes, but confiscated property is gone forever.
Under the law, once the government sets the process in motion, an initiating officer will serve a notice on the benamidaar and take the property under his control. An adjudicating officer will then examine all documents and evidence and pass an order on whether to confiscate the property. Once the property is confiscated, it will be managed by an administrator till a further course of action is prescribed against the offender. What will further strike fear in the minds of beneficial owners and benamidaars is the provision of a jail term and massive fine if found guilty. The amended Act provides for prison terms of up to seven years and fines of up to 25 per cent of the fair market value of the confiscated property.
If the law is used to go after many high-profile benamidaars, the property market will crash. That will bring its own deflationary trends and possibly lead to a systemic crisis, for the real estate industry has deep linkages with the real economy, the asset markets and the financial system.-wrote Jaggi