Gov­er­nance: Too much noise

Crit­i­cism of de­mon­eti­sa­tion by the Op­po­si­tion, espe­cially by Rahul Gandhi, leaves much to be de­sired as it not based on facts and fig­ures

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Crit­i­cism of de­mon­eti­sa­tion by the Op­po­si­tion, espe­cially by Rahul Gandhi, leaves much to be de­sired as it not based Rn IDFWs DnG fiJuUHs

WITH the pub­li­ca­tion of the RBI An­nual Re­port, giv­ing the num­ber and value of de­mon­e­tised notes com­ing back to the chests of the Cen­tral Bank, the is­sue whether de­mon­eti­sa­tion ( note bandi) has been a suc­cess or fail­ure has come up for dis­cus­sion in pub­lic do­main in a big way and some per­sons like Rahul Gandhi, Pres­i­dent of main op­po­si­tion party (Con­gress) has greatly crit­i­cised note bandi say­ing that it has pushed back GDP growth sub­stan­tially to the detri­ment of com­mon peo­ple, ben­e­fit­ting only 15-20 peo­ple, who are close to Prime Min­is­ter Naren­dra Modi. This ar­ti­cle con­sid­ers how far such crit­i­cism is valid and jus­ti­fied.

RBI fig­ures

The RBI has re­vealed that the to­tal amount of de­mon­e­tised cur­rency that was re­turned was close to 100 per cent with it re­ceiv­ing notes worth ` 15.31 lakh core of ` 500 and ` 1000 notes, which is 99.3 per cent of the to­tal value of spec­i­fied bank notes in cir­cu­la­tion as on Novem­ber 8, 2016, which was ` 15.42 lakh crore, while the to­tal value of notes re­turned from cir­cu­la­tion is ` 15.31 lakh crore. From these fig­ures, the con­clu­sion drawn is that all the black money in cir­cu­la­tion has be­come white by com­ing in cir­cu­la­tion and the claim that note bandi has been suc­cess­ful in catch­ing black money is a mis­nomer with no legs to stand. Ac­cord­ing to The Eco­nomic Times dated Au­gust 31, 2018, Rahul Gandhi has said:

• De­mon­eti­sa­tion was coun­try’s big­gest scam;

• What PM did was in­ten­tional;

• PM Naren­dra Modi in­flicted de­mon­eti­sa­tion to ben­e­fit 15-20 crony cap­i­tal­ists and his friends, who have Non-Per­form­ing As­sets (NPAs);

• To help them, he took money from the com­mon peo­ple and di­rectly put it in the pock­ets of the big­gest and most cor­rupt crony cap­i­tal­ists. By de­mon­eti­sa­tion, the PM has in­ten­tion­ally fin­ished off mid-sized busi­ness. All this has been said with­out any iota of ev­i­dence or facts to sup­port what has been said. Even the names of the 15-20 crony cap­i­tal­ists, who are claimed to be the ben­e­fi­cia­ries of the note bandi, have not been dis­closed. Ac­tu­ally, Rahul Gandhi has in his imag­i­na­tion, some 10-15 per­sons, who do not ex­ist in real life. He imag­ines that any ben­e­fit an­nounced by the Govern­ment is for the ben­e­fit of such per­sons to the detri­ment of the poor and com­mon peo­ple and crit­i­cises the Govern­ment on that ba­sis. Some­time back, he force­fully said in the con­text of loan waivers that the Govern­ment does not waive the loan of poor/com­mon peo­ple, but has waived huge loans of 10-15 peo­ple, who are Modi’s friends to ben­e­fit them. Again, there are no facts and fig­ures of any sort to sup­port the al­le­ga­tion. If Rahul Gandhi wants peo­ple to be­lieve what he says, he needs to (i) dis­close the names of such crony cap­i­tal­ists and their lo­ca­tion; (ii) na­ture of ben­e­fit con­ferred and its quan­tum; (iii) method of con­fer­ring the ben­e­fit; (iv) re­la­tion­ship of the re­cip­i­ent with the PM or oth-

Cur­rency ly­ing dor­mant in boxes, gunny bags, vaults, chests, lock­ers, etc., has flowed into the econ­omy, mak­ing more funds avail­able for the coun­try’s de­vel­op­men­tal and other needs

ers in the Govern­ment, etc. With­out such in­for­ma­tion, what is said in a pass­ing man­ner lacks cred­i­bil­ity. Ac­tu­ally, Rahul Gandhi seems to be­lieve that if an un­truth is re­peated sev­eral times, it starts sound­ing like truth. But, such con­vic­tions do not suc­ceed in real life in the long run.

Suc­cess of note bandi

Now, whether note bandi has tack­led the prob­lem of black money suc­cess­fully and has ben­e­fit­ted the coun­try and com­mon peo­ple can be ex­am­ined. The an­swer to both the queries has to be in the pos­i­tive. The fact that al­most equal num­ber of notes have come to the RBI is no mea­sure of its un-suc­cess. Rather, a num­ber of ben­e­fits could be said to have flowed to the econ­omy, namely: • Cur­rency ly­ing dor­mant in boxes, gunny bags, vaults, chests, lock­ers, etc., has flowed into the econ­omy, mak­ing more funds avail­able for the coun­try’s de­vel­op­men­tal and other needs. • The un­ac­counted/black money with de­posits in bank ac­counts have pro­vided trails to the I-T Depart­ment to start pro­ceed­ings against those who hoarded money and did not dis­close the same in their In­come Tax Re­turns. Once the cash has come into the bank ac­counts, the de­pos­i­tors lose anonymity. The ob­jec­tive of note bandi, ac­cord­ing to the Fi­nance Min­is­ter was not to gain from in­val­i­dated notes. The larger pur­pose of note bandi was to move In­dia from a non-tax com­pli­ant to a com­pli­ant so­ci­ety by in­creas­ing the num­ber of tax­pay­ers, which, as later in­for­ma­tion would show, has been achieved to a large ex­tent. • The I-T Depart­ment has al­ready started ac­tion on the ba­sis of data pro­vide by the banks to see whether the cash de­posited is ex­plained. If not, the de­pos­i­tors will have to face the con­se­quences by way of in­ter­est, penalty and pros­e­cu­tion. These will pro­vide de­ter­rence to oth­ers to not in­dulge in black money deals. • As a re­sult of note bandi, the num­ber of in­come-tax re­turns filed has in­creased from 38 mil­lion in March 2014 to 68.6 mil­lion in 2017-18. The I-T re­turns filed in 2018-19 up to Au­gust 31, 2018, have shown a sig­nif­i­cant surge, to­tal­ing 5.42 crore, far ex­ceed­ing the pre­vi­ous year, and is up 71 per cent over the pre­vi­ous year as re­ported in The Times of In­dia on Septem­ber 2, 2018. • The new notes have bet­ter se­cu­rity fea­tures, thereby mak­ing fake cur­rency ex­tremely dif­fi­cult. • Cash hoard­ing by house­holds, af­ter note bandi, has de­creased sub­stan­tially. One study shows that the cur­rency to GDP ra­tio was 10.9 per cent in 2017-18, lower than pre de­mon­eti­sa­tion lev­els. • Dig­i­tal deals have in­creased. • Cash pay­ments have de­creased. • Crit­i­ciz­ing the move, Rahul Gandhi said that be­cause of note bandi, GDP took a hit and crores of peo­ple were ren­dered un­em­ployed and mid-sized businesses were fin­ished off. How­ever, every new mea­sure does cause some ini­tial set­backs, but it can be said to be jus­ti­fied if ul­ti­mately it meets its goal. Fig­ures pub­lished in The Times of In­dia dated Septem­ber 1, 2018 show that in the first quar­ter of the cur­rent fi­nan­cial year (2018-19), GDP growth re­turns to 8 per cent af­ter two years; the econ­omy seems to be well and truly out of the slow­down it had slipped into af­ter de­mon­eti­sa­tion when growth rate fell to 5.6 per cent in the first quar­ter of last year. Since this growth is pow­ered by a near-dou­ble-digit rise in pri­vate con­sump­tion and over two-digit in­crease in in­vest­ments, the growth mo­men­tum is likely to build fur­ther in the com­ing months. Crit­i­cism in a democ­racy, like In­dia is wel­come as if it pro­vides con­struc­tive sug­ges­tions and cor­rec­tions to the Govern­ment’s de­ci­sions. But crit­i­cism just for the sake of crit­i­cism by the Op­po­si­tion is of no pur­pose. It merely leads to un­war­ranted con­fu­sion in the minds of peo­ple. The Op­po­si­tion needs to be con­struc­tive in its ap­proach while eval­u­at­ing the Govern­ment’s de­ci­sions – not su­per­fi­cial, re­venge­ful or aim at de­stroy­ing the image of the Govern­ment with no facts and truths in the crit­i­cism – do­ing so merely de­picts a de­struc­tive at­ti­tude. The writer is for­mer Chair­man, CBDT

I-T re­turns filed in 2018-19 up to Au­gust 31, 2018, have shown a sig­nif­i­cant surge, to­tal­ing 5.42 crore, far ex­ceed­ing the pre­vi­ous year and is up 71 per cent over the pre­vi­ous year

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