Demonetisation (DeMo), the overnight
invalidation of 86 percent of total value of currency, completes one year in
November 2017. After one year many remain unconvinced about the necessity
and efficacy of DeMo towards its principal stated objective: the annihilation
of black money. Although an assault was made on black money1,
the empirical data on its whereabouts, form and probable effect of such action,
is not reported formally. We can only hope that, what is forcefully lauded as a
goal and even an achievement is not measured through empirical means (even with
limitations). We all know that only what gets measured gets changed2.
This editorial seeks to present the impact of DeMo action on that lofty goal
from three different perspectives that are underplayed.
1. Role of Banks
Here is a real life situation I witnessed.
An income tax survey was carried out on an assessee. The tax officer sought day
wise cash deposit details and also sought direct certificates from assessee’s
bankers about those cash deposits. The certificate given by bankers was
disputed by the assessee as they showed large SBN deposits in second and third
week of the period. The assessee wrote to the higher ups in the bank and
banking regulatory system, giving evidence that SBN deposits as claimed by the
bank was not made by the assessee. The branch immediately issued a ‘corrected’
certificate to the tax office to show that such SBN deposits were not made by
the assessee.
A well reasoned reader can draw the meaning!
While fingers were pointed at a certain profession, there was hardly any
reference to the potential or even actual breach of banking system that could
have diluted the very purpose of DeMo. Reports and photographs of people
with loads of new currency notes (obtainable by few hundred man years of
standing in a line during those times), could be possible only through a breach
of the banking system. This aspect is played down instead of being investigated
at a systemic level.
2. Risk of selective approach to assessing deposits
The second question, rather a risk, is
what if those who have the information of bank deposit decide to selectively
turn a blind eye to some of them. For example, the
data of deposits could be selectively assessed to ignore some while punishing
others. I am unaware of legal and other precautions in place to ensure that
such ‘favourable assessments’ are not done to favour those who are high and
mighty, and friendly to the powerful. This could defeat the entire purpose
and actually be so counterproductive that it could result in legitimising
‘illicit’.
3. The Impending kept pending: Action against corruption
Corruption is pervasive, collusive and
multi-dimensional. Corruption and black money are connected by an umbilical
cord, except that we cannot tell who the mother is and who the child is.
The self proclaimed ‘super specialists’ in eradication of disease of corruption
and black money haven’t done the surgery to sever it. The roots of tree of
corruption are made of political economy, the substance that also influences
the strongest pillars of our constitutional system. Consider the sluggish pace
of war against black money and corruption when the big weapons are in the
garage while the war is supposedly on:
a) Lokpal and Lokayukta Act, 2013: Was notified in January 2014 and is
gathering dust since then. Reason given to Supreme Court in November 2016 was
that Selection Committee for appointment of Lokpal could not be constituted
because of unavailability of leader of opposition in Lok Sabha and therefore
amending bill was pending in parliament. In war, can there be so much waiting?
b) The Whistleblower Protection Act: Passed in 2014, but not notified
for 3 years.
c) RTI and Political Parties: The biggest parties, who talk at high
decibels about transparency in politics, oppose applicability of RTI to them.
Here, ‘No comments’ should suffice as the best comment.
d) Enforcement capability: Poor legislative, administrative and
political will and mechanism to deal with corruption cases. India is yet to
live up to the obligations under the UN Convention Against Corruption.
e) Finance Act 2017: The Finance Bill 2017 / budget speech, under the guise
of ‘transparency in electoral funding’ proposed a change that was exactly
opposite. A layer of opaqueness was sought to be added by removal of cap on
political funding (presently 7.5 percent3) and removal of disclosure
requirements of the beneficiary.
f) Electoral Bonds: Bond with the Best, goes an advertisement
tag line. While we all wish to bond with the best, if the minister has his way,
these electoral bonds could be out soon. The reason: donors to political
parties had expressed their reluctance to ‘contribute by cheque or other
transparent means as it would disclose their identity and entail adverse
consequence’. The present form of ‘electoral bonds’ could well be like
an IPO (Intimate Private Offering) for political parties – an easy way to
legitimise corruption. Why would the Finance Minister want to help the
‘few’ at the cost of transparency in political funding? Electoral Bonds
(which rather appear to be Political Bonds) representing underlying incognito
money should then be given to EC to improve elections. If these bonds come out
on the lines declared so far, could turn out to be BONDING of BIG BUSINESS with
BIG POLITICOS. I believe that Sunlight still remains the best
disinfectant4, and every citizen would rather seek sharper sunlight
on political funding over a veil of darkness!
g) Prevention of Corruption (Amendment) Bill 2013: Diluting the
existing spineless law and making it bedridden (if not dead). “The Bill has
deleted the provision that protects a bribe giver from prosecution, for any
statement made by him during a corruption trial. This may deter bribe givers
from appearing as witnesses in court.”5 There are other diluting provisions too.6 The key principals of bribery in private
sector and compensation for those affected by corruption are not even there. I
hope that, that is the reason why it is in cold storage and the anomaly will be
removed soon.
In conclusion,
an independent objective assessment of DeMo would be a welcome step instead of
another bash to celebrate 8th November. Before celebrating success,
it would be reasonable to empirically demonstrate the success to be so. While
rhetoric, promises and self praise are the visible #trends7; a
realistic and humble approach would evoke more trust and truly benefit the 1.3
Crore people who stood in lines (and some died too). All that we know so far is
that RBI took 9 months to count notes and gave the data but an emphatic
report to show the real effect of DeMo action on black money and corruption
remains wanting. That leaves Indians in the dark, the very shade of money DeMo
sought to eradicate. While one does not doubt the intent, intent without
execution means little. Sun Tzu points out in his Art of War: “Strategy without
tactics is the slowest route to victory. Tactics without strategy is the noise
before defeat.”
The government
deserves a special appreciation for one pointedly pursuing Ease of Doing
Business (EoDB). Considering that we remained in lower ranges since the
inception of EoDB index, jumping from 130th to the 100th rank
is indeed remarkable, although the stated aim was to be in top 50 by 2017. The
results are based on samples from Mumbai and Delhi, the effort in right
direction and at a good pace deserves acknowledgement. We should now aim to
reach in top 30 of Transparency International ranking on corruption. Then
investment will not have to be sought, it will come calling. Ram Rajya
will then come out of the manifesto and actually begin to manifest. While Acche
Din is a worthy aim, Acche Din would only be Acche for few if
they are not Sachhe Din. Jai Hind!
Raman Jokhakar
Editor
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1 Black Money economy is estimated to be Rs. 93 Lakh crore ($1.4Trillion) or 62 percent of GDP as per Arun Kumar, author of The Black Economy in India
2 Quote attributed to legendary Peter Drucker
3 Section 182 of the Companies Act, 2013. Compare this to Managerial Remuneration which is limited to 11 percent on a comparable base of profit.
4 Quote by Louis D. Brandeis, an American SC Justice
5 PRS Legislative Research – Highlights of the Bill – http://www.prsindia.org/billtrack/the-prevention-of-corruption-amendment-bill-2013-2865/
6 Refer Report No. 254th of Law Commission by Justice A P Shah
7 # supplied on purpose
