What is the issue?
Despite various programs, systemic problems impede government attempts to rid economy of black money.
What is the progress made by the programs?
- The government has taken several steps in the last three years to reform the Indian economy.
- But the results have not always been up to expectations.
- Black Money Act - It aimed to bring back a few lakh crore of unaccounted money parked as overseas assets.
- But only 644 declarations were received, and just Rs 2,428 crore was collected in taxes.
- 90% of the collections came from just 5% of those who declared their assets.
- This meant that the act could accomplish only 5 to 10% of what was expected of it.
- Income Declaration Scheme - Launched in 2016 it gave an opportunity to people with unaccounted income or assets to come clean by paying 45% tax on such wealth.
- It was expected that a few lakh crore of unaccounted wealth would be declared, but the government could get declarations amounting to only Rs 55,000 crore.
- Benami Transactions Amendment Act 2016 – It was passed to curb deposits of black money in third party accounts.
- In small towns and villages, there is a big difference between market value and stamp duty value of properties, particularly land.
- Demonetisation - The government’s idea was that counterfeit notes of Rs 500 and 1,000 as well as black money will remain undeposited and thus would go out of circulation.
- It was expected that around three lakh crore of unaccounted notes would not be deposited in banks.
- But these hopes weren’t fulfilled and the RBI has not yet declared the final figure of the deposits it has received.
- The expectation, that the parallel economy of black money will be wiped out, has been belied.
- Pradhan Mantri Garib Kalyan Yojana (PMGKY), 2016 - The scheme was launched to enable people who had deposited unaccounted cash in their own bank accounts or the accounts of third parties to make a declaration.
- Only about Rs 12,000 crore of declarations were received.
- People allegedly took the help of bankers and also used others’ bank accounts to deposit their unaccounted money.
- Banks did not make proper arrangements to detect counterfeit currency. Bold steps are not enough in themselves.
- The loopholes in the system have to be plugged before any major reform is undertaken.
Source: The Indian Express