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.
