Politicians
In Indian elections till about a decade ago booth capturing
was the biggest problem. With time and efforts of election commission booth
capturing was almost eliminated but electoral funding still remains a looming
threat to our democratic system. Fighting elections is a costly affair and the
expenditure limits set up by election commission are unrealistic and barring a
few almost all parties take anonymous donations from affluent business class
and which is mostly tax evaded money. Obviously, donations from businessmen are
paid back in terms of skewed policies and biased decisions in their favour.
Demonetisation along with the budgetary announcements by FM is a crucial step
to reduce the amount of anonymous donations to parties from twenty thousand to
two thousand rupees to curtail black money into politics.
Dravidian political parties are known to win elections on money
power; one of them hardly conducts public meetings and only distributes money
as evident in R K Nagar by poll caused by Jayalalithaa’s death. Parties in
Maharashtra are famous for giving tickets to real estate businessmen and mint
their money. Similarly, UP is also known for regional parties using black money
to fund elections by selling tickets. Measures like demonetisation are set to
deliver a big jolt to many of them as was evident in UP elections where some
parties had less money to spend. Use of tax evaded money for donation to
political parties to get undue favours in return is set to reduce in the times
to come.
Demonetization
will cause a cash crunch for political parties as most of them depended on
black money. This would in turn open the debate for much needed electoral
reforms that’s been pending for long and ultimately may be a step towards the
cleansing of the system.
If the politics don’t require black money from corrupt people
they may legislate and govern better and not hesitate from taking stern actions
against corrupt businessmen, which would formalise the economy to a greater
extent leaving the exchequer richer.
Hawala Dealers
The shadow
economy created due to hawala dealings overburdens the honest, hardworking
taxpayers who constitute mere one percent of the total population. Hawala
trading is one of the major sources of black money. In hawala, the money is
transferred from source to destination without actually moving it. It is a
parallel illegal network where the money is given to an agent at the source and
is collected from a network agent at the destination in exchange of a
commission and government loses tax on such illegal transfers.
In most of the cases this is black money and thus to evade tax
authorities this parallel route is used to transfer money. Audits reports and
IT raids have proved that a large part of Indian economy is black and that the
dishonest politicians, industrialists, bureaucrats have stashed huge amounts of
illegal wealth in foreign banks in tax heaven countries.
Hawala
trade has also received a punch as a result of demonetization. With
demonetization rendering old currency notes invalid, the entire network is
broken. Hawala traders are no longer accepting cash and transferring it to a
destination because the currency is not a legal tender. Such money if deposited
into banks would attract heavy penalties leaving that also as not a very good
option.
This random action will result in great losses to such
transactions which were outside the tax net and they may not be able to recover
from it for long.
Real Estate Mafia
In towns, cities
and metros, real estate is a big source of black money. In India, a large
percentage of land deals are underreported. Whenever you go to a builder to see
a flat, you always have to pay from 20 up to 40 percent of the cost in cash. No
builder takes 100% cash and they are able to hide a significant part of their
income from tax authorities. With demonetization, they will not be able to
provide the sources of their illegally acquired money or face heavy penalties.
Also, with the
increased use of technology in land records keeping it would make land deals
more transparent. Also cases like Adarsh society scam will not happen with all
government lands recorded in the system making it difficult for land hoarders
to illegally make constructions on them. All these steps would break the
builder politician nexus as well resulting in cheaper homes for home buyers.
This will bring down the amount of black money in elections as well making it
more possible for honest citizens to fight elections.
Benami properties transactions and illicit
land dealings have created a stockpile of black money. Real estate goons
project lands as agricultural lands and then transfer them as residential and
make hefty profits. This whole game of power and political connections has
virtually made it impossible for common man to afford house at otherwise
affordable rates. But promises of action against benami properties has shocked
real estate mafia and caught them unguarded. A considerable decline in real
estate pieces proves the effectiveness of the policies enacted by Modi
government.
Fake Currency
Dealers
Another
important motive achieved through demonetization is a curb on black money.
Pakistan imports more ink and paper than it needs for currency printing for
itself. ISI runs fake currency printing presses in Pakistan which is smuggled
into India through Bangladesh and Nepal routes.
NIA studies show
that fake currency notes worth rupees 400 crore are in circulation in India and
a large portion of them are in the form of demonetized currency notes. The fake
currency will have to be extinguished or brought into the banking system making
their detection possible. In addition to that, the new 500 and 2000 rupee notes
have world class security features making their duplication difficult for
Pakistan so it’s a way to stay a step ahead of the copiers.
Demonetization
move by the prime minister widened the tax net forcing people to make pan cards
and adhaar cards and pay taxes. Fake currency is no longer available as a safe
option like before and people want to avoid dealing with it. This would have a
ripple effect and would reduce corruption and illegal activities in general.
People fear Modi may be taking more steps in future to curb black money and
hence may not prefer it.
Terrorist
Organizations
The old notes
were copied by Pakistan and used to finance terror in India. The new notes have
advanced security features that may not be easy to copy for them for a long
time. This is set to give a big blow to terror outfits that use this fake money
to fund terrorists and export them to India. Terrorists’ organisations like
Hizb-ul-Mujahideen collect money in the form of donations in Pakistan and use
Hawala routes to route it into India to carry out terror activities.
With
demonetization the Hawala route is broken and it’s not possible for Pakistan to
route money into India to spread terror. Their existing currency stacks in
India face confiscation or may have to be extinguished. Their fake currency
printing machines also printed mostly 500 and 1000 rupees notes that have been
demonetised and new notes with advanced features may not be easy to duplicate.
Within weeks of
demonetization, Kashmir became a more peaceful place extinguishing the cash
from terror outfits. In fact, no internal riots and clashes took place in India
for the period after demonetization as a result of cash crunch.
Sports Betting
Gambling in
India is banned except lotteries but India have an illegal racket running
nationwide that conducts batting on many things. The net turnover of illegal
batting in India is estimated to be around $150bn and bulk of which is in
cricket. Other things that have betting in India are movie performances on
silver screen, election results, weather predictions etc.
IPL in cricket
itself accounts for a large part of batting money in India. Indian bettors
often have to transact money with foreigners. E-platforms such as Moneybookers
and neteller are popular payment methods for such transactions. Online
e-wallets are also used in which money is deposited by payees and it is then
used to fund betting activities. Measures like demonetization have made
circumventing the rules difficult as the cash depositors may be asked to reveal
the sources of the money later.
As part of the
income tax disclosure scheme, around 65 thousand crore rupees was declared but
it is alleged that a large part of this illegal wealth still remains unearthed
and after demonetization the part of this money that’s cash has become piece of
paper. However, the effect of demonetization on the money stashed abroad in
still unclear. This foreign money is estimated to be more than ten times the
countries total debt. Gamblers and betting agents are having a hard time as
e-transactions leave money trail for tracking and may invite troubles for them
anytime in the future.
Educational
Institutions
Indian education
system is also a huge generator of black money every year. Capitation fees of
around 50 thousand crore is paid at various educational levels from KG to PG in
India
This so generated black money often finds its
ways to terrorism, election financing and religious conversions. Medical and
engineering colleges are the biggest sources of black money with every seat
going for lakhs of rupees. These educational institutes use that money to pay
bribe to get accreditations from medical council and AICTE. Government has
plans to conduct single common entrance exam to fulfil their seats which will
reduce corruption. Auditing their financial statements, releasing them on
websites, strict monitoring of their funds etc are some other measures set to
reduce black money in educational institutes. Thus, educational institutes can no longer have usual donation
practices and there is looming fear in the minds of people related to all
sectors that tax authorities are keeping strict vigil at their activities. This
will definitely help poor parents to afford quality education for their
children.
Fake Trusts and
Charity
Fake trusts and
charity are also a big source of black money in India. They are created
sometimes only to turn black money into white. They take black money, evade
taxes on them and instead of using that money for charitable purposes route it
back to the donors after deducting a commission. While we can’t stop donations
to charitable organisations, at least the large donations must not happen in
cash.
They should be
done by account payee cheques only and PAN number should always be accompanied
in case of large donations. Politicians and businessmen use such trusts to
launder their ill-gotten tax evaded black money into the system. At least a
million charitable trusts and private organisations misuse the rules to employ
banking and other channels to launder money. Some fake NGO’s also exist; they
conduct fake demonstrations where their ultimate aim is to launder money.
Tax enforcement
measures and anti black money campaign by the current Modi government has
proved effective in cleaning up the system. The manifesto promises, attitude of
the government, and a series of significant systemic policy changes have seen
drastic changes in the defiant mindset of black money hoarders. Auditing
exercises across the nation, CAG reports and income tax raids have spoiled the
party for fake NGOs and charity trusts.
Rich Agricultural
Land Owners
In India,
agricultural income is tax free but this channel is often misused to launder
black money costing the exchequer in billions. While it is true that a large
number of farmers in India are poor, there exist few very rich land owners that
masquerade as poor farmers. They, even if they are rich, enjoy all kinds of
power and fertilizer subsidies, minimum support prices set up by the government
to protect poor farmers, loan waivers and most of all- tax free income. Rich
farmers and such corporations are very influential in the government and
bureaucracy and lobby against legislations that would pin them down. The system
is hoodwinked by such farmers by buying cheap and uncultivable land. They would
declare it to be cultivable land and thus all of their incomes become tax
exempted. With the announcement of demonetization such large piles of illegally
hoarded cash would become useless and poor farmers would benefit.
Another common
practice is to buy subsidised agricultural land and convert it into residential
land over a period with the help of people in influential positions or corrupt
politician/bureaucrats. In this way, these affluent fake farmers purchase
subsidised land at very low cost and sale them at hefty profits as residential
land after conversion. This directly impacts poor farmers as they are denied
their right to low cost subsidised agricultural land and also it is loss of
natural resources as fertile agricultural land is declared residential
fictitiously. The profits earned on these agricultural land deals are kept
hidden from the system and become a statistics in black money figures. But now,
due to strict action on illegal land dealings, ‘benami’ transactions, ill wealth
and action on corrupt bureaucrats by the Modi government have plugged the
loopholes in the system. The fake farmers are looking for ways to dispose off
their ill gotten wealth before the taxman can initiate criminal proceedings
against them.
Film Industry
Film industry is
another field where a lot of black money is involved. In a wikileaks cable in
2011, it got revealed that film industry welcomed it welcomed the funds from
politicians and gangsters who are looking to invest their ill-gotten funds. In
2012, in a sting operation by cobrapost also showed film directors admitting
that film industry uses black money to convert it into white. The IT act 1961
applies on the revenue sources of the film industry. Parts of it regulate TDS
on all payments to directors, actors, studios and distributors as per sections
192, 194C, 194J etc. By investing their tax invaded money into films, people
may earn returns on them and which may in turn be used to conduct other illegal
activities as well, in addition to tax losses to the country.
In 2012, a news
website, Cobrapost’s sting operation caught directors
Warnings, income
tax declaration scheme, demonetisation, blocking routes to tax heaven
countries, stress on e-transactions, adhaar linking and GST
implementation shows the intent and determination of the government to uproot
black money and corruption. This incessant drive against illegal money has left
corrupts people in the film industry puzzled and vulnerable.admitting on
record that how Indian film industry is working for black money to white
conversion. Some of the big names in the industry have registered their
companies outside India which is suspicious for Tax authorities.
Naxalites and
Maoist Groups
Naxalites and
such home grown anti social and internal terrorist groups want to destabilise
government. They rely on extorted, unaccounted and ill gotten wealth from
various illegal sources. On top of it they use this hard earned money of
kidnapped or robbed people to carry out anti social and anti democratic violent
activities that threatens the integrity and sovereignty of our country.
Another
benefit of demonetization is that Naxal financing has reduced. Naxalites used
to extort money from people and used that money to illegally run their
syndicate and execute violence. They may be left with cash that has become
illegal now. Obviously, they must not have had bank accounts to deposit their
cash in the system. Less cash to such internal terrorists means not just
monetary benefit but also it would help in maintaining peace and amity. Naxal
affected regions are bereft of development, education, health services and
government schemes. If Naxalism stops, the affected population can have access
to normal and peaceful life. Also, the security personnel deployed to curb such
acts of violence can be posted for some more productive and nation building
tasks.
These moves have also forced people to
disclose their legally earned money and deposit it into banks. The depositors
will earn interests and at the same time their money would be safe. This will
also increase banking culture among Indians and formalise the economy. The
banks may use the deposited cash for increasing economic activities such as
lending to entrepreneurs which will increase employment in the country. It will
open up a window for naxal families to join the mainstream banking system.
The large cash with the banks will also mean banks have more
money to lend and thus home and car loans may become cheaper and thus
manufacturing and real estate sectors may see a boom in the times to come. More
people especially the underprivileged may be able to afford their own houses in
the years to come as a result of demonetization.
Corrupt Bureaucrats
Bribery is a big way in India that generates black money. In
schools, colleges, hospitals, pension offices, recruitment boards, electricity
department, water department everywhere bribery is rampant. It is common belief
these days that government job interviews can’t be cleared until bribe is paid.
A Transparency international study in 2005 showed that 62% Indians had paid
bribe in their lives had paid bribes to get their tasks done in government
offices. The same study in 2008 showed the number of bribe payer Indians to be
40%. A 2017 survey shows that seven out of 10 persons, who had to deal with
public offices in India, had paid a bribe. Nearly 40% of the survey population
believed that corruption has increased in last 12 months. A whopping 73 % of
those who had paid a bride belonged to poor sections.
With demonetization, the cash stashed as a result of at least
large bribes would be rendered useless and RBI would be extinguished of its
liabilities. This measure would bring down the level of bribes in public
offices in the future. Indian law has provisions to punish bribe takers in
public offices but India also have a sprawling bureaucracy and a weak judiciary
making it possible for dishonest bribe seekers get away with them.
Modi
government has stressed on less cash economy and made systematic changes to
encourage people to use e-wallets and e-transactions. In a less cash economy
the bundles of black money cannot be stacked and taking bribes with an
e-transaction is suicidal as it leaves a money trail and tax authorities can
nab you anytime following the transaction route and cause. Therefore, cash is
not available to offer bribes using black money to corrupt bureaucrats and they
do not dare to take bribes using electronic channels due to fear of being
tracked by audit and tax authorities.
Although demonetization was targeted to give a blow to corrupt
people that have huge amounts of black money, the common man had to face great
difficulties due to it. Only about 32% Indians have access to banks and there
is just one bank on every 9500 Indians. The common people had to queue outside
banks and ATM’s for hours. Often the ATM’s and banks would run out of cash leaving
people more and more frustrated. The government had to face severe criticism
from opposition parties and media for poor planning and implementation that
wiped out 86% of the total volume of Indian currency. The people without bank
accounts were the most severely affected. It is true that people were losing
patience for the inconveniences faced yet most of them supported the prime
minister for his far sighted intentions to fight black and counterfeit money.
Common Man
As a result of
demonetization, people started using their e-wallets, debit and credit cards
and other online banking payment methods more and more. Even after the country
is fully remonetized, the people may not give up transacting using online
methods. Thus it may prove to be a giant step towards making India a less cash
economy. A less cash economy is better in the sense that e-cash is safer to
carry, makes giving bribes almost impossible and leaves behind a digital
footprint forever that the tax agencies can relook at. It also makes tax
evasion impossible as a result of which the country’s net tax net would
increase and government will be left with more money to spend on public welfare
and infrastructure related schemes.
More IT and banking jobs may be created for more and more and
more banking and online transactions happening as a result of demonetization.
Online accounts need technological infrastructure and maintenance and more
people may be hired to perform such works in the future. This would generate
employment opportunities for young professionals. India is fast becoming
digital as a result of demonetization.
Black
money was one of the reasons for inflation in India. Tax evaded income in the
hands of the people would make the demand of goods go high in the market while
the supplies remain the same. With a crackdown on black money through
demonetization, the inflation is going to be under control in the future and
the common man is going to benefit the most from this. As a result of
demonetization, defaulters in the areas like property tax, bank loans,
electricity and telephone bills are rushing to pay in cash fearing if they
didn’t do so the cash may become useless.
Additionally,
government has implemented GST that would widen the tax net, make tax evasion
almost impossible and is set to catalyse the economy. It is supposed to lift
the growth rate by 2%. GST has reduced cascading tax effects from Indian
consumers and that’s going to benefit them in future. The businessmen have to
file taxes in a simple manner online leaving no room for harassment at the
hands of tax authorities. It is set to increase the overall efficacy in
logistics as now there is going to be one tax in the nation that is the
destination based tax. Also, as per the provisions in GST, less developed
states get a boost. Multiplicity of taxes is eliminated as a result of GST and
as a result of this consumers are going to benefit from increased market
competition.
11 DIFFERENCE BETWEEN THE BOY YOU ARE DATING AND THE GUY YOU WILL MARRY
