JUDICIARY UNDER THREAT OR JUSTICE IN PERIL?

Every now and then would come a case of #JusticeLoya or the case of #thedelayedverdictinJayalalithacase or a similar issue to generate debate on the independence of the Judiciary in our country.

          Cho Ramasamy had long ago remarked that to get a favorable verdict in the Court, one has to know the Judges than knowing law. 

          Very many times, it has been pointed out that Courts are called Courts of law rather than as Courts of Justice. It is more so in India. And a very famous Chief Justice of India once remarked candidly, 'we are not final because we are necessarily right, but right because we are final'.

          Even the complications in interpretation of the provisions in the Constitution of India have been blamed on the numerous lawyers who were deployed for the purpose, instead of lay men who could have put it in simple terms.

          But experience teaches us that even simple things could be complicated by intelligent minds.

          First the print media, then the visual media and now the social media have created such a polarization among people that a majority have taken sides and want to argue only the side chosen by them, with brazenness, without an iota of guilt or shame and perpetuate their beliefs to endless  measure.  Thus a considerable number of persons involved in these debates have become lawyers themselves, though not necessarily holding any formal degree permitting them to do so.

          While the very concept of taking sides is anathema to arriving at truth, the judicial principles enabled one to put forth all possible angles for proper consideration.

          In this process employment of competent persons became a sine quo non to win one’s argument. Judicial principles started faltering at this very point.  Because, one who has more resources at one's command can get hold of a better lawyer, who can put forth his side in a better manner than the other one and truth became a prisoner of circumstances and submissions and at God's mercy directly.

          The higher judiciary has become more costly with Senior Advocates becoming an essential requirement if arguments have to be even heard.  The cost of the Senior Advocates ranges from Rs. 2 lakhs to Rs. 15 Lahks - per appearance.  It is carefully worded as appearance because it does not mandate that the advocate may have to even stand up or open the mouth.  Mere appearance when the case is called – even if adjourned by the Court itself, or at the request of the other party/parties.  And such appearances could be endless. Also do not miss the number of Judicial forums and procedures, in every single case.  While for the Government, it would mean only the cost of paper on which the decision to litigate is taken, for the common man, it bleeds the life out of him.  It is the same in the case of a common man's litigation against a corporate also, because the corporates have legal eagles empaneled.  

          When considered that famous Senior Advocates appear in 20 cases on an average per day, one could estimate their earning.

          Compared to the salary of the Judges, these fees are several times high. 

          That would point out the basic pit falls in judicial mechanism.

          If judgment process is so costly, what is the cost of justice?

          If judicial process becomes so complicated and costly, it invariably would become corrupt.  A corrupt judiciary will only enable a corrupt investigation system to thrive. 

          A small step towards solution of the above problem would be to allow the parties to present their side in person, if need be with the assistance of the advocates.  Like in the RTI Act, litigants should be allowed to argue their own cases, without restrictions.  Legal formalities should not come in the way.

          That reminds me of the attempt by the Advocate community trying to step into the RTI Proceedings also, some years ago. Luckily that attempt failed.  But the mechanism of RTI itself became whittled down.

          Along with public education and public health care, police/judicial reforms are urgently required for a just state to exist.

          Otherwise, any number of laws enacted would be of no help.

         

For my Communist brethren to think

Ever since the crisis that started in the USSR in the early 90s, Communism has been on a steady decline all the world over.  India is no exception.

The reason was that they failed to keep their ears to the ground.  They failed to apply reason to politics and indulged in empty demagogy.

Just like the proof of the pudding is in the eating, whether the Communists stood for the welfare of the downtrodden was up to the downtrodden to feel.

Whatever media or other influential classes can propagate, the native intelligence of the people can easily see through.  If the real feeling is there, it would percolate.  The hearts have a language, which is universal for all living beings.  The rational minded persons fail to understand that.  Strategies will not substitute real feeling and intention.  What started as a peoples movement had denigrated into a party politics.

As a result what happened is that instead of real feeling for the masses, those who came to power using the ideology to save the exploited, started chalking out strategies to keep their hold on the power.  The continued hold on the power was expected to deliver the results – in the long run.

But in the long run, power only corrupts and more power corrupts all the more.  Hence, by the time they were not yet satisfied with the increasing and widening of their power base, their descend had already started.

Before they could open their doors to the heaven of their own dreams, they had been toppled. That took away in its Tsunamic sweep, even what ever had been built for common good.

Time and tide wait for no man.

Those powers which have gained from the toppling of the Communists have also the same in store for them.  As long as they do not deliver and keep their sight only in conquering new horizons, they will not be able to assess the sand that gets swept away from under their very feet.

The nemesis for every life is embedded within. It does not join enroute.   

Communism as a philosophy will not die.  It stands against exploitation, of all kinds.  It shall re emerge in some other form, in some other name.  If only people can re-invent themselves and be true to that philosophy. 

And when the people who thought that a free economy is free, come to their real senses and understand that nothing is really free.

Till such time let the ideal rest in our hearts.

FEVER, GANDHI AND VIVEKANANDA

             Yesterday night I had terrific fever.  With jitters and cold shivers. Never in memory I had such seizures.  Then after I took some medicines with hot water and went back to bed, even as the fever was raging, some thoughts were reeling in the mind.

          Now, felt that those should be recorded, because, perhaps they came from deep within.

          Though I have had great regards for Gandhi, with passing time, I had felt drawn away from his activism.  It was less spiritual I had felt.

          There is an instance reported in the life of Ramana Maharshi.  Gandhi had come to the foot hills of Arunachala for a Conference.  People around the Maharshi tell him that efforts were on to bring Gandhi to the Maharshi.  Maharshi is said to have stated that ‘I do not think that they will allow him to come here’.  This has been interpreted by some as a reference to Rajaji who was a Vaishnavite and Gandhi also being a Vaishnavite and therefore Rajaji was the person whom Maharshi refered to as ‘They’, because Maharshi was a strong Saivaite.

          But this interpretation does not appear to be plausible because, if Maharshi had decided to draw some one to him, whether Vaishnavite, Muslim or a Christian, he could have done it.  For his stature Rajaji was nothing.  That the interpretation is flawed could be observed from another statement of Maharshi regarding Gandhi wherein he says, ‘he is like the Anchaneya, he is doing his work’.  That puts it in perspective, that Gandhi was destined for Karma yoga and the Jnana Yoga path of the Maharshi was not prescribed for him.

          Maharshi who underwent operations for his Cancer, without anesthesia, is reported to have wept day long hearing the AIR, on assassination of Gandhi.  For whom was he weeping?

          Gandhi, who accomplished a tremendous task by putting to rest riots in Bengal, at the time of declaration of Independence, certified by Mountbatten as a ‘One man army, who achieved what the entire Indian Army could not achieve in the North West Frontier Province’, was on his way to Lahore, when he halted at Delhi. But by then he had already understood that he had become a liability to his own Comrades in the Congress.  In his Delhi Diary, somewhere in January 1948, he writes, ‘I feel I have become a back number’.  For someone who wanted to live upto 125 years, death was being awaited as a relief.   Gandhi was disliked by many.  The Hindhu mahasabha, Muslims, Christians, SC/ST, Communists, and very secretly by the top brass of the Congress itself. The British Government was also wary that he may object to the Partition plan. But with all his collegues, separately agreeing for it, he had already lost his moral strength.

          And Jiddu Krishnamurthy rightly said, ‘we killed him’.

          But assassination of the same person was to continue.  Those who opposed him on ideologies, put the blame for everything on him. At the same time, Congress, which officially subscribed to his views, did every thing possible to annihilate his theories or dreams.

          Now, after decades, when the social fabric of the Country is under great threat, all those who had ideologically opposed Gandhi, now try find his support for the furtherance of their ideologies.  Now the Communist, the Clergy of other communities, and even the right wing of the Hindutva brand, quote him and feel that only from that Co-ordinate they will be able to move further.

                    Gandhi’s heart is poured out not in the ‘Harijan’, or ‘Young India’, they are political and social.  His personal feelings could be seen in his letters to C.F.Andrews.

All those oppose him, have only to think for a single moment, what pains and pangs that person had under gone and whether any one of us will be willing to undertake such an ordeal even to the extent of 1%.

Now, what happened to Gandhi during the Congress rule is about to happen to Vivekananda also. 

There was a young, sharp, extremely intelligent, courageous, logical minded person, who was bound hand and foot by his master and made to toil, with the keys safely kept away secretly, to be given to him, only after the given task was finished.

The youngster who wanted to escape to the Himalayas and spend time in silent meditation, was thrown on the streets.  He had to go like a nomad, city to city, village to village.  Born like a prince, he had to live the life of a pauper. And as in the case of Gandhi, in the case of Vivekananda also, his speeches are motivational, giving courage to the people who had been enslaved for centuries and had lost their moorings.  He asked them, ‘do you realize that descendents of Great Sages and Rishis had become next door neighbors to bruts and scoundrels; does that make you loose your sleep, does it make your blood boil, does it make you go without food, then you are on the first step of Patriotism’.  What a passion he had for the downtrodden?

Yet his feelings were reserved for private letters.

He continued to work, with gnawing pain in his heart.  He was a Communist to the truest sense. It is not that only Marx, Engels, Mao or Fidel Castro are Communists.  A Communist is the one who feels for the lowly and exploited.

But due to his Saffron clad image, he has been taken over by the Hindutva brigade.  However, what he stood for, what he felt, are seldom understood.

He was the co-ordinate prior to Gandhi.  From him flowed people of action like Sri Aurobindo, Nethaji Subash Chandra Bose, Pasum Pon Muthu Ramalingam and even Gandhi to some extent.

From him also the elevation to Sri Ramakrishna, Ramana Maharshi, Himalayan Saints and so on.

But he is distorted, half quoted and portrayed in such a different light that what the ‘once upon a time opponents of Gandhi’ feel now, will be felt of Vivekananda also, much later.

A STUDY ON #DEMONITISATION IN INDIA

          It is more than 100 days since #demonitisation of high value currency of Rs. 500 and 1000 was announced. Several opinions for and against, have been expressed, from macro/monitory economic perspectives and political angles. 

When the Prime Minister announced this decision, the main reason he stated for the move was the need to take out (1) black money and (2) fake currency from the economy.

In such a situation the Government ought to have had a rough estimate regarding the quantum of such black money and fake currency that had infiltrated the system, before embarking upon such a move to demonitise 86% of the entire currency in circulation, estimated to be around 15.5 Lakh crores.

But very strangely, in a reply to a question in the Parliament, the Finance Minister stated that neither before nor after the announcement of the demonitisation decision, the Government had any estimate regarding the quantum of black money and fake currency in the system. 

Then, who were the authorities involved in arriving at such a major decision affecting the entire economy and touching the lives of every citizen in this country, and on the basis of what data, is not known. 

Now with a cool head let us analysis the reasons and results so far.

#FAKE CURRENCY:

One article that appeared in The Hindu subsequent to the above announcement stated that during an inspection of the vaults of the RBI in 2010, it had been found that fake currencies were there in the RBI vaults.  It was also stated that these fake currencies had their origin in Pakistan and that they were used for terrorist funding by them on the Indian soil; that since Indian currency was being printed using paper procured from abroad, Pakistan had easy access to the same paper and were therefore able to print such fake currencies.

However, two aspects came out during the demonitisation exercise:

(1) There was no mechanism to ensure that fake currency does not get into the banks and get exchanged for new currencies in such a mammoth exercise and there were no provisions to track any such currencies which got into the banks, either due to lapse in detection, negligence – willful or due to pressure of work or even due to indulgence of the banking staff themselves, including at the RBI.  That such fake currencies had found their way into the vaults of the RBI even at normal times signaled that it was easy for such currency to get into the banks in a mad melee.

(2) Even during the process, there were reports that import of paper for printing of the new notes was being contemplated – which threw out the reason that use of imported paper was that which enabled Pakistan to print fake currencies.

Apart from the above two aspects, only time will tell whether the security features in the new currency notes are enough to put off future producers of fake currency. However, news already comes in that new 2000 Rs fake currency is getting injected into India via Bangladesh.

Again, there are no statistics regarding the percentage of such fake currency in circulation and why it would not have been possible to detect them in a demonitisation exercise over a larger period of time with specific year notes being withdrawn at a time, and simultaneous issue of new currency with enhanced security features. 

#BLACK MONEY:

          Though it was first stated that the intention was to kill black money, later, it was altered to killing the #black economy, because, it was found that money as such had no colour and it acquired such a status only depending upon whether the possessor had accounted for it or not.  The question of accounting for it however arises only in such cases where it was due to be subject to any tax and otherwise, accounting for it or not did not matter.

          Thus, if a particular person had generated black money by not accounting for it and not paying the tax due on the said amount, it remains black only as long as it remains in his possession, as currency.  The moment he invests that currency, or passes it on to someone else in any other method, it ceases to be black any more, unless the person who has received it also has to account for it and pay tax on the transaction and if he has not done so.

          In such a continuing transaction stream, to stop the transaction mid way and calculating the black money held in currency, is like taking a snap shot out of an entire film roll.  It has no actual effect on the actual illegal transactions. 

          And all those who indulge in such black economy transactions as a matter of routine, have mechanisms to account for them under wrong heads, most difficult to be investigated at a later point in time and thus legitimize the ill-gotten wealth.  That is the primary reason why, in spite of obvious accumulation of huge wealth in the hands of few individuals, during a short span of time, no action could be taken by any of the law enforcing agencies. There are so many loop holes to enable them escape.

          Difficulties will be faced only by such people who did not have avenues to utilize such areas of exemptions and who did not have scope for any such known source of income and were in the Income Tax bracket.  In such cases, the amount should have been so huge that they could not break them into smaller amounts to be deposited in the names of their kith and kin or benamies. Even in such cases, where generation of such un-taxed amounts are routine, they would have already settled the mechanism to bring them into their accounts by utilising some exemption or the other. Income Tax authorities already are on the job of verification of such declarations, to the extent possible. 

Now, without closing those avenues to avail exemptions under the categories where such accounting is not required or does not require to be taxed (like agricultural income and political donations) any requirement for getting the currencies into the books of accounts would have no meaning, in terms of detection of such ‘black’.

          People who have researched on the subject of black money in the Indian Economy are almost unanimous in their opinion that out of the 20% of black money generated in India, only 6% is within the country and only less than 3% is held in cash.  The rest of the amount is abroad or held as gold or in real estate. 

The question that had time and again been raised is whether for that 3% (which could be only in the hands of at best very few individuals), such a huge exercise, putting to difficulty the entire country was required.  Would not a strengthening of the anti-corruption and anti-evasion departments and their mechanisms itself, coupled with a robust judiciary not yielded results? For that matter, all the cash hauls unearthed during the demonitisation and the data on which action could later be taken, would also only depend upon these very fundamental organs of the Government.

          Apart from the above, the private banks, particularly the new generation private banks are not known to seriously follow the KYC protocols and address verification, due to the pressures to meet their internal targets.  Most of the industrial community is known to bank with the new generation private banks.  The minimum balance prescribed for each account is also prohibitive for common people to have accounts there. There the scope of multiple accounts increases.  This gaping loop hole came out during the demonitisation exercise itself, where large chunks of new currency was seen to have been distributed by such banks to single entities.

          The RBI also appears to have been supportive to these private banks by issue of more currency to them when compared to the other public sector banks, where the common man held accounts.  If the RBI could be so favourably disposed towards them in such an emergency, the position in ordinary times could very well be imagined.

          The entire banking sector, including the RBI have been kept out of the ambit of audit by the Constitutional Auditing authority, viz., The Comptroller and Auditor General of India (C&AG).  Right from the 80’s, senior Parliamentarians like Shri. #Era.Sezhian who was himself the Chairman of the PAC, had been highlighting that there were serious issues in the accounts of the banks requiring attention, which was proved by the fact that their total Debit and Credit sides were not tallying and that it called for the necessity for a statutory audit by the C&AG.  

          So the question that would naturally arise is as to how, in a democracy where the pillars of powers are controlled by mutual checks and balances, such unfettered and unaccountable powers to one institution alone, could be granted. 

          How can an organization deciding upon the life and fate of every citizen of the country, which has a say on their hard earned incomes, whether deposited in banks or held as currency, have such sky high powers, as to deny the fundamental right of the citizens, is the question that this demonitisation exercise has brought to the fore.

          And the ancillary question that would arise out of it is whether any exercise executed by such an unaccountable body could itself be expected to be beyond the arms of corruption and without it itself becoming a point of generation of black money or black economy.

#CASHLESSNESS:

          When the Prime Minister announced the decision, he stated that there will be an immediate 2-day bank holiday and thereafter the exchange process will start.  But it could not. 

          Then the Prime Minister asked for 50 days.  The reasons attributed were that the ATMs required re-calliberation due to the difference in size of the newly printed notes and that printing of new currency could take time.  It was stated that new currency could not have been printed in advance, due to the requirement to keep secrecy.

          People with knowledge of the printing capacity of the RBI had stated even at the outset that new currency to replace the demonitised ones could not be available within the 50 days time.

          Then came the insistence on cashless transactions.

          In a country where illiteracy is still rampant, where most of the parts of the country are untouched by banks, ATMs and POS, insistence for jumping into a cashless economy can easily be seen only as an excuse to get out of the obligation to replace the demonitised currency notes.

          It has repeatedly been pointed out that the cyber safety in India is far from the desired standards and that even a month prior to the demonitisation announcement, it was admitted that a large chunk of debit card data had been compromised.  With all sorts of hackings around, pushing an ill-equipped system to embrace such cash less transactions would be perilous. 

CONCLUSION:

          The #RBI is yet to release the data pertaining to the demonitisation exercise till date.  Those who defend the silence of the RBI stated that they were taking time to consolidate figures. So much for the computer preparedness of the country, even at the level of RBI ?  Then how are they going in for a computer based, e-transaction based economy?  Now the RBI has refused to divulge information on grounds that it will endanger security, safety, etc. Who believes these things?

          It is a #fundamental right of individuals to decide whether their money is to be held by them in cash or in bank.  The banks are required to offer proper rates of interest to attract deposits and also give incentives to make cash less transactions attractive.  On the contrary, the interest rates for savings accounts and even fixed deposits have steadily declined, putting to much difficulty that class of the majority of people of the country who do not invest in shares. 

          In the absence of the above said incentives, forcing the people to deposit their monies in the banks, would be obviously only to lend them at lesser rates of interests.  In a long term, it could be argued, that this would come back into the economy, in the form of job creation and salary to the people.  But while there is no certainty that a major chunk of this amount will not get siphoned off as NPAs, the cash crunch and disincentives for the forced depositors would be real – i.e., even assuming that a fool-proof e-system is put in place.

          If there is an estimated expenditure for the Government / RBI for printing currency, the amount involved in maintenance of the e-transactions would be recurring and multi-fold, as days go by and if the e-transactions themselves become the norm of the day.  The banks are bound to take advantage of that situation. Even if at initial stages the Government steps in to ensure that there are no service charges on cashless transactions, once it becomes the order of the day and people become dependent on the system, there is bound to be charges on the same.

          Thus it is evident that all the reasons stated for indulging in this mammoth exercise have been either false or misguided. 

          What has been a fact is that the people were put to unnecessary trouble and pain and the economy, particularly at the middle and lower middle levels has been very badly affected.  Saying these things openly invite accusations of being anti-Government or anti-national.

          #Prof U.R. Ananthamurthy in his last essay #‘HINDUTVA or HIND SWARAJ’, had this to say with a very heavy heart:

 “But there is another important fact we must pay heed to.  The middle classes, the Shudras, the Dlits and the Muslims have also been swayed by Modi’s oratory.  They seem to have given up leftist politics in the sway of Modi’s honeymoon period.  Perhaps it is only the Earth that will speak the leftilst language now, battered and infuriated as she is by Modi’s developmental agenda.  Perhaps she will unleash her fury through the weapons of storms, thunder, lightning, rain, floods and earthquakes.” 

          Let us pray that better sense develops; that elected governments do not take the people for a ride by selling falsehood in the name of panacea or ambrosia.

 Most importantly the Government has to keep this lesson of the burnt finger in mind while implementing the #GST, because an ill-prepared tax mechanism could  throw the economy into utter chaos and also affect the integrity of the country.

CONSENT FOR NATION BUILDING

The fundamentals of the chaos:

          Some of my friends have in private expressed astonishment regarding my stiff position against the <demonitisation> related chaos prevalent in the country now. I thought I will try to put in the form of an article what I feel about the entire chaos going on, as a student of Economics and as a tax man.

At the outset, to understand what is black money, how it is generated, particularly in India and the history that has lead us to the current situation, I thought that the write up available on the Wikipedia is fairly comprehensive.  I am therefore extracting the relevant portions for easy reading:

From wikepedia:

“Source of black money

Some Indian corporations practice transfer mispricing, by under-invoicing their exports and over-invoicing their imports from tax haven countries such as Singapore, UAE, and Hong Kong. Thus the promoters of the public limited companies who hold rarely more than 10% of share capital, earn black money abroad at the cost of majority share holders and tax income to the Indian government.^{[citation needed]}

Politicians, political parties and corrupt higher officials of government and its institutions take bribes from foreign companies and park or invest the money abroad in tax havens for transferring to India when needed. Many times locally earned bribes, funds, and collections are also routed abroad through hawala channels for evading from Indian tax authorities and consequent legal implications.^{[citation needed]}

In the Vodafone-Huthchison tax case, a foreign multinational company also evaded tax payments in India by making transactions with shell companies registered in tax haven countries^[2]

Round-tripping of black money

The unlawfully acquired money kept abroad is routed back to India by the round tripping processes. Round tripping involves getting the money out of one country, sending it to a place like Mauritius and then, dressed up to look like foreign capital, sending it back home to earn tax-favoured profits.^[9]

Foreign direct investment (FDI) is one of the legal channels to invest in Indian stock and financial markets. As per data released by the Department of Industrial Policy and Promotion (DIPP), two of the topmost sources of the cumulative inflows from April 2000 to March 2011 are Mauritius (41.80 per cent, US$54.227 billions) and Singapore (9.17 per cent, US$11.895 billions). Mauritius and Singapore with their small economies cannot be the sources of such huge investments and it is apparent that the investments are routed through these jurisdictions for avoidance of taxes and for concealing the identities from the revenue authorities of the ultimate investors, many of whom could actually be Indian residents, who have invested in their own companies.^[10][11]

Investment in the Indian stock market through participatory notes (PNs) or overseas derivative instruments (ODIs) is another way in which the black money generated by Indians is re-invested in India. The investor in PNs does not hold the Indian securities in her or his own name. These are legally held by the FIIs, but derive economic benefits from fluctuations in prices of the Indian securities, as also dividends and capital gains, through specifically designed contracts..^{[citation needed]}

Foreign funds received by charitable organisations, non-government organisations (NGOs) and other associations need not disclose the Indian beneficiary.^{[citation needed]}

Gold imports through official channel and smuggling is a major conduit to bring back the black money from abroad and convert in to local black money as the gold commands high demand among the rural investors particularly.^[12] Also fictitious high value round trip transactions via tax haven countries by diamonds and precious stones exporters and importers is a channel for to and fro transactions outside the country.^[13] Also, fictitious software exports can be booked by software companies to bring black money in to India as tax exemptions are permitted to software companies.^{[citation needed]}

Unlike in earlier decades, the interest rates offered abroad in US currency is negligible and there is no capital appreciation if the money is parked abroad by the Indians. So, Indians are routing their foreign funds back to India as the capital appreciation in Indian capital markets is far more attractive.^[14]

2016 Panama Papers leak

The 2016 Panama Papers scandal is the largest-ever leak of information on black money in history.^[15] International Consortium of Investigative Journalists first obtained the leaked information, revealing over 11 million documents. These documents pertain to 214,000 offshore entities and span almost 40 years. The papers originated from Mossack Fonseca, a Panama-based law firm with offices in more than 35 countries. The list of names exposed in the scandal includes 500 Indians who flouted rules and regulations, such as Amitabh Bachchan, Aishwarya Rai, Niira Radia,^[16] KP Singh, Garware family, Harish Salve, and others.^[17][18][19]

Black money in Swiss banks

In early 2011, several reports Indian media alleged Swiss Bankers Association officials to have said that the largest depositors of illegal foreign money in Switzerland are Indian.^[1][20] These allegations were later denied by Swiss Bankers Association as well as the central bank of Switzerland that tracks total deposits held in Switzerland by Swiss and non-Swiss citizens, and by wealth managers as fiduciaries of non-Swiss citizens.^[2][3][21]

James Nason of Swiss Bankers Association in an interview about alleged black money from India, suggests "The (black money) figures were rapidly picked up in the Indian media and in Indian opposition circles, and circulated as gospel truth. However, this story was a complete fabrication. The Swiss Bankers Association never said or published such a report. Anyone claiming to have such figures (for India) should be forced to identify their source and explain the methodology used to produce them."^[3][22]

In August 2010, the government revised the Double Taxation Avoidance Agreement to provide means for investigations of black money in Swiss banks. This revision, expected to become active by January 2012, will allow the government to make inquiries of Swiss banks in cases where they have specific information about possible black money being stored in Switzerland.^[23]

In 2011, the Indian government received the names of 782 Indians who had accounts with HSBC. As of December, 2011, the Finance Ministry has refused to reveal the names, for privacy reasons, though they did confirm that no current Members of Parliament are on the list. In response to demands from the Bharatiya Janata Party (BJP) opposition party for the release of the information, the government announced on 15 December that, while it would not publish the names, it would publish a white paper about the HSBC information.^[24]

According to White Paper on Black Money in India report, published in May 2012, Swiss National Bank estimates that the total amount of deposits in all Swiss banks, at the end of 2010, by citizens of India were CHF 1.95 billion (INR 92.95 billion, US$2.1 billion). The Swiss Ministry of External Affairs has confirmed these figures upon request for information by the Indian Ministry of External Affairs. This amount is about 700 fold less than the alleged $1.4 trillion in some media reports.^[2]

In February 2012, Central Bureau of Investigation (CBI) director A P Singh speaking at the inauguration of first Interpol global programme on anti-corruption and asset recovery said: "It is estimated that around 500 billion dollars of illegal money belonging to Indians is deposited in tax havens abroad. Largest depositors in Swiss Banks are also reported to be Indians". In a hint at scams involving ministers, Singh said: "I am prompted to recall a famous verse from ancient Indian scriptures, which says – यथा राजा तथा प्रजा. In other words, if the King is immoral so would be his subjects"^[4][25] The CBI Director later clarified in India's parliament that the $500 billion of illegal money was an estimate based on a statement made to India's Supreme Court in July 2011.^[6]

After formal inquiries and tallying data provided by banking officials outside India, the government of India claimed in May 2012 that the deposits of Indians in Swiss banks constitute only 0.13 per cent of the total bank deposits of citizens of all countries. Further, the share of Indians in the total bank deposits of citizens of all countries in Swiss banks has reduced from 0.29 per cent in 2006 to 0.13 per cent in 2010.^[2]

The through the Investigation Division of the Central Board of Direct Taxes released a White Paper on Black Money giving the Income Tax Department increased powers.^[26]

2015 HSBC leaks

In February 2015, Indian Express released the list of 1195 Indians account holders and their balances for the year 2006-07 in HSBC's Geneva branch. The list was obtained by French newspaper Le Monde and included the names of several prominent businessmen, diamond traders and politicians.^[27] The number of Indian HSBC clients is roughly double the 628 names that French authorities gave to the Indian Government in 2011.^[28] Indian government said it will probe into this matter.^[29] The balance against the 1195 names stood at ₹25,420 crore (US$3.8 billion).^[30]

The list which had names of dictators and international criminals, was simultaneously published by news organisations in 45 countries including The Guardian, UK; Haaretz, Israel; BBC, London.^[31] HSBC had helped its clients evade taxes^[32] and said in a statement that "standards of due diligence were significantly lower than today."^[33]

Domestic black money

Indian companies are reportedly misusing public trusts for money laundering. India has no centralized repository— like the registrar of companies for corporates—of information on public trusts.^[34]

SIT on black money

Noted jurist and former law minister Ram Jethmalani along with many other well known citizens filed a Writ Petition (Civil) No. 176 of 2009 in the Supreme Court of India (SC) seeking the court's directions to help bring back black money stashed in tax havens abroad and initiate efforts to strengthen the governance framework to prevent further creation of black money.^[35]

In January 2011, the SC asked why the names of those who have stashed money in the Liechtenstein Bank have not been disclosed.^[36] The court argued that the government should be more forthcoming in releasing all available information on what it called a "mind-boggling" amount of money that is believed to be held illegally in foreign banks.^[37]

The SC on 4 July 2011, ordered the appointment of a Special Investigating Team (SIT) headed by former SC judge BP Jeevan Reddy to act as a watch dog and monitor investigations dealing with the black money. This body would report to the SC directly and no other agency will be involved in this. The two judge bench observed that the failure of the government to control the phenomenon of black money is an indication of weakness and softness of the government.^[38]

The issue of unaccounted monies held by nationals, and other legal entities, in foreign banks, is of primordial importance to the welfare of the citizens. The quantum of such monies may be rough indicators of the weakness of the State, in terms of both crime prevention, and also of tax collection. Depending on the volume of such monies, and the number of incidents through which such monies are generated and secreted away, it may very well reveal the degree of "softness of the State."

— Justice B Sudershan Reddy and Justice S S Nijjar, Supreme Court of India, Source:^[35]

The government subsequently challenged this order through Interlocutory Application No. 8 of 2011. The bench (consisting of Justice Altamas Kabir in place of Justice B Sudershan Reddy, since Justice Reddy retired) on 23 September 2011 pronounced a split verdict on whether government plea is maintainable. Justice Kabir said that the plea is maintainable while Justice Nijjar said it is not. Due to this split verdict, the matter will be referred to a third judge.^[39][40]

In April 2014, Indian Government disclosed to the Supreme Court the names of 26 people who had accounts in banks in Liechtenstein, as revealed to India by German authorities.^[41]

On 27 October 2014, Indian Government submitted name of three people in an affidavit to the Supreme Court who have black money account in foreign countries.^[42] But on the very next day, Supreme Court of India orders centre Government to reveal all the names of black money account holders which they had received from various countries like Germany. The honorable bench of the Supreme court also asked the Centre not to indulge in any kind of probe rather just pass the names to them and Supreme court will pass the order for further probe.^[43]

But the facts were the other way round, as the clarification affidavit filed by the Finance Ministry on October 27 revealed.^[44] The affidavit asserted that a complete list of cases where information had been obtained from the German and French governments, with the status of the action taken by the government was submitted by the Central Board of Direct Taxes on June 27. It added that the CBDT officials also met and briefed the SIT on the status of the cases, background of the information received, non-sharing of information by Swiss authorities, and constraints faced by the government and alternative methods of securing account details.^[45]

On 12 May 2015, Ram Jethmalani attacked Modi Government for failing to bring back the Black money as was promised before Election.^[46][47][48]

On 2 November 2015, HSBC whistleblower Herve Falciani said he is willing to "cooperate" with the Indian investigative agencies in black money probe but would need "protection". Prashant Bhushan and Yogendra Yadav furnished a letter written by Falciani on 21 August 2015, to Justice (retd) M B Shah, who is heading the SIT on black money.^[49][50] Under the supervision of the SIT the I-T department has recovered just around Rs 3,500 crore from some of the account holders and expected to recover a total of 10000 crore till March 2015.^[51]

Double taxation agreements

Indian Government has repeatedly argued before the Court that it cannot divulge the names. It has further argued that the privacy of individuals would be violated by the revelation of data. These arguments are only designed to stall the revelation of names of some favoured entities. BJP leader Dr.Subramanian Swamy said that DTA was not a valid reason for not revealing names of the accounts of Indians held in foreign banks.^[52][53]

DTAA is about declared white incomes of entities so that tax may be levied in one or the other country and not in both. Black income is not revealed in either of the two countries so there is no question of double taxation. Further, this data would not be available to either of the two countries to be exchanged. It is no wonder then that till date, no data has been supplied to India by any of the countries with which this treaty has been signed. In brief, DTAA is about white incomes and not black incomes, so it is disingenuous to say that in future no data would be given to us if names are given to courts.^[54]

Criticism of government

Different governments have tried to stall SIT.^[55] A bank has been revealed to have acted like a hawala operator. Other MNC and private Indian banks are also suspected to have indulged in these activities^[54]

The HSBC Black money whistleblower Herve Falciani, who works with a team of lawyers and experts, told NDTV that there is "1000 times more information" available for investigators and there are a lot of business procedures to be unveiled to them. "It's just up to (the Indian administration). They can contact us," he said. He said India was given only 2 MB of the 200 GB of data. "If India asks tomorrow we will send a proposal tomorrow," he added.^[56] On 2 November 2015, Herve Falciani told in a press conference organised by Prashant Bhushan and Yogendra Yadav that, India has not used information on those illegally stashing away black money in foreign bank accounts, and still millions of crores were flowing out.^{[49] [57][58]}

Hasan Ali case

Hasan Ali Khan was arrested by Enforcement Directorate and the Income Tax Department on charges of stashing over 360 billion rupee in foreign banks.^[59] ED lawyers said Khan had financed international arms dealer Adnan Khashoggi on several occasions.^[60]

However, media sources claimed this case is becoming yet another perfect instance of how investigative agencies like Income Tax Department go soft on high-profile offenders.^{[61][62][63][64]} Ali's premises were raided by ED as far back as 2007. According several news reports, the probe against him has proceeded at an extremely slow pace and seems to have hit a dead end.^{[65][66][67][68][69][70]}

India Today claimed that it had verified a letter confirming the US$8 billion in black money was in a Swiss bank UBS account, and the government of India too has verified this with UBS.^[71]

The Swiss bank UBS has denied Indian media reports alleging that it maintained a business relationship with or had any assets or accounts for Hasan Ali Khan accused in the US$8 billion black money case. Upon formal request by Indian and Swiss government authorities, the bank announced that the documentation supposedly corroborating such allegations were forged, and numerous media reports claiming US$8 billion in stashed black money were false.^[72][73] India Today, in a later article, wrote, "Hasan Ali Khan stands accused of massive tax evasion and stashing money in secret bank accounts abroad. But the problem is that the law enforcement agencies have precious little evidence to back their claims. For one, UBS Zurich has already denied having any dealings with Khan."^[74]

Estimates of Indian black money

As Schneider estimates, using the dynamic multiple-indicators multiple-causes method and by currency demand method, that the size of India's black money economy is between 23 and 26%, compared to an Asia-wide average of 28 to 30%, to an Africa-wide average to 41 to 44%, and to a Latin America-wide average of 41 to 44% of respective gross domestic products. According to this study, the average size of the shadow economy (as a percent of "official" GDP) in 96 developing countries is 38.7%, with India below average.^[75][76][77]

Public protests and government's response

Further information: 2011 Indian anti-corruption movement and Corruption in India

In May 2012, the Government of India published a white paper on black money. It disclosed India's effort at addressing black money and guidelines to prevent black money in the future.^[2]

India has following institutions already preventing, finding and investigating underground economy and black money.^[2]

Swami Ramdev, popular as Baba Ramdev is a Hindu swami and a yoga guru. He is a social activist and has staged protests against corruption in the country. He has been associated with the 2011 Indian anti-corruption movement and also started his Bharat Swabhiman first phase Yatra with the pledge of disease free India and simultaneously to eradicate corruption and bring back black money from the birthplace of Sri Krishna, Dwarika Gujarat on 2 September 2010. This yatra has been through 25 states of India like Rajasthan, Jammu and Kashmir, Himachal Pradesh, Haryana, Uttar Pradesh, Jharkhand, Chhattisgarh, Orrisa, Assam, West Bengal, Maharashtra, Meghalaya and ends at the city of Mahakal Ujjain. On 20 September Swami Ramdev had started second phase of his yatra from the fort of Jhansi. More than 1 lakh people of Jhansi city had taken pledge to fight against corruption. On 30 January 2011, a written representation of people from over 600 districts was sent to the Prime Minister which contained demand of bringing back black money stashed abroad & putting an end to corruption, which was supported by all major social, spiritual groups and organizations of the nation. Ramdev himself sent the signed representation to the President of India through the District Magistrate of Bilaspur. Soon after on 27th Feb, 2011 he, organized a huge rally in Ramlila Maidan, Delhi which was attended by lakhs of people after which a written representation was handed over to the President to bring back black money, on the day which marks the birth anniversary of freedom fighter Shaheed Chandrasekhar Azad.^[78][79][80]

Central Board of Direct Taxes: is a statutory authority functioning across India under the Central Board of Revenue Act of 1963. The Member(Investigation) of the CBDT, exercises control over the Investigation Division of the Central Board of Direct Taxes. The Member is a high ranking IRS officer of the rank of Special Secretary to the Government of India. The Member controls the:

·        Chief Commissioner of Income Tax Central.

·        Directorate General of Income Tax Investigation

·        Directorate of Income Tax Intelligence and Criminal Investigation.

The Director General of Income Tax (International Taxation) is in charge of taxation issues arising from cross-border transactions and transfer pricing. This organisation has been in operation for nearly 50 years, is primarily responsible for combating the menace of black money, has offices in more than 800 buildings spread over 510 cities and towns across India and has over 55,000 employees and even employees who are deputed from premier police organisations to aid the department.

Enforcement Directorate: was established in 1956. It administers the provisions of the Foreign Exchange Regulation Act of 1973 (FERA), later updated to Foreign Exchange Management Act of 1999 (FEMA). It is entrusted with the investigation and prosecution of money-laundering offences, confiscation of the proceeds of such crime, matters related to foreign exchange market and international hawala transactions. This India-wide directorate, with focus on major financial centres in India, has 39 offices and 2000 employees.

Financial Intelligence Unit: has been operating as a separate investigative entity since 2004. This government organisation for receiving, processing, analyzing and disseminating information relating to suspect financial transactions. It shares this information with other ministries, enforcement and financial investigative agencies of state and central government of India. Every month, it routinely examines about 700,000 investigative reports and over 1,000 suspect financial transaction trails to help identify and stop black money and money laundering.

Central Board of Excise and Customs and Directorate of Revenue Intelligence: is the apex intelligence organisation responsible for detecting cases of evasion of central excise and service tax. The Directorate develops intelligence, especially in new areas of tax evasion through its intelligence network across the country and disseminates information across Indian government organisations by issuing Modus Operandi Circulars and Alert Circulars to apprise field formations of the latest trends in tax evasion. It routinely arranges for enforcement operations to research into the evasion of duty and taxes. The Directorate of Revenue Intelligence functions under the CBEC. It is entrusted with the responsibility of collection of data and information and its analysis, collation, interpretation and dissemination on matters relating to violations of taxation and customs law. The organisation has thousands of employees and is divided into seven zones all over India. It maintains close liaison with the World Customs Organisation, Brussels, the Regional Intelligence Liaison Office at Tokyo, INTERPOL, and foreign customs administrations.

Central Economic Intelligence Bureau: functions under India's Ministry of Finance. It is responsible for coordination, intelligence sharing, and investigations at national as well as regional levels amongst various law enforcement agencies to prevent financial crimes, generation and parking of black money and illegal transfers. This organisation maintains constant interaction with its Customs Overseas Investigation Network (COIN) offices to share intelligence and information on suspected international financial transactions. The COIN offices gather evidence through diplomatic channels from the foreign custom offices and other foreign establishments to establish cases of mis-declaration to help identify and stop tax evasion and money laundering.

In addition to the primary agencies listed above, India has 10 additional separate departments operating under the central government of India - such as National Investigation Agency and National Crimes Record Bureau - to help locate, investigate and prosecute black money cases. Discovery and enforcement is also assisted by India's Central Bureau of Investigation and state police.^[2]

In addition to direct efforts, the Indian central government coordinates its efforts with state governments with dedicated departments to monitor and stop corporate frauds, bank frauds, frauds by non-banking financial companies, sales tax frauds and income tax-related frauds.

MC Joshi committee on black money

After a series of ongoing demonstrations and protests across India, the government appointed a high-level committee headed by MC Joshi (the then CBDT Chairman^[81]) in June 2011 to study the generation and curbing of black money. The committee finalised its draft report on 30 January 2012. Its key observation and recommendations were:^[82]

1.    The two major national parties (an apparent reference to Indian National Congress, BJP) claim to have incomes of merely ₹5 billion (US$74 million) and ₹2 billion(US$30 million). But this isn't "even a fraction" of their expenses. These parties spend between ₹100 billion (US$1.5 billion) and ₹150 billion (US$2.2 billion) annually on election expenses alone.^[82]

2.    Change maximum punishment under Prevention of Corruption Act from the present 3, 5 and 7 years to 2, 7 and 10 years rigorous imprisonment and also changes in the years of punishment in the Income Tax Act.^[82]

3.    Taxation is a highly specialised subject. Based on domain knowledge, set up all-India judicial service and a National Tax Tribunal.^[82]

4.    Just as the USA Patriot Act under which global financial transactions above a threshold limit (by or with Americans) get reported to law enforcement agencies, India should insist on entities operating in India to report all global financial transactions above a threshold limit.^[82]

5.    Consider introducing an amnesty scheme with reduced penalties and immunity from prosecution to the people who bring back black money from abroad.^[82]

Proposals to prevent Indian black money

History

Even in colonial India, numerous committees and efforts were initiated to identify and stop underground economy and black money with the goal of increasing the tax collection by the British Crown government. For example, in 1936 Ayers Committee investigated black money from the Indian colony. It suggested major amendments to protect and encourage the honest taxpayer and effectively deal with fraudulent evasion.^[85]

Current Proposals

In its white paper on black money, India has made the following proposals to tackle its underground economy and black money.^[2]

Reducing disincentives against voluntary compliance

Excessive tax rates increase black money and tax evasion. When tax rates approach 100 per cent, tax revenues approach zero, because higher is the incentive for tax evasion and greater the propensity to generate black money. The report finds that punitive taxes create an economic environment where economic agents are not left with any incentive to produce.

Another cause of black money, the report finds is the high transaction costs associated with compliance with the law. Opaque and complicated regulations are other major disincentive that hinders compliance and pushes people towards underground economy and creation of black money. Compliance burden includes excessive need for compliance time, as well as excessive resources to comply.

Lower taxes and simpler compliance process reduces black money, suggests the white paper.^[2]

Banking transaction tax

Arthakranti, Pune-based think-tank has outlined policy prescription that involves replacement of most direct and indirect levies with a banking transaction tax and de-monetisation of currency notes of Rs 500 and Rs 1,000 to help prevent Indian black money, ease inflation, improve employment generation and also lower corruption.^[86][87]

Economic liberalisation

The report suggests that non-tariff barriers to economic activity such as permits and licences, long delays in getting approvals from government agencies are an incentive to proceed with underground economy and hide black money. When one can not obtain a licence to undertake a legitimate activity, the transaction costs approach infinity, and create insurmountable incentives for unreported and unaccounted activities that will inevitably generate black money. The successive waves of economic liberalisation in India since the 1990s have encouraged compliance and taxes collected by the government of India have dramatically increased over this period. The process of economic liberalisation must be relentlessly continued to further remove underground economy and black money, suggests the report.^[2]

Reforms in vulnerable sectors of the economy

Certain vulnerable sectors of Indian economy are more prone to underground economy and black money than others. These sectors need systematic reforms. As example, the report offers gold trading, which was one of the major sources of black money generation and even crime prior to the reforms induced in that sector. While gold inflows into India have remained high after reforms, gold smuggling is no longer the menace as it used to be. Similar effective reforms of other vulnerable sectors like real estate, the report suggests can yield a significant dividend in the form of reducing generation of black money in the long term.

The real estate sector in India constitutes about 11 per cent of its GDP. Investment in property is a common means of parking unaccounted money and a large number of transactions in real estate are not reported or are under-reported. This is mainly on account of very high levels of property transaction taxes, commonly in the form of stamp duty. High transaction taxes in property are one of the biggest impediments to the development of an efficient property market. Real estate transactions also involve complicated compliance and high transactions costs in terms of search, advertising, commissions, registration, and contingent costs related to title disputes and litigation. People of India find it easier to deal with real estate transactions and opaque paperwork by paying bribes and through cash payments and under-declaration of value. Unless the real estate transaction process and tax structure is simplified, the report suggests this source of black money will be difficult to prevent. Old and complicated laws such as the Urban Land Ceiling Regulation Act and Rent Control Act need to be repealed, property value limits and high tax rates eliminated, while Property Title Certification system dramatically simplified.^[2]

Other sectors of Indian economy needing reform, as identified by the report, include equity trading market, mining permits, bullion and non-profit organisations.

Creating effective credible deterrence

Effective and credible deterrence is necessary in combination with reforms, transparency, simple processes, elimination of bureaucracy and discretionary regulations. Credible deterrence needs to be cost effective, claims the report.^[2] Such deterrence to black money can be achieved by information technology (integration of databases), integration of systems and compliance departments of the Indian government, direct tax administration, adding data mining capabilities, and improving prosecution processes.

Supportive measures

Along with deterrence, the report^[2] suggests public awareness initiatives must be launched. Public support for reforms and compliance are necessary for long term solution to black money. In addition, financial auditors of companies have to be made more accountable for distortions and lapses. The report suggests Whistleblower laws must be strengthened to encourage reporting and tax recovery.

Amnesty

Amnesty programmes have been proposed to encourage voluntary disclosure by tax evaders. These voluntary schemes have been criticized on the grounds that they provide a premium on dishonesty and are unfair to honest taxpayers, as well as for their failure to achieve the objective of unearthing undisclosed money. The report^[2] suggests that such amnesty programmes can not be an effective and lasting solution, nor one that is routine.

International enforcement

India has Double Tax Avoidance Agreements with 82 nations, including all popular tax haven countries. Of these, India has expanded agreements with 30 countries which requires mutual effort to collect taxes on behalf of each other, if a citizen attempts to hide black money in the other country. The report^[2] suggests that the Agreements be expanded to other countries as well to help with enforcement.

Modified Currency Notes

Government printing of such legal currency notes of highest denomination i.e.; ₹1,000 (US$15) and ₹500 (US$7.40) which remain in the market for only 2 years. After a 2-year period is expired there should be a one-year grace period during which these currency notes should be submitted and accepted only in bank accounts. Following this grace period the currency notes will cease to be accepted as legal tender or destroyed under the instructions of The Reserve Bank of India. As a consequence turning most of the unaccountable money into accountable and taxable money.

Corruption in education

Further information: Capitation fee

Many institutions that are meant to provide education have been promoting corruption, and education has been a major contributor to domestic black money in India. Single common entrance exams for various professional courses (medicine and allied, engineering and allied, business management and allied),^[88] releasing the audited financial statements of the trusts/not-for-profit organizations that own these educational institutions in the public domain (website, a common e-repository), stoppage of government funds from AICTE, DST etc. to such institutions, are some of the suggestions to reduce the generation of black money in education.^[89]

Withdrawal of currency notes of higher denomination

There has been suggestions to withdraw currency notes of higher denominations such as the 1000 rupee notes.^[90][91][92] While this can lead to an increase in printing costs for RBI, the opinion is that that these costs should be weighed against the misuse of high-value notes.^[93]”

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               Out of the total quantum of black money pertaining to India, the major portion lies abroad.  Out of that which is in the Indian territory, major portion is held in real estate and in the form of gold and ornaments, gems or artefacts.

          Black money is laundered other than through trusts, as seen in the above write up, also by means of wrongly availing tax exemptions, fudging figures for the purpose of taxation and also misdeclarations in the returns.  One major form of misdeclaration is showing the uncounted income as ‘Agricultural Income’, which is exempt from Income Tax.

          By demonetisation, none of the above will get fished out.  They remain as they are, white as a dove.  The amounts involved with regard to wrong declaration, wrong exemption used, etc, wherever proceedings are pending, will also fall only under the category of grey money and not black money.

          Thus the actual size of the black money, held without being accounted at all (even without mis declaration, etc) and in the form of hard cash is miniscule.

          Now our entire exercise is stated to be targeted against this miniscule amount.

          Now, presuming that after all this exercise, that amount is brought to book, have the sources for generation of such black money been plugged? 

          After this purge, will further generation of this type of black money stop?

          If yes, then the question is why this exercise, if further generation of such black money will get stopped and why the various agencies cited in the write up above cannot deal with identifying and extinguishing the current black money?  Why a carpet bombing, instead of a surgical strike?

          If the answer is no, then what purpose is this entire exercise going to serve?

          To say that the steps to curb subsequent generation of black money will be taken subsequently, is a laughable one since, when the citizens of the country are put to such a tough tread mill, the loop holes for further non-generation of graft and black money should be in place.  The exercise cannot be repeated again and again.

          The next question is whether hoarding 2000 Rs notes is going to be more difficult than hoarding 1000 Rs or 500 Rs? 

          Are the new notes fake proof? (Of course on this only time will have to tell.)  But what is commonly seen is that technology has no patriotism.  It serves in the hands of any one caring to use it.  The urge to exploit it completely with a killer instinct is usually seen at the hands of the terror groups.

          Then what is the cost of this entire exercise –on the RBI for printing the new currency, on the banks and other institutions in distribution of the same, on the market in for the form of strain on the entire supply-demand-production-chain and upon the common man, whose private savings have been snatched away and he is at the mercy of the government to get it back.

What actually is the definition of ‘Demonitisation”?

          As per Investopedia “Demonetization is the act of stripping a currency unit of its status as legal tender. Demonetization is necessary whenever there is a change of national currency. The old unit of currency must be retired and replaced with a new currency unit.”

               Now, this could be done in a phased manner, as suggested in the wikepedia write up  with a time frame, giving each currency an expiry date, or could be done at a stroke, as has been attempted in India now.  But in India, it has not been completely taken away because, there have been exceptions granted for use of old notes.  Thus, the current exercise is caught between the two stools.

          There is absolutely no guarantee that the exemptions will themselves not be misused for laundering the black money held in hard currency. 

The role of the banks, particularly the new generation private banks in enabling their prime customers to launder the notes cannot be ruled out. The role of some of such banks have been mentoned in the write up above.

               The passing on even the fake currencies into the bank during the mele, and getting new ones in their place also cannot be ruled out.

          Further, by withdrawing the currency amount for 86% held by the public at one go, the pressure to replace it has been enormous and no light appears at the end of the tunnel till now.

          As could be seen from the definition, demonitisation means that the old currencies are replaced with new ones. In the present context of India, they have not been replaced fully.  Instead, people have been forced to deposit them in accounts in the banks.  Since the new notes are not yet supplied to the extent of demonitisation, there are curbs on the withdrawals from the banks.

          If the banks, for any reasons of their own, had put such curbs, it would have attracted legal action.  Now, the Government is giving cover for such a ‘Customer unfriendly act’, in the name of ‘national requirement’.

          I am not going into the fallacy of the expectation to re-engineer the entire country (largely living in rural areas, without banks and ATMs) to a plastic-card-economy and reduce cash transactions, as the Government is understood to have told the Supreme Court in an affidavit today (24.11.2016) as one of the objectives of this move.

          But one thing that is clear from the Prime Minister’s statement a couple of days ago, that within 10 days, more than 5 lakh crores of money has come into the banks and that it can be used for development, lets the cat out of the bag.

          It was Shri. S.Gurumurthy, the Sangh Parivar’s own economist who had stated that one of the prime reasons for our country withstanding the global melt down was the fact that in India, we have the concept of family savings.

          Now, in the name of demonitisitation, by forcing people to deposit all their private savings, held in cash, into the banks, the Government has laid it’s hand on this huge capital. They proclaim that this can be used for development activities, as if the entire amount was black money and they have caught the loot.

          The sops given by them for this is that the interest rates will be lowered. 

          Now, who are going to be benefitted by the lowered interest rates?

Not the ordinary man, who does not easily get any loans because he does not have any collaterals to provide.  It is the already rich who can provide any security and do business at the risk of the other man’s money (in this case the poor man’s money).

For the middle class, pensioners and old people, who do not want to take the risks of investing in share market, already the interest rates are so low that they still hold the amounts in the banks only out of fear of keeping them at their homes and in the fond hope that the amounts will be available in times of emergency.  

And even they spend sleepless nights on learning that the debit card  security is compromised.  So much regarding the security of the cash lying in banks in our names.

Now, whether the ordinary man is entitled to hold cash as his savings?  

The daily/weekly wage earners, whose working hours start before the banking hours and end only after the banks close for the day, who work on all 6 days of the week, if not 7, who are not literate and who are not well versed with the use of ATMs etc, who do not go to departmental stores to purchase their daily requirements and swipe the cards, definitely feel secured, to hold their savings in cash – for their day to day expenses, emergencies and functions in the families.  They are kept in old trunk boxes, under the pillows or in tin boxes in the kitchen. Since each member of the family goes for work, each of their savings are thus kept.

It is on this income that the Maharajah of India has set his eyes on.

It is this sense of securely that is being snatched away, without provision of any convincing substitute.

And sitting in the cool comforts of air conditioned cabins, we have the galls to ask, why 4500 rupees is not enough for a person?  ‘Why the same person should come back again? -  put a mark on his finger.  Let him depost his entire amount in the bank and withdraw it as others do.’

The miniscule number of persons who had been foolish enough to hold their illegal money in cash (without investing in the methods explained earlier) would have by this time used the loopholes in the law to launder them or convert them into gold or pass them on to benamies in some form or other.  They will not be there in the queues of the banks and post offices.

 It is the wage earners who did not depend upon the banking system who have been forced to queue up.  They do not want to speak out because they are afraid that their bread would be lost.  The small amounts, precious as their lives, have to be at any cost, got converted into the new legal tender. For that, they will endlessly stand in queues, pay any amount as commission, or stand any insult.

And that patience will be termed as their consent – for nation building.