Is Enough Being Done To Fight Economic Offences?

The fight against economic offences is still on, and the results are there to see, both in droves and trickles. There has been no letup in India government’s concerted efforts to cleanse the system for ensuring a bigger turnout of the fraudsters and defaulters to face the punishment and pay up.

The Central government in our country is perpetually at war against economic offences, year in and year out. At no point of time can it rest on its laurels even after having apprehended a large number of offenders in many big and small offences. Economic offences are committed ceaselessly somewhere or the other by individuals or well-established gangs. The instigating forces behind these unlawful acts are the base human emotions of greed and avarice. 

The probability factor of a non-existent fool-proof system gives rise to the surfacing of the human weakness to make money on the sly. The situation is made worse when officials, big or small, who form links in the government’s chain of command, succumb to the lure of money or other temptations or fall prey to threats and render the chain weak. The malady of human weakness afflicts equally the political figures in command of the campaigns and the members of the judiciary.  

Stringent Punishments Needed

Unlike in the totalitarian nations like China, where they have a zero-tolerance policy against crimes such as corruption or smuggling and also award summary execution, the system in India lacks stringent punishments. While this may speak well of the democratic system of governance and the high degree of human rights we have, ample leeway is allowed to the accused to get away from punishment in the absence of eyewitnesses or conclusive evidence. 

Both the public as well as the honest and upright officials do become dejected and even frustrated when a big-time offender goes scot-free, thanks to his money and muscle power. Consequently, the government can only win battles in the present system, with a victory in the war barely discernible in the distant horizon. The chinks in the armour are capable of making a cynic wonder if the war has actually been lost even before its commencement. 

The system is far from perfect but is not entirely bereft of honest political leaders with impeccable integrity and upright officials whose loyalty is beyond reproach. It would, of course, help if the rules are made stringent enough to enable handing out exemplary punishments to the offenders. The term economic offences bring within its ambit a wide range of unlawful acts of commission and omission relating to financial transactions. It includes seemingly simple acts of financial impropriety carried out in one’s daily life due to lack of knowledge of rules and goes on to cover deliberate acts of subversion of the nation’s security.

In simple terms, it all boils down to tax evasion and black money. The term black money does not just mean the vast sums of money stashed away in the overseas tax havens but all the money that is unaccounted and on which tax has not been paid. It includes the small amounts of money that change hands without proper receipts in market places, money generated by bribery, real estate transactions and drug peddling as well as the vast sums generated by smuggling, gun-running and human trafficking, just to name a few. Here, we are not even talking about the counterfeit currency notes printed by the enemies of the nation, although it definitely qualifies to be termed as black money.

Fight on Foreign Turf

In the backdrop of the above being the nature of the offences and the constraints faced by our country, the BJP-led NDA government lost no time in swinging into action to unearth and bring the black money home as soon as it assumed power in 2014. Among the earliest decisions the Union government took on its first day in office was to institute a Special Investigation Team (SIT) for this purpose. The SIT was mandated to probe into all the cases of black money. At that point of time, the Swiss authorities had revealed that the black money held by Indians in Switzerland amounted to US$2 billion.

In February 2012, Director of the Central Bureau of Investigation (CBI) had stated that the black money held by Indians in Switzerland and other overseas tax havens was around US$500 billion. However, in March 2018, the government disclosed that this estimated amount had swelled to Rs 300 lakh crore or US$1.25 trillion. That is more than 100 per cent appreciation in black money in a 6-year period! Bilateral agreements were entered into with countries for sharing of information regarding huge deposits of money in foreign banks. 

Fight on the Home Front

Furthermore, the Union government has pulled out all the stops to unearth black money within our country. In a daring move to bring black money into the banking system, the NDA government announced in 2016, demonetisation of all Rs 500 and Rs 1,000 banknotes, which then accounted for 86% of the total currencies in circulation. As a follow-up, the Income Tax Department came up with lists of people depositing huge sums in bank accounts in the post-demonetisation period. 

Subsequently, more than 1.5 lakh cases were selected for scrutiny by the Income Tax Department wherein large deposits were made into various banks across the country by depositors who could not explain the corresponding sources of income. Due to demonetisation, the scourge of fake currency notes that were circulating in the Indian economy also took a big hit. Moreover, demonetization, with the help of digitalization, even managed to bring down the value of banknotes in circulation by Rs 2.93 lakh crore. 

Meanwhile, the vengeful Pakistan government, which had allowed the printing of counterfeit Indian currency notes on its soil to be smuggled into India for financing its terror operations in the Kashmir valley, also suffered a massive blow. A huge cache of Rs 7 lakh crore of fake currencies printed in Pakistan, which the Islamic nation had planned to circulate in India, reportedly became worthless overnight. Thus, India struck rich with the demonetisation move! 

Our Central government had also announced a window for taxpayers to make a one-time declaration of their undisclosed assets abroad. Separately, two more windows were provided for taxpayers to declare concealed income. All these opportunities were availed of by taxpayers who came clean with over Rs 76,000 crore of undisclosed wealth and unaccounted income. 

The Benami Transactions (Prohibition) Amendment Act and General Anti-Avoidance Rules, as well as the Double-Taxation Avoidance Agreement, entered into with Mauritius, have provided the existing rules with more teeth to combat black money and money laundering. As a result of the NDA government’s invigorated drive to boost its anti-black money operations, the number of people who filed Income Tax Returns, saw an increase of 16 per cent in 2017-18 over the previous year. 

Pay Up Time The fight against economic offences is still on, and the results are there to see, both in droves and trickles. There has been no letup in India government’s concerted efforts to cleanse the system for ensuring a bigger turnout of the fraudsters and defaulters to face the punishment and pay up. The heat is being kept on with the big time offenders who have fled the shores of India after defaulting on their massive bank loans. It is a question of time before the chickens come home to roost!

(The article “Is Enough Being Done To Fight Economic Offences?” published in “Business World”)

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