We all have heard about political parties giving notes for votes but have you ever heard about banning notes and still gaining votes? The massive electoral victories that the Bharatiya Janata Party has witnessed after November 8, 2016, remains the biggest validation of the decision to discontinue the old notes of ₹500 and ₹1000 denomination in the fight against black money and corruption. To take a bold decision like this the political leadership requires extraordinary courage, conviction and honesty — qualities Prime Minister Narendra Modi has in abundance.
This government started its fight against corruption from day one when at the first Cabinet meeting a decision to set up a Special Investigation Team against black money was taken. The Supreme Court had directed the Union Government to set up a Special Investigation Team on July 4, 2011. The then UPA government not only delayed setting up the SIT but filed a petition before the Supreme Court stating that setting it up was untenable and not feasible. So the pain of the Congress Party and its allies can be understood.
Many money measuresThe Government has taken a slew of measures to eradicate black money:
In June, 2015, India joined the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information. With this India will be able to get data from nearly 94 member countries about assets of Indians held abroad including those entities where Indians are beneficial owners.
The Benami Transactions (Prohibition) Act was enacted in 1988 but in the ten years of UPA rule this Act was never notified as there was no intention to fight against corruption and black money. On August 11, 2016, the Narendra Modi government notified the Benami Transactions (Prohibition) Act after making suitable modifications to render the law more stringent.
The Prevention of Money Laundering Act 2002 and Foreign Exchange Management Act 1999 were amended to make the laws even more stringent to deal with the menace of black money.
The Government also gave a final opportunity to voluntarily disclose undisclosed incomes and offered tax amnesty for joining the mainstream.
A year later, I see a cleaner and more transparent Indian economy compared to what we had inherited from the UPA government. Some people have criticised the demonetisation effort claiming that 99 per cent of the cash in circulation has come to the banks. This criticism is totally unfounded. Every effort has been made to ensure that no poor or honest person was deprived of their honest holding. This does not mean that those who have deposited their ill-gotten wealth in banks will get any reprieve. On the contrary, the coming of all this cash in the banks allows us the opportunity to identify the names and sources of money and compare it with the tax records of the individual to ascertain whether that money was black or white.
Since the cash has come back into the banks, today we are able to trace 23.22 lakh suspicious bank accounts with deposits worth ₹3.68 lakh crore. 17.73 lakh PAN cardholders whose bank deposits do not match their tax records have been discovered. Rs. 16,000 crore did not return to the formal banking system. Undisclosed income worth Rs. 29,213 crore have been detected and admitted through searches and seizures.
What is even more startling is the fact that about 1.5 lakh (1,48,165) people deposited a total of around ₹5 lakh crore (₹4,92,207 crore) which is almost one-third the total currency deposited, with an average deposit size of ₹3.32 crore. Thus 0.00011 per cent of India’s population deposited almost 33 per cent of the total cash in the country. The estimated value of high denomination notes at the end of September 2017 is approximately ₹12 lakh crore.
If there was no demonetisation, the value of these notes would have been around ₹18 lakh crore today. Thus, the high denomination notes have been effectively brought down by about 6 lakh crore.
The registration of 2.24 lakh shell companies has been cancelled. Many of them had more than 100 bank accounts that saw heavy transactions during demonetisation. In fact one company had 2,134 bank accounts. Benami assets worth ₹1,626 crore have already been seized or attached so far.
Demonetisation has been helpful in curbing anti-national activities. It has dealt a heavy blow to the stone pelting industry in Kashmir valley and leftwing extremism. Post-demonetisation the Payment of Wages Act was amended to ensure direct payment of wages into bank accounts.
Fifty lakh new bank accounts were opened for workers. To extend the social security net to the employees, 1.01 crore employees were enrolled under provident fund and 1.3 crore under the Employees’ State Insurance Scheme.
Tax base growsThere has been unprecedented increase in the tax base. New tax-payers increased by 26.6 per cent, from 66.53 lakh in 2015-16 to 84.21 lakh in 2016-17. The number of e-returns filed increased by 27.95 per cent, from 2.35 crore in 2016-17 to 3.01 crore in 2017-18.
There has been an unprecedented growth in digital payments which will go a long way in developing a clean and honest economy. The digital payment transactions have increased from 220 crore transactions in 2013-14 to 1,076 crore transactions in 2016-17 indicating four-fold increase in three years. During the current year the number of transactions is expected to exceed 1,800 crore.
During September and October, the number of UPI/BHIM transactions nearly doubled over the previous month, showing nearly 100 per cent growth month on month. The number of BHIM/UPI transactions was 1.68 crore in August 2017, 3.10 crore in September 2017 and 7.69 crore in October 2017. Aadhaar Enabled Payment System (AePS) transactions have grown from 8.96 lakh transactions a day in November 2016 to 32.42 lakh transactions a day in October 2017.
E-wallet transactions have increased from 46.03 lakh transactions a day in November 2016 to 72.72 lakh transactions a day in August 2017. Debit card transactions have increased from 46.85 lakh transactions a day in November 2016 to 85.65 lakh transactions a day in August 2017. It is relevant to mention that the growth of BHIM/UPI and AePS has been far in excess of e-wallet growth, showing that government-owned payment systems are doing better than e-wallets.
Former Prime Minister Rajiv Gandhi and once said that if ₹1 was sent from the Centre, only 10 paise would reach the common man. Under the leadership of Prime Minister Modi, if we send ₹100 under Direct Benefit Transfer (DBT), then ₹100 goes directly into the bank account.
In the last three years the Government has saved more than ₹57,,000 crore which was pocketed by middlemen and fictitious claimants.
But one of the most important and defining impacts of demonetisation has been psychological. The honest and hardworking Indian today feels more empowered and confident while there is fear among wrongdoers, tax-evaders and hoarders. They are now afraid of evading taxes and amassing ill-gotten wealth and are complying with the tax regulations in larger numbers.
Post-demonetisation, the Indian economy is undergoing a transformation from informal to formal, from cash-driven to digital and from opaque to transparent.
So the next time you hear a political party criticising demonetisation, just list out the number of scams attached with that political party and you will understand the pain demonetisation inflicted upon them.
The writer is Union Minister for Law & Justice and Electronics & Information Technology