GAUTAM MUKHERJEE
Prime Minister Narendra Modi, in an impassioned campaign speech in Kanpur on December 19, some six weeks before a slew of State Assembly elections are expected, has put the cat amongst the pigeons. He hinted at motivated opposition to his moves, and not only for the ‘notebandi’. He said the Opposition also appeared to be against curbing cash funding of political parties, and holding all state elections together with the general elections once every five years.
The Prime Minister’s remarks on reforming political funding assume special significance, coming almost immediately after the Election Commission’ssuggestion of restricting anonymous cash donations to just Rs 2,000 each instead of the current cut-off at Rs 20,000.
Was the Prime Minister raising the topic because he may be thinking of amending the Income Tax law with regard to cash donations to political parties? That this will resonate very well with the public is certain as most analysis indicts political funding as the main generator and depository of black money.
In his Kanpur speech, Narendra Modi said that the Opposition disrupted the functioning of the entire Winter Session of Parliament so that no discussion on these important topics could take place.
By this he indicated his preference for consensus on such important changes, but with an opposition determined to back the status quo, the NDA may well have to use their majority in the Lok Sabha instead. Also, it will be easy to implement as a money bill amendment to the relevant section of the IT Act.
In the tumultuous session of Parliament just concluded, the government did manage to get a section added to the Income Tax Act, again as a money bill, with regard to people depositing black money after the demonetisation, and it being taxed at 50 per cent.
The Finance Ministry also recently reacted to false news reports that all political donations were tax free, and their deposits into the bona fide bank accounts of political parties, even in the discontinued notes, would not even be scrutinised.
The Government clarified that the tax exemption for political parties was in terms of the existing and relevant clauses in the Income Tax Act. But, even in this old provision, all political parties had to maintain books of accounts for every donation in cash or cheque, and records of its expenditure, duly certified by a chartered accountant.
Without this, the tax exemption would not apply. However, most commentators thought the special tax treatment to political parties and others like trusts and NGOs should now be done away with.
And the Prime Minister may now be voicing the peoples’ will, particularly with regard to the ending of cash donations to political parties.
The BJP has meanwhile also asked all its MPs to internally declare how much of the demonetised notes they had each deposited into their individual accounts after the cut-off date of November 8th. It appears, said the Prime Minister, that instead of working for the honest citizen and the poor, the Opposition was more interested in shielding the corrupt.
Prime Minister Modi said he was fully aware of the difficulties being faced by ordinary people all over the country due to shortage of new notes. He reiterated that the situation would begin to ease after December 30th , as promised by him, after a period of 50 days from the initial announcement. But while honest citizens were facing hardships, the Prime Minister acknowledged, the corrupt had managed to ‘purchase’ bank officials to convert their own money via the back door.
Here too, independent auditors have been called in at the urging of the RBI and the Finance Ministry to look into irregularities and pinpoint responsibility.
Prime Minister Modi positioned the BJP firmly against corruption in all its forms and thanked the people for their patience. But by mentioning the sold-out bankers in his speech, he implied that they would not be spared.
Clearly this is a time of transformation for substantial gains expected by the Government in the medium to long term. But benefits of demonetisation and related initiatives were meant for the honest citizenry only, said Modi.
He described many of the steps taken towards digital and cashless transactions and how the government is incentivising such usage both for the customer and the trader or service provider.
Modi was at pains to point out that the privileged and corrupt had been exposed by demonetisation and the coming days would reveal details of many of their financial misdeeds.
Many middlemen and facilitators such as jewellers are being caught with illicit currency and bullion every day by the Enforcement Directorate (ED), and other investigative agencies. None of the corrupt would be spared, Modi said. And by this, he meant the privileged political class, never targeted before, as well.
It is a political class that has been long used to shielding each other from the laws of the land. This, whether they were in power or not, in the government or the opposition. Or even if they had lost their elections now, but had been elected or nominated representatives of the people in the past.
There has always been a different application of the laws of the land for various sections. A lenient treatment was meted out to those who had status, influence, and wealth. A heavier application of the laws altogether was reserved for the poor and powerless. And there was a virtual immunity for the mighty politician, bureaucrat, or judge, in, or out of office!
If Modi succeeds in changing this ethos, via his multiple reforms, for a more egalitarian approach, he will certainly bring about a revolution of modernity and enduring progress.
The public at the Kanpur rally seemed ecstatic with what Modi was saying, but uncertain too, because this is all uncharted territory. Never in the history of independent India has such a cleansing been attempted.
The results to date are still to be fully clear, but judging from the enthusiastic crowds listening to the Prime Minister, people are most hopeful. A transformation of the Indian economy, its practices, and most importantly, the elected, nominated and official establishment, seems very much on the cards.
Reports are also coming in on substantial income tax reliefs for the middle classes in the forthcoming budget. While this may fall short of the abolition of direct taxes, it is nevertheless likely to be welcomed by all.
(The author is a senior columnist and commentator. Views are his own)