Sunday 29 March 2015

For Modi, North Block is what will matter in 2019 (Sunday Guardian)

M.D Nalapat is the Editorial Director of The Sunday Guardian.

The Justice Shah Special Investigation Team (SIT) was formed by Team Modi on the lines mentioned in a Supreme Court verdict, and has sat several times since the time it was set up. Lawyers, not unexpectedly, usually regard existing or new laws as a panacea for societal ailments, a view embraced with fervour by television anchors, and press reports indicate that the many sittings of the SIT have generated a flurry of recommendations designed to tighten further legal screws on delinquent behaviour. Given the number of laws in India (some of which have their roots in the period when Aurangzeb was ruler of Delhi), many may find it difficult to understand precisely how yet another set of laws would improve the situation, especially those where the onus is on the citizen to prove his or her innocence of charges levied by officials acting at the behest of business or political interests. Certainly, the implementation of the J.S. Verma recommendations, which added to existing laws on violence against women, has not improved the situation, while making it a relatively simple matter to file a case against any male imprudent enough to enter into any form of communication or contact with the opposite sex.
In India, our colonial-era laws are often used to collect bribes in order to fund the education of wards abroad, or to build a residence as opulent as that into which a former Principal Secretary to a former Prime Minister moved after demitting his job, while he had earlier been staying at a modest apartment in Vasant Kunj. His offspring too moved into much grander places of residence, in the way such well-born offspring are frequently known to do, naturally to silence from those government agencies tasked to track precisely such details and penalise those guilty of infringing the maze of law on the subject.
Apart from information which accidentally fell into its hands (and into that of several other governments), thus far the government seems to have come up with little in the way of retrieving moneys illegally placed abroad by citizens of this country. Expecting such individuals to have foreign bank accounts in their own name seems a trifle naive. Almost all those with cash kept abroad would have placed such money in the accounts either of relatives or friends, who have been made NRIs for the purpose, or would have availed of the legal and accountancy services abundant in offshore tax havens to create a chain of nominations for accounts whose secrecy would consequently be close to impossible to penetrate. As for those with accounts in the US, the gap of several months between news of US authorities offering data on the bank accounts of nationals to their respective countries and the actual signing of the protocol with the US government was sufficient to allow such account holders to have cleared out such accounts, thereby ensuring that all that the Government of India will finally come up with as a consequence of the Black Money (in foreign countries) law will be the same as will be dredged up by the Shah SIT, which is a derisory figure. And by levying confiscatory taxes and penalties on the funds disclosed, the government has ensured that the new law's success rate (in bringing back money illegally deposited abroad) will be as meagre as that generated from the sittings of the Shah SIT.
Fortunately, North Block mandarins have already declared that the Black Money law was "not a revenue raising measure". If the purpose was not to raise funds by getting back money illegally kept abroad, perhaps the objective of a law mentioned in this year's Budget speech was to sharpen the drafting skills of the North Block bureaucracy. By the time the Uttar Pradesh Assembly polls roll by in 2017 and the Lok Sabha polls two years later, should the moneys brought back by the Government of India be a piffling amount, the impact will be substantial on the political fortunes of Prime Minister Modi, whose party was elected to power because of the confidence of voters that he would succeed in bringing back vast sums of such cash. His success or lack thereof in this will be a major factor in future election campaigns. The problem is that those steeped for decades in the present colonial system of governance may find it difficult to change their ways. As was the case with the British Raj, the "stick" is usually outsize, while the "carrot" is shrivelled and inedible. Take the case of the recent increase in Service Tax, a measure that has had a devastating effect on employment generation in India. Rather than raising the rate even further, lowering it to at least 10% would have increased compliance and therefore collections, a fact that must be known to Prime Minister Narendra Modi, whose practical approach to governance in Gandhinagar is what has ensured his present stay at 7 Race Course Road. Unless he succeeds in changing the processes of governance in Delhi the way he did in Gujarat, for example, by ensuring the flow of hundreds of billions of dollars back to India from offshore banking havens and from international investors, what took place in Delhi is likely to be repeated elsewhere. More than the Ministry of External Affairs and even the Ministry of Defence in South Block, it is North Block — specifically the Ministry of Finance and the Ministry of Home Affairs — which will decide the result of the 2019 Lok Sabha polls.

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