It Could End Womb-To-Tomb Corruption

When Prime Minister Narendra Modi announced the demonetization drive, Prof R Vaidyanathan at IIM-Bangalore was not surprised. For, in 2011, the professor, who teaches finance and accounting, had alerted the BJP about the need to do away with Rs 500 and Rs 1,000 notes if India had to curb black money. Vaidyanathan, who held several discussions with National Security Adviser Ajit Doval on demonetization, says probity in public life should be the final objective.
You played a pivotal role in the decision to weed out black money. When did this idea occur to you?
I’d seen cash being seized from ambulances and police vans during elections and all were Rs 500 and Rs 1,000 notes.I realized that large denomi nation notes was the easy way of storing black money. We saw that more large denominations were getting circulated and it was dangerous.
Are you confident the government can get rid of black money?
In 2016, the total currency in circulation is Rs 17 lakh crore and Rs 500 and Rs 1,000 notes account for Rs 14 lakh crore.Let’s see how much will be put back into banks; that’ll tell us the amount of black money.
What next?
The quantum of cash an individual can hold should be defined. Today, there is no bar; we’re only monitoring transactions, not how much is stashed at home. The incometax department can raid me only if the money with me is beyond my known sources of income. There should be a restriction on how much cash an individual can have. This should not apply to corporates if their accounts are in place.
Doesn’t the Rs 2,000 note defeat the purpose? Will people not start hoarding it?
The government and RBI would have considered this and there will be safeguards. The Rs 2,000 currency plan has been there for 6-7 months.
The government is talking of a cashless economy. Won’t this inconvenience the majority outside the ambit of banks?
We’re already moving away from traditional transactions.Five years from now, I don’t visualise banks; mobile phones will be the banks. The traditional brick and mortar bank will be gone. There will be incovenience initially . Credit rating and monitoring will be easier. In the next 5-10 years, I visualise traders will also adopt modern techniques of transactions.
What is the quantum of black money in India?
Approximately 5% -6% of the GDP. Last year, the GDP was Rs 125 lakh crore, so black money would be Rs 6 lakh crore. All this needn’t be in Rs 500 and Rs 1000 notes. It could be in land and gold too. That won’t be revealed through this demonetisation. A substantial amount of corruption is in the government sector; it’s wombto-tomb corruption -from birth certificate to death certificate, we pay bribes.
There was talk initially about recovering money stashed abroad but nothing concrete has happened…

I hope that’ll be the next focus.I should be able to account for my money in Swiss banks.There should be a law where any money kept by an Indian citizen in a foreign bank belongs to country if she cannot explain the money source.

 What is the target -black money, fake currency or terror funding?

All three. Law-abiding, middleclass citizens should not panic.It’s aimed at political parties and government servants with ill-gotten wealth. We must have patience and join hands with the government in cleansing public life. We must stop being cynical.

 

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