Editorial

A little gain after more pain

Income tax authorities on the trail of illegal acts of money exchange in commercial banks following the demonetisation are netting bigger fish than they may have expected. Investigations into the hoarding of new currency notes in the denomination of Rs. 2,000 have implicated not only mining barons and contractors, but also government officials and politicians. But with Wednesday’s searches in the residence and office premises of Tamil Nadu Chief Secretary P. Rama Mohana Rao (who has since been replaced) leading to the seizure of loads of cash and gold, expectations are that more high-profile personalities will come under the scanner of the enforcement agencies trying to grapple with diversion of currency notes by bank officials to those in need of converting their stockpiles of ill-gotten high-value currency notes. It is now clear that in the first few days after the demonetisation announcement, when government-imposed limits on withdrawals were in force, and people were queuing up before banks, several unscrupulous officials of both public sector and private banks conspired to convert demonetised notes to benefit black marketeers and corrupt public servants. Tamil Nadu and Karnataka have accounted for most of the seizures, running to more than a hundred crore rupees in new notes, but this is surely an all-India phenomenon. If other States have not witnessed such seizures, it is more likely due to failure on the part of the investigators.

Many of these cases would not have come to light but for the illegal exchange of old notes that the black money hoarders were forced to undertake following the demonetisation. Whatever the flaws in the implementation of the demonetisation process — and there are indeed many — the fact remains that it was the demonetisation drive that enabled the law enforcement agencies to get to some of the money-launderers. Although the seizures are huge, these are not much more than the tip of the proverbial black money iceberg. That black marketeers and corrupt public servants have been able to quickly change so much of their under-the-radar wealth into new currency notes easily explains how most of the notes out of the Rs.15.4 lakh crore that were in circulation before the demonetisation have been returned to banks a week before the December 30 deadline. By all accounts, deposits in the Pradhan Mantri Garib Kalyan Yojana for black money disclosure are not very significant. The Centre is therefore under pressure to prove that the demonetisation drive has been effective in unearthing black money. Substantial seizures from the corrupt is a way of signalling this, and it will be no surprise if the raids only intensify in the days to come.

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Printable version | Apr 12, 2021 9:49:34 AM | https://www.thehindu.com/opinion/editorial/A-little-gain-after-more-pain/article16926533.ece

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