Conduits for benami wealth

By Dr. Santosh Kumar Mohapatra*

Prime Minister Narendra Modi castigated the Congress party after crores of rupees (around ₹ 350 crores) in cash were seized from Congress Rajya Sabha MP and liquor baron Dhiraj Sahu in Odisha and Jharkhand during tax raids. He said, “The countrymen should look at the pile of these notes and then listen to the honest ‘speeches’ of their leaders. Whatever has been looted from the public, every penny will have to be returned, this is Modi’s guarantee”. Dhiraj Sahu, in his first reaction to the raids, said the ₹ 350 crore that was seized was the proceeds of his family liquor business and he can account for it.

Some of the high-value seizures in the past include one from 2019 when the GST Intelligence raided a Kanpur-based businessman and seized cash amounting to ₹ 257 crore and another instance where cash amounting to ₹ 163 crore was unearthed by the I-T department during searches against a road construction firm in Tamil Nadu in July 2018.

Confiscation of huge black money shows that demonetisation has failed abysmally to curb corruption and black money as those were the main objectives of draconian demonetisation. Actually, corruption and nepotism are gnawing the vitals of the economic system. It has not declined in Modi’s era, rather has increased as manifested by Corruption Perception Index. Underlining that some of the mechanisms that could help reign in corruption are weakening,

Transparency International ranked India at 85 among 180 countries in its Corruption Perception Index report 2023, down from 79 in 2016. This means, in curbing corruption, India is behind 84 countries out of 180 countries.

Our administration and global system are rigged to favour the rich corporates, investors, and powerful. They can evade taxes, indulge in corruption, nepotism with impunity and can keep their black money in tax havens such as Mauritius, Switzerland, Lichtenstein, British Virgin Islands, etc, where names are kept secret and tax is not paid and even if paid a very lowly amount.

In 2012, the CBI director had openly admitted that Indians are the largest depositors in banks abroad with about $500 billion illegal money stashed in tax havens. Now, it would have increased by big margin. The State of Tax Justice report said globally countries are losing a total of over $427 billion in taxes each year to international corporate tax abuse and private tax evasion. With regard to India, the report said $10.3 billion, is lost in taxes every year to global tax abuse. Of this, over $10 billion is lost to tax abuse by multinational corporations (MNCs) and $ 200 million to tax evasion committed by private individuals.

In 2016, around 500 Indian names were found in the Panama Papers who had alleged illegal properties worth around ₹20,078 crore. The names included several Bollywood personalities such as Amitabh Bachchan, his daughter-in-law Aishwarya Rai, actor Ajay Devgn, businessman Vijay Mallya, former Solicitor General of India, Harish Salve, along with the most wanted underworld figure Iqbal Mirchi, who was allegedly Dawood Ibrahim’s right-hand man.

Similarly, over 380 Indians have been named in the 2021 Pandora papers. From Cricket legend Sachin Tendulkar to actor Jackie Shroff and even entrepreneurs like Anil Ambani and Kiran Mazumdar Shaw’s name were entangled in Pandora papers. Stock markets are manipulated to raise the value of shares of some selected companies. For example, billionaire Gautam Adani added $5.6 billion to his net worth in a week after Adani Group stocks added about $9.8 billion in market value.

The government has detected an increasing amount of GST being evaded each year, but recoveries have not kept pace with detection. Nationally, authorities uncovered GST evasion exceeding ₹4.4 lakh crore but recovered about ₹ 1.1 lakh crore, roughly 25 percent of the total. About ₹1.51 lakh crore of tax evasion was detected by the GST authorities till October in the financial year 2023-24, with Maharashtra, Haryana and Gujarat among the states with the highest amount of evasion. However, it has so far recovered just over 12 percent of this amount in 2023-24.

There has been a steady increase of income tax arrears from ₹ 5, 75, 340 crores in 2013-14 to ₹ 11,14,182 crore in 2917-18. According to CAG, the percentage of tax termed ‘ difficult to recover ‘ (categorised by the department) over total arrears continued to be abnormally high ranging from 96 percent in 2013-14 to more than 98 percent in 2017-18.

The Banks have written off bad loans worth ₹14.56 lakh crore in the last nine financial years starting 2014-15, alone over ₹2.09 lakh crore in 2022-23 and ₹10.57 lakh crore in the last five years. Out of the ₹14.56 lakh crore, the large industries and services stood at ₹7,40,968 crore. Nearly 2300 borrowers, each having a loan amount of ₹5 crore or more, wilfully defaulted around ₹ 2 lakh crore.

According Minister of State Finance Bhagwat Karad (in the written reply to Loksabha), public sector banks have written off an aggregate loan amount of ₹10.42 lakh crore from the financial year 2014-15 to the financial year 2022-23; but has recovered only an aggregate amount of ₹ 1.61 lakh crore from written-off loans.

Unlike loan waiver “Such write-offs do not result in waiver of liabilities of borrowers to repay, but actually around 15 percent recovered only. Question creeps in mind: if around 15 percent loans written off is recovered, then who are beneficiaries of the rest 85 percent. Why does not government investigate?

A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days. After loan became NPAs for 4 years, it is written off to reduce NPAs amount, tax liability, provisioning amount as such NPAs are considered as assets on which tax is paid.

Even after 9 years not a single person has been extradited nor a single dollar of black money stashed abroad has been brought back. After borrowing ₹ 9,000 crore from 17 banks and defaulting, Vijay Mallya left the country. Accused in the ₹ 13,500 crore PNB scam along with his nephew, he owner of Gitanjali Jewellery, Mehul Choksi fled the country in 2017 after obtaining citizenship from Antigua and Barbuda.

Nephew of Mehul Choksi, Nirav Modi, also known as the mastermind of the PNB scam owes more than ₹30,000 crore, is in the custody of the London police, and faces allegations ranging from money laundering to harassing government officials. Only founder, managing director, and CEO of Yes Bank, Rana Kapoor, is now in jail. During his tenure, Yes Bank granted a loan of Rs 30,000 crore, and Rs 20,000 crore turned into bad debts.

The CAG of India, in an audit report on the ‘Implementation of Phase-1 of Bharatmala Pariyojana’ from 2017-18 to 2020-21 has highlighted the cost escalation in constructing the 29.06 km Dwarka Expressway from ₹ 18 crore per km to ₹ 250 crore per km. Similarly, under the Bharatmala Pariyojana, 75,000 km of roads were to be constructed at the rate of Rs 15 crore per km. However, Central government increased the cost to ₹25 crore per km, thereby committing a scam worth ₹ 7.5 lakh crore in the project.

Some sought to know the source of “benami wealth” seized from the liquor traders. Corruption stems from our electoral system. Instead of addressing root causes, the ruling class and politicians are talking of fighting corruption to hoodwink masses. Today, Candidates, political parties are spending crores of rupees in election. Money and muscle power plays dominant role. If one does not spent money nobody will attend rallies and meetings, forget winning electoral battle. Even many voters are bribed to cast their votes to a particular party or candidate.

According to private think tank, the Centre for Media Studies (CMS), the Lok Sabha elections 2019 was the “most expensive election ever, anywhere” with the money spent for the exercise at around ₹55-60,000 crore, and the ruling BJP estimated to have spent 45 percent of the total expenditure. Estimating that ₹700 per vote was spent in the 2019 elections, it said that on an average, nearly ₹100 crore has been spent per seat this time. According to income tax agency, in recent Assemblies election of 5 states, the entire amount of cash seized has surpassed ₹1,000 crore.

Touted as a tool for transparency in election funding, Electoral bonds, generated donations worth over ₹9,188 crore for all political parties, put together between 2016-22. Among all the parties, the BJP earned 57 per cent of the total donations generated through electoral bonds, according to data released by the Association of Democratic Reforms (ADR). Eight national parties together held assets worth ₹ 8,829.15 crore in 2021-22, an increase of 20.98 per cent from the previous fiscal, with BJP grabbing the highest of₹ 6,046.81 crore or 69 per cent of the total.

“Electoral bonds are non-transparent ways of financing parties. Who gave the money and what did they get against it, nobody knows about it. According to Raghuram Rajan, the opposition parties are “forced” to use illicit money because electoral bonds provide an unequal playing field favouring the ruling party.

Politics has become rich persons’ and criminal’s game as the average assets of Rajya Sabha MP are Rs 80.93 crore, according to the analysis of election affidavits of 225 of the 233 MPs. Twenty-seven Rajya Sabha MPs are billionaires. The average worth of assets per MP from Lok Sabha and Rajya Sabha is ₹38.33 crores and 53 (7 percent) are billionaires.

About 40 percent of sitting MPs have criminal cases registered against them out of which 25 percent have declared serious criminal cases under charges of murder, attempt to murder, kidnapping and crimes against women. It means rich, wealthy and criminal has more chance to win election. So, most of candidates try to accumulate money and wealth by hook or by crook to contest and fight election. It is alleged that MP and MLA’s local area development (MLALAD) Fund” is misutilised too.

When top level people indulge corruption, it percolates every section of society. One or two might be caught but actually many corrupt people are not caught. Now those, who are opposed to ruling dispensation are targeted more. Of course, the government is selectively using Income Tax department, Enforcement Directorate, Central Vigilance Commission (CVC) against oppositions and its critics to disarm and debilitate them. Hence, cleansing political parties and electoral system, preventing use of illegal money in election by all parties including BJP is the first step towards tackling the evil of graft, corruption and benami wealth.


The author is an Odisha-based eminent columnist/economist and social thinker. He can be reached through e-mail at [email protected]


DISCLAIMER: The views expressed in the article are solely those of the author and do not in any way represent the views of Sambad English.

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