Is Mr Modi soft on Blackmoney holders?

The Modi Government had run a Income Declaration Scheme (IDS) for people to declare their black money. The deadline for IDS 30th September. 64,275 people had declared black money under the IDS scheme totaling to Rs. 65,250 crores. The penalty under this scheme was fixed at 45%. So it was expected that the Government will get 29,362.5 crores under this scheme.

This had made the Modi Government tom-tom its success. It was said that this is much bigger than the Voluntary Disclosure of Income Scheme (VDIS) run by the Congress Govt. in 1997 as VDIS had got 33697 crores from 4.72 lakh people. At that time the Government had got tax of 9,729 crore under VDIS.

Though the Modi Government was declaring success vis-à-vis the previous VDIS, one should realise that the size of economy today is way bigger than in 1997 and the present value of 33,697 crore will be way much bigger.

Now, a series of events appear to blow a big hole in the IDS scheme.

First a person from Ahmedabad who was to pay a tax of 13860 crores declared that he didn’t have that money and had declared on behalf of others. However, other people didn’t give him the money to convert, so he can’t pay up. Next, a person in Hyderabad had declared 10,000 crores and it was found that he didn’t have even 1 crore and had just made up this story to get attention to his business.

This has resulted in the the total size of IDS declarations to drop by more than half and even smaller than the VDIS of 1997. It is to be seen how the Modi Government gives a positive spin to this disappointing news.

It should also be noted that last year, the Government had run a similar scheme for foreign blackmoney holders. There were only 644 declarations and only 2,428 crores of tax collection.

Now, the Modi Government has said that if anyone wants to declare their undeclared cash and deposits in the bank accounts then they will have to pay 49.9% tax. So this becomes the third disclosure scheme by Modi Government within a year.

Three voluntary disclosure of income schemes by the Government in such a short period of time is virtually unheard. People will lose their faith in the system and will feel that honest tax payers are being discriminated against. Blackmoney holders will feel that they will always get some more opportunity later and will be willing to take a chance.

This doesn't fit in with the narrative of a strong Government. The Government now appears to be begging before people. Mr Modi and his ministers should think hard why they are repeatedly failing.

Reasons for Volteface over Surgical Strike 

Rahul Gandhi in one of his speeches in UP unequivocally praised Prime Minister Narendra Modi saying that the "surgical strike" is the first good think that the PM has done in the last two years. It was surprising praise, because that sound bite can be used by BJP against congress. Other political parties were guarded in their praise as they either congratulated the army or the Government. 

So what was the rationale behind directly praising Modi? Some feel that Rahul Gandhi acted like a statesman and praised where praise is due. There was another view, that Rahul Gandhi acted like an immature politician by directly praising the PM. 

However, on 6th October in the concluding rally of his Kisan Yatra, he came out hammer and tongs against Modi and accused him of playing politics over our soldiers sacrifices. He said Modi is doing "Khoon ka Dalali" by exploiting the death of soldiers, who have died fighting for the country in the border, to get credit for himself. He said "the soldiers who spilled their blood for the country and carried out surgical strikes, you are hiding behind them and trying to cash in on their blood. They have done their work, now you do yours. Help the farmers, give the army a hike in the seventh pay commission; it is your responsibility and that is what you have been elected for". These were pretty strong words and expectedly the all the BJP leaders and its allies as well as most of the sympathetic media jumped in to bash Rahul Gandhi, accusing him to be doubting the army. 

Modi has used far stronger words. Nevertheless, one thing that becomes apparent from this episode is that Rahul Gandhi is not briefed by the Old generation Congress leaders who were ministers in the UPA Government. After Rahul Gandhi praised Modi for the Surgical Strikes, it was P. Chidambaram, former Home Minister in UPA Government who said that there have been surgical strikes in the past but the Government never took credit for it. Chidambaram directly told this to a TV Channel. Later the Congress party came out with the dates of atleast four such incidents in the recent past. 

Rahul Gandhi could have avoided praising Modi, if Chidambaram and other Ministers in the UPA cabinet would have advised him. Rahul not being a part of the Manmohan Singh Government has resulted in this lack of information. It is well known that many of these old guard are against him. During the 2014 Lok Sabha, many of these old guard didn't contest elections. Chidambaram declined to contest but pushed and got his son Karthi to get the ticket in his place. Ofcourse he lost the election. 

Similarly many around the country didn't contest and allowed Rahul Gandhi to take the sole burden of fighting the Modi wave and lose "spectacularly". They have felt that it would be enough to bury him with this defeat. Some of them are said to be resisting Rahul Gandhi's elevation to the role of President of the Congress party in the place of Sonia Gandhi. The younger generation like Sachin Pilot, Jyotiraditya Scindia etc were junior ministers in the UPA cabinet and may not have been privy to these information. 

It is to be seen how Rahul Gandhi handles such non-cooperation by the Congress old guard and whether it results in similar spectacular stumbles.