The black money bill aimed at bringing back black money slashed abroad has not served the purpose. The declared amunt is a pittance. Still something is better than nothing.
The generation of black money needs to be totally plugged for which the enforcement authorities have to concentrate on the following areas involving professionals from different fields.One way of obtaining information is to have a channel opened for the people to freely report where they come across black money deals giving some evidences or some trace of it.
The areas where vigilance is required perhaps to prevent black money generation and money laundering are as under.
1) Allowing corporates to float any number of subsidiaries without any valid reason. These subsidiaries enable black money holders to have some avenues of investments and both the holding Companies and subsidiary Companies declare losses routinely without being seriuosly probed by any authorities. SEBI can be really vigilant and alert in preventing such companies.
2) Imports and Exports: Bank of Baroda Ashok nagar branch is a live example as to how Companies are alloweed to open accounts freely without adherence to KYC norms or any other regulatory Prescriptions. This must have been going on in several branches in a camoufalged manner as the branch Inspectins are not carried out by the Regulator these days.Liberalisation of regulation is essential but it should not lead to loot or indiscipline in conducting the affairs. There should be sufficient checks and balances.
3) Real estate : Black money is easy to be stacked in real estate. The unsold flats in various cities is a solid example of the volume of black money held in real estates. RBI policy rate cut cannot have any serious impact on the real estate movements as black money holders and banks which have financed these real estates are not affected by such policy measures.
3) Purchase of farm lands and forming farm clubs in and around major cities have become a fashion these days and both black money and white money flow to these farm clubs without any regulation as such. Some companires are floated and they purchase parcels of lands from farmers at very cheap rates and sell them as plots at exorbitant rates. They also form farm clubs and make the prospective buyers as members of these clubs by default. They generally do not prepare any accounts or make the transactions transparent and extort money from these members in the name of plots maintenance. Some banks also help them in different ways. The companies turn dormant after a few years and there does not seem to be any follow up on these companies by any autorities. White money gets converted into black money and banks are also involved. The fact that amounts are paid through banks do not have the meaning that the money is white. Banks deal in black money and no suspicion arises.
4) Purchase of Gold, Jewellery and other highvalue Commodiies :The dealers invariably insist on black money and they never entertain cheque or card payments. The IT authorities can visit any bullion merchants incognito and experience themselves that without cash no transactions can be carried out.
5) Dealers in furniture, furnishing houses spread over entire country: They always insist on cash and they seldom take cheque or cards.
The list goes on and if the authorities can really be after them, the finacial system in the country can be very clean and the revenues of the Government can get augmented several times. The informal economy which is large and bigger than the formal economy needs to be fixed and earlier it is done the better.
Dr T V Gopalakrishnan
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