Time for another Demonetisation Modiji

It is election time again and as usual irrespective of Modiji’s demonetisation or not and Mr.Arun Jaitley’s electoral bonds or not, cash in king for political funding. It is that five year harvest time when politicians are out on the streets to illegally buy votes and that is reflected in the currency in circulation in India, which is reported to be at an all time high of Rs. 21.50 lac crores. It was a comparative mere Rs.15.50 lac crores at the time of demonetisation in Nov. 2016. The politicians have been constantly building up reserves of cash on hand over the past few months, in the run up to the elections, such that the annual growth in cash on hand has been a record 17.3% this year. Despite a very strict vigil by the various authorities including by the tax department, police etc. led by the Election Commission, the system is sloshed with cash and political parties are desperately distributing it to all corners of India.

At such a time, the risk/challenge lies in the logistics of cash transportation, for which even government vehicles are illegally used. Huge cash was recently seized from two cars in the entourage of the Arunachal chief minister, which included government vehicles. The seizures of cash and all that it illegally funds for elections, including hard cash, booze and drugs has been of a record Rs.1,618 crores so far and as the voting dates come nearby, when the cash is actually handed over to the voters, the seizures are likely to be much more. Interestingly what happens to the cash and the accused after such seizure is not clear, as was recently stated by the EC, before the Supreme Court. A rough estimate says that the illegal cash in circulation, clearly for buying/influencing voters in this election is 50% more than what was deployed in the 2014 elections.

While the political system is liquid and flush with cash, which is bound to be transacted, it is the Income Tax Department, which has been in an overdrive, a hyper active mode, and it is their raids on politicians and their associates, which have been raising eyebrows, not just because they coincide with the elections, but because they are mostly conducted on the political adversaries of the BJP. Thus extensive politically motivated raids were conducted in Tamil Nadu and Karnataka recently. And since the raids are on politicians, who are the actual fountain head of corruption and black money in India, it is never a surprise that huge cash, benami assets, unaccounted income and assets, hawala deals, bogus entities to launder money etc. are found in such raids. They merely confirm the obvious ie. the netas are corrupt and they use black money to fund their elections.

But it is the ongoing income tax raids being conducted at numerous locations of the associates and relatives of Kamal Nath, involving hundreds of income tax officers, which commenced in the wee hours of the morning at 3 AM, a few days ago, without mandatorily informing the chief election officer of Madhya Pradesh, and in which the CRPF and the MP police are reported to have clashed, is what has raised eyebrows, not just because it coincides with the elections and is on one of the senior most Congress leaders, but also because it is reported to have unearthed a widespread and well organised racket involving collection and distribution of unaccounted cash, of Rs.281 crores so far, with direct leads to Ahmed Patel, the accountant/treasurer of the Congress party, who handles all its financial matters. The raids have been alleged to be politically motivated. An alarmed EC has advised the Finance Ministry to ensure that all enforcement agencies under it are absolutely impartial, neutral and non discriminatory and has called for a meeting with the Revenue Secretary and the CBDT chairman to discuss the ongoing income tax raids on Kamal Nath’s relatives and associates.

The system is awash with cash again, which also proves the failure of the much touted electoral bonds. It is estimated that as against total poll expenses of almost Rs.40,000 crores in these elections, a mere Rs.2,000 crores have been raised through electoral bonds so far. It also proves the failure of the determined assault of the PM on black money in India, led by his controversial draconian measure demonetisation, when the earlier notes were cancelled and new ones were issued. With cash in the system being at a record level of Rs.21.50 lac crores, and it being used for illegal purposes, its good enough a reason for the return of Demo 2.