India is not a poor country. It is a country where laws have been made and perpetuated for the elite, and not for the laity. One hopes and prays that this changes. The demonetisation attack on black money is the first of many steps which Modi must take in order to dismantle the structures that serve elites more than the masses.

Tax-free agriculture income elite: Much has been written about the rampant misuse of tax-free status granted to a small farmer toiling in the fields, but abused by holders of black money to whitewash it. The amounts in 2010-11 and 2011-12 are staggering at ₹200 lakh crore and ₹687 lakh crore respectively! Juxtapose that to the ₹14 lakh crore which has been demonetised and it seems logical that the next point of investigation would be the eight lakh assessees who had declared these staggering amounts. They are the elites.

The big investor elite: Aided by clever lawyers and accountants, the big investor can happily use laws, treaties and structures to avoid tax. The double tax avoidance agreement (DTAA) with Mauritius is one such example. In the case of the Mauritius treaty, it ends up being a no-tax treaty, if the money is sent by a company registered in Mauritius and invested in Indian listed companies for more than a year. Moreover, it is repatriated in dollars.

And if the money comes in through P-Notes, via a sub account with a foreign institutional investor (FII), there is no need for KYC either.

The P-Note and the Mauritian special treatment must stop.

Scamsters and legal elites: We also have several examples of scamsters who, after having stolen thousands of crores, have enough moolah with them to subvert the wheels of justice. Aided, of course, by some lawyers for whom money is, both alphabetically and ethically, placed ahead of morality. Using this moolah, justice can be indefinitely delayed. Adjournments are granted ad nauseum , never mind the adage of delayed justice.

What else explains the trials that last decades, where verdicts are given long after the victims are dead? What else explains the plethora of reports sought in rather obvious cases, such as NSEL, and the multitude of committees, all of which report a fraud and seek action, but none is taken.

The political elite: There are over 1,900 political parties of which 400 have never fought any election! Anyone can start a political party and donations to it up to ₹20,000 a person are not questioned! This is why 400 parties have not ever fought an election. They are just laundering money and the system allows them to. They are elites.

Parliamentarians get a pension after serving one five-year term.

Army men qualify after 20 years. The former’s pay and perks are huge, and decided by themselves. It is not linked to inflation similar to the one laid for the laity.

The demonetisation step will help eradicate corruption only if special laws and rules for elites are removed and the inequality bred by them is reduced.

Let the inequality be the result of honest and hard work, not thanks to tax breaks and an impotent legal system.

Should action be taken by the government to dismantle the elite structures, stock markets would correct. That would be a time to buy.

(The writer is India Head, EuroMoney Conferences. The views are personal.)

Related Topics
comment COMMENT NOW