Big issues, Uncategorized

Income Declaration Scheme

 Prime minister has warned black money holders that stringent action would be taken including imprisonment if they did not declare black money before 30th September. People are investing their black money in gold and a message has to be delivered that they should come clean with the onetime compliance window ending on 30thSeptember.

Highlights of the scheme

This scheme has been announced by Ministry of Finance which is applicable from 1st June till 30th September 2016. The Income Declaration Scheme is not an amnesty scheme to reward dishonest taxpayers.

The scheme extends an opportunity to come clean by paying more than the normal tax. Under this the undisclosed income and the high net worth transactions without PAN number are called Black Money.

Now people can pay 45% tax and can regularise this money. This kind of scheme was introduced in 1997 with the tax rate of 30%. At that time as many as 260 billion rupees assets and 70 billion rupees tax were deposited by people. The scheme was very successful.

The government does the same thing once in a while so that both the government and the people are benefited.

If the provisions are not obeyed, then strict actions are taken including imprisonment.

Prime minister said the government should not be forced to take action against black money holders. Government should compliance self discipline which is the best kind of discipline. Notices to around 7 lakh of high net worth individuals have been given. The government has relaxed the norms and allowed people to pay in three instalments over a period of 1 year.

The idea is to make the scheme successful. To make the scheme more effective the government should reduce the tax rate to 35% to attract more people to comply.

Why is it important to pay taxes?

Many counties have higher tax rates than in India. In counties like Switzerland and Sweden the rates are 50%. In America the rate is 45%. In India the tax rate is reasonable and government provides subsidies for fertilizers, gas etc. We expect so much from the government and for that people should pay taxes.

We expect lot from the government. We expect education, roads, electricity, metro etc. The money required must come through taxes or else the government should print the money which leads to inflation.

John f Kennedy has rightly said that “Ask not what your country can rightly do for you, ask what you can do for your country”

This is the least contribution to the civil society we make and take the full advantage.

The other issue is Benami transaction Amendment bill. Once the bill is passed the Benami transaction ceased by the authorities will be confiscated by the government. The income declaration scheme gives an opportunity to those holding such Benami property to come clean by paying 45% tax.

How is black money generated?

The money is generated by corrupt practices. The nexus between government officials and business people during the period of licence Raj. At present it is called Permission Raj. To get those permissions, like to open a school we need 53 permissions, to do an investment banking we need 90 permissions. For all these permissions the money is paid. This generates black money.

Black money is generated by Overinvoicing or underinvoicing of the exports or imports from the countries like Singapore, UAE and Hong Kong.

Most of the black money is parked in jewellery business and real estate. When the value of the rupee goes down and if somebody has invested in gold and the prices of gold is going up, they would be benefitting.

If people are not sure about the market for starting a business, they invest in gold or real estate. Real estate is a safe way because usually the prices of land go up. But in the last 4 to 5 years real estate market is down for so many reasons, but usually land has been a good investment.

There are lot of offshore schemes by which black money is generated. India has Double Taxation Avoidance Agreement (DTAAs) with more than eighty countries, of which comprehensive agreements include those with Australia, Canada, Germany, Mauritius, UAE, the UK and US and Singapore.

Tax planning is always welcome, but Tax avoiding is not. Now there is a great opportunity for those people who have not disclosed their income.

Various estimates say that the total exceeds of black money is $50 trillion; some say it is $500 billion. There is a sharp difference of the quantum of black money in India. Generally the black money in India is 50% of its GDP. There are no specific data and these are only speculations.

Conclusion

Supreme Court ordered setting up of Special Investigation Team. Progress has been made in India in sharing black money information with other countries like Switzerland which has agreed to share information with India. Sharing of information and declaring the names is a big step and governments are cooperating with each other.

Let’s hope those people who avail black money will avail the facility of Income Declaration Scheme and come clean, pay their taxes and get rid of their tension on this front.

Editorials, GS-2, Indian Polity, Public Admin 2, Uncategorized

How not to fight corruption?

The Prevention of Corruption Act (PCA):

  • It is the key legislation which defines what constitutes corruption and prescribes penalties for corruption-related offences
  • It is presently set to be amended by Parliament and the proposed Bill, now before a select committee of the Rajya Sabha, includes several contentious amendments that are likely to have far-reaching ramifications

Much-needed deliberations

Criminalising Bribers-

  • The proposed amendments make all actual and potential bribe-givers offenders under the PCA
  • In India, it is a reality that people are forced to pay bribes even to get their basic entitlements like rations, pensions, education and health facilities— leading to being ‘doubly wronged’

Dis-incentivising Reporting-

In situations where the matter will be of life and death, a bribe might sound illegal but for the treatment or justice, this risk will be definite. Forcing people into this dilemma would only further the culture of impunity by dis-incentivising reporting of corruption by bribe-givers.

Proposed amendments to the PCA— A retrograde step:

Case of Immunity

The government needs to reconsider the above-mentioned points and offer immunity to at least three types of bribe-givers—

  1. Those who are coerced to pay a bribe to obtain their legal entitlements
  2. Those who voluntarily come forward to complain and bear witness against corrupt public officials
  3. Those who are willing to turn approvers

For the second and third categories: Immunity should be provided only from criminal liability — bribe-givers must be made to return any benefit they secured as a result of the bribe. Providing immunity to these categories of bribe-givers would encourage them to complain about corruption and ensure that corruption is not a low-risk, high-return activity.

 

Need to put in place a comprehensive grievance redress mechanism—

The objective of combating coercive corruption would be more effectively achieved (can be remedied by the enactment of the grievance redress bill, which was introduced in the Parliament in 2011 and had support across party lines, but unfortunately lapsed with the dissolution of the last Lok Sabha)

Approval for investigation

The amendments state that complaints regarding corruption that relate to decisions taken or recommendations made by public servants in the discharge of their official duty, shall not be investigated without the prior approval of the Lokpal or Lokayuktas, as the case maybe. Such complaints shall be forwarded to, and deemed to be complaints made to the Lokpal or Lokayuktas.

Objective:

  • To safeguard public servants who are in decision-making positions, so that they may take decisions without fear of harassment
  • Amendment to replace Section 6A of the Delhi Special Police Establishment Act (was struck down by the Supreme Court)
  • Section 6A mandated prior sanctions for investigation for officials of the rank of joint secretary and above

A confusing element— leading to unending litigation with respect to investigations pertaining to determining if a decision taken or recommendation made by a public servant has played a bigger role or not

Solution:

  • The proposed amendments must either be dropped or
  • The complaints about all offences under the PCA shall be dealt with by the Lokpal at the Central level and Lokayuktas at the State level, for all categories of public servants covered in the respective laws.

Insulation of prosecuting agencies from government influence—

  • The amendments seek to increase the cover to even retired public officials
  • Requirement for seeking prior sanction from the government for prosecution— is a critical bottleneck and results not only in huge delays but also in the accused often never being prosecuted
  • The PCA must insulate prosecuting agencies from government influence

Way Ahead—

  • The Lokpal law has vested the power of granting sanction for prosecution in the Lokpal—wherever the procedure for granting prosecution is defined in the Lokpal or Lokayukta laws, it should be applicable
  • Cases wih no Lokpal or Lokayukta— an independent committee should be tasked with the responsibility of giving prior approval for prosecution
  • Need to operationalise the Lokpal Act and the Whistle Blowers Protection Act which were passed by Parliament more than two years ago (along with the PCA, form the necessary anti-corruption statutory framework)

Connecting the Dots:

  • Increasing the probability of detecting and punishing corrupt offenders by enforcing the anti-corruption laws impartially and reducing the delay in prosecuting offenders must be the topmost priority for the anti-corruption strategy of India. Discuss

Read: http://iasbaba.com/2015/08/iasbabas-daily-current-affairs-15th-17th-august-2015/

GS-2, Indian Polity, Uncategorized

How not to fight corruption

The Hindu

Context

  • Prevention of Corruption Act (PCA) is set to be amended by Parliament. The proposed Bill includes several contentious amendments that are likely to have far-reaching ramifications. They require considerable deliberation.

Prevention of Corruption Act (PCA)

  • PCA is the key legislation which defines what constitutes corruption and prescribes penalties for corruption-related offences.

What is wrong with the proposed amendments?

  • The proposed amendments make all actual and potential bribe-givers offenders under the PCA.
  • While it is desirable to treat giving bribes aimed at receiving illegitimate gains as an offence, people, especially the poor and the marginalised, are often forced to pay bribes to get what is legitimately theirs.
  • If they are also prosecuted, it would be a double wrong.

How to correct this wrong?

  • The proposed amendments to the PCA are, practically and morally, a retrograde step.
  • The government would be well advised to reconsider this and offer immunity to at least three types of bribe-givers.
  • First, those who are coerced to pay a bribe to obtain their legal entitlements;
  • Second, those who voluntarily come forward to complain and bear witness against corrupt public officials; and
  • Third, those who are willing to turn approvers.
  • For the second and third categories though, immunity should be provided only from criminal liability — bribe-givers must be made to return any benefit they secured as a result of the bribe.
  • Providing immunity to these categories of bribe-givers would encourage them to complain about corruption and ensure that corruption is not a low-risk, high-return activity.

What about Grievances?

  • Currently, if anyone files a complaint regarding denial of their entitlements, the complainant almost never gets redress nor is any penal action initiated against the guilty.
  • The objective of combating coercive corruption would be more effectively achieved if the government puts in place a comprehensive grievance redress mechanism.
  • This can be remedied by the enactment of the grievance redress bill, which was introduced in the Parliament in 2011 and had support across party lines, but unfortunately lapsed with the dissolution of the last Lok Sabha.

Approval for investigation

  • The proposed amendments state that complaints regarding corruption that relate to decisions taken or recommendations made by public servants in the discharge of their official duty, shall not be investigated without the prior approval of the Lokpal or Lokayuktas, as the case maybe.
  • Such complaints shall be forwarded to, and deemed to be complaints made to the Lokpal or Lokayuktas.
  • The proposed amendments must either be dropped or state that complaints about all offences under the PCA shall be dealt with by the Lokpal at the Central level and Lokayuktas at the State level, for all categories of public servants covered in the respective laws.

Insulation is required

  • The PCA must insulate prosecuting agencies from government influence.
  • The Lokpal law has vested the power of granting sanction for prosecution in the Lokpal.
  • The proposed amendments must appropriately reflect this.
  • Wherever the procedure for granting prosecution is defined in the Lokpal or Lokayukta laws, it should be applicable.
  • For all other cases, including where no Lokpal or Lokayukta has been set up, an independent committee should be tasked with the responsibility of giving prior approval for prosecution.

What else?

If the  government is serious about tackling corruption, it should, in addition to re-introducing the grievance redress bill, immediately operationalise the Lokpal Act and the Whistle Blowers Protection Act which were passed by Parliament more than two years ago. These laws, together with the PCA, form the necessary anti-corruption statutory framework.

Editorials, GS-2, GS-4, Uncategorized

An order against the anti-graft fight

Article Link

The Tamil Nadu government recently came out with an order which mandated prior permission of the government for an inquiry into corruption charges against any State official. However, many political parties and anti-corruption crusaders have criticized this decision.

What the order says?

It says in case of any complaint against government servants “irrespective of the rank or group of the public servants complained against, the Directorate of Vigilance and Anti-Corruption shall forward the complaints to the Vigilance Commission, and the commission in turn shall seek and consider the remarks of the Government before ordering appropriate enquiry” by the DVAC.

Practice so far:

Until this order, government approval for a preliminary enquiry (PE) or registration of a regular case was required only in respect of All India Services officers (Indian Administrative Service, Indian Police Service and Indian Forest Service).

Implications of this order:

The implication of the order is that any inquiry on complaints against even clerks or subordinate staff will have to be first cleared by the department.

How TN government defends this order?

The government says this order is aimed at bringing about uniformity in treatment of complaints against government servants of all ranks.

  • The State government order cites a Supreme Court ruling in a public interest litigation of 1997, which struck down the Single Directive of the Government of India that drew a distinction between officers of and above the rank of Joint Secretary and the rest of the bureaucracy.
  • The 1997 ruling interpreted the Single Directive as discriminatory and violative of Article 14 of the Constitution that grants the right to equality before the law and equal protection of the laws to every citizen.
  • The Madras High Court too had asked the State government to evolve a “non-discriminatory policy” towards all public servants.

Intention behind the Supreme Court’s order:

The annulling of the Single Directive, first in 1997 (the Vineet Narain judgment) and again in 2014 (following the incorporation of the directive into the Central Vigilance Commission Act, 2003) by the Supreme Court was mainly aimed at strengthening the hands of the Central Bureau of Investigation (CBI) and other vigilance agencies and gave them absolute freedom in proceeding with complaints of corruption without reference to the Central government.

Problems with TN’s order:

The Tamil Nadu government order does exactly the opposite. It further weakens an already weak Vigilance Directorate. The Vigilance Directorate in the stae does not enjoy even the limited autonomy that the CBI enjoys.

  • Also, apart from diminishing vigilance drives, the new order brims with practical difficulties. There are more than 2,00,000 lack officials in the state. If the complaint against even someone in the lowest rung in each department — a police constable or a Grade IV employee in the Secretariat or Revenue Department, for instance — has to be vetted at three levels, viz. the Vigilance Directorate, Vigilance Commission and the department concerned. This, obviously, takes too much time.
  • This delay might lead to loss of confidentiality of the contents of a complaint and there is also the danger of destruction of evidence to prove misconduct. Such delays might also pose various threats to whistleblowers.
  • The government order does not also make it clear as to what happens when there is disagreement on the course of action in respect of a complaint between the three principal players involved.

What needs to be done now?

Anti-corruption agencies should be given some free space when dealing with corruption cases. Autonomy to these agencies in initiating a preliminary enquiry or regular case will not result in miscarriage of justice because the ultimate power of sanction to prosecute a government official in a court of law rests with the government.

Conclusion:

The new order is further expected to encourage the corrupt elements in government. Hence, the State government should revisit the order. Such a course of action would considerably enhance its credibility.

Indian Polity, Public Admin 2, Uncategorized

What is Janlokpal Bill?

Delhi Janlokpal Bill has prescribed a cooling period for public servants for joining any private entity or doing any consultancy work. “No public servant, for a period of two years immediately after he ceases to be such public servant, shall be eligible to take up any employment, assignment, consultancy, etc with or for any person, private company or firm or public private partnership or private organisation with which he had substantially dealt with in his official capacity during the last period of five years immediately before he ceased to be the public servant,” section 24 of the Bill states.

Under the Janlokpal Bill the ombudsman will have powers to confiscate and attach properties of officials involved in corrupt acts. Janlokpal can even sentence someone to life imprisonment.

Delhi Janlokpal Bill: Under Ombudsman may attach, confiscate assets gained by a public servant through the acts of corruption the AAP government proposes that that a person who files false complaint will be punished with rigorous imprisonment which may extend to one year or with fine which may extend to one lakh rupees or with both.

According to Janlokpal Bill, the janlokpal can constitute a prosecution wing and appoint a Director of Prosecution and such other officers and employees to assist the Director of Prosecution for the purpose of prosecution of public servants in relation to any complaint made under this Act.

After the approval of the Janlokpal, the Director of prosecution shall file a case before the special court and take all necessary steps in respect of the prosecution of the public servants in relation to any offence punishable under this act.

Janlokpal Bill also proposes higher punishment for a public servant holding higher rank thereby becoming an exemplary ensuring accountability and responsibility.

“In case of wilful or malicious false complaints there is provisions of imprisonment or fine or both, Janlokpal will file a case in court for false complaint and court has to uphold it as false case for punishment. False complaints will also be decided by the judiciary,” the Delhi Janlokpal Bill stated.

Under Section 6: The removal of the Chairperson or members of the Jan Lokpal stated that one or more members/Chairperson could be removed “by a majority of the total membership of the legislative assembly” or “by a majority not less than two-thirds of the members thereof present and voting…”

Criticism: 

Bill’s introduction says “Whereas the government is steadfastly committed to the establishment of the National Capital Territory of Delhi as a “Corruption Free Zone…,” and “the Jan Lokpal may…utilise the services of any officer or organisation or investigation agency of the central government…,” is an intrusion in the domain of the central government. Many allege that this is deliberately done to get the Bill rejected by the central government.

Section 3, says that the selection of the Chairperson and two members of the Jan Lokpal, is decided by three politicians and the Chief Justice of the High Court. So, it is biased in favour of the ruling party. (but here 3 politicians will be CM, Speaker, Leader of the Opposition or an alternative selected by the Members of the Opposition, In all, two politicians from the AAP, and two non-AAP: the CJ of the High Court and the leader of the Opposition. Thus, it was evenly balanced. So this allegation is not correct.)

The powers of the Jan Lokpal were questioned. Under Section 10, it was stated “The Jan Lokpal may appoint or, with the consent of the government, designate officers or agencies as Investigation Officers, authorised to investigate offences under this Act…” This was taken by critics to mean that the Jan Lokpal would depend on the government, and thus not be independent.

Section 9 deals with malicious false complaints made, which can on conviction, “be punished with rigorous imprisonment which may extend to one year or with fine which may extend to one lakh rupees or with both.” Some felt that these punishments were too strong. But the maximum punishment is not mandatory, and malicious complaints can be very damaging to a citizen’s reputation.

 

After all the angry debate, the 2015 Bill is a significant step forward.