Contrary to whatever the government may say, the mopping up around Rs.65,000 crore of black money is not a commendable achievement. And the reasons for arriving at this conclusion can be gleaned from the table alongside.
First, there are enough reasons to believe that the government has not yet acted on the filing of agricultural income of over Rs.876 lakh crore (Rs.876 trillion) during just four years – 2010-2013. These are the figures available from income tax records, and not just hearsay. Just watch how the amounts declared as agricultural income jumped from Rs.16,464 crore in 2009 to Rs.83,742 crore in 2010, then to 19,971,098 crore in 2011, and further to 67,431,358 crore in 2012, before tapering off to Rs.164,583 crore in 2013. This author does not have access to information on filings after 2013.
But if media reports are to be believed, the amounts involved are over Rs.2,000 lakh crore. These reports are themselves based on the (reported) petition of a former income tax officer before the Patna High Court. The petitioner wants the court to direct the government to reveal the names of people who have made such preposterously high agricultural income disclosures. In his affidavit he is said to have claimed that the figure of such disclosures could exceed Rs.2,000 lakh crore.
Earning such huge incomes from agriculture is preposterous. Even if one takes the yields of the most fertile land with the most expensive crop, this type of earning is inconceivable.
Considering that the total tax collections in India have not crossed Rs.696,000 crore in any given year, the agricultural income represents tax collection for almost 125 years. In that sense, Prime minister Modi was right. If only India can get back its black money, Indians would not have to pay taxes for almost 100 years!
It is only when one takes such numbers into account that the penny finally drops. Just juxtapose the disclosure of Rs.65,000 crore (through declaration of undeclared income) with Rs.876 lakh crore. You then realise that the disclosures amount to just 0.07% of the amounts that appear to have been ‘misdeclared’ as agricultural income.
There is a second reason why the collection of Rs.65,000 crore is pathetic. Watch the number which shows collections as a percentage of GDP/GVA. Black money mobilisation in 1985 and 1997 were well over 2%. In 1997 it was as high as 4.2%. The present collection is just 0.6% of India’s GVA (the figure which has replaced GDP in government statistics). This is a figure to be ashamed about.
In fact, it is this abysmal figure that lends credence to media reports that only 15% of the disclosures were voluntary. If the declarations were indeed only 15% of Rs.65,000 crore, even a simple call from a tax official to those who have declared agricultural income of Rs.876 lakh crore could have worked. A ‘contribution’ of even 0.5% from such people could have propped up this number further. Clearly, even this was not possible, leaving black money collections at just 0.07% of the amounts ‘misdeclared’ and 0.6% of GVA. So what should the government do?
Ideally, the finance ministry, or the chief economic advisor, or the RBI (Reserve Bank of India), should prepare a report for the Parliament giving full disclosure of such agricultural income declarations. The Parliament will then have to decide how to deal with such numbers and the people behind these figures. This will be better than an eventual direction from the courts, asking the government to explain such numbers.
Alternatively, the government could pass a legislation requiring all large agricultural income declarants – maybe those who have declared agricultural income of over Rs.25 crore in any one year – to deposit 50% of such income with a specially designated fund. This fund could offer low-interest bearing bonds, redeemable only after 15 years or more. This would allow the government access to money for financing infrastructure capex. The low interest would compensate for the tax payable over a period of time. This way, everybody benefits.
The third alternative will be for the government to levy penalties on such agricultural income declarants for misdeclaring the actual source of income. In case proper action has not been taken, the investigating officer concerned could then be hauled up. A time-frame of one year should suffice for completing such a process, considering that three years (or more) have already passed since the time these agricultural income declarations were made.
Unless the government gives effect to one of the three measures listed above, its resolve to root out black money will not gain credibility. That would be sad for a government that has done so much, and wants to do so much more.