death knell

Source: The Hitavada      Date: 07 Sep 2017 11:30:10

THE Union Government has sounded the death knell for shell companies by freezing their bank accounts. This is one more positive step towards clamping down on generation of black money and curbing corruption.

Even while some quarters question the efficacy of demonetisation of high value currency in the denomination of Rs. 500 and Rs. 1000, the Government is very convinced about its bold step and the resultant clipping of the wings of black money holders. Along with demonetisation the Government has initiated several measures to curb black money and money-laundering, like its agreements with several foreign Governments on co-operation in sharing information on tax evasion by Indian entities and the money illegally parked by them in their banking system.

On Tuesday, the Government asked banks to freeze over two lakh accounts of companies whose names have been struck off the records. This has been done on the basis of data collected in the aftermath of demonetisation and when account holders, both individuals and corporate entities, failed to explain the source of huge amounts of money deposited in their accounts within the deadline in scrapped currency notes. This gave the trail to investigators of the Income Tax Department and Enforcement Directorate. The data collected thus by these departments was so exhaustive that it took several months to arrive at definitive conclusion about shell companies whose accounts remained dormant for long periods but came alive when demonetisation was announced.

In the wake of this, the Government had to be ruthless in arriving at the truth and to achieve its larger goal of reducing the influence of black money through which a parallel economy is believed to be thriving. This parallel economy obviously feeds on corruption, rent-seeking, avoidance of taxation, money-laundering, terror funding, drug and illegal arms running and a host of other ills. All these factors have been very badly affecting the economy. Prime Minister Mr. Narendra Modi has made it his single-minded mission to end this economic evil.

In the last three years of its governance, the National Democratic Alliance (NDA) Government, under the stewardship of Prime Minister Mr. Modi, has taken several stern economic policy decisions which may not be palatable to many whose shadowy interests have either been curbed drastically or have been laid bare.

The latest crackdown on shell companies would force those who own them to either come clean and own up to their misdeeds or allow the unclaimed money to go to Government coffers. The choice is very limited for those who have accumulated huge amounts of unaccounted money, mostly through illegal means.

Though the Government wants to come down hard on holders of black money, it has provided ample opportunity to them to come clean from time to time. Hence it cannot be said that the Government has not given enough breathing space to reveal. The truth is that not many are willing to own up to their illegal acts of accumulating black money through unlawful means.

If they do so it will be a huge loss of face for them as it is the money power that they often flaunt around to purchase clout with centres of power. Hence there is nothing surprising if a man running illegal businesses is found in the proximity of power centres so as to keep the hands of law at arms length.

By freezing accounts of shell companies, the Government has choked the channel that was being used by owners of those companies to park ill-gotten money and legitimise it through banking operations. This could only be the beginning of crackdown.