Quite a year ago, Prime Minister Narendra Modi demonetised the currency notes of 1000 and 500 denominations, avowedly aiming to target black money holders and black market. The decision severely hit common people and economic activities. However, his supporters applauded him for taking the bold decision to eliminate corruption whereas critics termed it as ‘organised loot’, ‘suicide’ and ‘monumental disaster’. Recently Reserve Bank of India revealed 99 per cent notes returned in banks shows that not much black money was recovered through the demonetisation.
On the contrary, the GDP growth of the country substantially fell down from 9.2% to 5.7%, slowing down one of the fastest growing economies in the world. Despite knowing these facts, the Modi government is celebrating 8 November, the day when the Prime Minister announced the decision of demonetisation, as Anti-Black Money Day. On the other hand, the opposition parties are observing the same day as Black Day.
A week before the celebration of Anti-Black Money Day, The Indian Express, one of the leading newspapers of the country, in collaboration with the International Consortium of Investigative Journalists (ICIJ) and German Newspaper Suddeutsche Zeitung uncovered the global web of black money in offshore companies through Paradise Papers. Paradise Papers, a trove of 13.4 million corporate records leaked from Bermuda firm Applebey and Singapore-based Asiaciti Trust, bring out the name of many national and international politicians, big businessmen, celebrities and corporate houses, including Queen Elizabeth II, American singer Madonna, former Prime Minister of Pakistan Shaukat Aziz, fugitive Indian businessman Vijay Mallya, Union Minister Jayant Sinha, BJP MP Ravindra Kishore Sinha, former Union Minister Sachin Pilot, former Chief Minister of Rajasthan Ashok Gahlot and Bollywood senior actor Amitabh Bachchan, etc. From India alone, 714 people have been named in the Paradise Papers who are involved in offshore financial activities.
Not necessarily all the overseas financial activities are black and illegal but these revelations blew the lid off the biggest secret financial transaction that the corporate sectors and politicians tried to hide from the government and regulators in order to evade taxes.
The investigating journalist claimed that there are larger cases of fraud, shell and front companies, round tripping, manipulation of the market, money laundering, parking black money, tax evasion and bribing, etc. Incorporating shell and front companies to avoid taxes and taking untaxed money out of the country through inflated invoices and then bringing it back as investment, using the loopholes of the law and violating it to avoid the taxes are some of the frauds committed by offshore companies revealed by the Paradise Papers.
This largest leak ever of offshore companies shows that it is the corporate sectors, politicians and rich men who are running and promoting the black market all over the world. It is not only this revelation that exposes the black activities of politicians and big businessmen. Eighteen months before the Paradise Papers, it was Panama Paper leaks which also blew the lid off the secret financial activities of big politicians and top corporate owners who were having offshore financial activities. Before that, there was Swiss Leak which exposed those top businessmen, politicians and the rich including 1,688 Indians who have secretly bank accounts in HSBC private bank.
These all leaks clearly show who are producing black money and where it is being produced. If the government wants to target black money, it will have to take strict action against them. Notwithstanding knowing the whereabouts of black money, the demonetisation, which ruined the economy of common and poor people, was, it is said, just an excuse to divert the attention of common people from those black money holders.
Demanding crackdown on the tax evaders, Human Rights group Amnesty International said, “When people do not pay their fair share of tax, it’s the poor who suffer the most. At a time when governments around the world are slashing spending on health, education, housing and welfare support, it’s shameful that so many wealthy individuals and companies are being allowed to stow away billions of dollars in tax havens.”
If we look this tax evasion in view of the recent tragedies that the country has faced, we can understand the far-reaching impact of tax evasion on the common people. In Gorakhpur hospital, hundreds of children died and continue dying due to non-availability of oxygen and proper health facilities as the UP government failed to pay the dues of oxygen suppliers. Analysts say that there was lack of fund allocation for the health sector that is one of the prime reasons behind such tragedies. There were various fund cuts from different sectors such as education and MANREGA. Tax evasion deepens these problems and shares a larger part of the responsibility.