The Island Editorial

Modi’s crackdown on black money

11 November 2016

 

There is nothing intrinsically wrong with power, but it does corrupt, as a truism goes, because greedy politicians wielding it are in league with unscrupulous moneybags. This evil nexus between shallow minds and deep pockets is the bane of democracy. Crooks, rolling in black money, bankroll key political figures and the latter become putty in the hands of the former after being elected. There is nothing called a free lunch and financiers’ interests thus take precedence over those of voiceless electors in whom sovereignty is said to reside.

Regulating campaign funds has been a long-felt need in this country and much has been spoken about it. With the introduction of the proportional representation system which requires campaigning in an electoral district instead of a single constituency, the situation took a turn for the worse. The proposed electoral reforms are being flaunted as a solution to the problem, but there is no guarantee that candidates, backed by moneybags, will cut down on their campaign spending. There have been calls for new laws to make politicians and their parties account for campaign expenditure, but they have gone unheeded for obvious reasons.

Massive undeclared cash donations from slush funds to politicians and political parties have become the order of the day because financiers including those involved in illegal activities have heaps of black money at their disposal. Wealthy politicians also use part of their ill-gotten money to shower bribes on voters and get elected. If politics is to be cleansed and democracy strengthened the problem of undeclared funding has to be tackled at source.

The Indian government has recently demonetised high denomination banknotes as part of its campaign against corruption. About 90 percent of the existing notes are to be withdrawn, we are told. This is being described as a bold move by Prime Minister Narendra Modi to prevent black money from being used to fund election campaigns. The Indian public has been greatly inconvenienced as a result, but their country will benefit from the government action if everything goes as planned. However, it is doubtful whether the super rich will queue up near banks etc carrying bags full of old currency notes.

A former Government Agent, in a letter published on the opposite page, today, reminisces of Sri Lanka’s experiment with demonetisation under the United Front government (1970-77) to ‘squeeze black money out of bloated capitalists’. He says he did not see any bloated capitalist among the people who queued up near state banks etc to obtain new banknotes. He describes what he witnessed in a southern township and what it was like in Colombo is not known. Our guess, however, is that the wealthy may have used some other channels to swap truckloads of demonetised notes for crisp ones. They are too big to be caught!

The success of India’s demonetisation project hinges on the Modi government’s ability to make the super rich fall in line. That is a gargantuan task. The Sirisena-Wickremesinghe government, too, has expressed concern about ever increasing campaign expenditure. Since it considers Modi a role model, it should seriously consider adopting his modus operandi to deal with the issue of black money finding its way into the war chests of politicians and political parties. Here is an Indian model worth adopting!

But, the question is whether demonetisation will work in a country where the Central Bank is ‘robbed’ in broad daylight and the robbers are protected by the government top guns openly. For the moneybags who sponsor political leaders having the demonetised banknotes exchanged for new ones without the knowledge of the authorities concerned will be child’s play. Thanks to their political connections, they are even capable of securing the release of undervalued super luxury vehicles through the Customs and helping themselves to workers’ savings in the Employees’ Provident Fund (EPF).