The Big Story: Corruption confusion

In a country of vast differences in wealth, it is but natural that corruption will be a major political issue. However, more often than not, the issue has led to little constructive policy making – a point that is more than apparent from the workings of the current Union government. Battling corruption has been top of the agenda for Prime Minister Narendra Modi. It was the primary reason cited for the 2016 demonetisation in which high value notes were removed from circulation. Yet, demonetisation also shows that the Modi government limited itself to the optics of fighting corruption. The move did little to impact black money, with nearly all the banned notes making it back to the banking system.

The Union government’s moves policing the buying of gold have been equally ham handed. India loves gold – it is the largest gold-consuming country in the world. Naturally, then, the yellow metal is favoured route used by people looking to launder their illegal wealth into legal money. In fact, on the day demonetisation was announced, reports indicate frenetic buying of gold – a clear sign that black money was being laundered into bullion. The month after demonetisation, the prices of gold boomed.

The Union government was slow to catch on to this trend – surprising given the long-standing use of gold as a money-laundering tool in India. Eventually, on August 23, more than 10 months after demonetisation was announced, the Union government bought jewellery dealers under the Prevention of Money Laundering Act. Moreover, Permanent Account Number cards were made mandatory for jewellery purchases above Rs 50,000.

This move was much delayed but a necessary one. If poor Indians had made sacrifices in order to ostensibly end corruption during demonetisation, it was only fair that channels to launder money for the rich were shut off too. However, the Union government managed to uphold this rule for the grand period of six weeks. Inexplicably, on Friday, a new order was issued scrapping the August 23 rule.

This is a stark exception at a time when the Union government is near-fanatical about the documentation of identity. Aadhaar, India’s biometric ID, is now required for tax filings as well as availing something as basic as cash transfers for Tuberculosis patients. Yet, somehow, vast quantities of gold can be bought anonymously.

Many experts have pointed to the ineffectual nature of the Modi government’s anti-corruption moves during demonetisation. This is yet another example of how little thought is put into deciding policy in this Union government.

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