Amnesty Unlimited

Special Bearer Bonds, 1991

February 2, 1981, Indira Gandhis government launched Special Bearer Bonds, which were repayable 10 years after the date of issue. All the bonds sold were of Rs 10,000 denomination and holders were entitled to receive Rs 12,000 for each bond on maturity.. Investment in these bonds enjoyed immunity from tax laws. The scheme was announced by the then finance minister, R Venkataraman, but got bogged down in controversy and had to be discontinued from April 30, 1981. The scheme, however, was resumed on December 1, 1981 and ran till January 9, 1982.

According to government sources, Special Bearer Bonds realised Rs 964.26 crore. The scheme did not result in any tax revenue.

Foreign Exchange Inward Remittances Immunity Scheme, 1991

This scheme was Dr Manmohan Singhs brainchild and was conceived during an acute foreign exchange crisis. The scheme was to encourage Indians who had stashed their cash in Swiss banks to bring them back. In the process, the government would also shore up its foreign exchange reserves. In this scheme also, the government had not envisaged any tax revenue. Launched on July 24, 1991, the scheme took a while to evoke even a reasonable response.

The incentives for bringing in money were quite a few. The scheme envisaged that all foreign exchange remittances made to anyone in India would enjoy immunity from all direct tax laws and exchange control regulations. There would also be no gift tax on the remittances made to any Indian. The scheme promised that there would be no scrutiny of the source of remittances either. Direct taxes, however, would have had to be paid on rupee proceeds from the remittances.

A whirlwind tour of West Asia and Europe by the then minister of state for finance, Rameshwar Thakur, and skilful handling by Sudhir Kumar in the finance ministry resulted in the scheme mobilising $600 million. For a scheme that lasted only for six months (it closed in January 1992), this was considered a big success.

India Development Bond

Another brainchild of Manmohan Singh, this scheme again aimed at providing amnesty to those who had kept their money abroad and wanted to bring it back. These bonds, denominated in US dollars, were issued by the State Bank of India. Any non-resident Indian or an overseas corporate body could purchase them without any limit. The maturity of these bonds was five years. Launched in July 1991, the scheme closed in January 1992.

The attractiveness of these bonds was that they were fully transferable among non-resident Indians. Interest earned was exempted from income-tax, and exempt from wealth tax till their maturity. The facevalue of the bonds and interest was repatriable with exchange rate protection. The bonds could be gifted to Indian residents, who were provided amnesty and immunity. But this was only for the first resident donee. While there was no gift tax, the resident donee bond holders were entitled to exchange rate protection and exemption from income-tax and wealth tax till maturity. The proceeds could not be remitted abroad.

The scheme was a huge success, although it did not yield any direct tax revenue. The total subscription of these Bonds was estimated at $1.8 billion.

Gold Bond, 1998

These bonds were introduced by Dr Manmohan Singh on March 15 for three months. Subscription was accepted in gold and at the end of five years, an equivalent quantity was to be returned. Bonds were open to a resident Indian, a Hindu undivided family, a firm or a company. Initial subscribers were granted immunity under wealth tax, gift tax, Income-Tax act, Customs Act etc. Holders of these bonds were not to be questioned about the source of the gold holding.

The main objective of the scheme was to mobilise idle gold resources of ordinary citizens to supplement official reserves. In retrospect, the scheme seems outdated. But it did mobilise 41.12 tonnes of gold and the government had estimated its receipt at Rs 1,.225 crore. - A K Bhattacharya.