Eye-Wash?

LETTERS TO THE EDITOR

D R Pendses article A flash of white, then fade to black (February 11) was an incisive analysis of how all the economic and fiscal objectives underlying the VDIS, which have been trumpeted as having been successfully achieved, have turned out to be economics of the absurd.

The revenue secretary and his lieutenants in the finance ministry were patting themselves on the back because VDIS had garnered a tax collection of Rs 10,000 crore, with declaration of about Rs 30,000 crore of concealed income. Considering that the scheme covered assessment years 1962-63 to 1997-98, it means a disclosure of a measly sum of less than Rs 1,000 crore of income declared and a tax collection of Rs 300 crore per assessment year at the present value of the rupee.

 

Considering the estimate of expert committees and groups who have placed the figure of black money at gargantuan levels ranging from 18 per cent to 50 per cent of GNP, the disclosed sum at macro as well as micro levels is laughable.

The objective of widening the tax net has also not been fulfilled because most of the declarations were from existing assessees. Most of the new assessees were closely related or associated with existing assessees who used the carte blanche of the scheme to make benami declarations. Only an insignificant number of hitherto unassessed persons chose to come into the tax net.

Coming to the third objective of harnessing black money for productive purposes, the author has aptly exposed the fallacy of this assumption. It is widely known that most of the income disclosed was in the shape of assets mainly jewellery. How and when these assets will become liquid to flow into productive channels is again in the realm of uncertainty of the time factor of the multiplier effect of actual cash declared as assets, at grossly antedated rates.