The Centre’s currency flushout move is giving a massive shakedown to the economy, distorted for long by black money. Some opposition parties are capitalizing on the difficulties common people are facing to access their own money; their fond hope is that Prime Minister rendra Modi has miscalculated badly, for which he will pay politically in the coming days. However, after this bitter medicine has run its course, it will drive home at least one lesson to those who apply their mind. The days of jugaad — the culture of indiscipline and informality, of bending rules and make shortcuts which has given India such a bad me — are numbered for sure. The Prime Minister has made his intentions clear by declaring that he is going after bemi property holders next, that he will seek to unmask them by examining records since Independence. And the necessary legal instruments are already in place, more so in the real estate sector — the favored place for corrupt politicians, government officials, shady businessmen, tax evaders and money launderers to park their ill-gotten wealth. After Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 was ected, the Central government followed up with the Real Estate (Regulation and Development) Act and the Bemi Transactions (Prohibition) Act this year. “We are going to take action against properties purchased in the me of others. That is the property of the country,” PM Modi declared in Goa recently. Experts believe that while a major part of uccounted money are stashed abroad, such funds are also secreted away within the country in land and buildings, gold and jewelry, securities and business investments. To avoid questions about income sources and paying taxes, such properties are bought in the mes of relatives, dubious trusts and even employees like drivers and domestic servants. The major share of uccounted or black money goes into real estate, which accounts for 11 percent of the country’s GDP as per FICCI’s estimate.
There is no better example than the earlier law on bemi transactions to show the extent to which entrenched vested interests can tie the hands of successive governments. For 28 years, this country had a law to curb acquisition of such property in the me of third party, but no government could get around to implementing it. The Law Commission of India began studying bemi transactions way back in 1972, but it wasn’t until 1988 that the Bemi Transaction (Prohibition) Act came into existence. But from then on until the beginning of 2016, even the rules for carrying out the purposes of this Act were never framed, neither was there any clarity about recovery procedure or pelties to be handed down, nor was the competent authority specified. Most glaringly, the burden of proof about whether a transaction is bemi rested on the person who brought forth the allegation. Thankfully, this travesty of a law (that was never meant to be implemented in the first place) was filly amended by Parliament in August this year and became effective from November 1 after receiving the President’s assent. It now has sufficient teeth to punish violators with 7 years in jail, fine up to 25 percent of the market price of the bemi property, as well as provision for the Central government to confiscate such property — if it is established that the payment was not done through a known source of income. The burden of proof will now be upon the accused, while the new law prohibits recovery of the bemi property by the real owner from the third party. Those furnishing information about such property will be protected under the Whistleblowers (Protection) Act, while safeguards into the law has been built in through a network of initiating officer, approving authority, administrator and adjudicating authority to establish a transaction as bemi. But it will be the land department in states, which are known cesspits of corruption, that will now be forced to implement this law and go after offenders. Provided the Centre can make State governments clean up their land departments, it is expected that land ownership and titles will become clearer, which will encourage banks to be freer with loans, and make transactions faster and more transparent. This in turn can only be beneficial for the real estate sector in the long run by ratiolizing land prices and making it feasible for the government to go for housing the poor.