By Prabhakar Mundkur

Prime Minister Narendra Modi has warned those in possession of black money to declare it before the given deadline of September 30 2016, adding that stern action might be taken after that.

“The first decision my government took was to make an SIT (Special Investigation Team) on black money. It is working and the Supreme Court is monitoring it. We have also made laws so that no one dares to send black money abroad from India. So more black money will not be generated.” Mr. Modi said in an interview to Network 18.

“For black money at home, we have changed the law, and there is a scheme till September 30 for anyone who wants to join to mainstream. If you made a mistake knowingly or unknowingly (by keeping black money), come to the mainstream now, I have given a way… If I take stern steps after the 30th, no one can blame me,” he said.

For the Indian businessman, black money is metaphorically Original Sin, especially since it has been around since time immemorial.

For the Indian businessman, black money is metaphorically Original Sin, especially since it has been around since time immemorial.

In my own lifetime, I have seen several attempts by past governments to mop up the devil in the economy by periodically making announcements with great aplomb of penalizing the offenders, but meeting with little success. Unfortunately, black money, like Satan, has deceptive and powerful ways of defeating subsequent governments and finance ministers. In Catholicism, the Sacrament of Penance is the way the Church allows men and women to confess their sins, and have them absolved by a priest. This in principle is similar to the Church allowing people to confess their sins in return for salvation. The basic requirement for a good confession is to have the intention of returning to God like the ‘prodigal son’, and to acknowledge their sins before the priest.

The basic requirement for a good confession is to have the intention of returning to God like the ‘prodigal son’, and to acknowledge their sins before the priest.

The Indian Black Money Law has quite closely followed the same principle by allowing offenders a compliance window (ending 30 September 2016) for declaring and paying both, tax and penalty for their foreign assets lying abroad. Years of sinning now absolved in a single confession.

How fair are black money laws to the honest tax payer?

While most laws of this nature have a laudable financial and economic objective, the honest tax payer, watching the drama unfold from the sidelines, can’t help but feel a twinge of pain.

While most laws of this nature have a laudable financial and economic objective, the honest tax payer, watching the drama unfold from the sidelines, can’t help but feel a twinge of pain. After having paid taxes, honestly for 30 years and filed returns, one wonders how he could have gone wrong. The annual missives from the Income Tax Department telling you, your tax calculations are wrong by a few hundred INR, or summoning you to meet the Commissioner for a query of little consequence, seem unfair in the context of people having stashed away thousands of crores abroad, and now escaping punishment by a mere confession.

The Principle of Restorative Justice

It is important for the honest tax payers who feel the injustice of the Black Money Law to understand the concept of Restorative Justice. It is an approach to justice that focuses on the needs of the victims and the offenders, as well as other community members. Instead of punishing the offender, offenders are encouraged to take responsibility for their actions by apologizing, returning stolen money or community service. In a sense, it provides help for the offender in order to avoid future offences. Man in his wisdom has created such admirable institutions for the good of society in general.

Honest tax payers and Black Money Law

The plight of honest tax payers | Photo Courtesy: Pexels

My own personal experience of this was none other than the Truth and Re-Conciliation Commission run by Archbishop Desmond Tutu, while I lived in South Africa. Witnesses identified as victims of gross human rights violations were invited to give statements about their experiences. Perpetrators of violence could also give testimony and request amnesty from both civil and criminal prosecution. The TRC did an unbelievable job of mass catharsis in South Africa and to a large extent alleviated the pain of apartheid.


Prabhakar Mundkur currently works as Chief Mentor at HGS Interactive. He is also on the Advisory Board of Sol’s Arc—an NGO involved with education for children with special needs.

Featured Image Credits: Pexels

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Posted by The Indian Economist