Indian Capital Is Fleeing Out Of The Country

Senior Congress leader Mani Shankar Aiyar has never held back from expressing his views about the country’s economic and political state, even when his own party was in power. In an exclusive interview with The Dollar Business, the veteran politician shares his opinion on policies like demonetisation, ‘Make in India’ and GST, apart from forecasting the outcome of the General Elections 2019.

- Manishika Miglani

TDB: Narendra Modi-led government had demonetised 86% of the country’s currency notes in November 2016, with an intent to eradicate black money and stop the funding of terrorism-related activities. How successful has the initiative been in your opinion?

Mani Shankar Aiyar (MSA): How can demonetisation help take the lid off black money holders, when Modi’s Income Tax Department has known all along that not more than 5-6% of the black money is held in cash? Isn’t it like searching for a needle in a haystack? To rob 86% of legal tender of all legitimacy overnight, in an economy where 98% of the transactions are in cash, is to follow the example of Muhammad bin Tughlaq, who in the 14th century issued copper coins after demonetising gold and silver coins.

TDB: The shadow economy in India still constitutes a large part of the economy. What in your opinion are the other measures that the government could  have taken to go head-to-head against black money?

MSA: To seriously tackle black money, the government needs to attack hoarders of gold and jewellery, unveil real estate ownership and the means used to acquire such properties, strangulate black money outflows, go after bank accounts in overseas tax havens, and most importantly, stop ‘round-tripping’ of black into white by recourse to anonymous participatory notes channelled through countries like Mauritius. All this would take an enormous investment of domestic political capital and international goodwill, besides endless time, courage and persistence in the face of many challenges. But it needs to be done.