While the prime minister is partly right, it isn’t the whole picture and there is certainly more than enough blame to go around.
New Delhi: The second phase of the Narendra Modi government’s fight against black money and corruption will, if public statements are anything to go by, likely be an attempt at cracking down on benami property transactions.
In his final Mann Ki Baat address of the year, Modi referenced these illicit property transactions, often fuelled by black money and corruption, saying that the Centre would soon implement the government’s Benami Property Act to “target other forms of illegally accumulated wealth”.
The prime minister’s radio address was not the only place that benami property– property that is often held by one party but paid for by another, usually with unaccounted-for money – has found mention.
The day after parliament’s winter session ended, at a BJP party meet in New Delhi, Modi addressed a hall full of MPs and railed against the Congress party’s inaction against benami property.
Referencing former RBI governor Y.V. Reddy’s lecture in October 2016, Modi pointed out that while the ‘Benami Transaction Prohibition Act’ was first passed by parliament in 1988 (when Rajiv Gandhi was prime minister), it “remained unimplemented for more than 25 years”. “You can tell from their [Congress and other parties] behaviour that in 1988 you pass a law for benami transactions but even after so many years you don’t notify it. You want to create chaos in parliament and get publicity from press conferences, but you don’t want to bring the law into action,” Modi said.
In his speech on December 16, the prime minister also goes on to juxtapose the Congress party’s inaction to his government’s way of handling demonetisation.
“Now these people will yell that Modi is doing everything in a hurry. You [the Congress] had from 1988 to now and didn’t bring it into action, gave a free pass to those taking part in benami transactions, now why start yelling when we are actually trying to do something? Is this how you would run the country?”
Modi also specifically blames the Congress party in this regard: “For us, the country’s interests are always above the party’s,” said Modi. But, “for Congress, the party’s interests are above the country’s”.
How true are Modi’s claims regarding the Congress party and historical inaction on curbing benami property transactions? They are partially true, but leave out past important interventions (such as the lapsed Benami Transaction (Prohibition) Bill 2011) and also doesn’t distribute blame equally.
The first piece of of legislation to target corrupt property transactions was, as Modi says, the Benami Transactions (Prohibition) Act, 1988. It first started out as an ordinance in May 1988 and then was later enacted by parliament at the time and came into force on July 19, 1988.
It is true, as the Second Administrative Reforms Commission noted in 2007, that the 1988 Act was never implemented or notified. “Unfortunately, in the last 18 years, rules have not been prescribed by the government…. With the result that the government is not in a position to confiscate properties acquired by the real owner in the name of his benamidars,” the commission said.
Why was it never notified? There are two broad reasons. The first is simply a lack of political will. In this, it’s not just the Congress party that should assume fault, as Modi claims, but every government from 1988 to 2014.
The list of all governments which failed to act against benami property by not notifying the legislation includes:
- The Rajiv Gandhi government of the Congress (1984-1989)
- The P.V. Narasimha Rao government of the Congress (1991-1996)
- The H.D. Gowda government of the United Front (1996-1997)
- The I.K. Gujral government of the UF (1997-1998)
- The Atal Bihari Vajpayee government of the Bharatiya Janata Party and NDA (1998-2004)
- The Manmohan Singh governments I and II of the Congress and UPA (2004-2014)
As we can see, virtually all India’s political parties, across the spectrum, including the BJP, have refused to step up to the plate and deserve to be blamed.
However, Modi’s comments also leave out the second potential reason why the rules were never notified.
The standing committee on finance (2011-2012), which was headed by former finance minister and BJP leader Yashwant Sinha, noted that the 1988 benami property law was quite simply riddled with “procedural infirmities”; legalese for the fact that the 1988 Act was largely a bad piece of legislation. For instance, although the 1988 regulations allowed for confiscation of benami property, it had “no specific provision for vesting of confiscated property with the Central government” or “any provision for an appellate mechanism against an action taken by authorities under the Act”.
That is why the Centre in 2011 decided that “it would not be possible to remove the infirmities” merely by making a few amendments, but a “fresh legislation shall be required to comprehensively deal with all issues”.
The Manmohan Singh administration consequently came out with the Benami Transactions (Prohibition) Bill 2011, which was tabled in parliament in August 2011 and which was intended to repeal the previous 1988 legislation.
This 2011 bill, although criticised for its scope of exemptions, was never passed by parliament due to major disruptions and overall dysfunction. As commentators noted at the time, “over 50% of Parliament’s time was lost to rowdy behaviour in 2013”. Ultimately, the Lok Sabha “did business” for only 22 of the 154 hours allocated for business during the 2013-14 winter session. Much of this of lost time was of course was (ironically) because some of the major corruption scams (Coalgate etc.) that erupted at the time.
Summing up, Modi is right in saying that the Congress party never implemented the 1988 law against benami property. However, this extends to the 2004 Vajpayee government as well and other political parties as well. Also, it’s false to say that nothing has been attempted in the last 25 years. The 2011 bill, which might have come with its share of flaws, was one such attempt.
The Wire is pleased to acknowledge the inputs of reader Hemant Kumar.
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