In a persistent criticism over demonetization, Delhi chief minister Arvind Kejriwal presented ‘evidence’ of his prior allegations stating that many people knew about demonetization of Rs. 500/1000 notes before prime minister Narendra Modi announced it on November 8.
Arvind Kejriwal seemed in a mood to slam the BJP government after showing a CNBC report questioning sudden growth of deposits in Indian banks during July-September 2016 quarter. Citing the report, Kejriwal said that it proves that people especially blackmoney makers already knew about the demonetization and deposited their money in banks before the anti-corruption move came into public light earlier this week. He also alleged that some people and BJP party workers knew about the move and made deposits before demonetization.
Kejriwal said, “According to a report shown by CNBC, Indian banks have witnessed a growth of thousands of crores of rupees in deposit during July-September (2016) quarter. It looks very suspicious.” Raising questions, he added, “In many banks, deposits in previous quarters were in negative, no growth at all. But all of a sudden during July-September quarter, huge amounts were deposited in these banks. Who possessed that money? All of a sudden, who made these huge amount of deposits in the banks?”
The CNBC report that Arvind Kejriwal has shown in the press conference was an analysis of quarterly growth in deposits in various Indian banks. The report shows that banks like State Bank of India, Punjab National Bank, Union Bank of India and more had seen an abrupt rise in the graph during the quarter of July-September 2016. For example, Union Bank of India is reported 6.7% of growth deposited in July-September quarter compared to 1.2% growth in deposit in the previous quarter.
However, the claims by the report is argued with the government’s Income Declaration Scheme (IDS) 2016 that lasted till 30th September. The scheme was a one-time compilation window for citizens to disclose their unaccounted income or assets and come out clean by paying the applicable tax, surcharge and penalty.
A financial advisor from Mumbai, Bherav Suthar said, “The sudden rise in the deposit in banks during July-September quarter is a result of Income Declaration Scheme. People disclosed their income and assets under the scheme.”
Soon after the IDS window ended, finance minister Arun Jaitley had announced that under the scheme, more than 64 thousand declarants disclosed a total amount of Rs. 65,250 crore, yielding Rs. 29,362 crore taxes to government.
In the press conference, Kejriwal came backed up with the IDS logic. He said, “You may have a doubt that July-September quarter is the period when there was Income Declaration Scheme. Don’t get confused. I have met some people today and they said that because of the IDS, there was a rise of deposits in banks. The money under IDS does not go into the banks in the form of deposits, instead it goes directly to government treasury. The money deposited (during July-September quarter) were only deposits of individuals. It was not a part of IDS.”
“Who owns this money? The (central) government had already told about the demonetization move to their people, their friends, BJP party workers before implementing it,” he alleged.
The question that arises from such allegations is whether the income declared under IDS went directly to government treasury? No. Under IDS, 45% of tax, cess and penalty of disclosed income was brought in the government treasury.
“Even if the deposit hike shown in the report is based on a private individual deposit, not under IDS, income tax will obviously scrutinize it,” said Suthar.
It will be interesting to see how things turn out in the next couple of weeks. Kejriwal doesn’t look laid back in any way to counter Modi this time too; though it is evident from previous track records that the prime minister won’t feed unwanted commentators any grass and continue to do what overrules within his mind.