31 December 2020: The Indian Express Editorial Analysis
1) When Enforcement Directorate attaches the property of an accused?
GS 2: Statutory, regulatory and various quasi-judicial bodies
- Recently, the Enforcement Directorate (ED, specialized financial investigation agency under the Department of Revenue, Ministry of Finance, Government of India) issued orders for the attachment of several properties belonging to former Jammu and Kashmir Chief Minister and leader of the National Conference in connection with its investigation into alleged money laundering in the Jammu and Kashmir Cricket Association (JKCA) case.
- Provisional attachment orders issued by the ED do not lead to immediate sealing of a property.
- The ED order would be valid for 180 days, during which time it must be confirmed by the Adjudicating Authority under the Prevention of Money Laundering Act (PMLA).
- If it is not confirmed, the property would be automatically released from attachment. And if it is, the accused can challenge the confirmation in the Appellate Tribunal within 45 days, and subsequently in the concerned High Court and the Supreme Court.
WHAT DOES THE LAW SAY ON THE ATTACHMENT OF PROPERTY?
- The purpose of attachment is to deprive an accused of the benefits of the attached asset. The law also provides for the property to remain out of bounds for the accused until the trial is complete.
- However, properties that are in use are generally not sealed until the case reaches its logical conclusion. Usually, the accused secures release of the property in appellate tribunals or High Courts, or is able to get a stay, and continue to enjoy it while the matter remains pending in the courts.
- Also, running businesses are not shut down. Therefore, a running hotel can, for example, be attached under the PMLA, and still continue its business.
PREVENTION OF MONEY LAUNDERING ACT (PMLA)
- Under PMLA, proceeds of crime — money generated out of a criminal activity — is attached on the directions of the ED Director. However, if that wealth is not available, the agency can attach property equivalent to that value.
- The PMLA defines “proceeds of crime” as “any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property, or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad”.
- While the idea of attachment of property equivalent to proceeds of crime has been contested, various court orders in the past have ruled in favour of ED’s interpretation of the term “the value of any such property” to mean that the agency can attach any property of equivalent value with the accused.
- The law also has a provision for the attachment of local property of equivalent value if investigations reveal that the accused has parked proceeds of crime abroad, and the same cannot be attached there.
WHAT HAPPENS TO ASSETS THAT ARE SEALED?
- Attached properties may remain locked for years, and may start crumbling. There is a provision for a body to maintain such properties, but it has not been set up yet.
- Attached vehicles are sent to warehouses owned by the Central Warehousing Corporation, where the ED pays to park the vehicle. As cases drag on for years, the vehicles rot.
- At the end of the trial, neither the accused nor the ED recovers anything from the vehicle. The agency could, in fact, end up paying more rent than the value of the vehicle.
WHAT IS THE JKCA CASE?
- The case relates to alleged irregularities in grants given by the Board of Control for Cricket in India (BCCI) to Jammu and Kashmir Cricket Association (JKCA).
- It is alleged that between 2002 and 2011, funds to the tune of over Rs 43 crore were siphoned off from the JKCA’s coffers. These funds were part of the Rs 112 crore grant given by BCCI to JKCA.
2) The growth we deserve
GS 3 Indian economy and issues relating to growth
- COVID19 pandemic is affecting all the countries at a whole. Due to this, India has passed 10 million COVID infections which are second highest in the world. As well as a new strain of COVID which is reported in the UK is even more infectious.
ECONOMY IN THIRD QUARTER:
- At the end of the third quarter, the economy is showing a hugely divergent performance.
- Some sectors are now doing well in production activities.
- This growth is shown: the growth is shown in Pharmaceuticals and chemicals on their Year-To-Date numbers.
- Fast-moving consumer goods: Fast-moving consumer goods reached last year’s level in the second quarter and is showing growth in the third quarter, while year to date numbers still lag.
- This situation is the same for two-wheelers as well as for Construction equipment.
- The construction sector: The construction sector is showing a huge recovery, with record sales numbers in the last three months mainly by the rural population.
- Year to date number of Capital goods are well down on last year but are now showing growth.
- Other sectors: As well as travel, tourism, real estate, construction, and retail, not forecasting a full recovery this year. As these sectors are with high employment but due to pandemic, it is potentially affected.
- GDP of India is expected to fall around 7.5 per cent for this full year.
- To get full recovery means getting back to the trend line of growth where we would have been pre-COVID.
- For getting back the recovery, we must start by setting out a clear growth ambition.
- The target of India: We had a target of $5 trillion by 2024, to get it we have to grow 9 per cent for three years.
- This growth of 9% will get us back to our 5 per cent trend line of growth by the time of the next national election in 2024.
SUGGESTION TO GET RECOVERY BACK:
First work is to pay bills:
- The most immediate fiscal stimulus possible is to put cash into the economy.
- To put cash into the economy we have to:
1)Distribute the pending tax refunds,
2)Pay the bills of all companies (large and small),
3) Pay off the many arbitration awards pending where the government has lost cases,
4)Pay state governments their pending GST dues.
- All this will run into a few trillion rupees, and also it will be cash that immediately stimulates the economy.
- As well as the government have to pay its claims. The government will claim that it has paid over 90 per cent of pending claims, but the under 10 per cent it hasn’t paid by volume adds up to the overwhelming proportion by value.
Second work is to invest in public health infrastructure:
- We have to invest in public health infrastructure.
- Some preparation is underway by the government to distribute vaccines.
- We have to finance state government efforts to build an extensive public health network to handle a possible second wave of the virus.
- If we demonstrate that we are much more prepared in 2021 as compare to 2020, we will spread confidence instead of despondency.
Third work is to invest in infrastructure:
- The infrastructure projects of roads, ports, logistics are stuck because funds are not available.
- The 20 trillion infrastructure pipeline needs to have some cash flow in it.
- As the pandemic revealed awful things about living conditions in slums across our cities that we have ignored for long times.
- We have to put in place the right public-private programme to provide decent, accessible housing, with quick and cheap connectivity into our cities.
Fourth work is of huge privatisation programme:
- Another question before us that How will all this be paid for? So we have to announce a huge privatisation programme.
- The boom in our current stock market says that buyers are ready to invest. But public-sector stock values are still depressed.
- Hence the government have to reduce its share-holding to 26 per cent across public-sector banks, steel companies, oil companies, manufacturing companies and hotel to whom it currently owns.
- But this privatisation should apply on only on one or two PSUs and see the result.
- The government might argue that big reforms prompt big protests as in Delhi on the agricultural reforms.
- The learning from those protests must surely be that the reforms themselves were right, but the method of doing should be different.
- As well as the government have to operate consistent with our democratic institutions.
- Besides that the government need discussion papers for public comment, the debate in Parliament, hearing out those who would lose out from the reforms, and compromise with the interests of state governments.
- The government should behave in public as that everything is moving in the right direction and will come right on its own.
- The year 2021 will be a year to welcome if it returns us to the growth trajectory we deserve.