Pradhan Mantri Garib Kalyan Yojana or PMGKY is a government scheme introduced by Narendra Modi in 2015 and was amended post demonetisation on 16th December 2016 to abolish poverty. The idea is to direct all the black money to improvise the conditions of the impoverished.
Objective Of PMGKY
When PMGKY was first introduced they had the following goals:
- A series of workshops will be conducted for all citizens of the country. Each participant has to pay a small amount of money to register for the workshops.
- All workshops will be conducted under the supervision of different Members of Parliament to analyse the proceedings and improvements.
- Several ministers were encouraged to take part in these workshops in order to contribute to the funding for the weaker sections.
Why Re-Introduce PMGKY?
The Pradhan Mantri Garib Kalyan Yojana is the opportunity for all black money holders to convert their illegal financial assets to legal ones by investing in PMGKY as a penalty. The denominations, INR 500 was changed and INR 1000 was eliminated on 8th November, creating history in the nation and ruckus for all black money holders. A time frame was given to all citizens to exchange the old currency notes with new ones setting a limit for the money to be exchanged. Those with a huge amount of black money dealt with this blow by burning stacks of 500 and 1000 currency notes. Having observed this, the PMGKY introduced in 2015 was revised according to new tax laws in 2016. Thus while the original objectives were maintained this new amendment came into play to enable all black money holders to rectify the nature of their monetary assets.
Implementation Of PMGKY Post Demonetisation
When PMGKY was launched, Modi stated that a part of the government funds will be indulged in conducting paid workshops and raising money for the weaker sections of society. After demonetisation, the laws were modified to raise a greater amount of money to abolish poverty under PMGK.
- The unaccounted black money held by citizens operating unlawfully will be declared confidentially via contributing it to PMGKY
- The earlier Income Tax Act was modified by honourable Finance Minister Arun Jaitley to make these amendments.
- The black money will be charged in two ways: 50% taxation for the illegal wealth attained with some of the amounts to PMGKY.
- Apart from the above divisions for black money penalty, 25% of the black money will be invested in the account of PMGKY for a period of 4 years. This investment will not be liable for returns through interest rates for that duration.
- Initially, all the national and co-operative banks were to operate in accordance with this scheme. But later co-operative banks were disallowed from continuing as they were suspected of converting the black money to legal currency for personal profits.
- The PMGKY tax reform can be availed till 31st March and all black money holders are being encouraged to participate in it as the proceedings will remain anonymous.
How To Deposit Money Under PMGKY
All black money holders aiming to convert their illegal wealth confidentially, must make the deposits in a Bonds Ledger Account maintained by the Reserve Bank of India. A certificate will be drawn in the name of the beneficiary who has declared the illegal money. The deposits can be made in all denominations that are a multiple of 100. All deposits have to be made by the black money holders at one time for complete transparency and avoiding pilferage. A Bonds Ledger Account will commence only after a deposit is made via cash, cheque or online banking to the authorised banks under this scheme. 25% of these deposits made will be invested without interest for 4 years under PMGKY.
Nomination can be done in the case of a Bonds Ledger Account. The primary account holder can nominate more than one person for the account. In the case of death of the primary account holder, the amount payable will go to the nominees or the heir.
Success Of Amended PMGKY
The concept of organising workshops and raising money for funding the impoverished was not very successful. But with the new angle of raising money via the unaccounted wealth post demonetisation is by far a successful idea. A lot of lawful cash will be generated to benefit the poor and the black money holders will get a window to rectify themselves.