Sikkim is not a hunting ground for gang of greedy businessmen and cheap politicians: Chamling

Former Chief Minister Pawan Chamling has warned that the alarming increase in Sikkim traders' market share on the Multi-Commodity Exchange MCX spike threatens Sikkim’ (MCX) could have an "adverse impact" on the Sikkimese's income tax exemption.

“What is the SKM government doing while all these illegal, anti-national, and anti-Sikkim activities are going on? Such multi-billion scams cannot take place outside the knowledge of the government. I have a serious suspicion that the Sikkim government is involved in the scam. I appeal to the Centre to initiate a fair investigation starting with the Chief Minister,” said the SDF president in his Sunday press statement.

According to recent reports in the national media, tax-free Sikkim has become a haven for commodity market speculators. Sikkim-based traders' market share on the Multi Commodity Exchange (MCX) in Mumbai increased to 5.5 percent in February from nil just over two years earlier. According to data, MCX's platform had a total volume churn of over $110 billion in February, with Sikkim accounting for over $6 billion. According to the Hindu Businessline on April 3, the number of merchants from the state increased to 2,217 from 674 in February 2020, based on unique client code.

The reason could be due to the exemption its residents get from the mandatory requirement of a Permanent Account Number (PAN), which allows them to skip filing tax returns, as per the media report.

To this, the former Chief Minister said it is another massively concerning issue that the people of Sikkim must look into critically. “Just as we were warning the Sikkimese people about the SKM government selling Sikkim government lands, assets, hydel power projects, and equity shares, now we are faced with national news warning us all that our Income Tax exemption granted by the Centre has been taken undue advantage of and apparently a multi-billion rupee scam is underway,” he added.

“There were only 674 traders from Sikkim, based on unique client codes, a figure which has now increased to 2,217. This is a 400% increase in the number of traders which is highly alarming. What is highly mysterious is that other densely populated States are witnessing a smaller volume even though they have a larger number of traders. For example, Bihar has 2.88 lakh traders but accounts for only 1.51 % of the trading volume. Kerala and Madhya Pradesh have 2.04 lakh and 4.67 lakh traders but account for just 1.45 and 3.2 % of the volume respectively. Many small and NE States have a zero to less than 1 per cent share.”

Chamling maintained that there is no doubt that traders are taking undue advantage of Sikkim’s tax exemption to mint billions of rupees. He pointed to a past similar “scam” that took place in 1980s under the under the Sikkim Sangram Parishad governance which came to be known as the “Gift Racket”.

“Crores of rupees were apparently laundered in Sikkim in the name of gifts. Local players were sending cash to non-Sikkimese “friends” as gifts. It was basically the recipients’ black money which they gave to Sikkimese players, asking them to send it back to them as gifts. They used this cleverly devised method to convert their black money into white money. The gifting partners from Sikkim were given a commission of up to 15 per cent for their service.”

“India Today had reported, “As some of the biggest names in and out of Sikkim – including film stars, well-known industrialists and a local minister’s wife – figured in the deals, the issue threatened to break into a major scandal.” The report further said, “State government officials and politicians have condoned or actively been involved in the laundering of money. Most of the businessmen on the list are supporters of the Sikkim Sangram Parishad”, said Chamling quoting the then media report.

“The unfortunate consequence of the racket was the extension of the Income Tax Act (1961) to Sikkim. India Today reported, “The happy honeymoon, however, may be coming to an end. The Union Government has finally decided to crack down on the flourishing “black-into-white” racket by extending the Income Tax Act (1961), Wealth Tax Act (1957) and Gift Tax Act (1958) to Sikkim. Sikkim, under its special dispensation after its merger with India in 1975, has no laws governing wealth tax or gift tax and even the income tax paid by its citizens is ridiculously low.”

Chamling added that a similar episode could be played over the commodity exchange concerns. History is all set to repeat for Sikkim, he said.

“Let the Sikkimese people remember that the Sikkim Democratic Front government lobbied for 13 long years since 1994 and convinced the Centre to grant an income tax exemption to the people of Sikkim. It was a huge feat for our government. The income tax exemption for Sikkim not only has economic advantages. It also cements our pre-merger distinct Sikkimese identity in the Republic of India. Sikkim is the only State that enjoys this special status under the constitutional provision.”

“I strictly warn the State government to come out clean on this immediately, before it is too late. This weak government has no right to sell our Sikkimese identity to its cronies. Sikkim is not the hunting ground for a team of greedy business people and cheap politicians. It is the land of the Sikkimese people. It is our pride. It is everything to us. Let them know it and render due respect,” said the SDF president.