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India parliament passes key Modi bill on 'black money'

By AFP - May 13,2015 - Last updated at May 13,2015

NEW DELHI — Lawmakers on Wednesday approved a crucial bill that aims to unearth billions of unaccounted dollars believed to be illegally stashed in foreign banks by Indians to avoid paying tax.

The upper house of parliament passed the bill that calls for fines as high as 10 million rupees (about $156,500) and prison terms up to 10 years for offenders.

The passage of the legislation underscores Prime Minister Narendra Modi's resolve to trace hidden and undeclared cash outside the country, known as "black money".

Modi's Bharatiya Janata Party (BJP) won the biggest mandate in 30 years last May on pledges to revive the economy and end corruption. 

Modi pledged during his high-octane election campaign to "bring back black money within 100 days" of being elected, after accusing the previous Congress Party-led government of failing to crack down on the issue.

He set up a team of regulators and ex-judges to identify illicit fund-holders and repatriate money as soon as he took office.

Illegal deposits abroad cost India billions of dollars in lost revenue. According to the Washington-based think-tank Global Financial Integrity, India suffered $344 billion in illicit outflows between 2002 and 2011.

The government has already submitted a list of people with illegal foreign bank accounts to India's top court, which is monitoring the case.

But the latest bill's passage is a rare victory for Modi in the upper house, where his coalition lacks a majority and regularly faces opposition protests.

Modi's struggle in the house has stymied his economic agenda, especially after furor over a controversial land-buying law and a further delay in the long-awaited goods and services tax (GST) bill which was sent for scrutiny to a committee earlier this week.

The GST bill aims to end India's patchwork of taxes under which each state can tax different commodities at different rates. The move would stop rival states competing for business through taxes.

It will now be introduced in the next parliamentary session in July.

Separately, India's government moved Wednesday to toughen child labour laws in a country where millions of youngsters work long hours, often in poor conditions, but activists slammed the steps as inadequate.

Modi's Cabinet approved a ban on all children under the age of 14 from working, except if employed in family businesses or in the sports and entertainment industry.

The current law prohibits children under 14 from working only in hazardous jobs, although even this is not properly implemented, according to activists.

The government defended the decision to allow some forms of labour after school hours or during vacations saying some children needed to learn traditional skills. 

"In a large number of families, children help their parents in their occupations... and while helping parents, children also learn the basics," the government indicated in a statement.

The Cabinet also needed to "keep in mind the country's social fabric and socio-economic conditions".

Some argue that outlawing child labour altogether is impractical in India where almost a quarter of the 1.2 billion population lives on less than $1.25 a day, according to the World Bank.

Millions of children work as domestic servants and in factories, mines and many other areas, aid agencies and government figures show.

Activists warned that the proposed changes could be exploited by unscrupulous employers and would be difficult to enforce in a country with a huge number of backyard industries. 

"There have been many discussions around providing vocational training to children but we think that this is regressive," Sreedhar Mether, advocacy and policy manager with Save The Children, told AFP.

"Enforcement of these points is really difficult and opens the possibility of children being exploited in bangle or garment industries where work is often outsourced to home-based units," he said.

Cabinet also approved higher fines of between 20,000 rupees ($300) and 50,000 rupees and jail terms of between six months and two years for employers hiring children under 14.

The approved amendments still need to be approved by both houses of parliament.

The changes are meant to bring India's child labour law into line with its landmark Right to Education law, which was passed in 2010 and provides free, compulsory schooling to children up to 14.

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