Black money, terror & fake notes: Alternatives to demonetisation
Modi government should have considered several alternatives if it genuinely intended to eradicate back money without causing hardships to the innocent citizens, argues an AICC study
The economy is facing a downturn due to demonetisation. The negative fallout has not compensated by the effective eradication of black money, terror and fake currency notes. Could one have expected better from a Prime Minister who did not even consult the eminent economists that reside in this country before wreaking havoc?
According to a study conducted by the All India Congress Committee research department, the government, if it genuinely intended to accomplish such a task, should have considered or should consider the following alternatives:
Track down swiss bank accounts
Black money hoarders prefer opening foreign accounts anonymously as the first step. In fact, Modi himself said in one his 2014 election speeches that more than 90 per cent of India’s illegal wealth lies abroad. Why could not Modi use executive action to recover information from Swiss bank and other nations about Indian accounts, like the UPA did in 2011?
Regulate real estate sector
Real estate is one sector where unaccounted cash is involved on both ends (buying and selling) of a transaction. With the RERA Act in force, Modi should have instituted for better policing of transactions and perhaps pushed for lower taxes as necessary. Instead, demonetisation has managed to only capture a small part in cash, long after the entire process of illegal transaction has taken place.
Why did the Modi government not unleash continued and high frequency I-T raids from day 1 of coming into power? The rich were practically untouched by the demonetisation drive.
Unaccounted money that is routed out of the country finds its way back as accounted money through Participatory notes (P-notes). Modi should have taken the bold step of banning these notes. Notably, the UPA had already initiated action in this direction by gradually restricting the use of P-notes.
Data & technology in tax systems
The use of advanced technology could have captured minute traces and patterns of tax evasion. It would then be easier for a trained taxman to compare and assess various properties of individuals and identify evaders. And as availability of data is increasing, and will grow substantially after GST, it would have easily determined who to go after.
Expenditure for digital India
If the government had spent out of its kitty for upgrading digital infrastructure, the capacity of the tax system could have increased by leaps and bounds. Alas, Digital India is just another jumla for Modi.