DEMONETIZATION - HIT THE BLACK MONEY......!!!!!!!!!

DEMONETIZATION - HIT THE BLACK MONEY......!!!!!!!!!

It is evident that demonetisation will not achieve its stated intent of eliminating black money but has thrown the entire country’s economic system in disarray. Related developments also call into question Government’s intentions and need clarification :-

Rs 1.14 lakh crore of bad debts has been waived by Government banks in the last 3 years. At the same time, loans worth lakhs of crores of rupees are still outstanding. Why has the Government not made public the names of the beneficiaries of the waiver and the names of the big defaulters, both individuals and corporations?

A key campaign promise was to bring back black money stashed abroad and deposit Rs 15 lakh each from the proceeds in the account of every citizen. Why has the Government not made public the names held by it of Indian account holders in offshore banks?

Were BJP leaders and friends given prior information about the impending demonetisation so that they could take pre-emptive measures to safeguard their assets? [The WB unit of the BJP is reported to have deposited a total of Rs 3 crore in Rs 500 and Rs 1000 notes in its bank accounts in the days and hours before the announcement of the demonetisation. A BJP leader posted pictures of wads of Rs 2000 notes much in advance of the demonetisation. A digital payments company printed a full page advertisement lauding demonetisation in a newspaper on the morning following the announcement at 8 pm on November 8, 2016.

Why did the Government announce that cash deposits higher than Rs 2.5 lakh will be scrutinised against the tax return with 200% penalty for any tax evasion? [This appears to be intended to dissuade people from depositing money so that the Government can claim success of demonetisation and forewarn people to split their deposits among different accounts and different depositors.

All conversions can be done only after filling a form and attaching ID proof. This has led to major harassment of poor and illiterate people and those who do not have an identity card.

What is the cost of demonetisation? [It has been estimated that the cost of replacing currency in circulation with new Rs 500 and Rs 2000 notes will be Rs 20,000 crore. Besides, far greater losses will be incurred by markets predominantly run on cash and the participants (wholesale markets, retail stores, street-vendors, transportation etc) and in lost productivity.

Even if the Government was intent on demonetisation, why was it not implemented after careful planning: new notes printed, arrangements made for distribution, ATMs recalibrated etc? [It has been seen that banks are running out of cash within hours of opening and most ATMs are still non-functional.

We are all concerned about the use of money power in elections. Why hasn’t the Government proposed state funding of elections? Why is the BJP resolutely against transparency in its own funding by refusing to come under the Right to Information Act?

The summary way demonetisation has been effected is leading to a riot like situation in the country. We demand that the Government ensure that common people have immediate access to enough money to pay for their daily needs and health emergencies. Failing which, we demand the rollback of demonetisation or suspension of demonetisation to enable the common person to make adequate arrangements for daily needs and for more orderly phasing out of the old notes. The role of the Government is to undertake honest tax administration and not to treat the common person like a criminal making him/her stand in line and filling forms to access his/her own legitimate money.

This is not a ‘notebandi’, actually it is a ‘notebadli’, a mere replacement of old higher denomination currency notes of 500 and 1000 with newer currency in denomination of 500 and 2000. As per RBI data, as on March 31, 2016, about 15.45 trillion worth currency in 500 and 1000 denomination was in the system, out of which about 55000 crores were in the banks and 10,000 crores were in the ATMs in the entire country, so net amount in hands of public was 14.85 trillion. The objective of this replacement exercise was to shed off the 70,000 crore worth currency in 500 and 1000 denominations which was fake and counterfeit, brought to india from other neighbour countries and terrorists. And this will be 100% accomplished as banks will not accept these notes for deposit and so this much currency worth will not be replaced. It will take about 6–7 years for this much fake currency to enter again in the system, and the decision to launch plastic notes will make it more difficult.

The other objective is to get rid of some part of black cash which the people will not deposit in the banks, and thus will not get replaced. Govt’s estimate was that about 3.5 trillion worth old currency will remain undeposited, so this much worth currency will not be printed by RBI and this amount will pass on to Govt. As a dividend, which it may utilize for infrastructure development or reduction of fiscal deficit. However, thanks to many loopholes in the entire replacement program, and banks involvement in turning black into white by illegal means, already 12.44 trillion has entered into the system, and by Dec 30, may be only 10% of the 14.85 trillion will remain unreplaced, i.e. 1.5 trillion. Even this amount is good enough to counter the cost of implementation of this exercise, which is estimated to be 1.75 trillion, including the GDP lowering.