The move to demonetize Rs.500 and Rs.1,000 currency tenders by the Narendra Modi Government was a laudable and historic effort to clean up the decades-long corruption and black money. A brave decision for the long-term betterment of the country’s economy! Also, it is a fact that the common people of this country are facing real-life challenges following the decision and that the Govt failed to make adequate alternative arrangements to avoid such a precarious situation in the country. However, it is understandable that considering the extreme secrecy involved in the crucial move, they were unable to undertake preparations to the desired extend.
As it is evidently seen, following the demonetization move, lakhs of crores of rupees are flowing into banks across India. It is expected that the trend would continue in the coming days, too. As per reports, jewellery sale has come down by 70%, a clear indication that the present demonetization process has laid trap for black money holders. It has potential to break all illegal transactions in real estate, gold, and a few other sectors where circulation of unaccounted money has reached saturation point.
India is on the top order among the most corrupt countries. Illegal nexus among politicians, business people and bureaucrats has resulted in percolating corruption into every fibre of the economy, resulting in the formation of a parallel economy based on black money or unaccounted money. There are bigwigs who do business worth Crores of rupees, but evade tax by cleverly tapping the loopholes in the system and go scot free. While a section of people thrive on black money, there is another section of honest people who strictly follow the laws and pay taxes to the government without fail. This section of ordinary people include salaried individuals whose income is credited directly to bank accounts.
It is important for the Central Government to alleviate the present inconveniences faced by the common people and take them to confidence at the earliest. Besides ensuring that common people have immediate access to enough money to pay for their daily needs and health emergencies, Government should also revise the tax ceiling. The ones who pay taxes without fail are mostly the ordinary salaried people. Even as living costs keep increasing, they ought to pay tax for all the earnings above a mere Rs.2.5 lakh. In the present scenario, the Centre can increase the Income Tax exemption limit to Rs.10 lakh, without any additional burden to the exchequer. Likewise, as per present tax rules, those who earn above Rs.10 lakh come under the highest Income Tax slab. This limit should be increased to at least Rs.20 lakh. These benefits need not be given to corporates and others with high-earnings.
Together with giving these benefits, financial transactions through debit/credit cards and cheques should be encouraged to reduce cash transactions. To do the same, charges levied on services using debit/credit cards and cheques should be discontinued. This measure is important, because cash transactions generate black money. Using plastic money and cheques will help make financial transactions transparent and accountable.
Meanwhile, talking to people belonging to different social and economic strata after demonetization was introduced, I learnt that the laudable effort to put an end to black money will become futile if urgent measures are not taken to control the lobby that is presently engaged in making black money white. These lobbies are ready to exchange the devalued old notes with new currencies for certain percentage of commission. There are others who do this through certain dollar exchange mechanism. There is no doubt that it’s difficult to make this system foolproof in a country with still a considerable percentage of illiterate people, who do not have the knowhow of using debit/credit cards or no frequent access to banks.
As for those dealing with black money, they’ll constantly try to find new ways and means to escape the hands of law. If the Government does not make it a point to seal all the loopholes, all these efforts – by the dedicate banking personnel, law-keepers and the ordinary people who showed patience to stand in queue for hours – will go in vain.