Financial secrecy deprives countries, especially developing ones, of key revenue resources by eroding their tax base. India must thus build a robust legal system to lift the veil of secrecy on both onshore and offshore financing.
Demonetisation has not dented the black economy, but it has damaged the white economy, especially the unorganised sectors.
In Understanding the Black Economy and Black Money in India, Arun Kumar takes us on a journey from the origins of the black economy in India to what should come after demonetisation.
By taxing the incomes of the top 4.1% of total agricultural households, as much as Rs. 25,000 crore could be collected as agriculture income tax.
C. Rammanohar Reddy speaks to The Wire about his recent book Demonetisation and Black Money, the impact of the policy on the masses and the government’s shifting narrative towards digitalisation.
With the end of the crisis in sight, the gains and losses from demonetisation can be assessed with some confidence.
Extracts from C. Rammanohar Reddy’s Demonetisation and Black Money that explore whether the note ban had any impact on the rich, how Digital India entered the narrative and the impact of the move on the poor.
Black money may be funnelled away in tax havens, but it is all controlled out of London, where Indian and other billionaires are happy to be based.
Despite the hardships, why do many people continue to back what most economists and analysts have termed a bad policy?
The rationales behind the surprise move – targeting black money, terror financing and building a cashless economy – have all failed to elicit results. Why then was this exercise undertaken at all?
If the government is serious about addressing the black economy, fundamental changes in the structure and organisation of the economy and politics are required.
For the government to truly fight black money and ensure complete transparency in political funding, the ambit of the Right to Information Act must be expanded to include political parties.
The Budget appears to be pro-poor and pro-business, but it fails to address the reforms actually needed to structurally transform the economy.
The Budget estimates of gross tax revenues for 2017-18 are the same as the revised estimates for 2016-17 – 11.3% of GDP.
Proposed amendments to RBI Act, IT Act and RP Act would leave the RBI and IT department with no means to probe funding of political parties.
The political economist answers a range of questions on the note ban – painting a comprehensive picture of what demonetisation has done to democracy, agriculture, the ‘black economy’ and society.
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A shift away from cash reliance will come only when the urban middle class finds plastic money more convenient, not with forceful government intervention.
Proponents of demonetisation say it was required for market correction. However, given the magnitude of government interference involved, it is likely to disrupt markets rather than correct them.
How much money will come through the second income disclosure scheme and by tracking down hitherto unidentified black money? What will it be used for?
To tackle black money that originates in the process of electing MPs and MLAs, the legal provision that freezes the number of Lok Sabha and state assembly states must be revisited.
The Sena also said that the BJP is living in a fool’s paradise if they think that demonetisation has ended the menace of black money
How Narendra Modi has brought back dark memories of colonial India.
While Modi’s statements about the economy fall flat when compared to data, most of the promises the prime minister made are simply new packaging on old schemes.
In a speech full of faulty economic reasoning, Modi made one factual claim – the number of Indians with official incomes greater than Rs 10 lakh is just 24 lakh. If demonetisation really works, he needs to up that figure substantially in the next two years.
Smaller informal economy players have totally lost out in this bizarre game, when they sold their currency at a discount only to help hawala dealers and middlemen make huge profits.
The government rejected the idea of demonetisation because it believes that such a move “would adversely affect the efficiency of exchange in business”.
While the prime minister is partly right, it isn’t the whole picture and there is certainly more than enough blame to go around.
If the Modi government is serious about acting against black money and corruption, why is it shying away from regulating political funding?
Blaming the money laundering instances on a few employees and suspending officials may deflect public and regulatory criticism but the cancer is widespread.
It is in both the Congress and the BJP’s interests that these records are not looked into; the Supreme Court should step in and insist on a proper investigation.
How does Narendra Modi’s demonetisation “surgical strike” help deal with the problem of black money in politics? The answer is simple: It doesn’t.
Deposits in excess of Rs 5,000 will only be credited once, and that too after the depositor is questioned as to why the notes weren’t deposited earlier.
The greater and longer the pain of demonetisation, the greater is the degree to which one of its key premises is undermined.
Although the BJP says demonetisation will target unaccounted money, it and other national parties have in the past failed to submit their income tax returns and disclose sources of donations.
The new black money disclosure scheme will start from December 17 and continue up to March 31, 2017.
The prime minister also pointed out that demonetisation should have been carried out in 1971 by Indira Gandhi, as was recommended by the Wanchoo committee.
Despite the hardships being faced by the working class due to the note ban, the rhetoric of fighting corruption and targeting the wealthy means they are bearing the pain in silence.
The scheme will give tax dodgers another chance to come clean by paying 50% of tax on the junked currency deposited in banks post demonetisation.
Invoking people’s power as a force higher than state power, as the prime minister appears to be doing, is highly dangerous.