Representative imageThere is no denying the fact that the demonetization drive by the Narendra Modi government has pushed the people into hardship. The decision may have been implemented without foolproof arrangements. At the same time, the government’s options were limited because it had to maintain secrecy for the complicated move to achieve its target.
Millions of rupees have flown into the banks after the demonetization announcement on November 8. This flow will continue in the near future. Sectors such as gold trade and real estate are more susceptible to the effects of black money. Sales at jewelries have come down by 70 percent, suggesting that the flow of black money has been reined upon.
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India is at the forefront of the most corrupt countries. A section of the population is fattening itself with money earned immorally and illegitimately, while the others pay their taxes to shore up the state’s finances. Committed taxpayers, including those who receive their salaries in the banks, do not have anything to hide.
Meanwhile, many of the big businessmen evade tax. A strong parallel economy is thriving with an unholy nexus with politicians and bureaucrats.
The central government has to take measures to lessen the hardships of the people hit by the change in policy and to lessen complaints by taking people into confidence.
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Amajor share of the taxpayers is made up of the salaried employees. They have to pay tax for anything exceeding Rs 2.5 lakh per year, no matter the cost of the inflation. The central government could decide to raise this cap to Rs 10 lakh immediately.
Current laws also demand tax at 30 percent from those who draw annual salaries above Rs 10 lakh. This cap can be raised to Rs 20 lakh.
Corporates and those in the high income bracket do not deserve any such exemption. The government’s finance will not be strained by such relaxations because more and more money is coming to the state’s coffers thanks to the curbs on black money.
At the same time, banks and other institutions should scrap the charges they impose on debit and credit card transactions in a bid to discourage cash transactions. Transparency in financial transactions will help in stopping tax evasion and eliminating black money.
My interactions with people from various walks of life tell me that a lobby is at work to exchange invalid currency notes for new ones. Some people have made it a profession to launder black money for a sizable cut. Some others are offering to change the invalid notes for foreign currencies. Transactions through debit and credit cards and net banking are still limited in a country like India with its high levels of illiterates.
Black money will keep finding channels to operate and escape scrutiny. If the government is not able to cover the loopholes, this whole exercise will be futile. The hard work put in by bank employees and law enforcers will prove to be of no value.
(Kochouseph Chittilappilly is a Keralite entrepreneur and philanthropist)
