Indore: Demonetisation is one of the steps to curb menace of black money. This step was necessary to curb growth of parallel economy. The sudden decision had hit many a target hard. But the success of the scheme can only be measured only when cash deposit in banks touches Rs 2 lakh crore. And if it goes beyond Rs 2 lakh crore then it will be a grand success. As the government wants to promote cashless economy, in future new currency note of Rs 2000 would be withdrawn .
These views were expressed by senior tax consultant Mahendra Badjatya, who is a practising CA for the past 35 years and has authored three books on economy and black money.
Talking to The Free Press Journal, he threw light on various aspects of black money and current demonetisation issue. Excerpts of interview:
- What is the size black money in India and abroad?
- In last seven decade, the political system, bureaucracy, poor tax system and illegal activities are among other factors which helped generation and consumption of black money. So the quantum of black money out of the total Rs 17.5 lakh crore in circulation could be Rs 2 to 3 lakh crore. But the wealth generated out of black money and parked in real estate, gold shares etc may be more than Rs 10 lakh crore.
- Do you think the sudden declaration of demonetisation is right?
- Yes, the surprise move was the only way for this type of operation. Actually eradication of black money from the system in terms of its generation and consumption can’t be done on the basis of demonetisation only. Before demonetisation, a complete master plan has been prepared and accordingly a series of steps has been taken by the government in last two years like changes in laws related to Money Laundering, Benami Property, Foreign Tax Credit, TDS, AEOI, Double Taxation Treaty, Transfer Pricing, Section 285BA of Income Tax Act, Income Declaration Scheme, Black Money Act, Phasing out exemptions and deductions etc. The demonetisation is one of the last steps taken by the govt.
- As in news that more than Rs 25000 crore were deposited in ‘Jan Dhan’ accounts. What is your observation on these figures?
- In general a Jan Dhan account holders are not earning more than their routine figure, so large-scale deposit in Rs 500/1000 currency notes is hard to digest. These account are either bogus or the holders are used for laundering black money by the vested interest.
- Why Rs 2000 currency note is brought instead of Rs 1000 note?
- The question is raised by many political parties and is right in its place. For instant replacement and due to transportation of this size of money all over the country it was well thought and necessary. So it does not mean that it was again to promote black money. It may be an isolated answer. It may be possible that after some time as the cashless economy grows the high denomination note of new Rs 2000 may also go.
- Is demonetization a step to collect more tax?
- No, tax collection does not appear to be only target. Actually it is the fight against many illegal activities like terrorism, fake money, organized frauds, international and local hawala system, book entry adjustments, drug mafia, money powered political elements, which are mainly nourished and flourished with the help of cash in the form of black money.
- In your opinion what could be the success criterion of demonetization scheme in numbers?
- According to the news, Rs 14.5 lakh worth high denomination notes are in vogue. If up to Rs 1 lakh crore remained out of banking system then the results are so-so. If it goes up to Rs 1.5 lakh crore then it is success. If it goes further up to Rs 2 lakh crore then it is great success.