Total Black Money In India 2018

Black money

Repercussions of Protracted Currency Shortage across Two Models of Financial Inclusion in India

Following the announcement of demonetisation on 8 November 2016, India saw the withdrawal of nearly 86% of the cash in circulation. This caused prolonged currency shortages and impacted employment, sales, income, loan payback capacity, savings and by extension, financial inclusion. A survey conducted among two distinct groups in Mumbai and Pune, three months after demonetisation, in April–May 2017, reveals the adverse impact of currency shortages on the incomes and livelihoods of those employed in tiny, informal enterprises. With a decline in the sales in their businesses, their income and savings fell, and so did the demand for credit.

Read more about Repercussions of Protracted Currency Shortage across Two Models of Financial Inclusion in India

Tax on Agricultural Income

A 2019 Comptroller and Auditor General report has brought out glaring irregularities in the exemptions given to agricultural income for income tax purposes. Exempting large income on agriculture from taxation not only makes the agricultural sector a conduit for money laundering and concealment of black money, but also holds back the much-needed modernisation and reform of the sector. Although everyone agrees on the desirability of taxing agricultural income, successive governments have shied away from it for electoral reasons.

Read more about Tax on Agricultural Income

The Curious Case of PAN–Aadhaar Linkage

The Government of India's justification for removing any distinction between a permanent account number allotted based on the Aadhaar and one allotted based on identification documents other than Aadhaar is examined. The government claims that this measure will end black money and money-laundering. Whether Aadhaar linkage to PAN truly identifies those holding financial instruments and undertaking financial transactions and whether it will save India the embarrassment of incorrect reporting as part of the nation's Foreign Account Tax Compliance Act and Common Reporting Standard obligations are explored.

Read more about The Curious Case of PAN–Aadhaar Linkage

Bringing Money Back

Estimate of illicit financial outflows and the demand to repatriate these are fraught with issues. First, there can be reversals in direction of flows of illicit money thereby making it tough to ascertain undeclared wealth held abroad. Second, even if the money is traced by the authorities of country, institutional impediments may prevent repatriation. Third, once such money is repatriated it may be more useful to employ these to set up trade transparency units.

Read more about Bringing Money Back

India's Marie Antoinette Moment

Narendra Modi's promotion of a "cashless society" shows the government's disconnect from ground realities, and harks back to Marie Antoinette's famous "let them eat cake" response to learning that peasants had no bread to eat. Clearly, a cashless or less-cash economy will not be achievable in the near future, and may also not be desirable.

Read more about India's Marie Antoinette Moment

EPW

Term & Policy

Connect with us