However, this data also means that the government must have already gripped its fists around some of the Rs 6 lakh crores that it was supposed to receive as windfall after demonetisation. This money was then supposed to be used to get rid of the Rs 3 lakh crore in bad loans that have been accumulated in banks so far. Further, the government had proposed heavy investments in public infrastructure. There were even rumours that Rs 15,000 would be deposited to every zero balance Jan Dhan account! However, though 60% of the money in circulation has reached the government’s hands, the windfall it was supposed to receive is nowhere near 60 percent.
In fact, the chunk of change that was to be received seems to have turned into a handful of pennies as the government is now devising new ways to capture black money. Just yesterday, Finance Minister Arun Jaitley today tabled the Income Tax Amendment Bill in the Lok Sabha. The bill aims at targeting the method of taxation on unaccounted wealth. According to the details that have emerged, a person with unaccounted deposits will have to pay 50 per cent of the amount including tax, penalty and Pradhan Mantri Gareebi Kalyan cess. Further, if the unaccounted wealth is undisclosed, the net rate payable to the government would mount up to 85 per cent. The question is, if demonetisation was supposed to eliminate black money, why is this amendment even necessary?
Added to this, is the truth that a huge chunk of the Indian black money lies abroad and hence, out of the government’s purview. There is also the question of counterfeit currency. The Rs 1000 note was fully inducted into the economy only in 2001. According to credible government data, it took Pakistan less than 5 years to replicate the high-value banknote and flood the Indian market with it. Even if the new notes have added security features, for a malicious country that even copied its nuclear weapons programme from other countries, how difficult can the task of counterfeiting paper currency be?
This means, that to prevent illicit funding for terror-related activities, the government has to either demonetise notes once in every decade or find other means of dealing with the menace. Further, the political motives of the government seem doubtful. Was there really a need for demonetisation right now? The government had already launched amnesty measures for black money holders that it touted as being successful. If demonetisation was deemed necessary, all earlier measures against black money fail by default.
It seems as though, the necessity of demonetisation was not fuelled by the rising issue of unaccounted money but rather by a governmental term almost 2/3rds over that had failed to achieve its objectives. It appears as if demonetisation was merely a measure for indicating the intention to achieve something rather than actually generating a clean economy.