Monday, 28 November 2016

Will demonetization wipe out black money?

               Chhibber in his recent article published in esteemed newspaper Indian Express dated November 28 categorically pointed out that the policy bound to have collateral damages.  It is a blunder rather than its affirmative effect to curb black money from the root itself he stated.  His analogy is countries like Zimbabwe, Argentina, Myanmar, Ghana, Soviet Union, Nigeria and Zaire have demonetized their currencies without any significant achievements.  Black money holders always transformed it in gold, real estate and offshore investment.  Furthermore, demonetization to be undertaken only when economy gets tumbled and inflation reaches at a higher peak.  His assessment is black money will reduce by 0.5 to 0.75 per cent of GDP but damages to the economy will be huge and unsustainable.  Rural based economy along with MSE will tumbled down and culminated to negative GDP growth.
            What legacy the present Government received from Dr Manmohan Singh Government was scams after scams.  Poor become poorer.  Agro based industries and MSE which are major employment provider were received in bad shape.  Politicians played with the life of common man.  Suresh Kalmadi, Raja, Kanimozi and many more have tarnished the image of Indian society.  There was rampant corruption at every level.  A decade of corrupt Congress raj culminated in to wealthy became wealthier.  There were no social, political and economical reforms for a decade.   

Now, ours is a growing economy.  Modi Government is adopting reforms one after the other.    To root out corruption, bilateral agreement with different countries is in progress, automatically information will be received as and when Indians will carry out transaction in other countries.  Efforts are being made to bring black money holder in tax net.  This is the beginning, not the end.  PM has already hinted in his speeches that next step is to curb benami properties.  Gold will probably the next target.  So, no need to panic.  Positive steps definitely will yield desirable result.  So, wait and watch.

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