Supreme
Court (SC) passed strictures on economic reform policy. Observations of SC are noteworthy; “When you
framed policy, was any mind applied? Was there a plan or was it brought in an
impulse?” court questioned and no satisfactory response was received from the
government. On December 14 the SC will hear
the argument from the respondent. It is
the duty of Modi government to fight the battle, if looser; government will have
to resign.
The
Income Tax department and Enforcement Directorate decided to begin massive assessment
exercise and will scrutinize all offbeat and suspicious accounts. To outflank the unending official procedures,
department is planning to bestow the discretionary powers to concerned officers. Processing and inferring more than 40 crore
accounts is not an escapade. Member of
task force on direct taxes said “The size is large, there is need to work out
rational solutions. It has to be rule
based and non-discretionary. Otherwise,
the return of investment in such investigation may be negative.” The observations are extremely important, if
officers are granted discretionary powers then can be used as per their vagary (Inspector
raj).
Let
me quote two examples. Jewelry firm from
Delhi has earned Rs 75 crore between 8 pm to 12 midnight on November, 8; the IT
department is investigating at three branches of a firm regarding sale of 200 –
250 kg of gold. Surprisingly, the jeweler
has not obtained PAN card details of customers.
The Jeweler intentionally showed sale below Rs 2 lakh per customer since
the law permits sale below the limit without PAN number. The proprietor denied allegations against him. Second, a novel way of cheating was
noticed. Money launderers have open fake
accounts in the name woman and her parents without their knowledge and
deposited Rs 4.25 crores. When concerned
questioned the lady, it was an ictus for the family. Such instances are the tip of iceberg. It is practically difficult to unearth each
and every misdeed. On an average, every
day, minimum of Rs one hundred crore of illegal transactions, hard currency transfer
and alleged wealth is being detected.
To
outflank the money crunch crises, innovative methods are being utilized. Organizers of annual agricultural fair near
Pune have distributed coupons of Rs 100 to farmers in exchange of Rs 2,000
note. Internal currency system was found
useful and farmers were happy to carry out financial transactions. A total of 10 lakh visitors have visited a
fair and business of Rs 10 crore was recorded by the organizers in a day.
Figures
across the country indicated drop in financial activities in real estate sector. To quote a few, the percentage of drop in
real estate sector is 39% from Mumbai, 16.4% from Delhi, 43% from Gujarat, 66%
from Jharkhand, 20% from Punjab and 30% from Chandigarh. In above cases, the deal was done before annunciation
of policy, however, sundry number of deals is registered after November 8.
It seems, politicians are playing their
own cards in and outside Parliament. The
unity among UPA as well as within NDA is shattered. Shiv Sena happen to have close association
with opposition; and JD (U) fraction, BJD, TSR are affiliated to ruling
party. In Rajya Sabha, because of lack
of quorum (minimum 25 MPs) the house adjourned till coming Wednesday. In Lok Sabha, the opposition was ready for
discussion but ruling party has not allowed to debate, resulted in huddle due
to slogan shouting and blame game. Rahul Gandhi, Vice President Congress Party
told the media that he wanted to speak about the biggest scam committed by PM
single-handedly. The opposition is
questioning regarding reduction of import duty on wheat from 10% to zero when
the bumper buffer stock is available, it probably due to cash crunch and to
avoid food riots. Union Commerce
Minister and Industry Minister Nirmala Sitaraman stated that the policy is to
make economy digitized and cleaner.
The Reserve Bank of India has instructed banks to circulate new Rs 500
notes through ATM. “Digital transactions
have surged up to 1,000 per cent” said Law and IT Minister, Ravi Shankar
Prasad. The decision of printing of
plastic currency notes is in progress, it was announced by the government in
the Parliament.
Mr
Kaushik Basu, former Chief Economic Adviser of India warned the government
regarding enhancement in sufferings of people and also new form of corruption
practices in society due to demonetization.
Due to complexity in the policy, collateral damages are many more. The difference - deposition of Rs 12 lakh
crore old notes minus circulation to the most Rs 6 lakh crore new notes - will
hamper the overall growth. In his opinion
the only poor are the sufferers. There
will be eminent slump in growth of economy as GDP is likely to go down to 6.9
per cent, he said. He described the term
“money mule” for those who will convert black money to white. “Black money is 20 to 25 per cent of GDP,
some time will be required for digital mode so as to curb illegal practices,
change in mind set is required, work burden has increased unnecessarily” are
some of the quotes from his lecture at IIT, Mumbai.
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