Demonetiation is incomplete unless govt abolish current tax system; Bokil

One year after demonetisation, Anil Bokil said that demonetisation was a bold decision of Narendra Modi led NDA regime but for complete elimination of black money, govt needs to make reform in current taxation system. It is being believed that he had given idea about demonetisation to the PM Narendra Modi.  In an interview to an e-paper Bokil said demonetisation is incomplete without the other steps in his formula which including a banking transaction tax replacing all other taxes.

One year after demonetisation, what is your observation now?

As per my observation, the exercise was not demonetisation, but was just de-currencyfication. Since government’s demonetisation exercise only pertained to the currency money in circulation, the word ‘demonetisation’ is inappropriate. Instead, the phrase ‘note ban’ correctly describes the exercise. Around 30 percent of our population Below Poverty Line (BPL), high-denomination notes accounted for about 85 percent of total currency money. This makes cash transactions very easy, boosting corruption, black-money generation, parallel economy and all sorts of anti-social, anti-national activities.

The high-denomination notes were also a reason for large proportion of fake notes. It also meant banks were always short of primary deposits, leading to hard and costly capital supply to the national economy, which affected all—farmers to businessmen. Due to this parallel economy, governing systems simply failed to deliver. Thus, note ban was a much-needed step. The cash gathered in high-denomination notes over the years has came back to banks, in the formal traceable economy. Banks now have more deposits that can be used for lending purpose. Digital transactions are on the rise. These are positive signs for the nation’s economy.

Do you think note ban managed to achieve the desired result?

The RBI has published its data on September 15, says—Re-distribution of currency: Rs 500 notes account for nearly 22 per cent as against 47 per cent a year Rs 500, Rs 1,000 notes together made about 85 per cent of total currency money a year ago while Rs 500, Rs 2,000 notes together make nearly 72 per cent of total currency money now. Total volume of currency stands at nearly Rs 13.3 lakh crore as on  March 31, 2017 compared to Rs 16.6 lakh crore in September 2016 We perceive note ban is just the start of a structural change. Note ban is an effective decision because it has reduced the black money in the form of cash in circulation. It is a required  balancing of an economy.

 

NOTE–THE CONTENT BELONGS TO ET

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