After two years of demonetisation, black money circulation to increase: Survey

New Delhi: Not everyone has a sweet memory of November 8, 2016, when Prime Minister Narendra Modi, announced war against black money by demonetising Rs 1,000 and Rs 500 notes. While few applauded the move, many are critical as over 99% of demonetised notes returned to the banks.

After two years, a whopping 60% of Indians think that black money has not died and is back in full scale in the country. They also say that its circulation is going to only increase before the 2019 General Elections, reveals a survey by LocalCircle.

On the second anniversary of demonetisation, both the ruling BJP and Congress in opposition continue to fight. Congress party launched a Twitter campaign to protest against the note ban exercise. Soon, BJP hit back with counter-arguments and listed out the positive impacts the drive had on the economy. While the Congress posted ‘#DestructionByDemonetisation’ Twitter posts, BJP launched a campaign against Congress, with the hashtag #CorruptCongressFearDemo.

The Government has been boasting about a 71% increase in the number of income tax returns (ITRs) filed till August 31, 2018, when compared with last year. However, 40% people said the biggest benefit of demonetisation was that it brought a large number of tax evaders in the tax net. Only 12% said it reduced the amount of black money in the economy while 23% said it increased the direct tax collection. 25% said it had no benefit at all.

These polls were conducted by LocalCircles, in which more than 32,000 votes were received from over 15,000 participants located in 215 districts of India. Approximately 30% of the respondents were women while 70% were men.

The data released by the Controller General of Accounts showed that direct tax collections grew by only 6.6% during April-July of the current financial year against the Budget target of 14.4 percent for 2018-19, painting not a very rosy picture.

Other findings of the survey conducted by LocalCircles are even more damning. About 39% Indians said that they purchased items without a receipt every second time. A majority also said that they purchased property via cash or partly by cash in the last 12 months. “38% in the survey said that when they purchased a property in the last 12 months, they paid the full amount via e-payment or cheque. 50% said they paid 25 – 50% cash while 12% said they paid under 25% in cash,” said the survey.

The use of black money in property transactions was most common and continues to be. Land owners, builders and common citizens all evade taxes by understating the official value of a transaction. According to citizens — while demonetisation had temporarily disrupted the real estate sector, and in 2017 several citizens had admitted that the percentage value of black money in a transaction had drastically reduced, they are now saying that it has risen in 2018 and is back to the pre-demonetisation levels.

When Prime Minister Narendra Modi announced demonetisation on November 8, 2016, to get rid of “black money”, the entire nation welcomed the move. The other reasons were to purge the network of counterfeit notes and break up the terror finance network. The objectives of the government were laudable, but the people and the economic system paid the price for it. Indeed, rendering 86% of the country’s currency invalid overnight delivered a big blow to the economy heavily dependent on cash.

Congress has planned nationwide protests demanding Prime Minister Narendra Modi’s resignation for “ruining” the Indian economy with the demonetisation drive. Posting memes and photos of people standing in long queues to withdraw cash during the post-demonetisation days of 2016, Congress has gone all out with its attack on the BJP government.