On the 8th of November 2016, the Prime Minister of India sounded the war cry on ‘black money’, setting off by demonetising the Rs. 500 and Rs. 1000 currency notes. Whether this first big step has an impact on curbing corruption, which is a major cause of the generation of ‘black money’ in India is yet to be seen. More steps in the days to follow will show if he will take the fight to the finish. However, one thing is certain, people have realised that they would have to change their ways and fall in line with doing business professionally in the formal economy; not paying bribes, paying taxes and transacting via the banking system to bring about the desired levels of transparency. A tough call indeed!
The frequently changing rules associated with the demonetisation exercise and the new amendments to the income tax act are likely to result in hundreds of thousands of notices being issued by the IT department to people and businesses who deposit cash in their bank accounts. They will question the source of these funds and upon the slightest doubt they will assess these deposits as unaccounted income and begin recovery proceedings for taxes and penalties. With India being a democracy, access to justice is a fundamental right of all citizens which governments cannot afford to deny. To seek relief, the assessees will counter the claims of the income tax authorities by taking recourse to the law. The gravity of the situation will become all the more pronounced when one considers the fact that there are 38.76 lakh cases pending as on December 31, 2015, in all high courts, of which 7.45 lakh — almost 20 per cent — have been pending for over 10 years. The situation in subordinate courts is not any better: Of the 2.18 crore cases pending in lowers courts in the country, 1.46 lakh are criminal cases and over 72 lakh are civil cases, not to mention the suomoto and frivolous cases being filed on a daily basis! One shudders to think what will happen then!
Undoubtedly, there have been positive outcomes of demonetisation. With new currency notes in short supply, activities of anti-national leftist groups such as the Maoists have been hit, there have been no reported incidents of stone-pelting in Jammu & Kashmir and the burning of schools there has stopped. Fake currency rackets, drug peddlers and ‘Havala’ networks have all been hit hard. Smugglers are finding it very difficult to sell their stuff in the ‘Grey Market’, as only cash dealings happen there.
However, as per analysts, the immediate impact in a liquidity crunch scenario will be of businesses cutting back on their current expenses and new investments. Industrial production shall suffer as sales dip, compelling them to lay off daily workers and some even issuing pink slips to their regular employees. A fact substantiated by a renowned conglomerate recently laying off 14,000 of its work force. Even the domestic sector won’t be spared, as a lot of people hire maids, cooks, drivers and helpers and pay them with black money. It might suddenly reduce the demand for these and impact such people at the bottom of the pyramid.
So what will the high levels of unemployment lead to? The answer is: most probably crime and possibly civil unrest, something that even the apex court has warned the government about!
So far the positives have an edge over the negatives. That’s probably why the hardest hit people who are at the bottom rung of society are supporting the government in its moves. I just hope that their patience doesn’t run out soon; only time will tell!
As SECURITY TODAY heads for the IFSEC India show in New Delhi as its Official Media Partner, I look forward to meeting many of my friends and readers, from India and overseas, there.
Till then, Cheers and wishing all our readers a Merry Christmas and a very Happy New Year!
G B Singh
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