Bengaluru, Nov 26: The Union Government's decision to ban Rs.500 and Rs.1,000 notes on November 8 has had wide ranging implications on lives of the citizens. The move is broadly aimed at tackling three problems - hoarding of black money, terror financing and presence of fake currency notes in the system.
Whether the move will be able to eradicate black money completely has drawn mixed reactions in one of the biggest online polls run by Oneindia. The survey was run in Oneindia's English, Tamil, Telugu, Kannada, Malayalam, Bengali and Gujarati channels, in which 31198 people participated.
Although, a majority of people (54.3%) did agree that demonetisation was a big step in the direction of eradicating black money, around 45.7% felt that introduction of Rs.2,000 notes will only increase black money.
Out of the 31,194 people posed with the question "Will black money be eradicated completely?", 14267 said that "introduction of the Rs 2,000 note will only increase black money" while 16, 927 agreed that "it is a big step in that direction".
It is quite evident that the menace of black money is so widespread that only demonetisation will not help to weed it out.
The demonetisation will surely affect those who have hoarded massive amounts of wealth in high value currency notes, but people will eventually find ways to convert their unaccounted wealth into white money.
Another thing is that all the black money is not necessarily cash and all that is in the bank is not white. There are always Swiss Banks and other safe havens abroad where black money can be stashed.
Coming to unaccounted cash in Rs.500/1000 notes, there are already reports of Jan Dhan accounts, especially of those with low money inflow, being used to deposite cash, which can later be withdrawn at a premium.
There were also reports of cash being directed to certain North-eastern states such as Nagaland, where I-T rules on declaring source of income does not apply. Black money hoarders can exploit such loop holes to convert their cash to white by paying a commission to those willing to cooperate.
Apart from cash, large amount of black wealth is invested in real estate, gold and other precious metals, diamonds, benami financial investments, undervalued stocks, undisclosed foreign holdings, and hawala.
The black economy is well entrenched in India because of multiple reasons. A multipronged approach is needed to root out this problem, but the most important thing that is needed is change in the mindset. People must take pride in being law abiding citizens and feel that taxes are being collected in the larger interest i.e. nation's development.