Advertisement
Monday, Aug 15, 2022
Outlook.com
Outlook.com
Reportage

November 8, 2016 Signifies The Government’s Resolve To Cure The Country From 'Dreaded Disease of Black Money: Arun Jaitley

November 8, 2016 Signifies The Government’s Resolve To Cure The Country From 'Dreaded Disease of Black Money: Arun Jaitley
November 8, 2016 Signifies The Government’s Resolve To Cure The Country From 'Dreaded Disease of Black Money: Arun Jaitley
outlookindia.com
2017-11-07T13:44:15+05:30

          With increase in tax base and bringing back undisclosed income into the formal economy, the amount of Advance Tax paid by non-corporate tax payers during the current year has also increased by about 42% during 1st April to 5th August.

          The leads gathered due to data collected during demonetisation period have led to identification of 2.97 lakh suspect shell companies.  After issuance of statutory notices to these companies and following due process under the law, 2.24 lakh companies have been de-registered from the books of Registrar of Companies.

          Further actions were taken under the law to stop operation of bank accounts of these struck off companies.  Actions are also being taken for freezing their bank accounts and debarring their directors from being on board of any company.  In the initial analysis of bank accounts of such companies following information has come out which are worth mentioning:

  • Of 2.97 lakh struck off companies, information pertaining to 28,088 companies involving 49,910 bank accounts show that these companies have deposited and withdrawn Rs.10,200 crore from 9th November 2016 till the date of strike off from RoC;
  • Many of these companies are found to have more than 100 bank accounts – one company even reaching a figure of 2,134 accounts;

          Simultaneously, Income Tax Department has taken action against more than 1150 shell companies which were used as conduits by over 22,000 beneficiaries to launder more than Rs.13,300 crore.

          Post demonetization, SEBI has introduced a Graded Surveillance Measure in stock exchanges.  This measure has been introduced in over 800 securities by the exchanges.  Inactive and suspended companies many a time are used as harbours of manipulative minds.  In order to ensure that such suspicious companies do not languish in the exchanges, over 450 such companies have been delisted and demat accounts of their promoters have been frozen; they have also been barred to be directors of listed companies.  Around 800 companies listed on erstwhile regional exchanges are not traceable and a process has been initiated to declare them as vanishing companies.

          Demonetization appears to have led to an acceleration in the financialisation of savings.  In parallel, there is a shift towards greater formalisation of the economy in the near term aided by the introduction of Good and Services Tax (GST).  Some of the parameters indicating such shift are given below:

  • Corporate bond market has started reaping the benefits of additional financial savings and transmission of interest rate reduction.  The corporate Bond market issuance grew to Rs. 1.78 lakh crore in 2016-17, the year on year increase was Rs.78,000 crore. With other sources of issuance in capital market the incremental variation is almost Rs.2 lakh crore in 2016-17 while that was Rs.1 lakh crore in 2015-16.
  • This trend is further substantiated by the surge in primary market raising through public and rights issues.  There were 87 issues of public and rights for raising equity involving amount of Rs.24,054 crore during FY 2015-16; in the first six months of 2017-18 itself there are 99 such issues amounting to Rs.28,319 crore.
  • Net inflow into Mutual Funds during 2016-17 increased by 155% during 2016-17 over 2015-16 reaching 3.43 lakh crore; Net inflows in mutual funds during November 2016 to June 2017 was about Rs.1.7 lakh crore as against Rs.9,160 crore during the same period in the year before;
  • Premia collected by life insurance companies more than doubled in November 2016; the cumulative collections during November 2016 to January 2017 increased by 46 per cent over the same period of the previous year.  The premium collections witnessed 21% growth for year ending September 2017 over the corresponding period of previous year.

          With a shift to less cash economy, India has taken a big leap in digital payment during 2016-17.  Some of the trends are given below:

  • 110 crore transactions, valued at around Rs.3.3 lakh crore and another 240 crore transactions, valued at Rs.3.3 lakh crore were carried out through credit cards and debit cards, respectively.  The value of transaction for debit and credit card was Rs.1.6 lakh crore and Rs.2.4 lakh crore respectively during 2015-16.
  • Total value of transaction with Pre-Paid instruments (PPIs) have increased from Rs.48,800 crore in 2015-16 to Rs.83,800 crore in 2016-17.  Total volume of transactions through PPIs have increased from about 75 crore to 196 crore.
  • During 2016-17, National Electronic Funds Transfer (NEFT) handled 160 crore transactions valued at Rs.120 lakh crore, up from around 130 crore transactions for Rs.83 lakh crore in the previous year.

          With higher level of formalisation, it has brought out related benefits to workers who were denied of social security benefits in the form of EPF contribution, subscription to ESIC facilities and payments of wages in their bank accounts.  Large increase in opening of bank accounts for workers, enrolment in EPF and ESIC are added benefits of demonetisation.  More than 1 crore workers were added to EPF and ESIC system post-demonetisation which was almost 30% of existing beneficiaries.  Bank accounts were opened for about 50 lakh workers to get their wages credited in their accounts.  Necessary amendment in Payment of Wages Act was done to facilitate this. 

          The reduction in incidences of stone pelting, protests in J&K and naxal activities in LWE affected districts are also attributed to the impact of demonetisation as these miscreants have run out of cash.  Their access to Fake Indian Currency Note (FICN) was also restricted.  During 2016-17, the detection of FICN for Rs.1000 denomination increased from 1.43 lakh pieces to 2.56 lakh pieces.  At the Reserve Bank’s currency verification and processing system, during 2015-16, there were 2.4 pieces of FICNs of Rs.500 denomination and 5.8 pieces of FICNs of Rs.1000 denomination for every million pieces notes processed; which rose to 5.5 pieces and 12.4 pieces, respectively, during the post-demonetisation period.  This shows almost doubling of such detection.

          In an overall analysis, it would not be wrong to say that country has moved on to a much cleaner, transparent and honest financial system.  Benefits of these may not yet be visible to some people.  The next generation will view post November, 2016 national economic development with a great sense of pride as it has provided them a fair and honest system to live in.

Advertisement

Outlook Newsletters

Advertisement
Advertisement
Advertisement

Read More from Outlook

Lament Of Separation: Songs Of Habba Khatun, Last Queen Of Kashmir, Still Echo In Valley

Lament Of Separation: Songs Of Habba Khatun, Last Queen Of Kashmir, Still Echo In Valley

In happy times and sad, Habba Khatun’s sensuous songs make both young and old emotional. With the never-ending conflict bringing tragedies to every doorstep, Habba’s lyrics of separation amplify their mourning.

How Indian Laws Govern People’s Right To Love And Live

How Indian Laws Govern People’s Right To Love And Live

In India, only those relationships between a man and a woman are considered to be legitimate when there is a marriage between the two.

Kohli Quits Test Captaincy, Leaves Leadership Vacuum

Kohli Quits Test Captaincy, Leaves Leadership Vacuum

Virat Kohli, 33, had recently stepped down as India's T20I captain and was subsequently removed as the ODI captain.

UP Elections 2022: How Congress Is Harnessing Power Of 'Persecuted' Women To Counter BJP

UP Elections 2022: How Congress Is Harnessing Power Of 'Persecuted' Women To Counter BJP

A Mahila Congress leader, who is the face of the ‘Ladki Hoon, Lad Sakti Hoon’ campaign, however, has accused the party of anti-women bias after she was denied a ticket.

Advertisement