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  • Winter Session: Will Demonetisation Dominate Debate

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    Nadeem Shafi
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    The demonetization of Rs. 500 and Rs. 1000 notes by the Modi government will dominate discussions during the upcoming winter session of Parliament. While Modi was initially praised for taking a bold step against black money, the cash shortages and disruptions caused by the move have led to widespread public unrest and anger. The opposition will seek to corner the government over the problems. Key issues that may be raised include whether the government tipped off supporters about the move in advance, allowing some to convert unaccounted cash into legitimate bank deposits. Modi will need to effectively address the allegations and counterattacks in order to get other legislative business back on track.

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    demonetisation

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    Winter Session_ Demonetisation Will Dominate....Mr. Rajesh Mokashi, MD&CEO in Firstpost

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    The demonetization of Rs. 500 and Rs. 1000 notes by the Modi government will dominate discussions during the upcoming winter session of Parliament. While Modi was initially praised for taking a bold step against black money, the cash shortages and disruptions caused by the move have led to widespread public unrest and anger. The opposition will seek to corner the government over the problems. Key issues that may be raised include whether the government tipped off supporters about the move in advance, allowing some to convert unaccounted cash into legitimate bank deposits. Modi will need to effectively address the allegations and counterattacks in order to get other legislative business back on track.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    29 views4 pages

    Winter Session: Will Demonetisation Dominate Debate

    Uploaded by

    Nadeem Shafi
    The demonetization of Rs. 500 and Rs. 1000 notes by the Modi government will dominate discussions during the upcoming winter session of Parliament. While Modi was initially praised for taking a bold step against black money, the cash shortages and disruptions caused by the move have led to widespread public unrest and anger. The opposition will seek to corner the government over the problems. Key issues that may be raised include whether the government tipped off supporters about the move in advance, allowing some to convert unaccounted cash into legitimate bank deposits. Modi will need to effectively address the allegations and counterattacks in order to get other legislative business back on track.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 4

    11/16/2016

    Print:WinterSession:Demonetisationwilldominate,butdoesModihaveacounterchaosplan?

    WinterSession:Demonetisationwilldominate,butdoesModihavea
    counterchaosplan?
    byDineshUnnikrishnanNov15,2016
    #ATMchaos#bankbranches#Banking#BJP#Congress#CPM#Demonetisation#MamataBannerjee
    #parliament#RahulGandhi#Wintersession
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    AsthewintersessionofParliamentbeginstomorrow(Wednesday),thenationisstillinthepainfulprocessof
    swallowingabitterpilladministeredbyNarendraModiintheformofanabruptbanofRs500,Rs1,000notes
    announcedon8November.Thesideeffectsofthispillarestillbeingmanifestedacrossthecountryintheform
    ofseveredisruptionstonormallifeandcashcrunch.
    Itisapeculiarsituation.
    ThedemonetisationprocessinitiatedbytheModigovernmentisthebiggestevercrackdownonfakecurrency
    dalalsandblackmoneyhoardersinthiscountryafterasimilarcrackdownbytheMorarjiDesaigovernmentin
    1978.ManyarelaudingPMModiforshowingthepoliticalwillandcouragetotakeontheparalleleconomy
    announcingwhatwassuretobeanunpopularstep.
    Remember,inthehoursaftertheannouncement,eventhebiggestpoliticalenemiesofModi,theCongresscamp,
    didn'thavesolidargumentsagainstthedemonetisation.Sowereotherregionalsatraps.Modistoodvictoriousin
    theeyesofeveryonewhosawthemoveusingtheyardsticksofabigeconomicreformandshowofpoliticalwill
    tocleansethedeeproutedparalleleconomyinthiscountry,longexploitedbycorruptpoliticians,croniesand
    crooks.
    But,thepublicvenerationsoongavewaytoangerandagony,whenthecashdroughtbegantohitthesystem,
    stillcontinuingevenafteraweekpostthedemonitisationannouncement.ThemadrushatATMsandbank
    branches,thelogicofnewRs2,000bills(moreofashowcaseitemforcommonmanatthisstage),theabsence
    ofproperplanningandthegovernment'scluelessnessonhowtobringbacknormalcyinpubliclife,changedthe
    publicperceptionofthetheexercise.

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    Print:WinterSession:Demonetisationwilldominate,butdoesModihaveacounterchaosplan?

    ]
    PTI
    Itisthismoodofpublicunrestthattheoppositionpoliticalpartieswillexploittotheirbestastheystepinto
    Parliamentbuildingtomorrow.Onecanexpectheavyexchangeofargumentsandcounterargumentsontheissue
    ofpublicagonypostthedemonetisationannouncement.Politicalpartieshavesurelydonetheirhomeworkon
    howtocornerthegovernmentontheissue.
    ThesignsofthiswereamplyevidentwhenCongressVicepresidentRahulGandhijoinedanATMqueuein
    Delhi,MamtaBanerjeemadeawarcryfromWestBengalandAkhileshYadavcriedfoulfromUttarPradesh.
    AllthiswillreflectinParliamentbeginningtomorrow.
    WhatoneneedstowatchoutishoweffectivelytheModigovernmentcancountertheonslaughtofaccusations
    andgetoverit,toprogresstothebusinessofhouse,mainlypassageofremainingcrucialbillsinParliamentfor
    themuchawaited1AprilrolloutoftheGSTCentralandintegratedGSTBills.
    Politicalaccusations
    But,besidesthepaincausedtothepubliconaccountofcashdrought,theotherbigchargethegovernmentwill
    likelyfaceintheHouseistheallegationDelhiChiefMinisterArvindKejriwalraisedlastweekthatthe
    governmentallegedlyleakedouttheinformationtotheBJPanditsfriendswellinadvance.
    Kejriwalaccusedthatthegovernment,thus,facilitatedthehoardersofunaccountedcashtopushtheirmoney
    intosaferdestinations,includingwhiteningpartofitbydepositinginthebankingsystem.Kejriwalalsocitedan
    incidentinvolvingSanjeevKamboj,coconvenor,BJPlawandlegalaffairs,Punjab,revealingonTwitter
    picturesofRs2,000noteson6November,twodaysaheadofPMModi'sannouncementon8November.This
    part,KejriwalalsoraisedconcernsoveranunusualsurgeinbankdepositsintheJulySeptemberquarter.
    Thegovernmentneedstotelluswhotheyhadwarnedamongfriendsaboutthisannouncementaboutblack
    money,saidtheDelhiCM.
    ItisafactthattherehasbeenrecordsurgeinbankdepositsintheJulySeptemberquarter.Duringthequarter,
    thebankdepositsrosebyarecordRs6.65lakhcroretoRs102.08lakhcrore,arecordlevelwhichhassurprised
    economistsgiventhatinthepreviousquartersmostbankshavereportedanegativegrowthindeposits.
    FinanceministerArunJaitleyhas,however,pointedoutthattheriseinthedepositwasbecauseof7thPay
    Commissionarrearsthatmayhavebeenchannelledintothebankaccounts.ButthisarrearsaroundtoRs70,000
    croreandaddanyotherinflowsincludingsubsidies,thisamountwillnotgobeyondRs11.5lakhcroreatthe
    most.

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    Print:WinterSession:Demonetisationwilldominate,butdoesModihaveacounterchaosplan?

    QuarterlybankdepositsinRsbillion
    Bankdeposits

    Changeinbankdeposits

    100,000

    9/27/2013
    3/28/2014
    9/26/2014
    3/27/2015
    9/25/2015
    3/25/2016
    9/30/2016

    3/30/2007
    9/28/2007
    3/28/2008
    9/26/2008
    3/27/2009
    9/25/2009
    3/26/2010
    9/24/2010
    3/25/2011
    9/30/2011
    3/30/2012
    9/28/2012
    3/29/2013

    3/30/2001
    9/28/2001
    3/29/2002
    9/27/2002
    3/28/2003
    9/26/2003
    3/26/2004
    9/24/2004
    3/25/2005
    9/30/2005
    3/31/2006
    9/29/2006

    9/26/1997
    3/27/1998
    9/25/1998
    3/26/1999
    9/24/1999
    3/31/2000
    9/29/2000

    50,000

    Getthedata

    Thisissomethingintriguingtome,saidDKJoshi,chiefeconomistatCrisil.DevendraPant,chiefeconomist
    atIndiaRatingsandResearchtoosaidthesharpgrowthinbankdepositsduringJulySeptemberisbaffling.
    Thisisperplexing.Anticipatingsometoughmeasures,thereisapossibilitythatblackmoneyhoarderswould
    havepushedpartoftheirmoneyintothebankingsystem,saidPant.
    Thelogicalquestionhereiswhysomeoneshoulddeposithisillicitmoneyintothebankingsystemandget
    exposedtothetaxmanevenifheknewthedemonetisationinadvance?
    Economistsandfinancialexpertspointoutthefollowingreasons:Itisnavetoimaginethattheentire
    blackmoneyispushedtothebankingsystem,butitisquitepossiblethatpartofwouldhavearrivedthere.The
    blackmoneyhoarderwhoknowsaboutthemeasurescomingsoonwouldhaveusedbenamistoputthe
    unaccountedcashintodifferentbankaccountstoescapetightscrutinyandtax/penaltyimplicationthatwill
    happenonsuchdepositspostthedemonetisationannouncement.
    ThegovernmenthaswarnedthatcashdepositsaboveRs2.5lakhthresholdduringthe50daywindowcould
    attracttaxplusa200percentpenaltyincaseofincomemismatch.
    "WewouldbegettingreportsofallcashdepositedduringtheperiodofNovember10toDecember30,2016,
    aboveathresholdofRs2.5lakhineveryaccount.The(tax)departmentwoulddomatchingofthiswithincome
    returnsfiledbythedepositors.Andsuitableactionmayfollow,"revenuesecretaryHashmukhAdhiahadsaid
    lastweek.'
    Inthisbackdrop,someonewhoknewabouttheensuingmeasurescouldhaveverywelluseddifferentpersonsto
    putmoneyinvariousaccountsandmaketheblackmoneylegit,saidaneconomistwhodidn'twanttobenamed.
    Forinstance,ifIsplitthismoneyandgiveinsmalllotstomanyofmyemployeesaskingthemtodepositin
    differentbankaccountsbeforedemonetisationkicksin,thefundsbecomewhiteandtheirsalaryburdenistaken
    careof,sayfornextsixmonths,theeconomistsaid.
    Forsure,thereisnohardevidencetosaythatselectfewweretippedoff,exceptKamboj'stwitterpicture.Also,
    thetaxdepartmentcananytimegobacktothesetransactionsandseekthesource.But,thepointhereisthat
    therehasbeenadubioussurgeinbankdepositsinthe3monthstoSeptember.
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    TheoppositionwillmostlikelytakeupthisissueandallegetippingoffofinformationinParliament.Thisis
    likelytoputtherulingNDAinaspot.Itislikelytobedifficultfortherulingpartiestoconductthelegislative
    businessnormally.
    Butnoteveryoneagreeswiththisconspiracytheory.RajeshMokashi,managingdirectorandCEOofCARE
    Ratings,saidthedepositsurgeisnotrelatedtomonetisation.First,thepaycommissioneffectisthere.Second,
    theIDSwouldhaveledtoconversionoflargeamounts(intobankaccounts),"Mokashisaid.
    Therearechargesandcountercharges.Onethingisforsure.Demonetisationislikelytostealtheshowin
    Wintersession.PMModiwillhavetousehischarisma,whichheisknownfor,togetthebusinessgoing
    counteringallegations.Thecriticalparttowatchiswhetherthegovernmentwillbeabletocontaintheuproarto
    theinitialdaysandgetbacktobusiness,mainlyGSTBillspassage,attheearliest.

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