Source: S Ketharaman
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Category: Excerpts
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Beware of the Taxman’s Wrath
Amid the panic and confusion caused by India’s ban on 86 percent of cash in circulation, there’s hope that the pain in the stock market won’t last beyond a quarter or two, and that everything will be hunky-dory once banks have dispensed enough new notes.
What if that optimism was unfounded?
Suppose that by the end of the year fund inflows double from the $75 billion already taken in by Indian lenders between Nov. 10 and Nov. 18. That would mean a return to the banking system of $150 billion, or roughly the entire stock of high-denomination cash held by the public before the ban.
To Modi’s government, that would signify an embarrassing win for money launderers’ shenanigans. If authorities respond by registering tax claims on a fifth of new deposits — in proportion to the government’s own estimates of the size of the parallel economy — then up to $30 billion of money coming into banks could be immobilized by disputes.
Even if all of it is ill-gotten, the signal such a large expropriation would send to other wealth owners could have a chilling effect on conspicuous consumption as well as purchase of new property
The taxman’s wrath, which would reveal itself only after the deposit surge tapers off, is yet to figure in investors’ calculations.-wrote Andy Mukherjee
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Black Money:The Elephant in the Room
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Modi as Hugo Chavez
In his radio address to the country yesterday, Modi’s speech was full of Us (Have Nots) Vs Them (Haves) rhetoric:
Some excerpts:
But vices are so widespread and deep-rooted that even today there are people whose vicious habits refuse to die. Even now, some people think that they can re-introduce into the system, money from corruption, black money, unaccounted wealth and Benami money (money in unknown person’s name), using some route or the other. They seek illegal means to save their ill-gotten wealth.
The saddest part is that, for this too, they have chosen to misuse the poor, the underprivileged people. By misguiding the poor, enticing them through the vices of avarice and temptation, wrongfully pumping money into their bank accounts, or getting them to undertake some wrong activities, some people are trying to save their black money.
I want to tell such people today – whether you reform or not is up to you, whether you respect and follow the law or do otherwise is again up to you; of course, the law will take its own course to decide on the requisite action; but, for God’s sake, please do not play with the lives of poor people. Do not do anything that may bring the names of the poor on record for wrong reasons and land my dear poor people into trouble during the investigation later on account of your foul deeds.
And the law regarding Benami property that has been enacted and is being implemented is very stringent and it is going to be extremely tough on wrong doers. The government does not wish that our countrymen should face undue hardships.
On the basis of reports received from about 45-50 cities, I gathered that demonetisation had encouraged people there to pay their arrears accumulated due to non-payment of dues earlier; many people were in the habit of not making tax payments such as water tax, electricity bills, etc., they just did not pay.
Now all of us know very well that the poor people always like to clear their dues 2-3 days in advance. It is the well-off people, who do not pay their taxes and bills as they have higher connections and know that nobody is going to ask or do anything against them
Err…do we now have a new Hugo Chavez in town?
His socialist rhetoric makes me think that Long Term Cap Gains Taxes are on its way for Equity Markets.
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Cash Shortage for another 4-5 months?
The Bank Employees Federation of India (BEFI) has said currency note shortage will continue for another four to five months even if the country’s all four currency press facilities work at optimum capacity.
According to them, the cash scarcity spilling over to next week will make people more impatient when receiving and withdrawing salary will become difficult.
“Cash shortage will continue even if the four currency note printing presses run at their optimum capacity. It will take four to five months to restore normalcy in cash supply,” bank employees’ union BEFI general secretary P K Biswas said in Kolkata.
Biswas alleged that some customers have vandalised bank property in some of branches of public sector banks and halted banking operations due to cash shortage post-demonetisation.
As on March this year, there were 15,707 million pieces of old Rs 500 notes and 6,326 million pieces of Rs 1,000 notes in circulation, the union said.
The situation “can turn worse” in a week or so if the customers face difficulties in withdrawing their salaries from banks and ATMs, BEFI said.
It said printing ink and dice for new denomination notes have reached the Salboni printing facility in West Bengal, but when the actual printing will start is yet to be known.-from Business World