Demonetisation anniversary: Narendra Modi govt has won the perception war despite carping critics

Time was when real estate was substantially bankrolled by black money with places like Delhi witnessing as much as 40 percent payment being made in cash hush-hush. State governments have been setting store by periodic revision in guideline value to counter this menace in order to guard their own revenue – stamp duty on transfer. But then the guideline value is only for land whereas used properties involve both land and buildings. That is why cash still ruled the roost. However demonetisation of Rs 500 and Rs 1,000 notes on 8 November 2016 has put the fear of God into the minds of real estate dealers as well as one-off buyers and sellers. Cash is no longer insisted upon or offered much less and that rules the roost. This is the single most important achievement of demonetisation. Real estate along with gold has had the dubious distinction of being branded as convenient shelters for parking black money. On the gold front too, the surge in investments in paper gold (ETF) is a ringing endorsement of Modi government’s relentless and frontal attack on black money including through demonetisation. Of course paper gold has other factors too going in its favor like—safety, purity, no storage cost etc. The Goods and Services Tax (GST) that followed demonetisation has been pilloried by detractors of the Modi government with Rahul Gandhi calling it Gabbar Singh Tax (GST) whereas the truth is it is a tax on Gabbbar Singhs of the nether world hitherto operating in subterranean channels. Out of the Rs 15.44 lakh crore in currency that was rendered invalid on 8 November 2016, Rs 15.28 lakh crore has come back into the Indian banking system. This means that 98.96 percent of Rs 1,000 and Rs 500 notes that were banned returned to the banks by the end of June 2017. [caption id=“attachment_4118819” align=“alignleft” width=“380”]  File image of Prime Minister Narendra Modi. PTI[/caption] Carping critics like Yashwant Sinha and Arun Shourie have interpreted these figures to mean official money laundering of illicit money, little realising that tax sleuths are still investigating the genuineness of these deposits with many jewelers shaking in their boots for their dubious complicity for playing the handmaiden role on the night of 8 November, 2016. A report in The Wire also discounts a good chunk of the high value demonetised notes not returning into the banking system on the ground. As much as Rs 3,000 crore of Indian currency is held in the tiny neighboring country Bhutan and it suspects Bhutan blithely countenancing the circulation of the demonetised notes as does Nepal. In these two countries, the Indian government’s writ does not run admittedly. Indeed, the jury is still out on the success of the admittedly traumatic demonetisation. While mainstreaming of the economy is a feather in the government’s cap, whether crooks’ bluff has been called will be revealed only in the  future. Excess deposit growth in the banking system during the demonetisation period (11 November, 2016 to 30 December, 2016) works out to 4.0-4.7 percentage points says a report in The Hindu . Banks must be goaded into advancing loans for business purposes instead of sitting tight on it. Arun Jaitley has put the issue in perspective quite picturesquely – the Modi government has achieved ease of doing business whereas the UPA government facilitated ease of doing corruption. That by about brings out the success or otherwise of demonetisation. Modi has indeed won the perception war on demonetisation whereas pedantic economists and pathological Modi-baiters refuse to give him credit on the ground that in the short term the nation, especially its small business, was traumatised. Is cash payment a crime, wonders Rahul Gandhi and his ilk. No, it is not in the humdrum of life for small transactions but it tantalises crooks with its anonymity when it comes to big time transactions away from the mainstream. The Modi government can take pardonable pride in celebrating November 8 as anti-black money day.