Eight years have passed since the 2016 demonetisation announcement by Prime Minister Narendra Modi. On the evening of November 8 of 2016, Modi announced the withdrawal of Rs 500, Rs1000 notes which constituted around 86 per cent of the currency in circulation. In every sense, demonetisation was more of a political move while the central bank watched the whole event from the sidelines.
The stated goals of demonetistion were many— fighting black money, fake notes and creating a cashless economy by pushing digital transactions. Among those targets, the biggest one was tackling black money. Black money refers to cash that is not accounted for in the banking system or cash for which tax has not been paid to the state. Has demonetization achieved the goal of erasing black money in the economy? Empirical evidence suggests otherwise.
As per a new survey by LocalCircles, even after eight years of demonetization, real estate continues to be the top sector where black money continues to find favour with many properties still falling under the benami (no name) category. A survey conducted by LocalCircles throws interesting insights. For instance, 9 in 10 citizens surveyed believe black money is still rampant in real estate. Further, around 62% property owners surveyed confirm having not linked their Aadhaar to their property.
According to a statement from LocalCircles, the survey received over 46,000 responses from citizens located in 372 districts of India of which 69% respondents were men while 31% respondents were women. A majority of the respondents (around 41%) were from tier 1, 27% from tier 2 and 32% respondents were from tier 3, 4, 5 and rural districts.
Reports of benami properties often crop up in relation to probe against government employees and political leaders alleged to be involved in various scams. The survey next asked citizens, “All ministers and government employees are required to disclose their and their direct family members assets on a regular basis. What should happen to those who aren’t making these disclosures?”
Out of 15,622 who responded to the question 67% stated face “termination (of service) after a final notice”; 29% stated that they should face “suspension after a final notice”; 2% stated that “no action should be taken” and 2% of respondents did not give a clear answer.
To sum up, 67% citizens surveyed believe that all ministers and government employees who do not disclose their and their direct family member’s assets as per government rules must be terminated from service while 29% citizens are in favour of their suspension from service instead of termination.
Real estate and construction sector is often cited as a major source of black money or pillar of the parallel economy. The survey asked citizens, “It is known that black money of some politicians, government employees and others is deployed in the real estate and construction sector as many inputs in this sector can be purchased in cash.
Should additional audits and checks be put in place to ensure that all purchases (products and services by builders and their sub-contractors are via GST receipts?” The question received 15,385 responses with 90% stating “yes”; 5% of respondents stating “no” and remaining 5% not giving a clear response.
To sum up, 9 in 10 citizens surveyed believe that black money is deployed in the real estate and construction sector and additional audits and checks are needed to ensure all products and services in the sector by builders and their subcontractors are being purchased with GST receipts, the survey said.