Demonetisation effective to scrutinise accounts used for black money transactions

As the nation marks the completion of one year of the Centre's demonetisation drive, citizens have revealed that while the notion had a drastic impact on the economy in terms of shortage of currency, some believe that the exercise has led to an audit trail which can be effectively used in the future to scrutinise and investigate accounts being used for black money transactions.

In a survey conducted by LocalCircles, it was observed that post demonetisation, the real estate sector showed a downward trend and many builders went into distress citing a cash crunch. But as the money flowed back into the system, cash transactions picked up, the real estate rates sky-rocketed again and everything went back to normal.

On the reduction of black money front, 32 percent respondents said it was state and public funding for elections that would curb the menace, while 11 percent said CCTVs must be installed in all government offices with citizen interface. Further, 33 percent citizens were in favor of transactions over Rs. 10,000 to be electronic compulsorily and 24 percent said rationalisation of taxation and stamp duty will be an important step.

Reforms in the electoral funding have been long pending and are much needed to reduce the generation and usage of black money during elections. According to citizens, a mechanism is needed where the government, citizens and corporates can become the primary source of organised electoral funding and stronger enforcement by election commission to ensure parties and candidates are not spending beyond the permissible amount can play a key role in reducing the need for black money in the system.

According to citizens, mandating all transactions above Rs. 10,000 to be done electronically will also ensure that all high-value transactions can be tracked and the cash transactions involving real estate deals will be substantially reduced.

Citizens also strongly backed a crackdown on black money, with 44 percent respondents urging a scrutiny on benami property and 23 percent demanding the targeting of trade without receipts.

However, it also suggested various ways in which black money in the economy can be reduced, such as bringing CA firms associated with any shell company transactions under the lens, cracking down on the sale of goods without invoices, monitoring cash payments of credit card bills, eCommerce deliveries, incentivising electronic payments and introducing smarter amnesty schemes to allow people to convert their black money into white by paying a certain percentage as fine.

On November 8 last year, the Centre declared Rs. 500 and Rs. 1000 notes as illegal and introduced new Rs. 500 and Rs. 2000 notes, in a bid to end black money menace in the country.