This refers to your first page report “Minutes: RBI had warned against govt against demonetisation” (March 11). The report states that the Reserve Bank of India (RBI) thought “most of the ill-gotten wealth is stashed in assets such as gold and real estate.”
As a Chartered Accountant in taxation, I disagree with this in all humility. First, the RBI is not an expert in black money and I do not blame them for giving an opinion which touched the surface only. Second, black money is not a static phenomenon. It is generated every day, finding its way into gold, real estate and business. Third, if black money has been stashed away in gold and real estate, these assets would have been acquired through cash black money. Fourth, black money comes as Black Label and Double Black Label. Black Label is generated by dodging taxes and these generally remain in business as bloated working capital. Double Black money is ill-gotten money, which is stashed away in gold, real estate, Swiss banks or foreign currencies, and finds its way to illegal assets, which sleep and don’t work.
What demonetisation has done is it has forced ownership of every single rupee in the monetery system. Now that every single rupee has an owner, he will have to explain where the money came from. Prior to demonetisation no one claimed ownership of the black money. That the economy and business in general had slowed down after demonetisation is proof of the success of demonetisation.
Deba Pratim Ghatak Durgapur
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