To Mollify Currency Crunch in Indian Market, Modi Government Set to Implement Urgent Control on Unaccounted Deposits.
The Centre experiences a public counterattacks against the PM’s overnight decision of scrapping about 86% of India’s economy by banning Rs. 500 and Rs. 1000 notes. The opposition conjured up a united forefront against the ruling BJP and pressurized the government to revoke this decision. Slamming his haters at a book release on Friday, PM Modi defends demonetisation. He effectively managed to curb this rebellion by saying,
“Those criticising demonetisation don’t have a problem with the government’s preparedness, they have a problem because they didn’t get time to prepare.”
However, this didn’t sit well with economists who calculate the costs of this experimentation, for which RBI and the government were poorly prepared. The key to currency crises depends on abrupt withdrawal rates of new currency and replacement of older Rs. 1000 and Rs. 500 notes in the market. However, since dispensation of new currency is affected by logistical, technical and monetary constraints, the government decided to exercise control on withdrawal limits for now.
Amidst rumours of high tax penalty and frenzied flow of incoming cash in bank accounts, the PM summoned cabinet ministers at a very short notice to revamp the formal banking system in favour of the public. The move followed sudden deposition of Rs. 14 lakh crores in Jan Dhan account over last 18-19 days.
Rumours state, considering suspicious influx of hefty cash in Jan Dhan accounts, the Cabinet plans to levy up to 60% tax on unaccounted deposits that are over the prescribed limit of Rs. 2.5 lakhs. There are talks of imposing an additional 30% to 200% penalty on black money holders that took advantage of the 50-day extension on over-the-counter exchange from November 10 to December 30. There were telltale signs of the government imposing a limit on gold stash and properties, but the ministers haven’t reached a solid conclusion yet.
Nevertheless, in the last night’s meeting chaired by PM Narendra Modi decided to introduce a motion concerning this decision in the House of Parliament. In this recent turn of events, it’ll be interesting to see if the opposition rules in favour of the motion to actually curb the growing corruption and black money holding in India.
While Congress, Trinamool and other parties unite against this decision, JDU turned the tables by opting out of Opposition’s “Bhaarat Band” drama. Backing Modi in this decision, Nitish Kumar assured JDU will support BJP in their fight against corruption. His stance is a slap on face for BJP allies like Shiv Sena that are involved with the opposition in this protest. On the other hand, the political analysts see Nitish’s step as a planned move for clearing up his image during Nischay Yatra in Bihar.
PM Modi, unmoved by the happenings around him, plans to introduce bonds and cash savings for the common man in an attempt to ease financial burden. Now that things have heated up, we’re waiting for the outcome of demonetisation. Will this decision rule in BJP’s favour? Only time can tell.
