Posturing on Black Money
The Polit Bureau of the Communist Party of India (Marxist) has issued the following statement November 9.
THE announcement made by the prime minister about the demonetisation of the Rs 500 and Rs 1000 notes is not going to yield the desired result of unearthing black money. It will have limited effect and is more like political posturing.
The claim that the demonetisation will check black money, fake currency, corruption and terrorism lacks substance. By the prime minister’s own admission, the bulk of black money generation and storage is in off-shore accounts in foreign currency. Counterfeit currency can be generated for any denomination. The announcement of a new Rs 2000 note along with another Rs 500 note does not in any way prevent future possible counterfeit circulation. It’s an established fact that terrorist funds flow through electronic transfers and not through currency transactions.
By allowing the conversion of the existing 1000 and 500 currency notes within the prescribed time limit, no effective measure is there to prevent benami conversions. Further, transactions through plastic will continue as usual.
In effect what this would result in is a total disruption of the payments and settlements that are part of daily life of our economy. It will burden the vast mass of our people from daily wage labourers, fishermen, small businesses, traders and vendors selling at the door step. What is going to happen is the disruption in livelihoods and bureaucratic harassment of ordinary people who wish to change the currency notes.
The basic avenues for money laundering through Participatory notes and diversions through tax havens remains untouched. There is no attempt to curb the roots of generation of black money such as in the real estate sector.
This is a measure to cover up the utter failure of the Modi government on the economic front, of joblessness, high prices and no pick-up in domestic demand, crippling all sections of our population, especially the working classes, and ruining the peasantry.
The CPI(M) demands that the government make public forthwith the names of those holding bank deposits and accounts in tax-havens and those refusing to return humongous loans from nationalised banks estimated at over Rs 11 lakh crores, if it is really committed to recover and curb black money.
"One common demand from the public is that high denomination currency notes, particularly `1,000 and `500, should be demonetized. In this connection, it is observed that demonetization may not be a solution for tackling black money or economy, which is largely held in the form benami properties, bullion and jewellery, etc. Further, demonetization will only increase the cost, as more currency notes may have to be printed for disbursing the same amount. It may also have an adverse impact on the banking system, mainly logistic issues, i.e. handling and cash transportation may become difficult and may also cause inconvenience to the general public as the disbursal or payments of wages/salaries to the workers will become difficult. Besides, it may also adversely impact the environment as more natural resources would be depleted for printing more currency notes. Demonetization undertaken twice in the past (1946 and 1978) miserably failed, with less than 15% of high currency notes being exchanged while more than 85% of the currency notes never surfaced as the owners suspected penal action by the government agencies."
(Excerpt from the report of the committee on "Measures to Tackle Black Money in
