January 5, 2017
With almost 95 per cent of the scrapped 500 and 1000 rupee notes making their way to bank accounts, the government may end gaining only around Rs 50,000 crore by way of additional surplus transfer from the Reserve Bank, which is far less than what was estimated earlier, according to a brokerage report.
January 5, 2017
With almost 95 per cent of the scrapped 500 and 1000 rupee notes making their way to bank accounts, the government may end gaining only around Rs 50,000 crore by way of additional surplus transfer from the Reserve Bank, which is far less than what was estimated earlier, according to a brokerage report.
Bank of America-Merrill Lynch in a note on Wednesday nearly halved its estimate of RBI dividend from black cash money not returned to banks to Rs 50,000 crore from Rs 95, 000 crore earlier, as banks are reported to have collected over Rs 14 lakh crore out of the Rs 15.44 lakh crore in demonetized notes deposits by December 19, the note states.
The dividend will be possible after the recent ordinance cleared by the Cabinet that allows the RBI to cancel the liability in respect of demonetized Rs 500 and Rs 1000 notes not returned to banks.
The ordinance presumably paves the way for a 'special dividend' in the fiscal. The RBI's special dividend may be utilized for social sector schemes in the forthcoming budget, it said.
The government was banking on around Rs 2 to 5 lakh crore not coming back into the system as this constituted black money that would have to be destroyed.
However, it appears that much of the black money has come into bank accounts through misuse of other people's accounts.
Assuming Finance Minister Arun Jaitley sticks to the 3.5 per cent fiscal deficit target, he will be just about able to maintain public capex at budgeted levels after utilizing the benefits of IDS for bank recapitalization and seventh pay commission payout, the report said. The budget 2017 can raise Rs 1,50, 000 crore and it has scaled down its earlier estimate of Rs 200, 000 crore, it added.
The estimate includes Rs 1 lakh crore that it expects will flow into the government's coffers through the income disclosure scheme (IDS).
The Revenue Secretary has already emphasized that all the money that has come into bank accounts post-demonetization does not constitute white money and would be looked into.
A senior Income Tax official told Mail Today that banks have already provided a list of those who have deposited Rs 2 lakh or more in their accounts after the high value currency was scrapped.
He said as many as 60 lakh individuals and firms have made large deposits totaling an astonishing Rs 7 lakh crore in old notes.
He said although the government will not hound any genuine depositor but at the same time it will not hesitate in tracking cases of tax evasion by black money holders trying to convert illegal wealth.
Ironically, some unscrupulous bankers, who helped black money hoarders to exchange scrapped notes into new currency, have emerged as the weak link in the chain.
Post-monetisation, unaccounted wealth holders have an option to avail of Pradhan Mantri Garib Kalyan Yojana (PMGKY) under which they can pay a 50 per cent tax to come clean.
Another 25 per cent has to be put in a fixed deposit for four years. The government will use the money to fund infrastructure and social welfare schemes. It now remains to be seen how many black money hoarders go for this option.
Courtesy: India Today
