In my first blog on demonetisation ( http://forsec.blogspot.in/2016/11/you-hustle-you-deal-you-steal-from-us.html ) i had said we have to wait for the dec'16 and mar'17 tax numbers to arrive at the conclusion as to whether the parallel economy is finally moving mainstream. this chart shows that at an average growth of 13.5% for the two months of nov-dec, it ties in with my band of 4.6% to 17.6% .
A lot needs to be done and already the banks have shown their true colours by imposing an additional 1% transaction fee on debit/credit cards. Refer my earlier blog on this ( http://forsec.blogspot.in/2016/11/fight-good-fight-post-demonetisation.html) where i had said that banking fees is one area that needs to be regulated - these should be pass through and not a profit centre for banks - its that simple and i am sure easily implemented by a RBI notification. govt departments can set the tone by making all their digital transactions free for the customers, which still hasnt happened! (update - the govt has started to make their transactions cost neutral)
March'17 tax figures will tell us how far demonetisation has resulted in reducing the parallel economy and also company results will tell us how much they have been impacted. A higher Rabi sowing of 6% has already shown that more of the formal economy has been used this time around to finance agriculture, whether this results really in a higher final production when procurement happens, we will know at the time of harvest.
At the beginning of the demonetisation move i had warned that this was the endgame for the informal economy, as the government will follow it up with more measures to go after those who are happy with an "informal setup". The recent announcement to use CA's to review the banking data to identify people who are potential tax dodgers is but one of many such measures that the government will be employing to end the informal economy, sooner rather than later. (update - the budget for 2017 has taken many measures to disincentive cash - lets see how this plays out in the fullness of time)
a final reminder from the evergreen epic..
"Being a journalist, Hacker had no particular talent for reporting facts" - the press reporting has to be taken with a pinch of salt as it is clear now that a part of them are pro-govt and a part of them against the govt.
"He can't seem to grasp that I don't want the truth, I want something I can tell Parliament.." - a govt pushed to the wall may just select obfuscation rather than the truth and that would be a bigger calamity than the various scams of the previous govt.
"Perhaps the government thinks that a tax is the best form of defence." - the introduction of GST may be the loophole for the govt as an excuse in the event of a sharp decline in growth and in the event there is no fall in growth - trumpet the success of both demonetisation and GST.
A lot needs to be done and already the banks have shown their true colours by imposing an additional 1% transaction fee on debit/credit cards. Refer my earlier blog on this ( http://forsec.blogspot.in/2016/11/fight-good-fight-post-demonetisation.html) where i had said that banking fees is one area that needs to be regulated - these should be pass through and not a profit centre for banks - its that simple and i am sure easily implemented by a RBI notification. govt departments can set the tone by making all their digital transactions free for the customers, which still hasnt happened! (update - the govt has started to make their transactions cost neutral)
March'17 tax figures will tell us how far demonetisation has resulted in reducing the parallel economy and also company results will tell us how much they have been impacted. A higher Rabi sowing of 6% has already shown that more of the formal economy has been used this time around to finance agriculture, whether this results really in a higher final production when procurement happens, we will know at the time of harvest.
At the beginning of the demonetisation move i had warned that this was the endgame for the informal economy, as the government will follow it up with more measures to go after those who are happy with an "informal setup". The recent announcement to use CA's to review the banking data to identify people who are potential tax dodgers is but one of many such measures that the government will be employing to end the informal economy, sooner rather than later. (update - the budget for 2017 has taken many measures to disincentive cash - lets see how this plays out in the fullness of time)
a final reminder from the evergreen epic..
"Being a journalist, Hacker had no particular talent for reporting facts" - the press reporting has to be taken with a pinch of salt as it is clear now that a part of them are pro-govt and a part of them against the govt.
"He can't seem to grasp that I don't want the truth, I want something I can tell Parliament.." - a govt pushed to the wall may just select obfuscation rather than the truth and that would be a bigger calamity than the various scams of the previous govt.
"Perhaps the government thinks that a tax is the best form of defence." - the introduction of GST may be the loophole for the govt as an excuse in the event of a sharp decline in growth and in the event there is no fall in growth - trumpet the success of both demonetisation and GST.
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