Was demonetisation worth the trouble?
R.N.Bhaskar – Jul 24, 2017 02:02 PM IST
In its submission before the Supreme Court of India, the government stated, on 23 July 2017, that it had uncovered undisclosed income o Rs.71,941 crore during the three years ranging from 2014-15 to 2016-17.
Did demonetisation help the government unearth significant amounts of black money?
No, or at least not as a proportion of undisclosed income uncovered by the authorities over the past three years, the Centre’s own data suggests.
In its submission before the Supreme Court of India, the government stated, on 23 July 2017, that it had uncovered undisclosed income of Rs.71,941 crore during the three years ranging from 2014-15 to 2016-17.
This “undisclosed income” was ferreted out, the government stated, through massive searches, seizures and surveys by the Income Tax department.
The government also stated before the apex court that immediately after demonetisation came into effect — in about two months from November 9 2016 to January 10, 2017 — “significantly large number of enforcement actions were undertaken by the IT Department”. . .”They included 1,100 searches and surveys and more than 5,100 verifications. The total seizure through these actions was of about Rs 610 crore, including cash of Rs 513 crore. The cash seizure included seizures in new currency of more than Rs 110 crore. The total undisclosed income admitted was more than Rs 5,400 crore.”
This tallies with the statement the government made before the Lok Sabha on 3 February 2017 (in reply to the unstarred question no. 387) that the Income Tax Department conducted more than 1,100 searches, seizures and surveys and issued more than 5,100 notices, during the period November 9, 2016 to January 10, 2017, for verification of suspicious high-value cash deposits in old high denominations. These actions led to seizure of valuables of more than Rs 610 crore which includes cash of Rs 513 crore.
The rest of the seized valuables are mainly in the form of gold, jewellary and silver. This means that unaccounted gold & jewellery was just Rs 97 crore! Moneycontrol.com had pointed out a fortnight ago that of the 100 tonnes of gold estimated to be smuggled into India each year, the total seizure during this period accounted for just 0.003 percent!
What this also means that demonetisation by itself accounted for seizures that were considerably small compared to the seizures and the disclosures the Income Tax managed outside the period of demonetisation. Even if one deducts Rs.5,400 crore from Rs.71,941 crore, it would appear that money,“undisclosed income” unearthed by the government outside the demonetisation period was larger than during the period.
So, going by the government’s own figures, it looks as if the pain caused by demonetisation wasn’t worth the effort. Maybe data it will release in the future would suggest a great success, but we are not holding our breath.