Demonetization, Black Money and Economic Growth:

Two recent reports by RBI that substantial number (99.30%) of demonetized notes of Rs.500 and Rs.1,000 have come back into the banking system has sent the entire opposition (read Modi Haters) into multiple fake orgasms.

Rahul Gandhi has announced demonetization has failed, economy has collapsed, people have lost jobs, etc. etc. etc. His slaves and on-call presstitutes have expectedly towed his line and started howling in the media.

However, the basic indices released by the Income Tax Department have made them lick scrambled eggs on their faces.

A widely circulated but wholly ill-conceived comment has been that just because most of the currency came back into the Banks, the objective of Demonetization has failed as if the invalidation of the Non-deposited currency was the only object of demonetization!

The larger purpose of demonetization that is deliberately ignored by the opposition and pathological Modi-Haters was to move INDIA from a 'Tax Non-Compliant' Society to a 'Tax Compliant' Society. This objective necessarily involved the formalization of the Economy by discouraging cash transactions that largely remained unreported and has delivered a blow to the black money. And this objective has been successfully achieved as is evidenced by the recent statistics released by the Finance Ministry.

When cash is deposited in the Banks, the anonymity about the owner of the cash disappears. The deposited cash is now identified with its owner giving rise to an inquiry, whether the amount deposited is in consonance with the depositor’s past income.

Accordingly, post demonetization about 1.8 million depositors involving some Rs.2.5 lac correct deposits have been identified for this enquiry. Many of them are being fastened with Income Tax and Penalties. Mere deposit of cash in a Bank does not lead to a presumption that black money is now converted into white money or tax paid money.

In March 2014, the number of Income Tax returns filed was 3.8 crores. In 2017-18, this figure has grown to 6.86 crores.

In the last two years, when the impact of demonetization and other steps is analyzed, the Income Tax returns have increased by 19% and 25%. This is a phenomenal increase.

The number of New Returns filed post demonetization have increased in the past two years by 85.51 lakh and 1.07 crore.

For 2018-19, Advance Tax in the first quarter has increased in personal Income Tax category by 44.10% and in the Corporate Tax category by 17.40%.

The Income Tax collection has increased from Rs.6.38 Lakh crore in 2013-14 to Rs.10.02 lakh crore in 2017-18.

According to the data released by the Finance Ministry, the growth of Income Tax collection in the Pre-demonetization first two years was 6.60% and 9.00%. Post-demonetization, the collections increased by 15% and 18% in the next third and fourth years. The same trend is visible in the fifth year.

The GST was implemented from 1st July, 2017 i.e. Post demonetization. In the very first year, the number of registered assesses has increased by 72.5%. The original number of 66.17 Lakh assesses has increased to 114.17 Lakh assesses.

This is the positive impact of the Demonetization on the economy.

More formalization of the Economy -> More Money in the System -> Higher Tax Revenue -> Higher Expenditure -> Higher Growth after the first two quarters.

This is the success of demonetization in short. But the intellectually bankrupt would refuse to understand and acknowledge and would continue their chest beating that sky is falling down.

That is perhaps why their Owner Rahul Gandhi had once said "Poverty is a state of mind"!

Ultimately who would understand the slaves better than their Owner!!