New Delhi, May 8, 2017: The Indian government’s demonetisation measures did not impede future black money flows in new denominations, a UN report said on Monday.
According to UN Economic and Social Survey of Asia and the Pacific 2017, complementary measures to demonetization would be required to target all forms of undeclared wealth and assets.
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“Broader structural reforms which could also contribute to enhanced transparency include: the implementation of a goods and services tax; voluntary disclosure of income scheme; and tracking of high-value transactions through taxpayer identification numbers,” it said.
“Other measures, such as reforming the real estate registration process to ensure transparency, are being discussed.”
As per the report, the disruption caused by demonetisation had “greater and longer-lasting” impacts for lower-income individuals, households and businesses that had difficulty insulating themselves against the shock.
“Rural incomes and consumption were affected due to a decline in prices for agricultural products (although again, this was not reflected in the national accounts data which measure agriculture in terms of quantity),” the report said.
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“In the medium-term, the currency initiative is expected to bring more economic activities into the formal sector and spur digitisation of financial transactions, helping to broaden the tax base and secure the fiscal space needed for public social and infrastructure expenditures.”
The report pointed out that “one-off” currency measure in effect transferred lost black money to the central government through unclaimed or unexchanged notes.
“Preliminary estimates suggested a 97 per cent recovery of notes, which would imply a 3.16 per cent increase in fiscal revenues for the government,” the report read.
On November 8, 2016, exactly six-months ago Prime Minister Narendra Modi announced that the Reserve Bank of India (RBI) would withdraw India’s two largest currency denominations — Rs 500 and Rs 1,000 — from circulation.
The two bank note denominations which were withdrawn represented more than 86 per cent of the cash in circulation. (IANS)
New Delhi, November 8, 2017 : On November 8 2016, every Indian citizen sat glued to their TV screens as Narendra Modi was set to make a big announcement. Outcome? The Indian Prime Minster shocked the entire nation with the introduction of Demonetisation, a move that was to change the very foundation of the cash-dependent Indian economy.
The much-debated move by Modi garnered the attention of several well-versed economists from the country and abroad, alike. While some people willingly welcomed the move, there were others who stood in staunch criticism.
As the move completes its first year, the Bharatiya Janata Party (BJP) is set to observe November 8 as ‘anti-black money day’ to celebrate Demonetisation anniversary in the country.
On the eve of the Demonetisation anniversary, the BJP released a cheeky video claiming to depict how ‘corrupt’ politicians have been criticizing the move, as the nation won following demonetisation.
In the video, the BJP attempted to take a dig at corrupt politicians, who have been criticizing PM Modi’s Demonetisation move.
In the video, a woman, playing the character of a frustrated, corrupt politician can be seen going on a rant over PM Modi’s note ban initiative, which was aimed to combat black money, corruption, fake currency and terrorism.
The video ends with a voice-over saying demonetisation has not only brought out this frustration of corrupt citizens, but also black-money, claiming that almost 99 per cent cash which was previously lying hidden with people has now entered the banking system.
The one-minute video, which is now going viral on social media, has already been re-tweeted more than 2 thousand times since it was released on November 7, on the eve of demonetization move.
Ahead of the Demonetisation anniversary, the last few days have witnessed several leaders present their opinions on PM Modi’s demonetization move.
Finance Minister Arun Jaitley called PM Modi’s note ban initiative a ‘watershed moment’ while Piyush Goyal, Minister of Railways believes the move has pushed India towards a more transparent economy.
However, the move is being criticized by ex-Prime Minister Manmohan Singh calling it ‘irresponsible’. The opposition maintains that PM Modi’s note ban initiative has caused reckless damage to the country and the Indian economy.
On Demonetisation anniversary, the BJP is set to observe November 8 as ‘anti-black money day’, while opposition leaders are set to observe the day as ‘black day’ in protest against the note ban initiative.
India will seek the Malaysian government’s help in extraditing televangelist Zakir Naik who faces charges of money laundering and inciting hatred through his sermons broadcast on Peace TV, the foreign ministry said Friday.
Zakir Naik obtained permanent residency in Malaysia
Officials will approach their Malaysian counterparts with the extradition request sometime within the next two weeks, Indian foreign ministry spokesman Raveesh Kumar told a weekly news briefing in New Delhi.
“Any formal request seeking the assistance of a foreign government in cases of extradition requires a completion of the internal legal process involving consultation with other ministries involved in the case,” Kumar said.
“At this stage, we are nearing the completion of this process and as soon as this process is complete we will be making an official request to the Malaysian government in this matter,” Kumar said. “It could be a couple of days or a couple of weeks. But it would be soon and the nature of our request would also be clear.”
Naik fled India a month before terrorist carried out a massacre at a café in Dhaka, Bangladesh, in July 2016. This week, Malaysia’s deputy prime minister said the Islamic preacher legally obtained permanent residency in the country, and that Malaysian authorities would arrest him only if he broke local laws or was found to be involved in terrorist activities.
Naik’s speeches allegedly inspired some of the militants who carried out the siege at the Holey Artisan Bakery café in Dhaka, where 29 people, including 20 hostages and five gunmen, were killed.
In November 2016, the Indian government banned Naik’s Mumbai-based NGO Islamic Research Foundation, which partly funded the Peace TV channel that is banned in India, Bangladesh and several other countries.
Kumar said because the Indian government had knowledge of Naik’s whereabouts, the legal procedures would be tailored to requirements between the two countries in their extradition treaty.
Advocate challenges charges
“Naik is being hounded because he hails from a minority community. The charges that the investigating agencies are trying to frame are all stale and are hardly incriminating,” advocate S. Hariharan told BenarNews in a phone interview from Delhi.
“The charges lack veracity and would not stand scrutiny in the court of law. We will be challenging the extradition and deportation.”
Last week, the Indian government filed a 61-page charge sheet against Naik alleging he was involved in a criminal conspiracy by lauding terrorist organizations. In April, a non-bailable warrant was issued against him in an alleged case of money laundering through his NGO and a shell company.
In Malaysia meanwhile, the opposition Pan-Malaysian Islamic Party (PAS) has urged the government to ignore any request from India to extradite Zakir Naik, Reuters reported.
“For Muslim individuals, even when they won by using arguments and not weapons, like Dr. Zakir Naik, they are considered terrorists because their arguments cannot be countered,” PAS president Abdul Hadi Awang wrote last week in an opinion piece published in Harakah Daily.(BenarNews)
New Delhi, October 4: Though the government’s radical measure of demonetisation has disrupted the economy and has hit the real estate sector — already reeling under prolonged slowdown — it will turn out to be a blessing in disguise in the medium-to-long term.
As an asset class, real estate has been a big source of generating and consuming black money. The cash component in real estate has been there at various levels, beginning with land transactions where it amounts to 30-50 per cent. The cash payout is quite high in luxury housing too. The consumption of cash has been as high as 30 per cent in secondary market transactions.
The primary market transactions, however, are by far bereft of cash component as home purchases are financed through loans from banks and housing finance corporations. It is another matter that even in primary market deals, developers have been encouraging cash payouts by luring property buyers with good discounts on property price.
The speculative buying by investors through offerings like underwriting and pre-launches has also been involving cash payout, leading to artificial price hike and in turn making homes out of the reach of masses.
Demonetisation, coupled with the government’s move to check benami transactions through legislation and curbs on cash transactions, was meant to clean up the system.
This sudden ‘shake up’ was, however, not without its adverse impacts. Demonetisation badly affected the liquidity in the capital-intensive real estate sector, deepening the problem of massive fund shortage/cash crunch faced by developers reeling under delayed deliveries, which deterred buyers from purchasing property.
The impact was more evident in markets like NCR and Mumbai which were largely investor-driven, compared to southern markets of Bengaluru and Chennai and even Pune in the west, which have been end-user driven. The premium/luxury residential segment, in which the cash component was more in transactions, got impacted by demonetisation.
Real estate experts’ belief that the impact of demonetisation is only short-term and will not have long-term impact, stems from the fact that developers who have been following transparent and fair practices have not been affected by demonetisation and instead it worked out to their advantage.
This also turned out to be a positive development for big global real estate consultants like JLL India which doubled its profits in 2016 over 2014-15, with 60 per cent revenue growth.
One key positive impact of demonetisation and RERA (Real Estate Regulation Act) has been that speculative investors deserted real estate and end-users/genuine buyers, who were all these years pushed to the sidelines, came out in large numbers. Now, it is the property consumers who are driving the real estate market, especially residential market, aided by the government’s pro-industry and pro-consumer initiatives.
The step to promote affordable housing and according real estate industry status for the purpose of making easy and cheap funds available to the sector also helps.
Demonetisation has particularly boosted foreign funding. The transparency brought in by demonetisation, aided by RERA, GST reforms and liberalisation of FDI norms, has boosted the confidence of foreign investors, which is clearly evident from the spurt in foreign investments, particularly from pension funds.
This will inject much needed liquidity in the sector starved of funds. Targeting consumers, the government under the Pradhan Mantri Awas Yojana (PMAY), is providing substantial interest subsidy to home buyers. The clampdown on floating cash in the system has contributed significantly to curbing inflation which, in turn, helped RBI in cutting interest rates, thereby boosting home buying.
The proposed measures to liberalise FSI norms and rationalise stamp duty, will give further fillip to the residential sector, particularly affordable housing.
Demonetisation had a salutary impact on property prices by curbing cash transactions and checking speculative pricing, in turn increasing affordability, which is a key to achieve the government’s flagship mission of ‘Housing for All’. RERA & GST are further aiding demonetisation to control prices.
The key provisions in RERA, to speed up project completion, by checking diversion of funds through mandatory escrow account, stringent penalties to check project delays, together with the government’s move to make all building sanctions online, will go a long way in checking time and cost overruns of real estate projects, thereby controlling home prices.
The ban on pre-launching of projects under RERA will also check artificial spurt in pricing. GST has come to tackle the flow of cash in the purchase of building materials by introducing input credit tax. Further, the government’s plans to liberalise FSI norms, especially for affordable homes, and rationalising stamp duty will have a sobering effect on property prices.
But for some little lingering effect, economists and real estate experts believe that the overall downside impact of demonetisation has faded and its impact is not going to be there in the next quarter.
Says Ashwinder Singh, formerly CEO of JLL India & now CEO of leading real estate consultancy, Anarock Consultants: “Other than in terms of the initial confusion-induced decline in sentiment, the trend that is emerging now, points towards a recovery in buying sentiment with serious buyers already returning to primary markets.”
The entire demonetisation exercise undertaken by the government and aided by other reforms, like Benami Property Act, RERA and GST, is to be looked at in the backdrop of the government’s multi-pronged policy to create institutional and regulatory framework for speedy and steady growth of the economy. And at the centre of all these initiatives is real estate, which is a key contributor to GDP. Going forward, these policy initiatives will help make real estate more organised, transparent, credible and affordable, making the sector investor and consumer friendly. (IANS)