Demonetisation drive a big success, claims govt
31 August 2017
The government's demonetisation drive has immensely benefited the Indian economy and the people at large with significant change in saving habits and formalisation of assets market, according to the finance ministry.
Considerably more funds came into the organised financial markets, whereas earlier households were parking much of their savings in unproductive physical assets.
As a result of demonetisation of SBNs, terrorist and naxalite financing stopped almost entirely. No high quality FICN was found / seized by intelligence operations, including at the Indo-Bangladesh Border since demonetisation. Further, it also adversely affected the hawala operators and dabba trading venues, according to the ministry.
The savings in the form of investment in equity mutual funds, life insurance premia etc increased. The total assets under management (AUM) of Mutual funds (MFs) rose by 54 per cent by the end of June 2017 from March 2016. As of 16 August 2017, the number of Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts stood at 295.2 million with rural accounts comprising 60 per cent of it. Zero balance accounts under PMJDY declined from 76.81 per cent in September 2014 to 21.41 per cent in August 2017.
The impressive revenue collection under GST is also partially attributable to demonetisation drive. The total revenue of GST remitted up to 29 August 2017 amounted to Rs92,283 crore, that too with only 64.42 per cent of assesses having completed the payments. The number of new taxpayers who have registered with the GSTN up to 29 August 2017 stood at 1.88 million.
In a fillip to the government's digitalisation drive, about 524 million unique Aadhaar numbers have been linked to 736.2 million bank accounts. This has resulted in about 70 million successful payments made by the poor using their Aadhaar identification every month, says the finance ministry.
The government now makes direct transfer of Rs74,000 crore to the financial accounts of 350 million beneficiaries annually, at more than Rs6,000 crore per month. Now, with the BHIM App and the Unified Payments Interface (UPI), a secure and seamless digital payments infrastructure has been created so that all Indians, especially the poor, can become part of the digital mainstream.
Digital payments in the country have increased by 56 per cent from 71.27 crore transactions in October 2016 to 111.45 crore transaction till the end of May, 2017. Within reach of the country is what might be called the 1 billion-1 billion-1 billion vision i.e. 1 billion unique Aadhaar numbers linked to 1 billion bank accounts and 1 billion mobile phones. Once that happens and it would happen quite soon, all of India will become part of financial and digital mainstream.
Despite pessimism in some quarters of a very large shock to economic growth on account of demonetisation, the Indian economy continued to be on the path of one of the strongest growths in the world.
The government says it has effectively managed the two humongous measures of demonetisation and introduction of GST, which changed structural and ethical foundations of Indian economy, with the least pain. With demonetization's short term effects having played out completely, it is the long term positive impacts which will be still working its way to contribute beneficially to India's economy and well-being of its people.
According to a finance ministry statement, a significant portion of SBNs deposited could possibly be representing unexplained/black money. Under the 'Operation Clean Money' launched on 31 January 2017, a scrutiny of 1.8 million bank accounts, prima facie, were found to be not in line with their tax profiles.
The Income Tax Department has so far received 9.27 lakh responses on 13.33 lakh accounts involving cash deposits of around Rs2,89,000 crore, it added.
Further, 5.56 lakh new cases and about 1 lakh of those cases in which either partial or no response was received in the earlier phase, have been identified using advanced data analytics. Besides, about 200 high risk clusters of persons were identified for appropriate action.
The I-T Department conducted searches on various entities, leading to seizure of cash and admission of undisclosed income. Since November 2016 and until the end of May 2017, a total of Rs17,526 crore has been found as undisclosed income and Rs1,003 crore has been seized. The investigation/scrutiny is going on.
Meanwhile, there has been a substantial increase in the number of income tax returns (ITRs) filed. The number of returns filed as on 5 August 2017 recordedan increase of 24.7 per cent compared to a growth rate of 9.9 per cent in the previous year. Advance tax collections of personal income tax (other than corporate tax) as of 5 August 2017 showed a growth of about 41.79 per cent over the corresponding period in FY 2016-2017. Personal income tax under self assessment tax (SAT) grew 34.25 per cent over the corresponding period in FY 2016-2017.
Transactions of more than 3 lakh registered companies are under scanner while one lakh companies were struck off the list. The government has already identified more than 37,000 shell companies which were engaged in hiding black money and hawala transactions.
Around 163 companies, which were listed on the exchange platforms, were suspended from trading, pending submission of documentary proof. The Income Tax directorates of investigation have identified more than 400 benami transactions up to 23 May 2017 and the market value of properties under attachment is more than Rs600 crore.