This document proposes a novel method to uncover black money in India by requiring all citizens to deposit existing Rs. 1000, Rs. 500, and Rs. 100 banknotes into their accounts within a set period. The deposited money would be used to print new currency, and people would be asked to use money from their accounts or lower denominations for transactions over the next month. Anyone holding the old notes after two months would face penalties, as the unreported money would no longer be valid. Implementing this plan would require increased electronic transaction infrastructure and monitoring by a central and state-level bodies to analyze the collected data and investigate problems affecting the economy. This proposal aims to curb black money and support appreciation of the Indian rupee.
2. Current Status of Indian Rupee
1 US dollar=65 Indian rupees.
Inflation rate:
Reasons for depreciation of INDIAN rupee:
Poor current account deficit
Black money.
Condition of import bill.
3. Corruption Index
Indiaโs rank is 16th in Asia and 87 in the world list.
Corruption and Black money are both side of the same
coin.
Swiss bank reveled that India has money than rest of the
world.
Even though Swiss bank agreed to disclose the name of
the account holders Indian government didn't enquired
about it.
The amount in Swiss bank 13 times larger than
countryโs foreign debt.
4. Black Money
Black Money refers to that money which is not fully legitimate
property of the owner.
It is normally received in terms of cash from economic activities. i.e.
Individuals who received it must hide it, spend it on for the
fulfillment of their needs.
โBlack Money is the aggregate of incomes
which are taxable but not reported to authorities.โ - NIPFP
5. Sources of Black Money
Evasion of taxation in various
forms
High level corruption
Real estate transaction
Excise duty evasion & Customs
duty evasion(import)
Evasion of sales tax
Smuggling
from exports & from public
expenditure
educational institutions & from private
corporate investors
Film industry
Professional income
Selling of licenses and permits
Others like gambling, bribes, financial
transaction, HAWALA, prizing, coaching
classes etc.,
6. Impact
Leads to misdirection of
precious national resources.
Worsened income distribution.
Big sized unreported segment of
the economy.
Transfer of funds from India to
foreign countries.
New black money culture in
business world.
Corruption in the society.
Corruption of the entire political
scenario.
Affecting the GDP Growth.
Greater Burden to Honesty Tax
Payers.
Inflation.
Impact on Society.
7. Black to White
Donation to
Charity (Anonymously)
Altering the Source of Income
Using the money for Fraudulent
Transactions
Investing in Movies
HAWALA
Through Real Estate
Current Efforts to
Avoid black money
FIU (Financial Intelligence
Unit) to Track Black Money
Governmentโs Effort on
Chasing Black Money
Committees Formed by
Government against Black
8. Ideas used in the proposal
Transparency of e-transactions is to be explored.
Proper accounting of the money in other transactions.
Effect of fake notes.
Unearth the un-accounted money.
9. Implementation
Every Indian citizen will be
ordered to deposit all his Rs.1000,
Rs.500 and Rs.100 in his account
within a stipulated period.
The money submitted is recycled
to get paper for printing new money.
Every person is advice to use the
money in his account through e โ
transactions or use Rs.50 and Rs.10
for the coming one month.
New money is printed using the
collected money such that the
money kept secretly is not valid
after this two months.
Transaction with the foreign
banks is to be investigated and fool
proof documentation is to be done.
Data collected is used to
investigate the various problems
affecting the economy.
This data collection and
investigation should be done every
two years.
Severe penalty for person caught
for illegal transactions.
10. Infrastructure Required
Usage of the payment cards should be promoted and the devices for this
should be installed in each and every shops.
A central body like FUI should take up the responsibility of monitoring
and control of these transactions.
There should be state wise monitoring authority.
11. Central Body
for
monitoring
State wise
body for
monitoring
Banks
Citizen Citizen
Banks
Citizen Citizen
State wise
body for
monitoring
Banks
Citizen Citizen
Banks
Citizen Citizen
Hierarchy of Proposed model
A practical method to unearth the black money there by appreciating the Indian
rupee is discussed. Before plugging the leaks in distribution system the majour
leak(depreciation of Indian rupee) is to be done, and we suggest this as a cure for
Plugging of leaks in Public distribution.
12. References:
www.TRADINGECONOMICS.com | Ministry of commerce and Industry.
Economic Times, India
Black Money-White Paper ,May 2012,Ministry of finance, Department of Revenue,
Central Board of Direct Taxes, New Delhi.
http://www.thehindu.com/opinion/interview/rupee-depreciation-is-more-than-what-we-
can-pass-on/article5079796.ece