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Winter Session - Demonetisation Will Dominate.... Mr. Rajesh Mokashi, MD&CEO in Firstpost
Winter Session - Demonetisation Will Dominate.... Mr. Rajesh Mokashi, MD&CEO in Firstpost
Print:WinterSession:Demonetisationwilldominate,butdoesModihaveacounterchaosplan?
WinterSession:Demonetisationwilldominate,butdoesModihavea
counterchaosplan?
byDineshUnnikrishnanNov15,2016
#ATMchaos#bankbranches#Banking#BJP#Congress#CPM#Demonetisation#MamataBannerjee
#parliament#RahulGandhi#Wintersession
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AsthewintersessionofParliamentbeginstomorrow(Wednesday),thenationisstillinthepainfulprocessof
swallowingabitterpilladministeredbyNarendraModiintheformofanabruptbanofRs500,Rs1,000notes
announcedon8November.Thesideeffectsofthispillarestillbeingmanifestedacrossthecountryintheform
ofseveredisruptionstonormallifeandcashcrunch.
Itisapeculiarsituation.
ThedemonetisationprocessinitiatedbytheModigovernmentisthebiggestevercrackdownonfakecurrency
dalalsandblackmoneyhoardersinthiscountryafterasimilarcrackdownbytheMorarjiDesaigovernmentin
1978.ManyarelaudingPMModiforshowingthepoliticalwillandcouragetotakeontheparalleleconomy
announcingwhatwassuretobeanunpopularstep.
Remember,inthehoursaftertheannouncement,eventhebiggestpoliticalenemiesofModi,theCongresscamp,
didn'thavesolidargumentsagainstthedemonetisation.Sowereotherregionalsatraps.Modistoodvictoriousin
theeyesofeveryonewhosawthemoveusingtheyardsticksofabigeconomicreformandshowofpoliticalwill
tocleansethedeeproutedparalleleconomyinthiscountry,longexploitedbycorruptpoliticians,croniesand
crooks.
But,thepublicvenerationsoongavewaytoangerandagony,whenthecashdroughtbegantohitthesystem,
stillcontinuingevenafteraweekpostthedemonitisationannouncement.ThemadrushatATMsandbank
branches,thelogicofnewRs2,000bills(moreofashowcaseitemforcommonmanatthisstage),theabsence
ofproperplanningandthegovernment'scluelessnessonhowtobringbacknormalcyinpubliclife,changedthe
publicperceptionofthetheexercise.
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Print:WinterSession:Demonetisationwilldominate,butdoesModihaveacounterchaosplan?
]
PTI
Itisthismoodofpublicunrestthattheoppositionpoliticalpartieswillexploittotheirbestastheystepinto
Parliamentbuildingtomorrow.Onecanexpectheavyexchangeofargumentsandcounterargumentsontheissue
ofpublicagonypostthedemonetisationannouncement.Politicalpartieshavesurelydonetheirhomeworkon
howtocornerthegovernmentontheissue.
ThesignsofthiswereamplyevidentwhenCongressVicepresidentRahulGandhijoinedanATMqueuein
Delhi,MamtaBanerjeemadeawarcryfromWestBengalandAkhileshYadavcriedfoulfromUttarPradesh.
AllthiswillreflectinParliamentbeginningtomorrow.
WhatoneneedstowatchoutishoweffectivelytheModigovernmentcancountertheonslaughtofaccusations
andgetoverit,toprogresstothebusinessofhouse,mainlypassageofremainingcrucialbillsinParliamentfor
themuchawaited1AprilrolloutoftheGSTCentralandintegratedGSTBills.
Politicalaccusations
But,besidesthepaincausedtothepubliconaccountofcashdrought,theotherbigchargethegovernmentwill
likelyfaceintheHouseistheallegationDelhiChiefMinisterArvindKejriwalraisedlastweekthatthe
governmentallegedlyleakedouttheinformationtotheBJPanditsfriendswellinadvance.
Kejriwalaccusedthatthegovernment,thus,facilitatedthehoardersofunaccountedcashtopushtheirmoney
intosaferdestinations,includingwhiteningpartofitbydepositinginthebankingsystem.Kejriwalalsocitedan
incidentinvolvingSanjeevKamboj,coconvenor,BJPlawandlegalaffairs,Punjab,revealingonTwitter
picturesofRs2,000noteson6November,twodaysaheadofPMModi'sannouncementon8November.This
part,KejriwalalsoraisedconcernsoveranunusualsurgeinbankdepositsintheJulySeptemberquarter.
Thegovernmentneedstotelluswhotheyhadwarnedamongfriendsaboutthisannouncementaboutblack
money,saidtheDelhiCM.
ItisafactthattherehasbeenrecordsurgeinbankdepositsintheJulySeptemberquarter.Duringthequarter,
thebankdepositsrosebyarecordRs6.65lakhcroretoRs102.08lakhcrore,arecordlevelwhichhassurprised
economistsgiventhatinthepreviousquartersmostbankshavereportedanegativegrowthindeposits.
FinanceministerArunJaitleyhas,however,pointedoutthattheriseinthedepositwasbecauseof7thPay
Commissionarrearsthatmayhavebeenchannelledintothebankaccounts.ButthisarrearsaroundtoRs70,000
croreandaddanyotherinflowsincludingsubsidies,thisamountwillnotgobeyondRs11.5lakhcroreatthe
most.
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Print:WinterSession:Demonetisationwilldominate,butdoesModihaveacounterchaosplan?
QuarterlybankdepositsinRsbillion
Bankdeposits
Changeinbankdeposits
100,000
9/27/2013
3/28/2014
9/26/2014
3/27/2015
9/25/2015
3/25/2016
9/30/2016
3/30/2007
9/28/2007
3/28/2008
9/26/2008
3/27/2009
9/25/2009
3/26/2010
9/24/2010
3/25/2011
9/30/2011
3/30/2012
9/28/2012
3/29/2013
3/30/2001
9/28/2001
3/29/2002
9/27/2002
3/28/2003
9/26/2003
3/26/2004
9/24/2004
3/25/2005
9/30/2005
3/31/2006
9/29/2006
9/26/1997
3/27/1998
9/25/1998
3/26/1999
9/24/1999
3/31/2000
9/29/2000
50,000
Getthedata
Thisissomethingintriguingtome,saidDKJoshi,chiefeconomistatCrisil.DevendraPant,chiefeconomist
atIndiaRatingsandResearchtoosaidthesharpgrowthinbankdepositsduringJulySeptemberisbaffling.
Thisisperplexing.Anticipatingsometoughmeasures,thereisapossibilitythatblackmoneyhoarderswould
havepushedpartoftheirmoneyintothebankingsystem,saidPant.
Thelogicalquestionhereiswhysomeoneshoulddeposithisillicitmoneyintothebankingsystemandget
exposedtothetaxmanevenifheknewthedemonetisationinadvance?
Economistsandfinancialexpertspointoutthefollowingreasons:Itisnavetoimaginethattheentire
blackmoneyispushedtothebankingsystem,butitisquitepossiblethatpartofwouldhavearrivedthere.The
blackmoneyhoarderwhoknowsaboutthemeasurescomingsoonwouldhaveusedbenamistoputthe
unaccountedcashintodifferentbankaccountstoescapetightscrutinyandtax/penaltyimplicationthatwill
happenonsuchdepositspostthedemonetisationannouncement.
ThegovernmenthaswarnedthatcashdepositsaboveRs2.5lakhthresholdduringthe50daywindowcould
attracttaxplusa200percentpenaltyincaseofincomemismatch.
"WewouldbegettingreportsofallcashdepositedduringtheperiodofNovember10toDecember30,2016,
aboveathresholdofRs2.5lakhineveryaccount.The(tax)departmentwoulddomatchingofthiswithincome
returnsfiledbythedepositors.Andsuitableactionmayfollow,"revenuesecretaryHashmukhAdhiahadsaid
lastweek.'
Inthisbackdrop,someonewhoknewabouttheensuingmeasurescouldhaveverywelluseddifferentpersonsto
putmoneyinvariousaccountsandmaketheblackmoneylegit,saidaneconomistwhodidn'twanttobenamed.
Forinstance,ifIsplitthismoneyandgiveinsmalllotstomanyofmyemployeesaskingthemtodepositin
differentbankaccountsbeforedemonetisationkicksin,thefundsbecomewhiteandtheirsalaryburdenistaken
careof,sayfornextsixmonths,theeconomistsaid.
Forsure,thereisnohardevidencetosaythatselectfewweretippedoff,exceptKamboj'stwitterpicture.Also,
thetaxdepartmentcananytimegobacktothesetransactionsandseekthesource.But,thepointhereisthat
therehasbeenadubioussurgeinbankdepositsinthe3monthstoSeptember.
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TheoppositionwillmostlikelytakeupthisissueandallegetippingoffofinformationinParliament.Thisis
likelytoputtherulingNDAinaspot.Itislikelytobedifficultfortherulingpartiestoconductthelegislative
businessnormally.
Butnoteveryoneagreeswiththisconspiracytheory.RajeshMokashi,managingdirectorandCEOofCARE
Ratings,saidthedepositsurgeisnotrelatedtomonetisation.First,thepaycommissioneffectisthere.Second,
theIDSwouldhaveledtoconversionoflargeamounts(intobankaccounts),"Mokashisaid.
Therearechargesandcountercharges.Onethingisforsure.Demonetisationislikelytostealtheshowin
Wintersession.PMModiwillhavetousehischarisma,whichheisknownfor,togetthebusinessgoing
counteringallegations.Thecriticalparttowatchiswhetherthegovernmentwillbeabletocontaintheuproarto
theinitialdaysandgetbacktobusiness,mainlyGSTBillspassage,attheearliest.
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