The capital sale of asset 3. Black income

The
demonetisation exercise is on the face of it, a financial affair. Generally, it
is undertaken at the time of excessive money supply causing hyperinflation and
instability in the economy. But when we evaluate India it was not so. The
reason behind the demonetisation was black money and corruption. Some argue
that corruption is the lubricant an is often associated with economic
progress.  Demonetisation is the most
important and necessary when there is a change of national currency.
Demonetisation is the process where the government declares currently running
currency notes illegal to be tender after the declaration is made. The reasons
of demonetisation are to control counterfeit notes that could be contributing
to terrorism, and to eliminate the black money. A well-known study on black
money in India was done in 1985 by National Institute of Public Finance and
Policy under the guidance of Dr Shankar Acharya. To prepare a global estimate
of black income their study confined itself to six areas.

1.     Incomes
received either openly or covertly in the production of goods and services

2.     Black
income received in relation to capital sale of asset

3.     Black
income generated through in fixed capital formation in the public sector

4.     It
is generated through private corporative secor

5.     Generated
through export

6.     Generated
through over invoicing of imports by the private sector and sale of import
licence. (demonetisation a means to an end? Ramagopal agarwala sage
publications India pvt ltd. Pg 15-16. 2017)

The
demonetisation had a great significant impact on the state of the Indian
economy. Thus it would be able to introduce to the people the need of the use
of digitalisation and transparency of the transactions. According to S
Gurumurthy, demonetization is a corrective steps and he further add
demonetization as an investment. The reason to comment it as an investment,
nearly 30 crore bank account were opened and brought huge savings into banking
system. Irresponsible monetary management has been stopped Tax base has risen
by about 20 percent and advance tax for 2017-18 has increased 42 percent
(Business line, 23/2017). Through the implementation of GST and other policies
today it is not possible to bring black money to invest in land, gold or equity
on the scale that used to happen in the past.