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Demonetise Rs 500, Rs 1000 notes to combat black money, says aam aadmi

PTI 31 Aug 2012, 11:24:06 IST
New Delhi, Aug 16: The common man wants the government to demonetise high denomination currency notes like Rs 1,000 and Rs 500 to effectively combat the menace of black money in the country, a Finance Ministry report has revealed.

The other salient demands by the public include bringing a voluntary disclosure scheme for black money hoarders and bringing a strong Lokpal Bill.

The feedback from the ‘aam aadmi' was received by the Central Board of Direct Taxes (CBDT) which had appealed to the public to share its views on tackling the problem of illegal funds and addressing new measures to curb generation of a black economy.

The suggestion of withdrawing the big currency notes, however, has been turned down by top financial and economic brass of the Ministry which includes chiefs of agencies like the Enforcement Directorate (ED), Directorate Revenue Intellegence (DRI) and the Financial Intelligence Unit (FIU).

“One common demand from the public is that high denomination currency notes, particularly Rs 1,000 and Rs 500, should be demonetised”, the CBDT chairman headed panel said in its report to the Finance Ministry.

“In this connection, it is observed that demonetisation may not be a solution for tackling black money or economy, which is largely held in the form of benami properties, bullion and jewellery”, the report said.

“Further, demonetisation will only increase the cost, as more currency notes may have to be printed for disbursing the same amount,” it said.

The report also adds that demonetisation “may also have an adverse impact on the banking system, mainly logistic issues, like handling and cash transportation may become difficult and may also cause inconvenience to the general public as the disbursal or payments of wages/salaries to the workers will become difficult.”

Demonetisation undertaken twice in the past (1946 and 1978) miserably failed, with less than 15 per cent of high currency notes being exchanged, while more than 85 per cent of the currency notes never surfaced as the owners suspected penal action by the government agencies,” the report said.