DeMo can do little to stop blackmoney: Assocham

Tribune News Service

New Delhi, January 17

Demonetisation may wipe out the present stock of blackmoney held in cash from the economy but cannot eliminate the ill-gotten wealth converted into assets such as gold and real estate, a study by Assocham said on Tuesday. 

Besides, the scrapping of high-value notes does not prevent the future generation of unaccounted money. “Invalidating existing high-denomination notes addresses the stock of blackmoney but does little to address future flows. Eliminating such flows will require further reforms such as lowering stamp duty on property transactions, electronic registration of real estate etc,” it said.

It said high-denomination currency withdrawal is not without some inherent problems. “It is very difficult to separate blackmoney from white money because distinction is not once-and-for-all. White money used to purchase something becomes black if the shopkeeper does not pay sales tax,” it said.

“Indications that most of the scrapped currency has returned to the banking system through right or wrong means also suggest that demonetisation may not even fully wipe out the existing stock of ill-gotten cash. To that extent, even our study may turn out to be ambitious if the tax authorities are not able to trace the money laundered through various accounts,” the study said.