New Delhi: Reserve Bank of India has revealed that only 1% of demonetised banknotes haven’t returned to the banking system, raising questions on the very purpose of taking this step. Government initially defended the step saying the purpose was to purge black money and counterfeit notes and later changed it as an excuse to make people learn value of patience and fundamental of economics.
After being slammed by RBI and Supreme Court, government is under pressure to recover the money lost due to demonetization. Hence, government is likely to levy a demonetization cess of around 1%. During UPA government, Service tax was 12.36% which was increased by BJP to 14.5% by adding various cess such as education cess, Swachh Bharat Cess and Krishi Kalyan Cess.
Finance Minister, Arun Jaitley while addressing the press on lower GDP growth rate, said “Demonetisation was executed to increase the GDP growth rate but it seems like it will take a few more quarters for that. Demonetisation cess is to break even the amount spent in minting new currency minus the amount recovered”.
PM modi has appealed the nation to co-operate with the Demonetisation cess and has promised that demonetisation cess will be dropped once the GDP growth rate comes to previous rate. PM Modi also said “Demonetisation cess is for common people, in the long run it will help India grow faster than the top economies of the world.”
It is understandable that government needs funds to execute the plans, but if government fails to execute the plans even after levying taxes then it must look at the fundamental problems such as the intention behind the plan, involvement of senior leaders etc. Government needs to check chinks in the long hierarchy of democratic system. So that common people don’t feel cheated.