$74b in Indian ‘black’ money comes to light

new delhi — India’s government estimates that its clampdown on cash will uncover as much as $74 billion of unaccounted money, the first time that Prime Minister Narendra Modi’s administration has put a figure on the potential size of the nation’s shadow economy.

The government expects that between Rs4 trillion to Rs5 trillion ($74 billion) of now banned currency notes won’t be deposited in banks, Attorney General Mukul Rohatgi told the Supreme Court on Tuesday. This implies that about a third of the nation’s 500 and 1,000-rupee notes that were in circulation were stashed away illegally to avoid tax.

Modi last week announced the decision to scrap high-value notes in his biggest steps against tax evasion and graft. Citizens have until December 30 to deposit their worthless notes in bank accounts to re-validate the amounts; big deposits will be matched against income statements and discrepancies will be investigated.

Critics of the move — which sucked out about Rs15 trillion of currency in circulation — say it only hurts the common man in a nation where 98 per cent of consumer payments are still in cash. Supporters say the step can flush out so-called black money from the $2 trillion economy, as much as one-fifth of which is estimated to be unaccounted for.

new delhi — West Bengal Chief Minister Mamata Banerjee and her Delhi counterpart Arvind Kejriwal on Thursday jointly tore into Prime Minister Narendra Modi’s demonetisation move and warned of a public revolt if the decision that has caused cash chaos was not reversed in three days.

But the government denied any possibility of rolling back the decision to spike 500 and 1,000 rupee notes, aimed at curbing black money, corruption and terror funding.

Addressing a public rally at the Azadpur fruit wholesale market here, Kejriwal and Banerjee both alleged a conspiracy behind the demonetisaion. Calling its aftereffects a “crisis”, Kejriwal said people didn’t have cash even to buy basic essentials.

“If this was indeed against corruption and black money, the first to support you would have been Arvind Kejriwal and the Aam Aadmi Party,” he said, at the rally at one of India’s largest wholesale hubs, which has also been in crisis. “Take back this decision in three days... Don’t test people’s patience. Otherwise, there will be a‘bagaawat’ (revolt).”

Addressing the rally earlier, Banerjee mocked at Modi’s “achche din” slogans and said the currency spike decision had caused economic instability in India. “Is this achche din? If in three days you don’t withdraw (the move), we will step up our protests.”

But Finance Minister Arun Jaitley said there was “no question of rolling back” the demonetisation move and accused Kejriwal and Banerjee of “spreading panic”.

Small businesses in India have taken a huge hit in the aftermath of the currency spike, with people struggling to manage cash for ration, medicines and commuting.

At least 42 deaths — including suicides, cardiac arrests and hospital casualties — in the past few days have been attributed to the demonetisation.

Kejriwal reminded the audience that he had been an Income Tax commissioner and that it was beyond his understanding how corruption and black money could be checked by introducing new 2,000 rupee notes. —