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Demonetisation is an “also-ran” measure: RBI

Published

9 years ago

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Reserve Bank of India New Delhi. Photo: UNI

[vc_row][vc_column][vc_column_text]For the central bank, GST, insolvency and benami laws are more substantial moves to check black money[/vc_column_text][vc_column_text]By Parsa Venkateshwar Rao Jr

The Reserve Bank of India (RBI) in its half-yearly Financial Stability Report (FSR), released on December 29, 2016, has surprisingly moved the demonetization drive of the Modi government to one of the many initiatives. It is not at the top of the list though it has dominated public debate on the streets and in the media.

The central bank listed the bankruptcy law and the Goods and Service Tax (GST) as the two most important factors which would influence the performance of the economy. On demonetisation, the RBI said: “Other initiatives such as the withdrawal of legal tender status of specified bank notes (SBNs) could potentially transform the domestic economy.”

It would appear that Prime Minister Narendra Modi, Finance Minister Arun Jaitley and other ministers and BJP spokespersons would not trumpet demonetisation as the most important decision of the two-and-a-half-year-old BJP-led NDA government.

The RBI has noted several measures taken by the government to tackle the challenge of black money:  “…the government’s resolve to take on the shadow economy through various measures are expected to deliver net direct and collateral benefits to the economy in the long run, and will also improve India’s international standing. Such measures include, among others, the income disclosure scheme, setting up of a Special Investigation Team (SIT), enacting a law regarding undisclosed foreign income and assets, amending the Double Taxation Avoidance Agreement between India and Mauritius and India and Cyprus, reaching an understanding with Switzerland for getting information on bank accounts held by Indians and amending the Benami Transactions Act. Further, the initiatives for encouraging the use of non-cash and digital payments and withdrawal of legal tender status of specified bank notes (SBNs), accompanied by changes in income tax rules are expected to result in a shift away from the significant dependence of Indian economy on cash-based transactions….”

It is evident that the government’s boast and its attempt to spread the message that demonetisation was a bold and firm response to tackle black money and the “shadow economy” does not find favour with the central bank. It does not seem to consider demonetisation as the radical move that the Prime Minister and his colleagues have tried to project it as.

Addressing the issue of “shadow economy”, the FSR notes that it is a worldwide phenomenon and that it is difficult to define it in precise terms. It says, “The term shadow economy may refer to black economy or black money. There is no uniform definition of black money in economic theory and various other terms such as ‘unaccounted income’, ‘black income’, ‘dirty money’, ‘black wealth’, ‘underground wealth’, ‘black economy’, ‘parallel economy’ are also used in this regard. In the Indian context, the White Paper on Black Money, released by Department of Revenue, Ministry of Finance in 2002 adopted a definition of black money “as assets or resources that have neither been reported to the public authorities at the time of their generation nor disclosed at any point of time during their possession.”

And it notes, “In recent literature and usage, shadow economy is also referred to as System D. Though estimating the size of the shadow economy is challenging, according to the Organisation for Economic Co-operation and Development (OECD) half of the world’s workers were employed in the shadow economy in 2009 (this number is likely to grow to two-thirds by 2020).”

Compared to the populist twist that the government sought to give and make it appear that demonetisation was the magic wand that would conjure away black money, the FSR lays bare the complexity of the problem. It explains in clear language the connection between shadow economy, employment and tax rates. It says, “One of the many problems with the shadow economy is that it renders official statistics unreliable and severely impacts policy formulations by governments. Besides, the loss of tax revenues may force governments to hike tax rates, which in turn may further encourage greater activity in the shadow economy. As per some analyses, in the US a 1 percentage point increase in personal income tax rates, other things being equal, tends to increase the size of the shadow economy by 1.4 percentage points. Similarly, a 1 point increase in a regulation index (ranging from 1 to 5) corresponds to a 10 per cent increase in the shadow economy. There is also evidence in some economies of dynamic mobility between the official and shadow economies depending on the relative ‘net’ wage levels; this in turn is an indication of the influence of tax rates and rigidities in labour markets on the size of the official versus shadow economies.”

And it gives its clear view as to the best way of tackling shadow economy, black money et al, and it does not suggest even in an oblique manner that demonetization is the solution, or even that it is one of the solutions. It says, “While the impact of the shadow economy on direct tax revenues is a concern, its role in contributing to indirect taxes and economic growth is debatable. The best way to contain the shadow economy is to improve governance and quality of public services, avoid excessive regulations, impose stringent penalties and have a compatible tax structure.”[/vc_column_text][/vc_column][/vc_row]

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PM Modi’s Indonesia visit to boost defence, digital and strategic partnership

Prime Minister Narendra Modi’s Indonesia visit is expected to strengthen bilateral ties through new initiatives in defence, digital infrastructure, maritime security, trade and critical minerals.

Published

7 hours ago

on

July 6, 2026

By

PM Narendra Modi

Prime Minister Narendra Modi’s upcoming visit to Indonesia is expected to give fresh momentum to the growing strategic partnership between the two countries, with discussions likely to cover defence cooperation, maritime security, digital connectivity, trade, critical minerals and several other sectors.

India’s Ambassador to Indonesia, Sandeep Chakravorty, said the relationship between New Delhi and Jakarta has entered a stronger phase following Indonesian President Prabowo Subianto’s visit to India as the Chief Guest for the Republic Day celebrations last year. He said the Prime Minister’s visit is expected to further strengthen this trajectory through a series of new understandings and agreements.

Defence and maritime cooperation likely to receive major push

According to the ambassador, defence and maritime security will remain key pillars of the discussions during the visit.

He highlighted Indonesia’s strategic location along the Malacca Strait, describing secure sea lanes as vital for both countries and the wider Indo-Pacific region. He stressed that uninterrupted maritime connectivity remains essential for global trade and regional stability.

Without revealing specific details, Chakravorty indicated that the visit could produce significant outcomes in defence cooperation, saying several important announcements are expected.

‘BrahMos Plus’ hints at broader defence partnership

The ambassador also suggested that defence ties between India and Indonesia are moving beyond discussions centred on the BrahMos supersonic cruise missile.

Responding to a question about future cooperation, he remarked that the next phase would be “BrahMos Plus,” while refraining from providing further details.

He said future collaboration is expected to focus on defence manufacturing, technology partnerships, training and capacity building. India, he noted, has emerged as an important exporter of defence equipment and could support Indonesia’s efforts to strengthen its domestic defence manufacturing capabilities.

Military cooperation is also expanding, with India set to participate with troops for the first time in the multinational Garuda Shield military exercise after previously attending as an observer.

Digital connectivity and UPI integration gain momentum

Digital cooperation is expected to be another major highlight of the visit.

The ambassador said Indonesia is preparing to launch its Open Network for Digital Commerce (ONDC)-inspired platform during Prime Minister Modi’s visit, making it the fastest international adopter of India’s digital public infrastructure model.

The initiative is expected to support nearly 65 million micro, small and medium enterprises (MSMEs) in Indonesia by creating a more open digital commerce ecosystem.

Chakravorty also said discussions on integrating India’s Unified Payments Interface (UPI) with Indonesia’s payment systems have reached an advanced stage.

While technical integration remains complex due to Indonesia’s multiple payment-switch networks, he expressed confidence that progress would continue and the Prime Minister’s visit could accelerate the process.

Critical minerals and investment to feature prominently

Critical minerals are also expected to be a major area of cooperation as both countries look to strengthen supply chains for clean energy technologies and electric vehicle manufacturing.

Indonesia possesses significant reserves of nickel and other strategic minerals, while India is seeking reliable supplies to support its manufacturing ambitions.

The ambassador said India plans to invest in processing critical minerals within Indonesia rather than importing only raw materials. He added that such investments would support industrial development in both countries while contributing to India’s self-reliance goals.

Cultural ties to be highlighted

Apart from strategic and economic cooperation, the visit is also expected to showcase the longstanding cultural relationship between India and Indonesia.

Both countries will launch a 15-month programme commemorating Rabindranath Tagore’s 1927 visit to Indonesia, recognising his influence on the country’s educational and cultural landscape.

Prime Minister Modi is also expected to visit Yogyakarta, a city known for its historic temples, reflecting the deep civilisational links shared by the two nations.

With cooperation expanding across defence, digital infrastructure, trade and critical minerals, the visit is expected to mark another important step in strengthening the India-Indonesia strategic partnership and advancing cooperation in the Indo-Pacific region.

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Ram Mandir Trust accepts Champat Rai’s resignation amid donation theft row

The Shri Ram Janmabhoomi Teerth Kshetra Trust has accepted Champat Rai’s resignation as General Secretary following the donation theft controversy, with Bajrang Bagra emerging as a leading contender for the post.

Published

7 hours ago

on

July 6, 2026

By

Champat Rai

The Shri Ram Janmabhoomi Teerth Kshetra Trust has accepted the resignation of its General Secretary, Champat Rai, following the controversy surrounding the alleged theft of cash donations at the Ram Temple in Ayodhya.

According to sources, Bajrang Bagra has emerged as one of the leading contenders for the post. Bagra currently serves as the International General Secretary of the Vishwa Hindu Parishad (VHP). A chartered accountant by profession and a former head of PSU NALCO, he is considered to have the administrative and financial expertise required as the Trust moves into its next phase.

Sources indicated that the Trust is looking to appoint someone with strong experience in governance, finance and institutional administration to strengthen its functioning.

Although Champat Rai has stepped down as General Secretary, sources said he is expected to continue as a trustee unless he decides otherwise.

Decision on successor may come after VHP executive meeting

The appointment of the next General Secretary is unlikely to be announced immediately. The VHP’s biannual national executive meeting is scheduled to take place in Delhi on July 19 and 20, where several organisational decisions, including transfers and appointments, are expected to be discussed.

Champat Rai and trustee Anil Mishra had submitted their resignations after Uttar Pradesh Chief Minister Yogi Adityanath reportedly took a firm stand on the alleged donation theft. Their resignations came after the Special Investigating Team (SIT) submitted its preliminary findings into the case.

Donation theft investigation

According to the preliminary investigation, temple staff responsible for counting cash donations allegedly siphoned off money despite CCTV cameras being installed at the counting centre. The report stated that the footage was not monitored regularly, allowing the alleged theft to continue. Reports suggest that around Rs 7 crore to Rs 7.5 crore may be missing.

So far, eight people have been arrested in connection with the case. Among them is Ram Shankar Yadav, also known as Tinnu Yadav, who worked as Champat Rai’s driver.

Sources said Champat Rai has told his close associates that Tinnu Yadav played the central role in the alleged fraud and misused the trust placed in him. According to the sources, Rai also claimed that when Yadav feared he would be caught, he leaked information to a Samajwadi Party leader.

The other accused arrested in the case are Avinash Shukla, Anukalp Mishra, Lav Kush Mishra, Manish Kumar Yadav, Karunesh Pandey, Ramashankar Mishra and Subhash Srivastava.

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WhatsApp gets more time to respond on username feature, rollout in India put on hold

WhatsApp has been granted more time to respond to the government’s concerns over its username feature and has assured that it will not launch the feature in India until discussions are completed.

Published

8 hours ago

on

July 6, 2026

By

WhatsApp

Meta assures the government that the feature will not be introduced in India until ongoing consultations are completed.

Meta-owned WhatsApp has been granted an extension to submit its response to the Centre regarding its proposed username feature, while assuring the government that it will not roll out the feature in India until discussions on the matter are concluded.

According to sources, the government has allowed WhatsApp three additional days to file its response after the company sought more time. The original deadline for the reply was Friday.

The proposed username feature would allow users to connect with others without revealing their phone numbers, a move that has raised concerns within the government over its potential impact on cyber safety.

Last week, the Centre issued a notice to Meta questioning the feature, expressing concerns that it could increase online fraud, phishing attempts, impersonation, and so-called “digital arrest” scams. The government also directed the company to pause the rollout until consultations are completed to its satisfaction.

Sources said representatives from Meta met officials from the Ministry of Electronics and Information Technology (MeitY) on Friday following the issuance of the notice. During the discussions, WhatsApp reportedly assured authorities that the feature would not be introduced in India before the consultation process is completed.

The government has also asked Meta to explain why action should not be initiated under the Information Technology Act and the relevant rules if the proposed feature is found to compromise user safety. It reminded the company that WhatsApp, as a significant social media intermediary, must comply with due diligence obligations under Indian law.

A WhatsApp spokesperson had earlier clarified that the username feature is not yet live and is expected to be introduced gradually later this year.

The company said it has built several safeguards into the feature to prevent impersonation. According to WhatsApp, usernames of public figures, government entities, celebrities, and verified Meta accounts have been reserved so that they can only be claimed by their legitimate owners. It also said lookalike variations of such usernames are being restricted.

WhatsApp also clarified that users will still need a phone number to create and use a WhatsApp account. The username feature is intended only as an alternative way for people to connect.

The company added that users would need to know another person’s exact username before initiating contact. It also plans to limit how many new users an account can message, prevent repeated attempts to guess usernames, and use automated systems to detect impersonation and abusive behaviour.

To help users identify unfamiliar contacts, WhatsApp said it will display contextual information whenever someone sends a message through a username for the first time. Users will be informed whether the sender is a new account, an existing contact, someone who shares a mutual group, or a person located in another country before deciding whether to respond.

Following its notice to WhatsApp, the IT Ministry also issued notices to Telegram and Signal, seeking details on how their existing username-based systems address concerns related to fraud and impersonation. While WhatsApp has around 500 million users in India, Telegram has a significantly smaller user base.

In recent days, Meta and Telegram have also come under regulatory scrutiny on separate issues. The government recently issued a notice to Meta regarding child sexual abuse material appearing in Instagram advertisements, while Telegram was directed to strengthen action against the circulation of pirated films, OTT content, and other copyrighted audio-visual material on its platform.

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