India News

Demonetisation is an “also-ran” measure: RBI

Published

10 years ago

January 18, 2017

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]

India News

India Metro Rail Network May Overtake US in 2 Years

India’s metro rail network has reached 1,170 km across 26 cities. Union minister Manohar Lal said the country could overtake the US in network length within two years.

Published

12 hours ago

September 5, 2026

APNLive Desk

India is on track to become the country with the second-largest metro rail network in the world after China, with Union Minister Manohar Lal saying the country could overtake the United States within the next two years.

India’s metro rail network has now expanded to 1,170 km across 26 cities. The network is only 216 km shorter than the US metro rail network, which stands at 1,386 km, according to figures cited by the minister.

India’s metro network expands rapidly

Speaking after the inauguration of an extended metro service in Indore, Manohar Lal highlighted the pace at which metro connectivity has grown in India.

He said metro services were operational across just 245 km in five cities when Prime Minister Narendra Modi assumed office in 2014. The network has since expanded to 1,170 km across 26 cities.

The minister said India could overtake the US in terms of metro rail network length in the next two years and become the world’s second-largest country in this segment after China.

China currently has around 8,000 km of metro rail lines, according to the figures cited by the minister.

Indore metro extension inaugurated

The minister made the remarks after inaugurating an extended section of the Indore metro. The project was built at a cost of around Rs 2,850 crore.

The Indore metro was earlier operating commercially on a six-km stretch between Gandhi Nagar and Super Corridor-3 stations. Following the extension, the service will operate on a 17-km route between Gandhi Nagar and Malviya Nagar Chauraha.

Madhya Pradesh Chief Minister Mohan Yadav said the metro service would mark a new phase in Indore’s development. He also said the network would eventually be extended to Ujjain and other nearby areas.

India’s metro rail network: Key figures

India currently has 1,170 km of operational metro rail network.
Metro services are operational across 26 cities.
The US has around 1,386 km of metro rail network.
India is currently 216 km behind the US.
China has around 8,000 km of metro rail lines.
India’s operational network stood at 245 km across five cities in 2014.

India News

PM Modi returns to SRCC after 13 years, revisits 2013 glass full speech

PM Narendra Modi returned to SRCC after 13 years for its centenary celebrations, revisiting themes from his landmark 2013 address.

Published

13 hours ago

September 5, 2026

APNLive Desk

Prime Minister Narendra Modi returned to Delhi University’s Shri Ram College of Commerce (SRCC) on Saturday, 13 years after his previous visit to the institution as Gujarat chief minister.

His latest visit came as SRCC marked its centenary celebrations. Modi’s 2013 address at the college had attracted significant attention as he spoke about India’s youth, governance and the country’s demographic potential.

In 2013, Modi was Gujarat chief minister and had not yet been named the BJP’s prime ministerial candidate. He returned to the same campus this year as Prime Minister, having completed 12 years as Prime Minister and serving his third consecutive term.

What PM Modi said at SRCC in 2013

The 2013 lecture was titled Emerging Business Models in the Global Scenario. The address also covered governance and India’s young population.

He described India’s youth as a source of national strength rather than simply a group of new-age voters. He also highlighted India’s demographic advantage and argued that the country needed to make better use of its young population.

One of the notable moments from the speech involved a glass of water. Modi contrasted the conventional descriptions of a glass as half full or half empty and said he viewed it as full, with half containing water and the other half air.

The speech also included his remarks on technology and young Indians. Referring to an anecdote from a visit to Taiwan, Modi used the phrase “mouse-charmers” to describe Indians using computers and suggested that young Indians had the ability to influence the world through technology.

‘Minimum government, maximum governance’

Modi’s 2013 address also touched on governance. He spoke about the role of government and the need for better governance.

He also spoke about India’s potential in the 21st century.

Modi returns as PM for SRCC centenary

The September 5 visit coincided with Teachers’ Day and SRCC’s 100th anniversary. The Prime Minister’s Office had announced that Modi would participate in the college’s centenary celebrations and address the gathering. SRCC was established in 1926 by industrialist and philanthropist Sir Shri Ram.

Earlier this year, Modi also met the SRCC governing body at his residence in April in connection with the college’s centenary celebrations and released a commemorative postage stamp marking the occasion.

The return to SRCC came 13 years after his 2013 appearance at the college, when he addressed students as Gujarat chief minister.

India News

Supreme Court judge calls police assault on CJP protesters very distressing

Supreme Court judge Justice Ujjal Bhuyan criticised alleged police assaults on CJP protesters and raised concerns over excessive force.

Published

22 hours ago

September 5, 2026

APNLive Desk

Supreme Court judge Justice Ujjal Bhuyan has criticised the assault of protesters by police personnel during the recent CJP demonstrations in Delhi, describing the conduct as “very, very distressing” and a matter of serious concern.

Speaking at the launch of retired IPS officer Yashovardhan Azad’s book Policing the Republic, Justice Bhuyan said the detachment expected from police officers appeared to be diminishing.

He expressed concern over young Indian Police Service officers personally participating in the assault of protesters and demonstrators.

Justice Bhuyan stresses need for responsible policing

Justice Bhuyan said effective policing does not require excessive use of force or infringement of human rights. He emphasised that the police play an important role in maintaining public confidence because citizens generally approach the police when they feel they have been wronged.

He said maintaining the credibility of the police force was therefore of “utmost importance”.

The judge’s remarks come amid continuing scrutiny of the police and paramilitary response to the CJP protests in Delhi.

Supreme Court panel to examine police action

The Supreme Court has constituted a high-level panel to investigate allegations concerning the use of force by Delhi Police during the July 20 student protests at Jantar Mantar and the subsequent Parliament march.

The panel, headed by former Supreme Court judge Justice R Subhash Reddy, will examine complaints relating to lathi charges, tear gas, pellet guns and electronic batons. It will also look into allegations of targeted harassment or molestation of female protesters and review available CCTV and video footage.

The police response during the protests has faced criticism, while Delhi Police has maintained that its personnel were also attacked during the clashes.

Judge raises concern over custodial deaths and torture

Justice Bhuyan also spoke about custodial torture and deaths, describing custodial death as one of the gravest crimes in a society governed by the rule of law.

He stressed that torture and cruel, inhuman or degrading treatment cannot be accepted, regardless of whether such conduct takes place during investigation, interrogation or other circumstances.

The judge further warned that when government functionaries themselves become lawbreakers, it can undermine respect for the law and encourage lawlessness.

He questioned whether citizens lose their fundamental rights simply because they have been arrested by police.

‘Fake encounters’ cannot be part of policing

Justice Bhuyan also addressed allegations of extra-judicial killings, commonly referred to as “fake encounters”. Referring to a 2011 Supreme Court judgment, he said such encounters undermine the rule of law.

He stressed that an “encounter philosophy” cannot become part of legitimate policing and said proven fake encounters involving serving police officers must be treated with the utmost seriousness.

The Supreme Court’s panel will now examine the allegations surrounding the police action during the July 20 protests as scrutiny of the events continues.