Strike at sources of stash

The jargon relating to money circulation is usually the exclusive preserve of elite and it is considered to be hard to chew for the man on the street.But the words like black money, currency, bank and ATM (Automatic Telling Machines) have been on the tip of every one’s tongue right from the poor and the unlettered to the rich and intelligentsia and from the outlawed to the law-abiding citizens for the last few days, thanks to Prime Minister Narendra Modi’s surgical strike on black money.

Withdrawal of high-value denominations—Rs 500 and Rs 1,000—from circulation since the launch of surgical strike on November 8 has literally set the proverbial cat among the pigeons with all the sections of people – from the poor to super rich – running helter-skelter for exchange of big notes.

The crackling and swanky Rs 500 and Rs 1,000 notes which were the prized possession of affluent people till now have dramatically become a thing of disgust and unwanted as their hoarders have been in a hurry to dump them by all means.

The poor with a bank account and Aadhaar card have become saviours of the rich in currency conversion. There have been reports from across the State over engaging the BPL families and the self-help group women by black money hoarders in remitting the unaccounted money up to Rs 49,000 into each of their savings bank accounts for a commission of Rs 9,000 for each
conversion.

In spite of the government’s lofty claims that the surgical strike is aimed at combating the spectre of black money, the sudden move virtually stifled the economy in almost all spheres for want of low-value currencies in sufficient numbers.

Trade and commerce in the State registered almost zero business as the transactions in groceries, fancy, textiles, building material, fertilisers, pharmaceuticals etc came to a grinding halt. Gold, however, continues to retain its glitter as black money holders consider it as an easy route for conversion.

As a result, gold biscuits have been on sale even for Rs 75,000 higher than the actual price of each piece weighing 100gr. Gloom, however, looms over realty as it has been hit hard by the PM’s surgical strike.

Realty has been surviving all these days with a yawning gap between the book value (government-fixed land values) and the actual market price on ground, giving scope for flourishing black money. A realtor wishing not to be quoted told this writer that the gap is as wide as 70 per cent, meaning 70 per cent of investments in the particular sector are unaccounted.

Transactions in real estate sector will have to come to a standstill and the price crash is inevitable in the days to come,” he said. The surgical strike makes it inevitable for all the transactions in the realty field to be white and it is suicidal for the realtors to sell the properties with their book value.

The government is likely to witness a drop in revenues from the stamps and registration department as a cascading effect of the imminent slump in realty.

However, the realtors’ pain may turn a gain for home buyers in view of expected price crash.Athukuri Anjaneyulu of the Guntur district branch of the AP Chambers of Commerce and Industry estimates that transactions worth Rs 1,000 crore have been affected in his district alone in the last four days.

Zero business has been witnessed in rice, mirchi, tobacco, fertilisers, groceries and fancy areas as the traders stayed away from trading due to the scare of big notes, he added

In fact, realty, gold, education and professional services like hospitals harbour black money. Corporate educational institutes are alleged to have become safe havens for black money due to certain loopholes in the Andhra Pradesh Societies Registration Act.

Incidentally, the political parties received election funding mainly from the realty and bigwigs in corporate education in the last 2014 elections, say the observers.

LSN Prasad, a Professor in Economics from Guntur, subscribed to the view that real estate, education and health sectors are mainly contributing to black money in the state.

Without bringing them under the tax net by plugging loopholes in the relevant laws, the PM’s surgical strike is unlikely to strike black money,” he observed.