Finance Minister Arun Jaitley’s 2017 budget proposes a ban on any cash transaction in a day over 3 lakhs rupees (about $4446.75).
This is far worse than any restriction in the US, where cash transactions above $10,000 are not banned, but simply reported by the bank to the IRS.
Like demonetization, the new ban is an unnecessarily coercive, intrusive, and punitive move, with entirely foreseeable and counterproductive results.
By completely banning cash transactions above 3 lakhs, the government is actually unraveling the last stitch of credibility holding its efforts together.
Large cash transactions are not going to disappear. All that will happen is that they will not pass through banks at all.
Large purchases have hitherto involved a percentage of the price being reported and taxed (the white part) and the rest being paid under the table (the black part).
Now you can be assured that come April 1 there will be no “white” part at all.
It will be all black.
Just as the printing of new currency notes was the pretext whereby fake notes, excess currency, and chaos have been slyly injected into the system leaving no one sure of just how much cash is in circulation at all, so too the new tax will create a new layer of impenetrable fog under cover of which the enemies of India’s aam admi will operate with impunity.
Those enemies, let us be clear, operate not just from terrorist outposts in Bangladesh or Pakistan, but from the seat of the international cabal’s financial shock-and-awe machinery in India: that is, from the RBI, the finance ministry, and the Prime Minister’s Office.