{"id":5189,"date":"2017-05-22T17:46:15","date_gmt":"2017-05-22T12:16:15","guid":{"rendered":"https:\/\/teekhapan.wordpress.com\/?p=5189"},"modified":"2017-05-22T17:46:15","modified_gmt":"2017-05-22T12:16:15","slug":"of-shaky-demonetisation-statistics-arun-jaitley-and-black-money","status":"publish","type":"post","link":"https:\/\/vivekkaul.com\/2017\/05\/22\/of-shaky-demonetisation-statistics-arun-jaitley-and-black-money\/","title":{"rendered":"Of “Shaky” Demonetisation Statistics, Arun Jaitley and Black Money"},"content":{"rendered":"
We don\u2019t live in a perfect world. And given this, governments like to showcase the positive impact of the decisions they make, all the time. Sometimes, they get very desperate in the process.<\/p>\n
Take the case of the economic impact of demonetisation. Most data now coming out clearly shows that the decision did not have a positive impact on the Indian economy. It might have helped the Bhartiya Janata Party to win the Uttar Pradesh assembly elections, but that doesn\u2019t necessarily make it a right decision on the economic front.<\/p>\n
Nevertheless, the Modi government would like us to believe that demonetisation has helped the country on the economic front. Early last week the finance minister Arun Jaitley said<\/a> that \u201cmore than 91 lakh people were added to the tax base due the result of the actions taken by the income tax department<\/em>.\u201d<\/p>\n It was later clarified that 91 lakh people were added to the tax base in 2016-2017(i.e. between April 1, 2016 and March 31, 2017). As per Jaitley\u2019s statement 91 lakh individuals were added to the tax base post demonetisation, which is incorrect.<\/p>\n Meenakshi Goswami, Income Tax Commissioner and the official spokesperson of the Central Board for Direct Taxes (CBDT), told NDTV later in the week that<\/a> \u201c91 lakh was the total number of new taxpayers enrolled in the financial year 2016-2017<\/em>.\u201d<\/p>\n Now this makes things interesting. On the face of it, the addition of 91 lakh individuals to the income tax base sounds like a huge number. But when we are talking about any increase or decrease, a number should never be viewed in isolation.<\/p>\n The trouble is that we don\u2019t have long term data on this front because of a change in the definition of \u201ctax base\u201d and \u201cnew tax payer added during the year\u201d. The annual report of the ministry of finance for 2015-2016 points out that new taxpayers \u201cadded during the year 2014-15 is 76,04,154\u201d. This basically means that 76 lakh new taxpayers were added during 2014-2015. I couldn\u2019t find any data for 2015-2016. Now compare the 91 lakh additions in 2016-2017 to 76 lakh additions in 2014-2015, and suddenly the number doesn\u2019t seem too high, given that no demonetisation was carried out in 2014-2015.<\/p>\n Even if the government doesn\u2019t do anything, taxpayers get added every year, especially when the minimum tax slab continues to remain the same. In 2014-2015, the minimum tax slab was Rs 2,50,000, which is where it continues to be. This basically means that inflation alone would have ensured that more people came into the tax bracket and thus increased the tax base.<\/p>\n Over and above this, as the economy grows and people earn more, more people come into the tax bracket.<\/p>\n Once we take these factors into account, the addition of 91 lakh taxpayers suddenly doesn\u2019t sound much, especially taking into account the disruption that demonetisation caused through the length and the breadth of the country.<\/p>\n