DUBAI // Hidayat Ali says the Indian government’s move to withdraw 500 and 1,000-rupee notes is the tough love his country needs to rid itself of corruption and shrink the “black economy” in which tax dodgers thrive.
Indian expatriates who support their government’s move to uncover undeclared wealth hope that it will create a level playing field to lift up the poor and middle class.
“I’m sure 100 per cent that this will be a cure for black money sickness,” said Mr Ali, who has worked as a security guard in Dubai for 12 years.
“It means big trouble for tax robbers who collected lots of black money but never paid taxes so the rich continued to be rich and the poor stayed poor.”
In his home state of Rajasthan, Mr Ali’s wife has stood in long queues at least three times this month to withdraw lower-denomination notes.
“In a country so big, there will be some trouble,” he said. “But it is for the good if bank interest rates come down and there are development programmes and money for the villages.”
Ruchi Bhushan, who returned this week from a short trip to India, clearly remembers the words of a New Delhi taxi driver.
“He said the common man would have been shouting on the streets in demonstrations and not standing in queues in front of banks if they did not understand this was a good thing,” Ms Bhushan said.
“Most people think it’s a good move that can level the playing field, that it was people with black money running from pillar to post trying to figure out what to do with that cash.”
Like thousands of Indians going home, Ms Bhushan borrowed small change from friends for the cab fare from New Delhi airport
Expats are also taking back old 500 and 1,000-rupee notes, no longer legal tender, belonging to friends and relatives with the documents necessary to deposit the cash in their bank accounts before the December 30 deadline.
Tourists and expats have faced problems since the notes cannot be used or exchanged at special airport counters, which have also run out of change.
The Indian embassy in Abu Dhabi has advised travellers to carry international credit and debit cards.
Phone calls have been pouring in to financial planner K V Shamsuddin’s weekly radio show.
“Most people are worried all money in their bank will be taxed but when I explain the tax will be only on the interest earned on their money in their bank accounts, they are relieved,” said Mr Shamsuddin, chairman of the Pravasi Bandhu Welfare Trust that advises expats on savings.
Others who parked cash in co-operative banks and did not disclose the funds to income tax authorities are anxious about penalties.
“I help them understand this was urgently needed to stop black money, which is a parallel economy. Non-resident Indians are concerned about currency notes they have because going to India is not practical for everyone.”
The price of air fares means it is not possible for most Indians to hurry home and deposit old notes, and they have asked for an extension to the deadline at the end of the year.
Some remain unconvinced about long-term reform.
“The confusion will affect business because income levels of those who run cash businesses will go down and spending will reduce,” said Sudesh Aggarwal, head of the Indian Trade and Exhibition Centre in Sharjah.
“It will affect the rich with black money but it will also affect the weaker sections. To move from a cash to cashless economy is not right because a large percentage of India still live in the villages.”
rtalwar@thenational.ae
