A CA’s Perspective On Demonetization – IIM Ranchi
Amidst all the demonetization chaos, IIM Ranchi students had the honour of having an interactive session with Mr Parag Kulkarni. The Finance Club of IIM Ranchi organised a meet with Mr Parag who is the first and youngest Indian to complete CA exams from India, USA, England and Wales. He is an associate member of Institute of Chartered Accountants in England & Wales (ICAEW), Institute of Chartered Accountants of India (ICAI), a Charter Holder for CPA(USA), has also completed Diploma in IFR from the Association of Chartered Certified Accountants (ACCA), London and IFRS Certification from ICAI.
In the session, Mr Parag discussed the impact of demonetization and its implications on different sectors of the Indian economy. Welcoming the step of demonetization taken by the government, Mr Parag explained its global perspective. “There are four types of money in the market”, he said, “ Black Money– the money that remains unaccounted to avoid paying taxes. Grey Money – the money that leaves the country unaccounted (black money in a foreign country) but is brought back again into the economy as white money (in form of some foreign investments). Then there is Green Money – the fake and counterfeit currencies brought in by anti-nationals. Lastly, Red Money – money that comes out of illegal business activities.”
Mr Parag blamed the bureaucratic system of governance, improper rules and policies of businesses for black money in the economy. He added that to eradicate black money from the system, the government would require to tackle red money first and along with that implement structural reforms. Talking about tax evasion through investments in tax havens, he said that the government will soon be coming up with tax laws in the coming financial year.
Due to demonetization, there has been an increase in the deposits to the bank, increasing the interest expense of the banks. This has lead to banks investing in government bonds to cover their spread, eventually increasing the funds with the government which would be spent for development of the economy, he said. In the end, Mr Parag touched upon several other topics like economic crises of 2008 and inflationary measure RBI can take in near future. With a lot of KT, it was a great session.