Black money or unaccounted money stashed outside (the size of the amount is unknown) our country results in a real loss to the Indian economy. India has been under the pressure of the black money menace since many years. Thus in order to bring back the money stashed abroad and to curb the black money menace, the Finance Minister - Mr Pranab Mukherjee tabled the much awaited 'White Paper' on black money.

The 'White Paper' suggests various ways to bring an end or to lower the volume of black money in the country. One of these suggested measures is to encourage the use of debit and credit cards along with electronic transfer of funds.

Let us see how the use of debit and credit cards would help curb the black money menace.

The 'White Paper' suggests that the promotion of banking channels and greater use of credit and debit cards can help check black money generation as they leave adequate audit trails. It says the Government should deliberate on offering tax incentives on the use of credit or debit cards as practiced in South Korea. The 'White Paper' further clarified that payments by debit or credit cards through e-service intermediaries will simplify and encourage payments in these modes and reduce the cash economy. Moreover, with e-transfer facilities available to trade, one can foresee this as a major thrust towards strengthening accountability and discouraging unaccounted activities.

Some of the other measures mentioned in the 'White Paper' to curb the black money menace are:
 

• Rationalise tax rates, cut transaction costs for compliance and administration
• Pursue further economic liberalisation
• Ensure financial sector reports all global transactions above a threshold
• Make electronic payment and reporting pre-conditions for registering property
• Reform natural resource sectors in coordination with states
   

What should credit or debit card holders do...

In our opinion card holders especially the credit card holders should not get swayed by incentives provided and go on a shopping spree. Remember though incentives, if at all are given to card holders the ultimate credit bills have to be defrayed by card holders and maintaining a healthy credit score is essential. Spending within your means, will ensure financial well-being in the long run and thus will be wise idea to adopt.

Our view:

We believe that though the so-called 'White Paper' has been brought out on black money, it lacks depth as it does not offer an official estimate of black money, does not disclose names of those with assets overseas and absolutely silent on the role of black money in poll funding. The Government needs to strengthen the policy framework and law & order in the country by minimising the loopholes in them.

Also, political parties should work together and concentrate more on bringing back India on a high growth trajectory rather than wasting time by debating over various issues due to vested interests.

Disclaimer: This newsletter is for Private Circulation only and not for sale, is only for information purposes and Quantum Information Services Pvt Limited (PersonalFN) is not providing any professional/investment advice through it and, does not constitute or is not intended to constitute an offer to buy or sell, or a solicitation to an offer to buy or sell financial products, units or securities. PersonalFN disclaims warranty of any kind, whether express or implied, as to any matter/content contained in this newsletter, including without limitation the implied warranties of merchantability and fitness for a particular purpose. PersonalFN and its subsidiaries / affiliates / sponsors / trustee or their officers, employees, personnel, directors will not be responsible for any direct/indirect loss or liability incurred by the user as a consequence of his or any other person on his behalf taking any investment decisions based on the contents of this newsletter. Use of this newsletter is at the user's own risk. The user must make his own investment decisions based on his specific investment objective and financial position and using such independent advisors as he believes necessary. PersonalFN does not warrant completeness or accuracy of any information published in this newsletter. All intellectual property rights emerging from this newsletter are and shall remain with PersonalFN. This newsletter is for your personal use and you shall not resell, copy, or redistribute this newsletter, or use it for any commercial purpose. The user accepts the terms of use on this web site.

Add Comments

Comments
ahernandez@utn.ac.cr Jun 17, 2012 A better way to state you Question is:What is the rate of aiptecparion (i/Yr) for a painting that is purchased today for $2M (PV) and sold 5yrs from now (n=60) for $5M (FV) there being no additional outlays during the coming 5yrs (PMT = zero). Input the above and Press the (i/Yr) button to get the answer of 18.466% per yr.
gunkel@ids-mannheim.de Jun 17, 2012 The exact procedure dendpes on which financial calculator you have. I am willing to BET the calculator will TELL you if you can find a help button or one labeled PV (present value). I am 100% positive it you visit the manufacturer's website, you can download a complete manual.
harinathank@yahoo.com May 25, 2012 Apart from acting as a toll for tracking Black money circulation, Credit Card usage also helps reduce cash handling in the country and improves banking transactions and discipline the citizens Therefore, i wholeheartedly welcome the proposal

 1