“We have to beg to get out own money!” The middle aged lady
uttered these words loudly to no one in particular, but to vent out her
frustration.
I overheard this when I was waiting for my turn to withdraw
cash from a leading Private Sector bank last week. While RBI allowed me to
withdraw Rs. 50,000 from the current account and Rs. 24,000 from the savings
account, the Private Sector Bank had imposed limits of Rs. 10,000 from Current
Account and Rs. 6,000 from the savings account.
There was another half an hour to go before my turn arrived,
so I placed the gaze of my eyes on the branch of a tree across the road, while
letting my ears wander. This middle aged lady in her late 30’s or early 40’s
had arrived with her husband and now started calling her friends to see if they
could help her.
Based on the few phone calls she had made, I gathered that
she wasn’t here for a white washing job, but for a colouring job. She was
seeking help publicly from friends to convert her hard earned, tax paid white
money to black. And I don’t even think she was realizing that she was creating
black money in the system. She wasn’t from the mafia, underworld or any other
clan which thrives on black money. She was just an honest tax payer
participating in this process.
The moment I realized, what was happening, I was in a state
of shock. Over the last few weeks, I have not been shocked by the amount of
undisclosed non-tax paid money which has come out of the closet. While I have
been disappointed by the efforts of a section of society to help people convert
such tainted money into legal assets and protect their losses, I haven’t exactly
been shocked by this. I perked my ear lobes and started paying more attention
to the lady’s telephone conversation.
I don’t know her name, but let us call her Anita. Anita was
getting her house renovated and she had to make a payment to the interior
designer. I wondered, why does she have to pay her interior designer in cash? I
mean interior designers aren’t exactly, illiterate, bottom of the pyramid
people having no access to banking system. They would be more in the league of
people being serviced by Wealth managers. She could simply issue him / her a
cheque.
Well the designer told her that the cost of the work was 10
lakhs, and if he / she were to be paid by cheque, the bill amount would be 11.5
lakhs, out of which 1.5 lakhs would be extortion money, to be paid to the
government. Translated, it means Service Tax @ 15%. Anita who has hard earned
tax paid money, and working on a tight budget, doesn’t want to inflate her bill.
So she is hunting for people who can withdraw cash so that she can give her
interior designer. To me this was a light-bulb moment.
In the last couple of weeks, I have attended a couple of
weddings, so called low scale due to demonetization, but ostentatious by my
standards. The people who were the bride / bride groom’s parents were all
salaried class, who had duly paid their taxes. I made a few calls to these
people and realized that all of them were in the same state. Nobody was willing
to pay the 15% Service Tax and were willing to pay in cash and knowingly /
unknowingly participate in the parallel economy process.
I have realized that, in the last three weeks, both
whitewash as well as blackening were going on in equal measure. Which is why
the queues at ATMs and Bank branches are not going down. Looks like over a
period of time, the entire cash economy is going to continue to thrive.
Suddenly a thought struck me. If it was my house to be
renovated or my son’s wedding what would I do? I then remembered a famous
dialogue from an Amitabh Bachchan movie….”Jao pehle us aadmi ka sign lekar aao….”
