ISAS Insights

A concerted attempt has been made by the Government of India to unearth unaccounted cash. Reports of the Reserve Bank of India (RBI) elicited the fact that cash in circulation was growing at an unprecedented rate when other indicators in the economy did not reveal any genuine reasons for such large amounts to be circulating. The manufacturing sector did not indicate any growth nor did construction, hence a year on year growth of about 15 % in the last two years was causing consternation. Given the serious situation which appeared to be emerging, as being brought out by many studies, the government had to resort to the surprise element in the ferreting out process. This will cause hardship for some time but will certainly address the 'stock' of accumulated black money. There is an urgent need to address the regeneration of black money which constitutes the flow element.