While noting that demonetisation of high value currency by the government last year will help bring in more taxpayers into the tax net, the United Nations ESCAP in a new report has said that more measures will be required to fight black money in the future.
“The measure did not, by itself, impede future black money flows in new denominations. … Broader structural reforms which could also contribute to enhanced transparency include: the implementation of a goods and services tax; voluntary disclosure of income scheme; and tracking of high-value transactions through taxpayer identification numbers,” it said in the Economic and Social Survey of Asia and the Pacific 2017 released on Monday.
The report also said there is more awareness about alternatives to cash transactions post demonetisation but said moving towards a cashless economy will also require addressing household determinants of cash dependence beyond technology adoption, including low financial inclusion, high informality and low financial literacy.
It also expects the Indian economy to continue growing at a “stable” 7.1 per cent in 2017, edging up to 7.5 per cent in 2018, led by higher private and public consumption and increased infrastructure spending.
It added that the impact of demonetisation will be “transient” on the economy.
Meanwhile, the report said that inflation is projected to reach 5.3 per cent to 5.5 per cent in 2017 and 2018.
“A key downside risk is heightened financial sector risks related to the concentration of bad loans in public sector banks,” it further said.