What we can expect next is a patient round of bean-counting in the Finance Ministry as taxmen zero in on high-value cash deposits. Some 60 lakh depositors have put in deposits totalling Rs 7 lakh crore since November 8 in instances exceeding Rs 2 lakh each. But toothcombing these and actually calling the bluff on tax evaders may take months or years and in cases involving big fish, involve appeals to income tax tribunals or even high courts.
However, we can reasonably expect Finance Minister Arun Jaitley to announce a very comfortable fiscal deficit situation for the 2017/18 financial year when he rises to present the budget on February 1. This would be largely though anticipated income tax gains from the deposits made in banks. The minister is already setting the mood by pointing to robust growth in tax collections..
A low deficit will give the government enough elbow room to play shots – be it in the form of lower taxes for citizens, populist schemes, recapitalising banks scarred by bad loans or fresh spending on infrastructure.
A Robin Hood-like transfer of a big chunk of fiscal gains to the poor holders of Jan Dhan Yojana may be the most romantic outcome of the demonetisation drive.
