Black money: Corrupt may park money in gold
Hyderabad: With the government making it tough to hold cash in high denomination notes, experts feel people may park their unaccounted money in gold and other assets — making their prices shoot up in the long run.
“These measures will not bring down corruption. Officials and politicians will continue to take bribes until they have power to make things worse for you. However, they make park this money in some other form,” said a head of an industry body on the condition of anonymity.
Gold and jewellery are considered to be the easiest way to hide unaccounted money as these could be passed on as traditional possessions. With the boom in real estate, a huge chunk of black money got transferred to land and property.
Globally, it was observed that when holding unaccounted money in cash was made difficult, corrupt officials would opt for taking bribes in kind, including gold.
This may result in an increase in gold prices in the medium run. While major real estate developers may not have big impact, property sales may dip in the short term as black money suddenly goes out of circulation. However, it may pick up later.
Guilty may use Jan Dhan
Tough black money law may prevent people from depositing the unaccounted money in banks directly, leaving them opt for benamis for conversion of black money.
“Black money holders will have no option but to plan their deposits. They may use accounts of their friends and relatives to split their black money to evade income-tax scrutiny,” said a income-tax planner.
According to him, “Tax evaders could also use the Jan Dhan accounts of poor people to convert their old notes into the new ones. This warrants tax officials to track the unusual flow of money in Jan Dhan accounts.”
Apart from this, he said the demand for buying used jewellery also may increase. However, the demand for new gold jewellery may take a hit. The demonetisation may also impact the upcoming elections, which are heavily funded by black money.