Soon after demonetization of 500 and 1000 rupee denominations, the country went into a short period of turbulance. Many economists predicted that India might take a hit on GPD growth number and it came true.
70 percent of the transactions in India are done by unorganized sectos and that too in cash. You must be surpised to learn that India is one of those rare countries were ecommerce giants have the facility of cash on delivery including Amazon.
Rationale behind the demoneziation drive was to hit on black money, terrorist funding and corruption. But none of these seem to achieve its predicted goal.
Hell lot of rules and regulations were innovated just to bring more problems to common middle class citizens. I am not against reforms and moving towards cashless economy but I do have few issues with the way these exercises were carried out on national level without proper planning.
And now Indian Government is asking all of its citizens living outside of India for more than 182 days per year to declare their foregin bank account details to the income tax department.
I don't understand why? The same reason is given by Government now that they want to stop money laundering, corruption and black economy. I don't think this is going help the economy.
Foreign remittance is very useful to sustain the exchange rate of a developing country like India. Once non-resident indians ( those Indians living outside India for more than 182 days in a year) are forced to declare their foregin bank accounts and financial assets holdings, they will either stop sending money to India or at least reduce the frequency which will impact the excahnge rate.
Over the period of time, the exchange rate should depreciate which will help India to increase it's exports and tourism business but it will make imports expensive.
Oil and war weapons are the biggest import bills for India and this will increase the fiscal deficit and put lot of pressure on GDP numbers. The bank credit growth is at 20 year low and entire banking sector is suffering from bad loans as of now.
India is facing more problems now in terms of finances, economics and on war front than before. This is not the right time to bring all these type of regulations.
What I feel is that Indian Government is planning to tax all of it's citizens living aboard on foregin income as well like the USA does. This can be done after the successful implementation of Adaar card system.
However, Indian Government should not forget that they are still developing country and they should focus more on improving economic strength instead of copying what others are doing.
Its better to follow basics than to innovate more ways to put burden on citizens.