Prime Minister Dr. Manomohan Singh while speaking in the Parliament on the issue of on-going fiscal crisis asked people to stop purchasing gold and minimize use of petrol and diesel. But mere 'advice' will not affect affluent society, which is the biggest user of gold and petrol. Strict steps therefore are to be initiated by the government for effectively curbing purchase of gold and petrol.
Reserve Bank of India
) was worried on increasing craze for gold where gold-import rose by 11-percent in a year against global rise of just 3-percent. It was wrong that Indian government succumbed to political and other pressures while Indian Finance Minister had to take back measures from the Union Budget for 2012-13, which could have effectively check the use of black money to purchase jewellery.
Idea of introducing maximum 14-carrot gold for jewellery can be re-introduced with 10-percent excise-duty on jewellery. Since most investment in gold is made out of black money, sincere steps should be taken to transform currency-circulation in banking transactions so that surplus currency may be ordinary ‘paper’ for all practical purposes.
India should follow sensible advanced countries by discontinuing circulation of higher-denomination currencies like five hundred and above because it is used as black money to buy gold. All sale-purchases exceeding say Rs 20, 000, even though payment may be made in parts, must be through banks. In case of cash-payments, currency-tax @ 30-percent may be imposed.
All expenses exceeding Rs 1000 must be allowed when made through cheques/ drafts. Payments of essential services like water, telephone, electricity bills and municipal taxes exceeding Rs 1000 must be paid by cheques/ drafts only. Drafts/ Pay-Orders/ Traveler-cheques must carry names and address/ account-numbers of purchasers with reduced validity-period of say 45 days to check their misuse as ‘benami’ drafts for carriers of black money.
Likewise use of petrol can be effectively checked by discouraging manufacture and import of big cars. Differential slabs of excise-duty on cars should be on the basis of ex-factory price of cars rather than on length of cars. Cars with ex-factory price-tag of say rupees ten lakhs should have excise-duty at rate of 100-percent.
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