Narendra Modi need to be on his toes with regard to black money

New Delhi: If experts are to be be believed, PM Narendra Modi is walking a tightrope with his fight against black money.

The pivotal factor here is that he has unleashed a wave of bold, and sometimes brazen, initiatives to root out income that has been illegally obtained or not declared to the taxman. But that has chilled the economy.

Read:- Yashwant Singh targets Jaitley on Black Money, seeks explanation

In the last year or so, Indian government focus has shifted from elite corruption to dealing with the next layer down: ordinary taxpayers. The country has more citizens who go overseas on holiday than taxpayers who declare income of more than 1 million rupees.

PM has done plenty of things in order to force a change in collections. A controversial ban on big banknotes last year made people less comfortable hoarding undeclared cash. A new nationwide “goods and services tax” (GST) is based on electronic invoices, forcing small traders to enter the formal economy to claim back tax credits. New real-estate regulations mean it is harder to park illicit cash in property.

Read:- I express gratitude to citizens for going for digital transaction: Modi

In order to support the economy and square the funding circle, Indian Government is now considering relaxing the fiscal deficit target from 3.2 percent. Low inflation, a narrow current-account deficit, and large foreign-exchange reserves would make a limited adjustment manageable.