It is natural that the government wishes to fine-tune its ability to manage, track, and minimise the use of unaccounted money in the economy. Mature economies ensure that their tax systems envelop most productive activity, and that tax evasion or avoidance is rendered difficult. But this needs to be done transparently and effectively, without excessive inconvenience being rendered to ordinary taxpayers. The current Indian administration has at various points in the past insisted that it intends to protect taxpayers from excessive intervention. And some major steps in this direction, such as the “faceless” interface with the tax authorities, have been taken. But two recent efforts show how easy it is to slip back into old, bad ways.
The concern about the Reserve Bank of India’s (RBI’s) notification regarding Rs 2,000 notes is the first such example. The RBI last week announced this high-denomination note would be withdrawn from circulatio
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