'Transparency only instrument to deal with black money, corruption'

Transparency and not demagnetisation of Rs 5000 notes is the only effective instrument to deal with black money and corruption in the economy. This was stated by former advisor to Prime Ministers on Finance Dr Hafeez Pasha and Dr Salman Shah while talking exclusively to Business Recorder. Demagnetisation of the Rs 5000 note may have a slight impact on cash transactions but would never be a permanent solution against black money and corruption, they argued.
Dr Pasha said the government, instead of discontinuation of high value note, is considering offering a new amnesty scheme, third one by the present government. He added that amnesty schemes were not historically successful and the government must improve its tax system and ensure transparency in the economy. Banking sector suffered badly due to withholding tax on banking transactions, he said, and advised the government against taking decisions which would have a negative impact on the economy. Pasha said that in India demagnetisation was a surprise and may have had some impact while in Pakistan it would not be a surprise and would not have any big impact.
Dr Salman Shah concurred and said that discontinuing high value note of Rs 5000 may have some impact on cash transactions but added that people would find other ways. He emphasised that transparency is the only way to effectively deal with the problem of black money and corruption as the experience in India has served a serious blow to the Modi government as well as to the Indian economy.
Ministry of Finance said that given the continuing use of cash in transactions, government argues that discontinuation of Rs 5000 note would adversely affect the efficiency of exchange in business and may be a source of discomfort and anxiety for the people.
A clarification by the Finance Minister came after a resolution moved by Osman Safullqah Khan was passed by Senate asking the government to withdraw high denomination Rs 5,000 notes from circulation to reduce illicit money flow, encourage the use of bank accounts and reduce the size of undocumented economy. According to Finance Ministry the current denomination of highest value notes in Pakistan ie Rs 5000 was significantly smaller compared to those of major currencies such as $100 note, Euro 200 and Pound Sterling 50. During 2015-16, only 17 percent of the notes printed were of Rs 5000 denomination.