8 years post demonetisation: Black money still haunts real estate

90% citizens surveyed want all products and services by builders and their subcontractors to be purchased with GST receipts, according to a survey by LocalCircles

Eight years after demonetisation, 90 per cent of Indians still believe that black money is rampant in the real estate sector and government efforts to have a central data base for land/ properties has a a long way to go as 62% of property owners have not linked their Aadhaar to their property, according to a survey conducted by LocalCircles. 

 

On November 8, 2016, the Indian government took the bold step of demonetising Rs 500 and Rs 1,000 currency notes, marking a key move in its fight against black money and corruption. The objective was clear: reduce unaccounted wealth in the economy, particularly in sectors like real estate, which had long been a haven for black money transactions. However, eight years later, the battle against black money continues, with cash in circulation nearly doubling—from Rs 17 lakh crore in 2016 to Rs 34 lakh crore in 2024.

 

 

While demonetisation was intended to curb corruption, hoarding, and black money, the real estate sector remains one of the primary channels for unaccounted wealth. A significant portion of property transactions continues to be conducted under the radar, with many properties still being bought and sold through benami transactions—where the ownership is hidden behind a nominee or intermediary to conceal the true owner.

 

Government Efforts: Modernising Land Records to Curb Benami Deals

The Ministry of Rural Development (DoLR) has undertaken a series of initiatives to address these issues, notably the Digital India Land Records Modernisation Programme (DILRMP). According to the Department’s latest data, by December 31, 2023, 95% of the country’s villages (6,25,137 out of 6,57,397) have completed the computerisation of Record of Rights (RoRs). Additionally, over 9 crore land parcels across India have been assigned a Bhu Aadhaar—a unique identification number aimed at eliminating fraudulent land transactions and improving transparency.

 

The move towards e-Registration of property documents has also gained momentum, replacing the traditional manual process. Linking property records with Aadhaar numbers is a crucial part of these reforms. It is designed to ensure that property ownership is accurately tracked and verified, reducing the chances of benami transactions, where the true owner remains concealed.

 

The Role of Aadhaar in Tackling Black Money in Real Estate

In line with these efforts, the Aadhaar linkage initiative has been one of the most talked-about measures. The government’s decision to link land documents to Aadhaar numbers aims to establish a centralized, transparent system where every piece of property is traceable to its true owner. This is expected to prevent tax evasion, curb illegal transactions, and reduce the usage of black money in real estate deals.

 

Yet, despite the ambitious plans, the process of linking Aadhaar with property records has not been fully realised across the country. According to the survey by LocalCircles, which received over 46,000 responses from citizens across 372 districts in India, 62% of property owners have yet to link their Aadhaar to their property. This highlights a significant gap in the government's efforts to fully digitise land records and enforce transparency.

 

The LocalCircles survey, which was conducted to gauge the effectiveness of Aadhaar linkage and the prevalence of black money in the real estate sector, revealed some concerning findings. Despite the government’s push for digitisation, a significant portion of the population is either unaware or has not been prompted to link their property documents with Aadhaar.

 

The survey also revealed widespread public dissatisfaction with the government's progress in tackling black money, particularly in the real estate sector. A striking 90% of citizens believe that black money is prevalent in real estate and construction, where many payments are still made in cash to avoid taxes. As such, they strongly support the imposition of additional audits and checks to ensure that all transactions in the sector are carried out via GST receipts, which would guarantee transparency and accountability.

 

Furthermore, when asked about government employees and politicians not disclosing their assets, 67% of respondents advocated for the termination of service for ministers and officials who fail to declare their assets, while 29% suggested suspension instead.

 

While urban areas like Delhi and Kerala have made strides in digitising land records and implementing GIS mapping, rural areas face challenges. In states such as Kerala, where efforts are underway to link Aadhaar numbers to land records through the Revenue Land Information System (ReLIS), the process has been slow, with reports indicating that some areas are still relying on traditional manual methods.

 

The government’s Union Budget for 2024-25 has proposed further steps to modernise land records. The creation of a Bhu-Aadhaar (unique land identification number) system for rural areas and the full digitisation of urban land records are set to be key components of these reforms. Finance Minister Nirmala Sitharaman emphasised that the Centre would work closely with state governments to complete these reforms in the next three years, providing fiscal support to incentivise the states.